M c I n t i r e I n v e s t m e n t I n s t i t u t e1

McIntire Investment InstituteAt the University of Virginia

Westport Innovations IncWPRT:NASDAQ

Prepared by Simratbir Singh| 01 March 2012

M c I n t i r e I n v e s t m e n t I n s t i t u t e

Company OverviewStock OverviewThesis Points

Value Added ResearchRisks

RecommendationQ & A

2

Outline

M c I n t i r e I n v e s t m e n t I n s t i t u t e

• Founded in 1995• Headquarters = Vancouver, Canada• Full Time Employees = 354 • Sector = Industrials• Industry = Auto Parts• Locations = North America, Europe, China, and

Australia• IPO = 1997

3

Westport Innovations

M c I n t i r e I n v e s t m e n t I n s t i t u t e4

Strategic Global Locations

M c I n t i r e I n v e s t m e n t I n s t i t u t e

For Future Presentations

5

Company Overview

Westport Innovations is a provider of engine and fuel system technologies utilizing gaseous fuels.The company provides alternative fuels, low-emission technologies that enable engines to operate on fuels such as compressed natural gas, liquefied natural gas, hydrogen, and biofuels.

M c I n t i r e I n v e s t m e n t I n s t i t u t e

Value Investing Conference

6

The Company's technology and products enable three petroleum-based fuel engines that primarily use natural gas. Light (2.4 liters) Medium (5.9 to 8.9 liters) Heavy-duty (11 to 16 liters) High-horsepower (greater than 16 liters)

The Company leverages its technology by partnering with diesel engine and truck original equipment manufacturers (OEMs) to develop, manufacture and distribute its engines to a group of global truck and bus OEMs.

Company Overview

M c I n t i r e I n v e s t m e n t I n s t i t u t e

The Company's business operates in three segments:• 1. Cummins Westport Inc. (CWI) which serves the medium to heavy-

duty engine markets. – Joint Venture – Sells a range of low-emissions alternative fuel

engines for commercial urban fleets, including buses and trucks.• 2. Juniper Engines Inc. (Juniper) which designs, produces and sells

high-performance alternative fuel engines• 3. Westport Heavy Duty (Westport HD) division engages in

engineering and design of natural gas-enabling technology for its heavy-duty diesel engine and truck market.– Light-Duty division which focuses on light-duty automotive

systems, components, and engines used in industrial equipment.

7

Business Functions

M c I n t i r e I n v e s t m e n t I n s t i t u t e8

Fuel Injector Products

M c I n t i r e I n v e s t m e n t I n s t i t u t e9

Shareholders

M c I n t i r e I n v e s t m e n t I n s t i t u t e10

• Prev Close: 40.47• Open: 42.59• 52wk Range: 16.19 - 47.38• Shares Outstanding: 54.8M• Volatility Average:64.22• Beta: 1.43 • Avg Vol (3m): 1,382,190• Market Cap: 2.08B• P/E: N/A

Key Ratios

M c I n t i r e I n v e s t m e n t I n s t i t u t e11

Stock Snapshot

M c I n t i r e I n v e s t m e n t I n s t i t u t e12

Financial Data

M c I n t i r e I n v e s t m e n t I n s t i t u t e13

Stock Performance

M c I n t i r e I n v e s t m e n t I n s t i t u t e

New Position Decisions

14

The Natural Gas BenefitExtensive Intellectual PropertyStrategic Partnerships and Business

AlliancesTurmoil in Iran and the Middle EastStrong Management Team

Thesis Points

M c I n t i r e I n v e s t m e n t I n s t i t u t e

• Natural Gas is cleaner burning and lower in carbon emissions than oil or coal.

• Lower pollution and cleaner cities.• WPRT primarily uses Shale Gas

– Gas trapped within shale formations– Shales are fine-grained sedimentary rocks that can be rich

sources of petroleum and natural gas– Production of natural gas from shale formations has

rejuvenated the natural gas industry in the US

15

Why Natural Gas?

M c I n t i r e I n v e s t m e n t I n s t i t u t e16

Natural Gas Production

M c I n t i r e I n v e s t m e n t I n s t i t u t e17

Why Natural Gas?

Cost Effective

M c I n t i r e I n v e s t m e n t I n s t i t u t e18

Natural Gas Production

M c I n t i r e I n v e s t m e n t I n s t i t u t e19

Natural Gas Production

M c I n t i r e I n v e s t m e n t I n s t i t u t e

• The natural gas vehicle (NGV) industry is a large and rapidly growing market. • As of May 2011

– 13+ million natural gas vehicles in use worldwide– Only 112,000 operating on U.S. roads

• The International Association of Natural Gas Vehicles projects that there will be more than 50 million natural gas vehicles worldwide within the next ten years, representing approximately 9% of the world transportation fleet.

• Tremendous growth opportunities in light, medium, and heavy duty transportation markets.– WPRT manufactures products for all three markets. – Engines from forklifts to construction vehicles, and even locomotives.

20

Market for Natural Gas

M c I n t i r e I n v e s t m e n t I n s t i t u t e

• Competitive advantage - Extensive intellectual property portfolio• Patents include:

– Various fuel injectors – Engine fuel systems– Compressors

• Over 400 patents, 290 patents issued worldwide– Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Korea,

Russia, UK, and US.

• Over 65 patents in the U.S.• 115 patent pending applications• Global IP strategy

21

Extensive Intellectual Property

M c I n t i r e I n v e s t m e n t I n s t i t u t e22

Company Strength = Individual Company Revenue/Total RevenueIP Strength = Individual Company Patents/Total Patents

M c I n t i r e I n v e s t m e n t I n s t i t u t e

• Westport leverages its proprietary technologies by partnering with leading diesel engine and vehicle original equipment manufacturers (OEMs) to develop, manufacture and distribute natural gas engines.

• Westport currently has strategic alliances with– 3 of the world's top 4 engine producers and supplies– 6 of the world's top 10 truck producers. – In the light-duty market, Westport has strategic

relationships with 7 of the world's top 10 automotive OEMs.

23

Strategic Partnerships and Business Alliances

M c I n t i r e I n v e s t m e n t I n s t i t u t e

• To gain access to their manufacturing capacity, supply chain and global distribution networks in a cost effective manner.

• Collaboration in order create sustainable transportation solutions that reduce greenhouse gases.

• Other partners include international government agencies, university research laboratories, and natural gas fuel and infrastructure providers.

24

Benefits of Partners

M c I n t i r e I n v e s t m e n t I n s t i t u t e

Issues in Afghanistan affecting attitudes towards Americans and other Western nations.

25

Turmoil in Iran/Middle East

M c I n t i r e I n v e s t m e n t I n s t i t u t e

US conflict with Iran Nuclear weapons Economic Sanctions Response – Cut oil exports UK, France, and Netherlands

Impact on gas prices Less reliability on the Middle East Won’t involve a future of transferring huge amounts of wealth to

ME US will not have to compete with China for imported oil.

26

Turmoil in Iran/Middle East

M c I n t i r e I n v e s t m e n t I n s t i t u t e

• David R. Demers– Founder and CEO since 1995– Bachelor of Physics and Laws Degrees in 1976 and 1978 respectively.

• Bill E. Larkin– CFO since 2010– Previously served as CFO of Fuel Systems Solutions– CPA, audited at Deloitte & Touche LLP, based in Los Angeles– Bachelor of Science degree in accounting

• Elaine A. Wong– Currently Executive Vice President, Strategic Development– Joined WPRT in 2001, has slowly moved up the ranks– CPA, Bachelors of Commerce Degree with Honors from University of

British Columbia.

27

Strong Management Team

M c I n t i r e I n v e s t m e n t I n s t i t u t e28

VAR

M c I n t i r e I n v e s t m e n t I n s t i t u t e

• Kombiz Momtaz – Scottrade Branch Manager– Although he is not allowed to recommend due to

company regulations, he did offer some personal insight into WPRT (Not the views of the company)

– “Demand for construction equipment has shown positive signs in recent periods”

– Due to the current global infrastructure demand, China and India, companies such as WPRT should benefit tremendously in the coming decade.

– Higher demand for construction equipment engines

29

VAR

M c I n t i r e I n v e s t m e n t I n s t i t u t e

• Confidential Source – Analyst at a multimedia financial-services company– “…10 bagger stock”– “No choice Fuel Revolution”– “…unrest in Middle East….leader in conversion and

manufacturing CNG engines.”– “Gaining more coverage by Wall Street Firms”– “CNG has huge market potential, has already invaded

markets in Brazil, Pakistan, Iran, and India”• Personal experience

30

VAR

M c I n t i r e I n v e s t m e n t I n s t i t u t e

• Deron Simpson – Westport Innovations Investor Relations Office– “Natural Gas engines are going to be a significant part of a

growing market, and WPRT is the leader”– “…Natural gas is cost-effective, Oil is not”– Competitive Advantage

• WPRT is better than competition because of its Intellectual Property.

– R&D and innovation leader– “Plan to become profitable in the near future”– Long-term investment

31

VAR

M c I n t i r e I n v e s t m e n t I n s t i t u t e

• Weak Financial Performance in the past– Negative operating and profit margins– Losing money (Net Income)– Currently Not Profitable

• Change in progress– High operating expenses incurred due to Research and

Development– Have developed and are now starting to manufacture a lot of these

goods– Expansion Mode– Steady growth in terms of net tangible assets (48M 180M in

little over a year) and net assets (107M 273M in two years)

32

Risks

M c I n t i r e I n v e s t m e n t I n s t i t u t e

Examples of Companies using CNG• Cement Mixers delivering concrete to New York.• Los Angeles and Washington DC buses run on natural gas.• Indiana Dairy Farmers Association have a new fleet of 42 natural gas powered

trucks.• AT&T has over 3,000 natural gas powered vehicles, plans to increase to 8,000

by 2013• UPS- Michael Britt, director of maintenance and engineering

– “Only long term viable option to diesel.”– Proof: UPS recently ordered 48 gas-powered trucks, with plans to add

952 more• New York Waste Management Trucks

33

Setting Trends

M c I n t i r e I n v e s t m e n t I n s t i t u t e

MII Website

• Westport Innovations Inc. is commercializing high pressure direct injection (HPDI) combustion technology.

• This technology allows diesel engines to operate on cleaner-burning gaseous fuels without sacrificing performance or fuel economy.

• The Company has a development project with Ford Motor Company.

34

Current Projects

M c I n t i r e I n v e s t m e n t I n s t i t u t e35

HPDI

M c I n t i r e I n v e s t m e n t I n s t i t u t e

• Place WPRT on MII’s watchlist

• Closely monitor the stock

• Once the stock starts profiting from operations, initiate 3-5% long position.

36

Recommendation

M c I n t i r e I n v e s t m e n t I n s t i t u t e37

Questions?