Thank you for standing-by. This is the conference operator. Welcome to the Westport Innovations Quarter Two 2015 Financial Results Conference Call. As a reminder all participants are in listen-only mode and the conference is being recorded. After the presentation there will be an opportunity to ask questions. [Operator Instructions]. At this time I would like to turn the conference over to Darren Seed, Vice President of Capital Markets and Communications. Please go ahead.

Thanks operator and thank you and good afternoon everyone. Welcome to our second quarter of fiscal 2015 conference call. It’s being held to coincide with the disclosure of our financial results earlier this afternoon. For those who haven’t seen the release and financial statements yet they can be found on Westport’s website at www.westport.com. Speaking on behalf of the company will be Westport’s Chief Executive Officer, David Demers; and Westport’s Chief Financial Officer, Ashoka Achuthan; and Westport’s President and Chief Operating Officer, Nancy Gougarty. Attendance at this call is open to the public and to media, but for the sake of brevity, we are restricting questions to analysts. You are reminded that certain statements made in this conference call and our responses to various questions may constitute forward-looking statements within the meaning of U.S. and applicable Canadian securities law and such forward-looking statements are made based on our current expectations and involve certain risks and uncertainties. Actual results may differ materially from those projected in the forward-looking statements. Information contained in this conference call is subject to and qualified in its entirety by information contained in the company’s public filings and except as required by applicable securities laws, we do not have any intention or obligation to update forward-looking information after this conference call. You are cautioned not to place undue reliance on any forward-looking statements. Now, I will turn the call over to David Demers.

Good afternoon everyone and thank you for your interest and support of Westport. Despite some extraordinary economic turbulence around the world, our 2015 plan continues to be on track. I'll take you through some of the highlights and the context of our four key priorities for 2015 and then I'll turn call over to Ashok and Nancy for more details. First, as we've told you we're continuing our investment program alongside committed OEM partners for new commercial products and of course these are long life products typically looking at meet the decade in life. So these are our decisions that we don’t take lightly. We do review our product investments quarterly and we believe all of our current investments represent an important strategic opportunities with attractive risk rewards and with committed partners even in the current markets. As these programs complete and expenses taper off, we may be in a position to tap down the historical investment pace or product sales begin to climb. So for example our next generation Volvo cars will begin to ship this quarter and our previously announced Ford F150 will begin to ship in Q4 of this year. We also made steady progress this quarter on our HPDI product programs including the announced completion of a major initiative with a new OEM partner. The completion of this initiative validates the unique performance and emission characteristics of HPDI 2.0 on state-of-the-art OEM into the platforms. Now our HPDI components are on track for delivery to customers for validation testing in early 2016 and at that point we would expect the development expenses associated with those components to begin to decline A second theme of the year is that we are continuing to reset and rationalize and consolidate our current product portfolio while ensuring that we exceed…

Thank you David. Good afternoon everyone. I will provide you with some highlights of our second quarter actions we have taken to address our expense and cash positions and cover our financial outlook for the rest of 2015. As David noticed despite global energy price volatility and economic turbulence in many key markets Westport achieved a significant improvement on key financial measures for the second quarter of 2015 and is on track to deliver on its financial targets. Westport revenues from operations including our corporate and technology investment segment was 27.8 million for the second quarter ended June 30th compared with 37.9 million for the same period last year. The 27% decrease is due to the timing of service revenue a $4.1 million unfavorable impact of foreign exchange translation from the Euro to the US dollar and a sustained economic weakness in certain European and Asian markets. Westport is reiterating its revenue outlook and expect consolidated revenue from Westport operations and corporate and technology investments to be between 110 million and 125 million for the year ended December 31, 2015. Cummins Westport or CWI’s revenue was 93.1 million on 2947 units for the quarter ended June 30th an increase of 17% over the same period last year. Revenues increased year-over-year, basic rate due to a strong performance in North American core segments of transit and refutes. Weichai Westport's revenue was 41.9 million on 3491 units for the quarter a decrease of 69% over the same period last year. General economic conditions in China which has resulted in an industry-wide softness in truck demand contributed to Weichai Westport's weaker sales. Moving on to operating expenses Westport consolidated reduce its combined operating expenses by 9 million or 26% for the quarter ended June 30, 2015 compared to the same period last year.…

Thank you Ashoka. Today I'm going to focus on providing some operational highlights and priorities for the company. I'll start by saying our Westport team continues to deliver on our progress of our programs. We're hitting key milestones and targets despite the energy price volatility and the economic weakness in certain European and Asian markets. It feels that the when this having outside but sometime outside, but despite these challenges we're making a number of product announcements in the quarter including the introduction of the new logo car drive power frame by fuel engine and the EPA certification on the 2015 sports trend advanced and the announcement of the new Ford F150 five few product. In addition to these announcements, the team is dedicated to our HPDI 2.0 and continue to focus on component readiness. As we progress substantially in the engineering of our injectors, rails and off-engine systems for HPDI 2.0, the outcome of a number of engineering challenges to achieve the state of component readiness is here. The deployment of HPDI 2.0 is expected to shift from a design and development phase into testing and validation phase in early calendar year 2016. The associated investments in the technology will be in line with these upcoming phases of development and are indicative of the near term launch. It would be reasonable to expect that with the near term launch our R&D efforts will drop off as these products reach their launch stage. We have same strong interest in our technology as demonstrated in our post-quarter two and with the announcement of the completion of the major engine program with our fifth HPDI engine customer in this case was Daimler AG. As we turn our attention to Weichai Westport and our China sales. Despite the challenges that we have seen…

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. Thank you, our first question is from Laurence Alexander from Jefferies. Please go ahead.

Hi. This is Jeff on for Laurence. On the new OEM announcements, how will the OEM relationship to be accounted for at least service revenue situation or you'll show the cash flow initially and then the OEM will reimburse after milestones or to be funded mostly by the partner.

Well, and the answer is depends on the partner and depends on circumstances. So I think generally we have been building the components let's say so I mean that's out duty is to get things ready in our supply chain. And so a lot of our work is component readiness as you heard Nancy say. And so then we're putting more of the work of developing specific engines or trucks onto the OEM partner. But again we're going to help out in some of those cases. So it's not really cutting right. Generally that's been to divide as we want to build common platform that we can use with multiple OEMs and that's why we're spending so much time on the next generation injectors in rails and fuel pumps and things like that. But at some point we want to be OEM to take on the truck integration truck development and testing. So that's typically how the expense split has gone. And our partners are making substantial investments besides us to bring these products to market which is why we think it's a realistic thing to do. Whether that crosses over into them hiring us to do work that we would expect them to do that's sort of one circumstance or whether we stepping and help out because it's not clear. And we just want to get the program moving that's kind of the second side. So generally I'd say the answer is yes there is a lot of money we spend. We're going to divide it up between the partners on a rational basis and then presumably we're going to have a similar divide on the rewards when we start to sale product in the marketplace. But right now our focus on getting these components to the level of engineering proof and certainty and manufacture ability and cost that we think we need. Nancy I don't think if you want to elaborate.

No I think that summarizes that I think it's a blended and we continue to work successfully with the variety of different partners. And as we working as marketing and as we stated with the five different customers that we have and we working on. Everyone has their unique ways I want to do it and I think that's why Westport is there I'll say partner of choice in this regard. Because we are we do have some flexibility.

Great and if I can switch gears quickly to China. Can you elaborate a little bit on what you're seeing there and the outlook for the HPDI at the lean product there? And given this environment do you expect to launch the 12 leader and what was the reaction from the test engines in late 2014.

So let me I would say that as I commented that we've remain very bullish on the China market. There is a several dynamics for a launch in China that we think plays well for us relative to our segment and relative to natural gas. We think that's first of all there is discussion that’s going on in the Central government is relative to their view of what they want to do from the environment and some of the new regulations plus the demand I would say even just for the environment standards and China being strengthened and the demands of the population on that front. So those played for us at this stage of the game we continue to be very positive relative to what we’re seeing relative to the market interest in our HPDI as I mentioned we are launching this fueling system called LPP low pressure pump which will allow us to be using LNG and getting the market ready for that fueling source as you know HPDI really demands to be run on LNG at this point in time. So we are seeing interest from a variety of folks on this front and I think that if you look at what’s happening with the LPP that’s a precursor for the kind of demands that we’re going to see in the HPDI market.

Great, thank you.

The next question is from Ann Duignan from JP Morgan. Please go ahead.

Hi guys good afternoon. Can you give us a little bit more color on the average that you’re looking for and how you’re valuating those and how much of interest, do you expect to have for them? And then could you talk a little bit about have you had any conversation with Ford at all about maybe selling the entire web part just so to breaking up that?

Ann this is Ashoka I know in terms of the non-core asset sales as we call them non-core for a reason, I mean clearly these are not asset sales that are going to impact our ongoing revenues. So outside of that is a very little I can elaborate on other than the fact that we are on track to have these transactions consummated over the upcoming quarters. And David also mentioned the range of our expectations in terms of proceeds which is around 50 million. And no there is no plan to put less quota up for sale.

Okay I appreciate that and then just switching gears just I was curious in your presentation upfront you describe your business, you describe yourself as a leading provider of engine and fuel system technology do you utilize the – fuel? And then I noticed in your press releases in July 7, you’ve announced that your offering in liquid protein system is this another shift in strategy?

No it’s Darren the strategy actually specifically is around the Ford F150 campaign this is a light duty focus just face some of the market demand and obviously we’ve got the natural gas F215, F350 series I mean even up from 50 offering dedicated to buy fuel. But there was some demand in the specific market for propane applications for pickup charts so that…

And what I'd add without acquisition or acquisition of Prince last year we acquired a lot of LPG propane capability so this is an example of how we leverage the capabilities we acquire into our existing product spectrum.

Okay. So maybe the distance overview needs to be updated include other than gas?

We can add that.

Okay I’ll get back in line. Thank you.

Thanks Ann.

The next question is from Eric Stine from Craig Hallum Capital Group. Please go ahead

Hi everyone. Just maybe I'm wondering if I characterize the OEM activity, behind the scenes to your over the last year I know that the Daimler program – for the year so have you seen any change in oil orders or is it pretty much steady.

Yes it’s such a small number to target say statistically I’d say the general feel and I'm looking at Nancy here is I think there’s wide spread acceptance in every market in the world that they need a natural gas strategy step one, step two is I think most people have gone through some technology analysis and understand that they are going to need a high performance natural gas engine not just to quick me too I mean a lot of people have launched pretty straight forward dual fuel systems or even gone to a spark ignition system but I think those first generation products are now well understood and their limitations are understood and so we’re seeing a lot of believe that direct injection systems HPDI systems in particular are what's going to dominate the market for the next generation. And so I think everyone is quite engaged in looking at their natural gas strategy. The only thing is really changed is timing I think the people are now feeling that timing is less urgent than it was in 2012, but at the same time they're all pushing towards the time table lets says they really get our product out the door in the next few years because greenhouse gas regulations are hitting and other expectations are hitting and no one knows when oils can turn off. So I would say generally the consensus is moving in one direction which is natural gas is here to stay and we need it. And number two is we need unique of performance HPDI. So we're really busy.

Okay. So maybe and I know that's about HPDI but also curious to some depends spark ignited product traction there. Is that something we could see some developments in 2015 and what I would assume that would also be cost sharing?

Yeah I would say that in general just coming as David said he is at HPDI as an example but I would as he mentioned the need for within the portfolio to have natural gas product depending on where the vehicle or engine ranges we're finding strong interest or maybe I'll say serious interest in relative to this enhanced spark ignited product that we have. I think that you can from our point of view we have looked at it there is obviously some gains that the people can get by introducing this enhanced spark ignited which we think is exciting and interesting. But like David said the need to have a product offering from most OEMs is really critical. So the dialogue we're having are quite encouraging.

Okay. Alright last one from me just on the OpEx ex-the one-time charge it was another. Now a sequential decline I mean any way to quantify how much more you have to go there or what anything you're in anything along the line might help. Thanks.

So as you can see coming in our operating expense guidance it's pretty much across the board in R&D. The only word of caution I'd have here is our R&D spend is inherently a little lumpy quarter-over-quarter. So I would not necessarily read any kind of trajectory at the current level. But outside of the R&D spend you will notice that you have very significant control on cost discipline across the board on OpEx. So that you can clearly expect will continue.

And I think adjusting overtime for all the unexpected things is and I think that that's we as an organization and I think have really buckle down and every time we do have changes. We're making the adjustments and I think that that's why the results came through like they did in quarter two.

Got it. Thanks.

The next question is from Rob Brown from Lake Street Capital Markets. Please go ahead.

Good afternoon, just kind back to China. Do you have any sense on when the Chinese market kind of stabilizes in future?

Rob I wish I knew that. I'd be a very wealthy woman. I don't I think at this point in time I can just repeat what I have read I think that there is on across the second half of the year where we've ever than in the first half. We need to see if that's going to be true or not. I would say the China market has a lot of volatility going on that's well beyond just what's happening in the natural gas market. I would say that I'm encouraged because as the activities are still think on pace for us relative to the programs that we're working with our partners there. So I think that that maybe a probably the strongest indicator. But I would tell you I think China is a have hard read at this point in time.

Okay. Thank you, and then on HPDI development work. You said you'd have sort of next step in testing in 2015. But maybe just -- kind of lay out how it rolls out thereafter two or three away the product into the market. Is it how long to revenue at this?

I would say it's there is and that's one. So as we have chosen to talk we're talking about component readiness. I think the individual OEMs will have to speak to how they want to bring it out to market I would say each OEM has its own cycle by which we go through to get the engine complete get the testing done go through formal certification levels and as you noted last year we did announce for our Weichai engine we have already received the China five certification for that and I think that that’s an indication also that things are progressing. So I would say for us it’s all about getting the right component ready and getting it to production status which were nearing year end we are closing out here as we in the third and fourth quarter and moving into our I will say durability and production level testing.

Great. Thank you.

The next question is from Jerry Revich from Goldman Sachs. Please go ahead.

Good afternoon.

Hey Jerry.

I am wondering if you could talk about the performance of Weichai Westport this quarter if you think we’re seeing inventory destock and presumably they are some at how far through the destock cycle any color there would be helpful?

I think that what you are seeing is just from what I and I have been there couple of times in the quarter I would just say that it’s very reflective of what’s going on generally within the truck market within the China for most of the big trucks remind you that the number of units that they produced though it looks is definitely year-over-year lighter I think it’s still if you look at it on a full year basis it’s still one of our largest markets relative to natural gas. So though it’s not what 2014 was we’re still relatively confident with the uptick level that we see in interest on the variety of the OEMs that used the Weichai engines.

Okay. And Nancy if it’s not inventory destock that implies some share shift towards diesel from gas is that what you are saying?

No, I don’t think so, because I think that if you look at the overall market in of itself you will find that the first half of the year just in general trucks, and even in diesel the volume isn’t what it was the prior year. If you look across all the players not just Weichai but others that play in the market as well on the engine manufacturing side.

Okay. And then can you talk about how the natural gas locomotive program is going for you folks where are you in the testing process when do you expect that program to deliver a commercial product?

I don’t know we can we’re still working relative to our LNG tenders that we have given to Canadian national railroad we are working those but at this point in time I am not sure we are in a position to talk too much else relative to what we’re doing on the locomotive side. But stay tuned.

And after you complete the divestitures that you spoke about could you just remind us your priority for use of cash will you look for M&A opportunities or do you want to keep the cash on the balance sheet on the R&D just reorient us if you could on how we should think about priorities there?

I think I mean it’s I am looking around at Ashoka I think Ashoka is going to turn it into gold bars and bury them in his office somewhere but honestly it’s going to be whatever the strategy plan looks like this has been a really volatile few years in this industry as you know we think we call the trends right there is an increasing push towards OEM product from the aftermarket we are increasingly seeing people looking for higher technology and more advance systems because the base entrance are getting better we’re seeing direct injection gasoline that’s why we’ve launched the new technology platform with Volvo car because they have one of the first high performance direct injection gasoline platforms. So the tendency is toward technology and toward integrated OEM products which is where we’ve positioned ourselves lots of opportunity across this industry as it make that shift. So will there be M&A or investment opportunities certainly we want to keep our powder dry because of the uncertainty and the volatility that Nancy talks about yes of course when we say it’s not things that we need to own it doesn’t mean that it’s not still of interest maybe just to our partner is that we want to work with that we can sell these or something like that. So I think the industry is going through a rapid maturation and transition. We intend to be in the lead in the future as we are today and so we'll have to decide what to do with our balance sheet as we see the opportunities but strengthening the balance sheet and giving people comfort that we have the balance sheet we need to finish our programs is certainly a priority for 2015.

Okay. And lastly I know you don't give quarterly guidance. But you spoke about a couple of product lines that are going to be launch into 4Q, it sounds like you should be building momentum exiting the years. Is that the right way to think about it?

We aspire to be a growth business and I know it doesn't quite look like that. But if you look at CWI we are up year-over-year there seems to be a broad consensus somehow what low oil price is. There is no interest in natural gas. But it's just not true. There are some very strong core markets that are continuing to develop well and that we just launched the new engine as you probably saw with Cummins Westport for the school bus market, we think the school bus market finally ready to move in a serious way. So we want to have those products ready and see that growth. So we are going through a pretty rapid evolution of our product line. Nancy reiterated a few of them, but there is a lot of new products in the cycle. It's not just the HPDI. Yeah, of course we hope that we can launch these products at the right time for our market demand to asses them and pickup that said the market is certainly challenging and volatile and we have to be a little humble about picking the timing perfectly. I think we are getting the long-term trends right. We've got the products interest from all the players that we work and all the OEM's we talk to I think we pretty clearly developing products that people want. How fast we see the market pick them up. We'll have to wait and see those. Certainly we hope that we are on a growth trajectory that's why we are doing it.

Thank you.

The next question is from Noah Kaye from Northland Capital Markets. Please go ahead.

Hi, this is Argon [ph] for Noah Kaye. Couple of questions here. So first question is kind of regarding the CWI 6.7 liter engine. Do you have any expectations for revenue contribution? I'm just trying to get a sense of how we can model this going forward?

Well bear in mind in terms of the space CWI the 6.7 liter engine replacing. It's much larger than either of the two engines that they currently have in production. So it is going to be a very significant space, very attractive in certain markets like school buses and as we mentioned in our press release earlier this year. The launch is going to be nearly 2016. So all in all we are expecting this to be a very significant player in the space.

The market size given our 8.9 liter product for school buses. So this is probably closer product housing units. Just given the size of the engine and the buses that can go in. But I think with the 6.7 liter you are targeting a market that's closer to 25 to 30,000 units per year. So there is definitely much larger opportunities to give you sense of that and in terms of penetration hopefully something we can look at the rest of the business is a historical trend, just trying to help some more.

Okay, great. And touching on the CWI gross margins. Are you guys anticipating any changes with kind of roll outs of new products or do you think they are reaching more sustainable level?

I think they are at sustainable levels at this point.

Okay, alright. Thank you and then final question is just, can you give a little more color into kind of new LCC product, I mean where in terms of being rolled out. Are there any expectations or contribution there?

We would the focus of the low pressure pumps and system is really for the China market. We as I think as you study the china market you can see that L&G is not pretty predominant fuel and availability in that market and we are finding that there is demand for it and else we prepared for our HPDI launch we're finding that lot of the customers that will be doing OEM truck programs with having immediate needs for this kind of product so our intent is to get a roll out at the end of this calendar year so we are prepared with manufacturing facilities in other assets in order to make sure that that comes to production.

Okay thanks for taking my questions.

The next question is from Chip Moor [ph] from Canaccord Genuity. Please go ahead.

Thanks just wanted to clarify on the disposals it sounded like your first couple of transactions at least from the parts completion in the Q4 timeframe special to represent the majority of – there and how should we think about the timing and magnitude? Thanks.

I would expect Chip, I would expect the majority of the transactions to wind up by the end of this year yes.

Okay thanks.

The next question is from Jeff Osborn from Cowen & Company. Please go ahead.

Hey great I just had two questions one, looking at the CWI and I still think they averagely just take revenue divided by units so I think the pricing was up $5,000 sequentially is there any noticeable mix shifts between 12 leader and 8.9 in the quarter?

It is a mix shift that is the contributor, mix and then there is parts of revenue as well so yes a combination of those two.

And is that Ashoka geographic mix shift or stringent displacement side more towards the – leader in the quarter?

As you know we don’t break up the split between 8.9 and 12 but it is product mix within shall we say within North America for the most part?

Okay great to hear it and then I was just curious on the 50 million in asset sale David is that can you confirm that you haven’t identified buyer rates with and agreed upon price is this a closing process of that or is this here you mentioned Ashoka I think you’ve identified assets that maybe you had some offers that were less than attractive so I'm just trying to understand between your comments and the optimism of about 50 million of how locked and secure that number is?

Yes again we’re trying to be careful here. Certainly when we said that we have identified some transactions we’re in active negotiations with multiple parties. We’re not yet certain that those transactions are going to close for a bunch of reasons that you can imagine. So we think we have a pretty good handle and we’re on track to get these things done on the time table that we’ve talked about but there is still enough uncertainty that we’re not telling it well so reasonably confident but not yet sure, how’s that.

That’s helpful and just a last question about the 50 million is that a pretax number or is there a taxable gain on the tail of these assets?

That’s proceeds to us after whatever cost of expenses are practice might be low so we’re trying to be fair and say yes that’s what we would expect with go into a showcase gold bar stash.

Yeah bear in mind we are sitting on a significant net operating loss position at this point.

Right and then you mentioned just a follow up if you want to comment you mentioned noticeable revenue impact but I assume there would be a reasonable OpEx impact or should we think about these more as facilities as like sale lease backed transactions I'm just trying to get a sense of what…?

I think other than telling you its green and it comes in a little box I think we have shared everything we are willing to share on this. So please. Thank you.

All right. Thanks guys.

[Operator Instructions] Our next question is from Mike Bladen [ph] from Stifel. Please go ahead.

Thank you. I wanted to ask you about this tape on your press release that breaks down the total adjusted EBITDA in operating business units and corporate technology investments just speaking about your past to getting debts to be positive over the next year or so how do you envision that breaking down between units and corporate tech investment?

You can see ongoing improvement in the operating business unit performance I mean that trends have been building at least for the last year we did have a blip towards the end of 2014 but we are back on track, so clearly you can expect to see continuing improvement. Maybe not necessarily linear but certainly the continued improvement in adjusted EBITDA in the operating business units because that's what the operating business units are there for to make money and help us support our R&D spend on the investment side. At the same time you will continue you will expect to see a decline in our engineering and investment spend simply because as Nancy and David mentioned at the fate of the development program we are at. As programs die down and we enter the validation phase from the development phase you will see a decline in the R&D spend. And as we transition from a validation space to production space you will see the earnings slipping from the investments in segment to the operation unit segment.

Okay great. And then you stated couple of times in the press release that currency benefited your advance this view as you quantify that.

That I think on the revenue side I mentioned we have about $4.1 million negative impact due to the euro to US dollar exchange rate. Obviously that benefits unfavorable impact changes to favorable when you look at it on the operating expense side. So there was a light contribution if you will on the operating expense side for our euro expenses. Yeah as a Canadian dollar helps us on our spend in on our R&D spend in Canada.

Okay got it. And then could you just tell us what region of the world that the new HPDI customer is located.

Nancy HPDI like all.

It's pretty clear that this based in Europe.

Got it. Thank you. Those are my questions.

This concludes the time allocated for questions on today's call. I will now hand the call back over to Mr. Seed for closing comments.

Thanks very much everyone and look forward to seeing everyone on our Q3 conference call currently estimated for the end of October.