Westport Reports First Quarter Fiscal 2008 Financial Results

Market Wire, August, 2007

Westport Innovations Inc. (TSX: WPT), a global leader in gaseous-fuelled power technologies, today reported financial results for the first quarter of Fiscal Year 2008 ended June 30, 2007 (Q1 FY2008), and provided an update on operations.

"We continue to see strong growth with revenue up 48% this quarter from the same period last year," said David Demers, Westport's Chief Executive Officer. "Demand is strong in all of our major markets and we expect strong growth to continue as we launch new products in both CWI, with the ISL G engine, and ramp up deliveries of our new heavy-duty LNG truck product."

Financial and Business Highlights

- Consolidated quarterly revenues of $15.7 million for Q1 FY2008 increased 48% from $10.6 million for Q1 FY2007.

- First quarter FY2008 net loss of $4.7 million ($0.06 loss per share) compared to a net loss of $5.4 million ($0.07 loss per share) for Q1 FY2007.

- 11 Westport liquefied natural gas (LNG) heavy-duty trucks delivered to customers in California during the first quarter.

- Contracts completed for the next 20 LNG truck systems for service at the San Pedro Bay Ports, to be delivered over the next few weeks.

- CWI's ISL G engine received formal certification from the United States Environmental Protection Agency (US EPA) for 0.2 grams per brake horsepower-hour (g/bhp-hr) oxides of nitrogen (NOx) and 0.01 g/bhp-hr particulate matter (PM). Deliveries commenced in June.

- CWI announced major orders for transit fleets in Beijing and Delhi.

- Subsequent to the end of the first quarter, Perseus, L.L.C. (Perseus) converted its approximately $22.1 million secured, subordinated convertible debentures and sold the resulting 16.5 million common shares of Westport to third parties at a price of $3.10. Perseus retains a small share position and approximately 4 million warrants. This transaction results in cash interest savings of up to $0.9 million to June 30, 2008 and reduces interest and amortization of discount expense by approximately $2 million in the current fiscal year.

- Clean Energy Fuels Inc. (Clean Energy), a Westport strategic partner and a major investment, completed its NASDAQ IPO during the quarter. Andrew Littlefair, President & CEO of Clean Energy, was recently elected to the Westport board at the 2007 Annual Meeting of shareholders.

- Michael Gallagher, President & COO of Westport, was appointed to the Westport board of directors following the resignation of John Fox and Kenneth Socha, both of Perseus.

First Quarter Fiscal Year 2008 Financial Results in Detail

Westport's consolidated revenues for the three months ended June 30, 2007, compared to the three months ended June 30, 2006, increased by 48% to $15.7 million from $10.6 million. CWI product revenues increased by $3.5 million as the result of increased shipments of engines and kits to Asia. CWI parts revenue also increased by $0.9 million as the result of timing and mix. We also followed up our initial launch of LNG systems for heavy duty trucks in the fourth quarter of fiscal 2007 with 11 LNG systems shipped in the three months ended June 30, 2007. Non-CWI revenues were up $0.7 million in the three months ended June 30, 2007 compared to the same quarter in the prior fiscal year. Gross margin was 34%, compared to 38% over the last fiscal year, as a result of product and geographical mix.

Net loss for the three months ended June 30, 2007 was $4.7 million, or ($0.06) per share, an improvement of $0.7 million from $5.4 million, or ($0.07) per share, in the same period in fiscal 2007. CWI's gross margins increased by $1.1 million on $4.4 million of higher revenues but our 50% share of net contribution from CWI decreased slightly from $0.8 million to $0.6 million after taking into account a $0.5 million increase in operating expenses and the impact of $0.8 million in foreign exchange losses on US dollar denominated net assets, including its future income tax assets. Excluding CWI, Westport's net loss improved by $0.9 million primarily as the result of higher gross margins, lower research and development expenses and increased government funding in the quarter and a gain of $0.7 million on the sale of approximately 4% of our shareholdings in Clean Energy, offset by $0.8 million in interest and amortization of discount on our long-term convertible note.

Research and development expenses, on a net basis, for the three months ended June 30, 2007, were $5.4 million compared to $6.0 million for the same period last year. Non-CWI research and development expenses decreased by $0.9 million as the result of higher government funding recognized in the period ($0.5 million) related to the extension of our funding agreement with ITO (formerly TPC).

Our cash balance as at June 30, 2007 was $19.9 million compared to $23.1 million as at March 31, 2007, a change of $3.2 million. Cash used in operations and for capital expenditures for the three months ended June 30, 2007 was $4.7 million compared to $3.8 million in the comparable period of the prior year, with the increase primarily driven by increased working capital requirements ($1.2 million). Operating cash usage was offset by $1.1 million in proceeds received from our sale of Clean Energy shares and $0.6 million in proceeds received on the issuance of shares on conversion of employee stock options.