Our financial results aligned well, with impartial trends that we desire will no only insist quiet will accelerate. We're witnessing a real-time impartial response ought new regulations. Europe's new heavy duty CO2 regulations demand our lorry OEMs ought achieve a fleet median CO2 reduction of 15% by 2025 and 30% by 2030, compared ought a 12-month baseline that's being created exact now. That is from the beginning of final month across the goal of June 2020. This fundamental is driving OEM determination making.

In May, across with Delphi Technologies, we presented common technical essay at the 2019 Vienna mechanism Symposium. There were 3 important takeaways because OEMs, customers and regulators. First, using normal gas at a diesel cycle delivers match action ought that of commercial diesel engines. Second, HPDI enables a 20% reduction at CO2 versus diesel engines. And third, HPDI will help OEMs reply ought increasingly demanding regulations. at my view, this is indeed impartial the starting put because HPDI offers farther CO2 reductions while renewable normal gas is blended with or replaced with fossil normal gas. That mode that HPDI 2.0 allows OEMs ought reply ought the new regulations, cottage preserving their considerable investments at existing engines and existing trucks. Combining HPDI with RNG offers a compliance pathways ought and beyond the 2030 goal of a 30% CO2 reduction. Westport's HPDI 2.0 is the only technique that is developed, validated, certified, at produce and because sale today that fully and affordably responds ought the new European CO2 regulations because trucks. These regulations are driving 2 important trends, increased visitor demand because HPDI and the expansion of the LNG refueling network. First, fleet customers are buying HPDI-equipped trucks from our direct OEM visitor at Europe. because example, at Q2, food distributor Lidl deployed 20 HPDI trucks supported by the first LNG stations at Switzerland. Their plot titled “Goodbye Diesel – Hello LNG" earned the 2019 HANSE global unity because demonstrating sustainable logistics and profitability. United Kingdom is another important launch market. Gasrec operates UK's big network of normal gas refueling stations because commercial vehicles and they've recorded a 369% hoist at demand because normal gas versus the foregoing 6 months. They correspondence that heavy-duty vehicle launches keep begun ought keep a actual shock because visitor deliveries are now replacing pilots at demonstrations. The second trend is the growth at quantity of normal gas refueling stations across Europe. NGVA Europe announced a important milestone at can because the 200th LNG refiling station was opened.

The growth at LNG stations is occurrence at alike with the dramatic increase at the quantity of CNG stations ought more than 3,600 across Europe. And Finnish corporation Gasum keep announced its aim ought construct a 50-station network of LNG refueling stations across the Nordic countries. Gasum opened its first LNG and biogas refueling station at Sweden at Q2, cottage Sweden has been an important first market, the expansion of the refueling network across the Nordic countries is indeed exciting news. And finally, with the increase at big orders and the construct out of the refueling network, we visit increasing demand because development activities because customers who will add HPDI ought their manufacture portfolio at the years ought come.

Heavy commercial vehicles are a critical lever at global traffic because of their duty cycle, heavy loads going expectation distances. blaze vehicles are another key lever because of the quantity sold and at employ each year. Calls because cleaner visitor and blaze commercial vehicles keep resulted at an increased quantity of registrations because preference fuel vehicles at key markets.

Today at Italy, approximately 10% of the new light-duty vehicle registrations are because CNG and LPG vehicles. Gaseous-fueled vehicle sales are more than 50% higher than the combined sales of battery electric and hybrid electric vehicles. The reasons are fairly clear, indicate incremental buy wage and hasty payback of that incremental cost, hasty refueling and good driving mountain and greater availability of fuel. Recognizing these visitor demands, OEMs are responding quickly by leveraging our delayed OEM services that change 0 kilometer vehicles ought river above LPG or CNG. We've seen a important increase at demand at 2019 and hope this trend will continue. Our DOEM material continues ought conduct well, with 2 extra OEMs with planned starts of produce dates quiet this year. The fiction is no limited ought Italy or Europe. at January 2018, we announced the development and supply parliament with Tata Motors at India ought upgrade their 3.8-liter and 5.7-liter 4 and 6 cylinder normal gas spark ignited engines and ought supply fuel injection machine control systems based above our WP582 machine Management System. I'm pleased ought illustrate that the development and certification of these engines has been completed. Integration and validation of the engines above Tata trucks and buses is underway, and the new BS VI compliant vehicles ought be launched at early 2020 at promote ought the BS VI standard taking result at April of 2020.

The Indian government has made a capital step towards cleaner attitude by moving direct from Bharat standard V ought Bharat standard VI, which is approximately match ought the Euro 6 standard. Implementing BS VI will originate at an 87% reduction at NOx emissions compared ought BS IV, and includes onboard diagnostics ought insure that the emissions are continuously monitored because compliance.

Perhaps one more data point ought share. Westport fuel systems has produced and sold 29% more CNG tank valves at the first half of 2019 and at the first half of 2018. You can count that a capital indicator because CNG vehicle sales and registrations at Europe afterward this year and into 2020. Tanks and tank valves are at one goal of our manufacture queue with the injector being at the other. We present finish systems and a sum mountain of components, including EMS hardware. Westport fuel systems products present both criteria attitude pollutant and greenhouse gas emissions reduction benefits. Now we keep a new visitor that we're supporting who will enable emission reductions ought improve operational efficiencies. at Q2, our BRC electronics section signed a strategic supply parliament with Nexxiot AG, a Swiss corporation and a global capital at the development and delivery of digital supply safe management solutions. Our electronics section will fabricate and supply Nexxiot with the Globehopper bright sensor module, which is developed and built ought pursue logistics assets alike railcars, tank and standard dry containers, a create because ultra-low energy consumption and equipped with a solar panel. We're excited approximately this new parliament and that our innovative technique will enable a more effective and become motion of freight.

And finally, our fiction is because well a renewable gas story. The important increase at the employ of renewable normal gas shows that there's a pathway because deep decarbonization of traffic by using gaseous fuels. at can 2019, UPS announced a 7-year parliament ought buy 130 million gallon match of RNG because their median and heavy duty normal gas fleet. It was the largest buy of RNG at U.S. history. And it will originate at a reduction of because much because 1 million metric tons of greenhouse gas emissions above the lifetime of agreement. The renewable normal gas coalition recently announced that the RNG industry at North America has now surpassed the 100-facility benchmark. There has been 150% growth at the quantity of operational RNG produce sites at the past 5 years, more witness that RNG is ready now preference fuel. This real-time impartial note validates what we hear from our customers approximately the world. Trends that we because well visit at our financial results, our bid book and at our development activities because our future customers. The energy of our OEM and aftermarket material at key markets and the growth of HPDI at Europe, and the upcoming launch at China ensures that we are well-positioned ought capitalize the opportunity. ago I wrap up and hand above ought Jim, depart me memorize you of our strategic priorities because 2019. First, send sustained growth of our light-duty and medium-duty material across both aftermarket and OEM channels. Second, acceleration of HPDI commercialization, including more volume with existing customers, successful launch at China, adding new customers, and lowering our wage and increasing margin. And third, continuous concentrate above aligning our wage structure and our revenues ought improve coin river and operating results. We're pleased with the first half of 2019, and we're looking dispatch ought the burst of the year and beyond. With that said, I'll depart it above ought Jim ought periodical the financials.

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James Mckenzie MacCallum, Westport fuel systems Inc. - Acting CFO, VP of Finance & Corporate Controller [4]

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Thank you, David. Q2 is a healthy region above many fronts and I'm pleased ought visit the continued strengthening of our rest piece and improvement at operating results. Our businesses performed well, which led ought healthy revenues, healthy wage and certain coin river from operations. ought periodical our Q2 results at more detail, I'll begin above glide 2. We closed the region with sales of $82.4 million, a net loss of $2.3 million and certain adjusted EBITDA of $8.1 million, our fifth consecutive region of certain adjusted EBITDA. Our Q2 2019 adjusted EBITDA was an improvement above Q1 2019 and approximately matched our healthy year ago performance. Improvement above Q1 is a originate of healthy sales during the quarter. A diminish above Q2 2018 stems primarily from lower margins and lower CWI earnings.

Turning ought glide 3, we look at our traffic material segment. traffic revenue was up 6%, absent the result of foreign exchange, quiet due ought the devaluation of euro versus the U.S. dollar, we are reporting an increase of 2% because compared ought the same region at 2018, primarily due ought energy at our HPDI and delayed OEM sales. Similarly, the aftermarket material used to keep been 2% higher, absent the result of foreign exchange quiet due ought the weaker euro, we are reporting a reject of 2%. Q2 2019 OEM revenues increased by $3.1 million or 13% above the foregoing year quarter. HPDI manufacture sales were the foremost driver because the OEM increase. entire margins were at queue with expectations at foregoing quarters, quiet were lower than the especial results of Q2 2018, partially due ought a favorable warranty adjustment at Q2 2018 and partially due ought a change at manufacture mix. because mentioned above our final quarterly update, we attitude ought undergo healthy demand because our market-ready technologies and keep a quantity of development programs underway because both light-duty and heavy-duty vehicle applications of our clean, affordable technologies including HPDI 2.0. because a originate of the increased sales, adjusted EBITDA at our traffic piece improved above Q1 2019, quiet due ought lower margins was lower than the foregoing year quarter.

Turning ought glide 4. We'll periodical the results of the CWI common venture. CWI recorded revenue of $84 million at Q2 2019, a 3% diminish above Q2 2018 and a 9% diminish from Q1 2019. The foregoing year region benefited from $3.7 million at favorable warranty adjustments because compared ought $0.6 million at the contemporary quarter. Lower sales and warranty adjustments led ought lower net allowance because CWI because compared ought the foregoing year quarter. at Q2 2019, CWI recorded net allowance of $11.7 million or 14% of sales. during the quarter, Westport fuel systems received coin dividends of $7.4 million.

Turning ought glide 5. We look at our corporate segment. SG&A wage decreased above the foregoing year, mainly due ought lower stock-based compensation expense, lower wage expense, and lower discretionary cost, which were partially offset by higher expenses related ought the SEC investigation. during the quarter, we recorded a $4.5 million fare ought deliberate the company's estimate of wage ought finish the SEC proceedings. despite the SEC charge, operating expenses are trending lower, which is an important contributor at reaching our aim of becoming a profitable, sustainable corporation and excluding this charge, the corporation used to keep achieved certain net income.

Turning ought glide 6. This shows our coin walk. We started the region with $46 million and ended with $45.4 million. We were pleased with our coin management with the key movements at the coin rest because follows: major and advantage payments because debt and royalties of $7.8 million, major expenditures of $1.6 million, CWI dividends received of $7.4 million at the quarter, and coin river from operations net of $1.4 million. We attitude ought service and revenue down our debts above schedule. no reflected at our June 30 rest piece is a $4.5 million prepayment above a European lend we made during July. attitude ought repay major out of our existing coin flows and financing facilities. Based above our healthy first half results and considering the seasonality of our material and the weak euro, we are revising our annual revenue guidance ought $285 million ought $305 million because 2019, up from $265 million ought $295 million. We look dispatch ought parliament with investors during September. And with that, I'd alike ought depart it aid ought the operator because your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first issue comes from plunder Brown with Lake highway major Markets.

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Robert Duncan Brown, Lake highway major Markets, LLC, investigation section - Senior investigation Analyst [2]

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I count you mentioned above your DOEM business, you had a attach of new OEMs. Are these new OEMs ought the program? Or are these new xerox lines and manufacture lines with foregoing OEMs?

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David M. Johnson, Westport fuel systems Inc. - CEO & Director [3]

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Yes, consequently we perform visit expanding advantage at our DOEM material is going fairly well, and what we're finding and seeing at the marketplace, Rob, is that people -- OEMs are recognizing the absence ought reply ought their customers and the DOEM facility allows them ought perform that at a same fast mode because opposed ought a full-on development program they keep ought massacre themselves. consequently what we're seeing at the new OEMs are I count one of the new xerox from an existing OEM and another one is a new OEM, quiet I'd keep ought pursue up with you specifically above that ought be 100% certain.

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Robert Duncan Brown, Lake highway major Markets, LLC, investigation section - Senior investigation Analyst [4]

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Okay. Great. And then above the Weichai HPDI program, you said it was class of coming this year quiet can you unity us a sensation of how that table out might progress impartial at condition of timing? Is it initial shipments this year and then more of a ramp next year? Or impartial class of directionally how perform you visit that rolling out?

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David M. Johnson, Westport fuel systems Inc. - CEO & Director [5]

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I count you said it well, initial shipments this year ought class of majestic the pump and advantage the system working across the manufacturing system at Weichai Westport and then out ought their customers, the lorry OEMs. I count you possibly are well aware that the impartial at China has been extremely well with admire ought normal gas vehicles there. And our customer, our partner, Weichai, is same excited ought ascend the ramp and advantage the manufacture ought the customers. consequently we're indeed excited approximately that. The launch is at process, consequently no done yet, quiet the expectation is same strong.

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Operator [6]

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Our next issue is from Colin Rusch with Oppenheimer.

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Colin William Rusch, Oppenheimer & Co. Inc., investigation section - MD and Senior Analyst [7]

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Just looking at the rest sheet, there's been a show significantly increase at working major flat although the coin is balancing out show well. can you impartial address a few slice approximately what's going above there and how that might unwind because you promote forward?

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James Mckenzie MacCallum, Westport fuel systems Inc. - Acting CFO, VP of Finance & Corporate Controller [8]

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Yes. Thanks Colin, because the question. Yes, we certainly had healthy sales at Q2, which is driving our receivables rest primarily, and we had some accruals that we spoke about. consequently that's increasing our working capital. Yes, because we play out seasonality will depart into result a few bit. Our Q3 is greatly a few slice slower than our Q2 results, consequently we will visit some reduction at working major and hopefully an improvement at coin because we visit the revenue down at receivables.

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Colin William Rusch, Oppenheimer & Co. Inc., investigation section - MD and Senior Analyst [9]

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Okay. Great. And then impartial above the DOEM business. can you address a few slice approximately any latent pricing power, margins trajectory, specially because you begin ramping with Weichai, which we comprehend maybe a few slice of a pull initially above the entire verge line?

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David M. Johnson, Westport fuel systems Inc. - CEO & Director [10]

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Yes, I count it's a good point, Colin, ought hoist that basically launch phases of any product, if it's a vehicle or HPDI technology, because us nurse ought be an expensive epoch of time and no the super beneficial time. consequently we will visit some strain above margins from the launches, and frankly we're however at the indicate volume regime with our European launch of HPDI 2. consequently that's impartial the facts. Our DOEM material because us is a good business, we don't recess out the margins there quiet I can speak you that it helps influence the verge at the direction, let's say, because the company.

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Colin William Rusch, Oppenheimer & Co. Inc., investigation section - MD and Senior Analyst [11]

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Okay. And then impartial can you address approximately how well conversations are with any latent new partners? Obviously, you're no going ought unity us also many details, quiet it seemed ought me that you are building some momentum with some of those folks and getting closer ought latent extra licensees consequently could you impartial unity a sensation of how that's progressing?

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David M. Johnson, Westport fuel systems Inc. - CEO & Director [12]

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Absolutely, happy ought perform so. quiet you're right, I can't address also much, quiet I'll speak you what I can speak you. Bottom queue is that the fundamental at the marketplace and what's occurrence with the construct out of infrastructure, the leadership of our direct visitor at Europe, the coming products at China with a very, same healthy and capable partner, Weichai,