Westport Fuel Systems (WPRT) posts loss and flags going-concern risk

Rhea-AI Filing Summary

Westport Fuel Systems Inc. reported sharply weaker results for the three months ended June 30, 2026 as it transitions away from its former Heavy-Duty OEM service business. Revenue from continuing operations fell 78% to $2.7 million from $12.5 million, largely because the transitional service agreement with Cespira ended in Q2 2025. Net loss from continuing operations widened to $11.4 million, and adjusted EBITDA was a negative $6.3 million.

Liquidity remains strained. Westport had $23.9 million of cash and cash equivalents and $1.0 million of current long‑term debt at June 30, 2026, and management states that existing cash is projected to be insufficient to fund operations for the next twelve months, raising substantial doubt about its ability to continue as a going concern. The company completed a June 2026 financing, issuing common shares and warrants for initial proceeds of about $10.0 million and recognizing $11.3 million of warrant liabilities.

Cespira, Westport’s 55%-owned joint venture with Volvo Group, showed strong operational momentum. For the quarter, Cespira’s revenue rose 125% to $27.1 million, with gross profit of $3.8 million versus a gross loss a year earlier, and its net loss narrowed to $2.4 million. Westport’s High-Pressure Controls segment generated $2.7 million of revenue and a small gross profit, supported by new plants in Canada and China and ongoing work to improve output and margins.

Positive

• Cespira revenue grew 125% to $27.1 million in Q2 2026, turning a prior-year gross loss into $3.8 million of gross profit and materially reducing its operating and net losses.
• Westport completed a June 2026 financing, raising $10.0 million in initial proceeds with potential for an additional $10.0 million from warrant exercises over two years.
• High-Pressure Controls segment maintained positive gross profit with $2.7 million Q2 2026 revenue and a 5% gross margin, and posted 13% gross margin for the six‑month period.
• Cespira and Volvo Group signed a development agreement targeting commercialization of an HPDI hydrogen solution for a 13‑litre engine, with European certified launch targeted before 2030.

Negative

• Westport’s Q2 2026 revenue from continuing operations dropped 78% to $2.7 million after the Heavy‑Duty OEM transitional service agreement with Cespira ended.
• Net loss from continuing operations widened to $11.4 million in Q2 2026 from $5.1 million a year earlier, and adjusted EBITDA deteriorated to –$6.3 million.
• Management projects existing cash of $23.9 million will not fund operations for the next twelve months, and explicitly notes substantial doubt about the company’s ability to continue as a going concern.
• Total liabilities increased to $32.7 million from $25.2 million year‑end, and Westport recognized $11.3 million of warrant liabilities plus a $1.5 million loss from fair value changes in Q2 2026.

Filing Explained

The June financing closed with 1,600,000 shares issued and warrants for additional shares, increasing dilution exposure for existing common holders.

This August 11 Form 6-K is Westport’s interim report for the periods ended June 30, 2026, and it records the June 23 financing as closed: 1,600,000 common shares were issued, while two warrant classes remain potential future share issuance.

For existing common holders, the issued shares already increase the share count, and exercise of the warrants would create further dilution. The company disclosed pre-funded warrants for up to 3,254,369 common shares and private placement warrants for up to 4,854,369 common shares.

The pre-funded warrants have a nominal exercise price of $0.00001 per underlying share, while the private placement warrants have an exercise price of $2.06 per underlying share. The filing reports $10.0 million of initial financing before fees and transaction costs.

Although Westport describes an opportunity for a potential additional $10.0 million over the next two years, that amount is financing capacity rather than stated committed proceeds; the closed transaction provided the initial amount.

Key Figures

Q2 2026 Revenue (continuing): $2,717 thousand Q2 2026 Net loss from continuing ops: $11,375 thousand Cash and cash equivalents: $23,946 thousand +5 more

8 metrics

Q2 2026 Revenue (continuing) $2,717 thousand Three months ended June 30, 2026, down 78% from $12,498 thousand

Q2 2026 Net loss from continuing ops $11,375 thousand Three months ended June 30, 2026 vs $5,053 thousand prior-year quarter

Cash and cash equivalents $23,946 thousand Balance at June 30, 2026, compared with $27,158 thousand at December 31, 2025

Cespira Q2 2026 revenue $27,071 thousand Joint venture revenue for three months ended June 30, 2026, up 125% year over year

Cespira Q2 2026 gross profit $3,814 thousand Improved from a gross loss of $1,926 thousand in prior-year quarter

Warrant liabilities $11,337 thousand Current warrant liabilities recognized on balance sheet at June 30, 2026

Adjusted EBITDA Q2 2026 $(6,273) thousand Consolidated adjusted EBITDA for three months ended June 30, 2026

Shareholders’ equity $52,271 thousand Total shareholders’ equity at June 30, 2026, down from $68,813 thousand at year-end

Key Terms

going concern, equity method, Pre-Funded Warrants, warrant liabilities, +2 more

6 terms

going concern financial

"These conditions raise substantial doubt about Westport's ability to continue as a going concern"

Going concern is the accounting assumption that a company will keep operating and meeting its obligations for the foreseeable future. The phrase matters most when a company or its auditors disclose substantial doubt about it, a formal warning that the business may not have enough resources to continue without raising money, restructuring, or selling assets. That language in a filing or press release signals elevated financial risk.

equity method financial

"We account for Cespira using the equity method of accounting"

An equity method investment is an accounting approach used when a company owns enough of another business to influence its decisions but not control it (commonly around 20–50% ownership). Instead of counting only dividends, the investor records its share of the other company’s profits and losses on its own income statement and adjusts the investment’s value on the balance sheet—like tracking a friend’s joint project by noting your share of their gains or setbacks. For investors, this matters because it can significantly affect reported earnings, asset values, and the apparent strength of a company’s financial results.

Pre-Funded Warrants financial

"pre-funded warrants to purchase up to 3,254,369 common shares (the "Pre-Funded Warrants")"

Pre-funded warrants are financial instruments that give investors the right to purchase a company's stock at a set price, but with most or all of the purchase price paid upfront. They function like a coupon or gift card for stock, allowing investors to buy shares later at a fixed price, which can be beneficial if they want to avoid future price increases. This makes them important for investors seeking flexibility and certainty in their investment plans.

warrant liabilities financial

"The Company's warrant liabilities consist of Pre-Funded Warrants and Common Warrants"

Warrant liabilities are the financial obligations a company records when it grants warrants—special rights allowing someone to buy shares at a set price in the future. If the warrants are expected to be exercised, they are treated as a liability because the company might need to deliver shares or cash later. This matters to investors because it affects the company’s reported financial health and the potential dilution of existing shares.

HPDI fuel system technical

"commercializing the HPDI fuel system technology to enable heavy-duty diesel engines"

Adjusted EBITDA financial

"We reported negative adjusted EBITDA of $6.3 million during the second quarter"

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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FAQ

How did Westport Fuel Systems (WPRT) perform financially in Q2 2026?

Westport reported $2.7 million in revenue from continuing operations in Q2 2026, down from $12.5 million a year earlier, and a net loss from continuing operations of $11.4 million. Adjusted EBITDA was negative $6.3 million, reflecting lower revenue and higher operating losses.

What is the going-concern status of Westport Fuel Systems (WPRT)?

Management states there is substantial doubt about Westport’s ability to continue as a going concern within one year. Based on projected capital needs and operating requirements, current cash of $23.9 million is expected to be insufficient, and planned financing actions are not yet sufficient to remove this doubt.

How is Cespira, Westport’s joint venture with Volvo, performing in 2026?

Cespira delivered strong growth, with Q2 2026 revenue of $27.1 million, up 125% year over year, and gross profit of $3.8 million versus a prior gross loss. Its operating loss narrowed to $2.1 million, and six‑month revenue reached $49.3 million.

What liquidity and debt levels does Westport Fuel Systems (WPRT) report?

At June 30, 2026, Westport held $23.9 million in cash and cash equivalents and $1.0 million of current long‑term debt to Export Development Canada. Net cash used in operating activities from continuing operations was $7.9 million for the first half of 2026.

What were the key terms of Westport’s June 2026 financing transaction?

Westport issued 1,600,000 common shares, pre-funded warrants for up to 3,254,369 shares, and warrants for up to 4,854,369 shares. The combined offering price per common share plus warrant was $2.06, generating initial gross proceeds of $10.0 million before fees.

How did Westport Fuel Systems’ balance sheet change by June 30, 2026?

Total assets declined to $85.0 million from $94.0 million at year‑end 2025. Total liabilities increased to $32.7 million, and shareholders’ equity fell to $52.3 million, partly due to cumulative losses and recognition of $11.3 million of warrant liabilities.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 6-K 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2026

Commission File Number: 001-34152

WESTPORT FUEL SYSTEMS INC. 

 (Translation of registrant's name into English)

 1691 West 75th Avenue, Vancouver, British Columbia, Canada, V6P 6P2 

 (Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

S   Form 20-F    £    Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

INCORPORATION BY REFERENCE

Exhibits 99.1 and 99.2 to this report on Form 6-K are hereby incorporated by reference into the Company's Registration Statement on Form F-3 (File No. 333-289669) and the Registration Statements on Form S-8 (File Nos. 333-248912, 333-211726, and 333-168847).

EXHIBIT INDEX

Exhibit						Description
99.1						Management's Discussion and Analysis for the period ended June 30, 2026
99.2						Condensed Consolidated Interim Financial Statements for the period ended June 30, 2026
101						INS XBRL Instance Document
101						SCH Inline XBRL Taxonomy Extension Schema Document
101						SCH Inline XBRL Taxonomy Extension Calculation Linkbase Document
101						DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101						LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101						PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			WESTPORT FUEL SYSTEMS INC.
			By:			/s/ Elizabeth Owens
			Name:			Elizabeth Owens
			Title:			Chief Financial Officer

Date: August 11, 2026

Management's Discussion and Analysis

BASIS OF PRESENTATION

This Management’s Discussion and Analysis (“MD&A”) for Westport Fuel Systems Inc. (“Westport”, the “Company”, “we”, “us”, “our”) for the three and six months ended June 30, 2026 provides an update to our annual MD&A dated April 23, 2026 for the fiscal year ended December 31, 2025. This information is intended to assist readers in analyzing our financial results and should be read in conjunction with the audited consolidated financial statements, including the accompanying notes, for the fiscal year ended December 31, 2025 and our unaudited condensed consolidated interim financial statements for the three and six months ended June 30, 2026. Our interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The Company’s reporting currency is the United States dollar ("U.S. dollar"). This MD&A is dated as of August 11, 2026.

Additional information relating to Westport, including our Annual Report Form 20-F for the year ended December 31, 2025, is available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov, respectively. All financial information is reported in U.S. dollars unless otherwise noted.

FORWARD-LOOKING STATEMENTS

This MD&A contains forward-looking statements that are based on the beliefs of management and reflects our current expectations as contemplated under applicable Canadian securities laws and the safe harbor provisions of Section 21E of the United States Securities Act of 1934, as amended. Forward-looking information generally can be identified by the use of forward-looking terminology such as "expect", "anticipate", "believe", "estimate", "plan", "project", "intend", "may", "will", "should", "could", "would", "continue", "forecast", "outlook", or similar expressions, including the negative of such items. Such forward-looking statements include, but are not limited to, future strategic initiatives and future growth, future of our development and service programs and project milestones (including those relating to Cespira's HPDI fuel system and Hydrogen), our expectations for 2026 and beyond, including anticipated effects of new accounting and reporting standards, the global demand for our products or our HPDI joint venture's products (including from Cespira's HPDI 2.0TM fuel systems), timing and progress of development, validation and commercialization activities (including expected timing of field testing and commercialization paths); expected timing of receipt of amounts (including holdback receivables); expectations regarding output, efficiency and operational performance; outlook for commodity prices; liquidity outlook and the Company's ability to fund operations over the next twelve months; plans and ability to improve liquidity through financings and other alternatives (including the potential use of the Company's shelf prospectus); anticipated funding of, and contributions to, the Company's joint venture arrangements (including expected funding levels and the Company's expected share of such funding); and other statements regarding the Company's future plans, objectives, strategies, results, performance, condition or prospect.

These forward-looking statements are neither promises nor guarantees but involve known and unknown risks and uncertainties that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed in or implied by these forward-looking statements. These risks include risks related to revenue growth, operating results, liquidity, our industry and products, the general economy, conditions of the capital and debt markets, government or accounting policies and regulations, regulatory investigations, climate change legislation or regulations, technology innovations, as well as other factors discussed below and elsewhere in this report, including the risk factors contained in the Company’s most recent annual report, Form 20-F, filed on SEDAR+ at www.sedarplus.ca. The forward-looking statements contained in this MD&A are based upon a number of material factors and assumptions which include, without limitation, market acceptance of our products, product development delays in contractual commitments, the ability to attract and retain business partners, competition from other technologies, conditions or events affecting cash flows or our ability to continue as a going concern, price differential between compressed natural gas, liquefied natural gas, and liquefied petroleum gas relative to petroleum-based fuels, unforeseen claims, exposure to factors beyond our control as well as the additional factors referenced in our

1

Management's Discussion and Analysis

annual report. Readers should not place undue reliance on any such forward-looking statements, which are pertinent only as of the date they were made.

The forward-looking statements contained in this document speak only as of the date of this MD&A. Except as required by applicable legislation, Westport does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after this MD&A, including the occurrence of unanticipated events. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement.

GENERAL DEVELOPMENTS

•For the three months ended June 30, 2026, Cespira, our joint venture with Volvo Group, increased its revenue by $15.1 million or 125% compared to the prior year quarter. Cespira reduced its net loss by $4.4 million. Westport reduced its capital contributions to Cespira in the six months ended June 30, 2026 to $6.4 million from $8.9 million in the prior year quarter.

•For the three months ended June 30, 2026, our High-Pressure Controls segment had revenues of $2.7 million, slightly lower than $2.9 million when compared to the prior year quarter. Our new manufacturing plants in Canada and China continue to improve performance six months into their launch.

•On June 30, 2026, Westport held its Annual General and Special Meeting of Shareholders. Shareholders approved all resolutions presented at the meeting including the election of all nominated directors for the ensuing year, the appointment of Deloitte LLP as our auditors for the fiscal year, the advisory vote on executive compensation, and the name change resolution.

•On June 22, 2026, Westport entered into a securities purchase agreement with CVI Investments Inc. ("Selling Shareholder") and agreed to issue and sell to the selling shareholder an aggregate of: (i) 1,600,000 commons shares, (ii) pre-funded warrants to purchase up to 3,254,369 common shares (the "Pre-Funded Warrants"), and (iii) private placement warrants to purchase up to 4,854,369 common shares (the "Warrants"). The closing of the issuance and the sale of the shares, the Pre-Funded Warrants and the Warrants took place on June 23, 2026. The combined offering price for each common share, together with an accompanying Warrant, was $2.06. The combined offering price of each Pre-Funded Warrant, together with an accompanying Warrant, was $2.05999. The exercise price of the Pre-Funded Warrants was $0.00001 per underlying common share. The exercise price of the Warrants was $2.06 per underlying common share. The financing transaction provided an initial $10.0 million to Westport before fees and transaction costs with an opportunity for a potential additional $10.0 million in the next two years.

•On June 18, 2026, Westport announced that Cespira and Volvo Group have signed a development agreement to finalize the integration and commercialization of Cespira's HPDI fuel system technology to enable Volvo Group's 13-litre engine to run on hydrogen. Volvo trucks are currently in on-road testing as announced by Volvo Trucks on April 1st. The European certified commercial launch is targeted to happen before 2030.

2

Management's Discussion and Analysis

BUSINESS OVERVIEW

Westport is a technology and innovation company connecting synergistic technologies to power a cleaner tomorrow. As a supplier of affordable, alternative fuel, low-emissions transportation technologies, we design, manufacture, and supply advanced components and systems that enable the transition from traditional fuels to alternative energy solutions.

Our technologies support a wide range of alternative fuels – including natural gas, renewable natural gas ("RNG"), and hydrogen – enabling OEMs and commercial transportation industries to meet performance demands, regulatory requirements, and climate targets in a cost-effective way. With decades of expertise and a commitment to engineering excellence, Westport is helping our partners achieve sustainability goals - without compromising performance or cost-efficiency - making clean, scalable transport solutions a reality.

Westport is headquartered in Vancouver, Canada, with operations in Cambridge, Ontario; Calgary, Alberta; China and Europe. With a focus on engineering, manufacturing, and supplying alternative fuel systems and components for transportation applications, Westport's product offerings, sold under its AFS and GFI brands and through Cespira, Westport's joint venture with the Volvo Group ("Volvo"), enable the use of several alternative fuels in the transportation sector that provide economic and/or environmental advantages as compared to diesel, gasoline, or battery powered electric vehicles.

Our portfolio includes our High-Pressure Controls segment sold under the AFS and GFI brands and a 55% ownership in Cespira, a joint venture with Volvo. Our High-Pressure Controls segment designs, develops, and produces components including pressure regulators, valves, filters, electronic control units ("ECUs") and high-pressure hydrogen components for transportation and industrial applications. We partner with fuel cell, hydrogen engine and alternative fuel engine manufacturers offering versatile solutions that serve a variety of fuel types. Cespira launched in 2024 and is committed to advancing the development and commercialization of Cespira's HPDI™ fuel system, a fully OEM-integrated gaseous fuel system that enables heavy-duty diesel engines to operate with a range of alternative fuels including natural gas, RNG, hydrogen and others without any performance or efficiency compromises relative to the base diesel engine platform. As part of Westport and Cespira's portfolio of solutions, Cespira's LNG HPDI 2.0 fuel system is on the road today and is a complete system offering OEMs the flexibility to differentiate their natural gas product lines easily while also maintaining maximum commonality with their conventional diesel fueled products.

Business Segments

Westport develops and supplies advanced alternative-fuel systems, components, and technologies that enable global transportation and industrial customers to affordably reduce emissions and transition toward cleaner mobility solutions. Our technologies, products, and services are sold under our established brands and form the foundation for sustainable growth in both existing and emerging markets worldwide. We operate through the following segments:

Cespira

In June 2024, Westport and Volvo entered into a series of joint venture agreements (collectively, the "JV Agreement"), to establish Cespira, focused on promoting, developing, and commercializing the HPDI fuel system technology. Under the terms of the agreement, Westport owns a 55% equity interest in Cespira, while Volvo owns 45%. The JV prioritizes scaling the HPDI fuel system and supporting the global transition to carbon-neutral, internal combustion engine technologies, particularly in heavy-duty, long-haul trucking, where multiple propulsion technologies are required to achieve substantial decarbonization. Cespira designs, assembles, and supplies LNG HPDI 2.0 fuel systems, related components, and engineering services to engine manufacturers and commercial vehicle OEMs. The fully integrated LNG HPDI fuel systems enable diesel engines to operate predominantly on alternative gaseous fuels - such as RNG - while maintaining equivalent power, torque, and fuel efficiency relative to conventional compression ignition engines fueled with diesel fuel. This can be a cost-effective pathway to meaningful greenhouse gas reductions. The JV is also advancing the application of HPDI fuel systems for hydrogen and other alternative fuels in internal combustion engines, expanding its relevance to future decarbonization strategies.

3

Management's Discussion and Analysis

High-Pressure Controls

The High-Pressure Controls segment designs, engineers, manufacturers and supplies components for transportation and industrial applications, using gaseous fuels such as hydrogen. This segment represents Westport's off-engine product portfolio, supplying regulators, valves, ECUs, pressure components, and related engineered solutions to OEM and Tier-1 customers worldwide. These technologies support fuel-cell vehicles, hydrogen fueled internal combustion engines, and natural gas mobility platforms.

Westport's High-Pressure Controls segment, with its GFI branded products, has decades of engineering expertise in developing high-quality and often customized components tailored for global automotive, truck, bus, rail, and industrial OEMs. The business is positioned at the forefront of the clean-energy transition, with solutions supporting both current alternative fuel deployment and hydrogen powered mobility.

Through our GFI-branded operations, with manufacturing facilities in Canada and China, we deliver components used in passenger vehicles, buses, mid-duty and heavy-duty trucks, rail applications, construction and industrial equipment.

RISKS, LONG-TERM PROFITABILITY & LIQUIDITY

Government Regulation, Policies and Incentives

Government regulation is a key factor in driving accelerated global demand for and adoption of reduced emission vehicles. Supportive government policy combined with rising corporate adherence to emission reduction goals are creating growth catalysts for Westport in some of its key markets. While we have benefited historically from certain government environmental policies, mandates and regulations around the world, there can be no assurance that these policies, mandates, and regulations will be continued. If these are discontinued, if current requirements are relaxed, or if other regulations are implemented that may impact our business, we may experience a material impact on our competitive position.

Global inflation trends remain inconsistent, with inflationary pressures easing in developed countries, while continuing to impact certain emerging and developed markets. Westport sources its components from global suppliers and continues to face inflationary pressure on production input costs. Specifically, the cost of semiconductors, raw materials, and parts has increased, along with higher labor costs, all of which are contributing to margin compression.

Interest Rates

In response to inflationary pressures, central banks in major markets had raised interest rates to multi-decade highs. While some regions, including Canada, the United States, and Europe, had reduced rates, current levels remain restrictive and are having a significant impact on both the automotive and clean energy sectors. There continues to be uncertainty around inflation and many central banks have been holding interest rates steady for the past year, resulting in slowing of capital investment and infrastructure development.

Automotive manufacturers and OEMs are facing challenges as higher interest rates are compressing profit margins. This environment is leading to delays and cancellations of clean energy investments as companies prioritize cost-cutting measures. Additionally, elevated interest rates have contributed to a slowdown in global economic growth, particularly in emerging markets where economic conditions are already volatile, are facing heightened financial pressures, which could further dampen demand for clean energy solutions.

Hydrogen Eco-System Uncertainty

The hydrogen industry is currently facing economic challenges associated with limited load of available hydrogen which has resulted in high operational costs across the value chain. This has led to

4

Management's Discussion and Analysis

delays and cancellations of projects. Key cost factors, such as rising renewable electricity prices and increased electrolyzer costs, are having a significant impact on the economics of renewable (green) hydrogen projects. These higher costs, coupled with uncertainties surrounding fuel supply and infrastructure development, make it challenging to predict when hydrogen technology for transport will become a viable decarbonization solution.

Fuel Prices

European natural gas prices are still significantly below the record highs of 2022. Lower demand, influenced by reduced economic activity and previous mild weather, has contributed to price moderation. Additionally, the diversification of gas imports continues to be a key focus of European energy policy. Long-term forecasts suggest that natural gas prices will remain well below 2022 peaks. This outlook reinforces the impact of fuel’s cost-effectiveness and its role in advancing the transition to natural gas-powered vehicles

In addition to the risks referred above, readers should also refer to our discussion in our annual report Form 20-F for the year ended December 31, 2025, dated April 23, 2026, under the headings "Risk Factors" and "Business Overview" for more information.

Liquidity and Going Concern

We believe that we have considered all possible impacts of known events arising from the risks discussed above related to supply chain and fuel prices in the preparation of the interim financial statements for the three and six months ended June 30, 2026. However, changes in circumstances due to the forementioned risks could affect our judgments and estimates associated with our liquidity and other critical accounting assessments.

For the six months ended June 30, 2026, we had operating losses from continuing operations of $12.1 million. Cash used in operating activities from continuing operations was $7.9 million for the six months ended June 30, 2026 and was primarily driven by operating losses and changes in working capital.

As at June 30, 2026, we had cash and cash equivalents of $23.9 million and long-term debt of $1.0 million from Export Development Canada ("EDC"), of which all is current.

Based on our projected capital expenditures, debt servicing obligations and operating requirements under our current business plan, we are projecting that our cash and cash equivalents will not be sufficient to fund our operations through the next twelve months from the date of the issuance of this MD&A. These conditions raise substantial doubt about Westport's ability continue as a going concern within one year after the date of this MD&A is issued.

Management is currently evaluating several different options to improve Westport's liquidity position, including raising funds from the public markets and borrowing debt or other financing alternatives. These plans are not final and are subject to market and other conditions not within our control. As such, there can be no assurances that Westport will be successful in obtaining sufficient funding. Accordingly, we concluded under the accounting standards that these plans do not alleviate the substantial doubt about Westport's ability to continue as a going concern.

Cybersecurity and data privacy risks

We rely on information technology networks and systems to operate our business, including internal IT business applications and systems that store business, employee, and other information. We have experienced, and may in the future experience, cybersecurity incidents, including unauthorized access to our systems and data. Cyber incidents could result in business disruption; theft, loss, misuse, or improper disclosure of confidential, personal, or proprietary information; remediation and response costs; increased cybersecurity protection and insurance costs; claims, litigation, regulatory inquiries or investigations, penalties, and fines; reputational harm; and other adverse impacts. Cyber incidents could also delay our financial reporting or our ability to complete audits and filings on a timely basis

5

Management's Discussion and Analysis

and could result in regulatory orders or restrictions such as management cease trade orders. Although we maintain cybersecurity measures and engage third‑party experts, and although certain of our operational systems (including systems supporting manufacturing continuity) are segregated from other IT environments, our measures cannot fully eliminate these risks, particularly as threat actors evolve. We are also exposed to cybersecurity and data privacy risks arising from third‑party service providers and partners. Any of the foregoing could have a material adverse effect on our business, results of operations, financial condition, liquidity, and reputation.

SECOND QUARTER 2026 RESULTS

Revenues for the three months ended June 30, 2026 decreased by 78% to $2.7 million compared to $12.5 million in the same quarter last year. As planned, our Heavy-Duty OEM segment ended its transitional service agreement with Cespira at the end of Q2 2025 resulting in reduction in revenue when comparing period over period.

Cespira delivered strong financial performance, driven by significant growth in both product, aftermarket, and service revenue. For the three months ended June 30, 2026 revenue was $27.1 million compared to $12.0 million in the prior year quarter. Gross profit was $3.8 million for the three months ended June 30, 2026 compared to gross loss of $1.9 million in prior year quarter.

We reported a net loss from continuing operations of $11.4 million for the three months ended June 30, 2026 compared to net loss from continuing operations of $5.1 million for the same quarter last year.

Cash and cash equivalents were $23.9 million at the end of the second quarter 2026. Cash used in operating activities from continuing operations was $4.6 million for the quarter, primarily driven by operating losses in the quarter and changes in working capital. Cash used in investing activities from continuing operations was primarily driven by capital contributions to Cespira of $3.5 million for the quarter. Cash provided by financing activities from continuing operations were primarily driven by the financing transaction and debt repayment of $1.0 million in the quarter.

We reported negative adjusted EBITDA of $6.3 million, (see "Non-GAAP Financial Measures" section in this MD&A) during the second quarter compared to negative adjusted EBITDA of $1.0 million for the prior year quarter. The increase in negative adjusted EBITDA was primarily driven by an increase in operating loss for the quarter partially offset by a decrease in the loss from investments accounted for by the equity method. Included in the prior year quarter's adjusted EBITDA was our discontinued operations' performance, which included an operating profit of $3.1 million for the three months ended June 30, 2025.

6

Management's Discussion and Analysis

SELECTED FINANCIAL INFORMATION

The following table sets forth a summary of our financial results:

Selected Consolidated Statements of Operations Data

						Three months ended June 30,												Six months ended June 30,
						2026						2025						2026						2025
(in thousands of U.S. dollars, except for per share amounts and shares outstanding)
Revenue						$	2,717					$	12,498					$	5,002					$	19,821
Cost of revenue						$	2,584					$	11,656					$	4,353					$	17,444
Gross profit						$	133					$	842					$	649					$	2,377
Gross margin1						5		%				7		%				13		%				12		%
Loss from investments accounted for by the equity method						$	(1,283)					$	(3,686)					$	(2,664)					$	(7,570)
Net loss from continuing operations						$	(11,375)					$	(5,053)					$	(17,082)					$	(10,348)
Net loss from discontinued operations						$	—					$	(29,291)					$	—					$	(26,447)
Net loss for the period						$	(11,375)					$	(34,344)					$	(17,082)					$	(36,795)
Net loss per share from continuing operations - basic & diluted						$	(0.64)					$	(0.29)					$	(0.97)					$	(0.60)
Net loss per share from discontinued operations - basic & diluted						$	—					$	(1.69)					$	—					$	(1.53)
Net loss per share - basic & diluted						$	(0.64)					$	(1.98)					$	(0.97)					$	(2.12)
Weighted average basic & diluted shares outstanding in millions						17,822,491						17,338,288						17,609,725						17,330,527
EBIT1						$	(11,078)					$	(32,100)					$	(17,324)					$	(34,165)
EBITDA1						$	(10,823)					$	(30,049)					$	(16,857)					$	(30,184)
Adjusted EBITDA1						$	(6,273)					$	(1,017)					$	(11,132)					$	(1,024)

1These financial measures or ratios are non-GAAP financial measures or ratios. See the section 'Non-GAAP Measures' for explanations and discussions of these non-GAAP financial measures or ratios.

Selected Balance Sheet Data

The following table sets forth a summary of our financial position as at June 30, 2026 and December 31, 2025:

						June 30, 2026						December 31, 2025
(in thousands of U.S. dollars, except for per share amounts and shares outstanding)
Cash and cash equivalents						$	23,946					$	27,158
Total assets						85,007						94,009
Total liabilities						32,736						25,196
Shareholders' equity						52,271						68,813

7

Management's Discussion and Analysis

RESULTS FROM OPERATIONS

Revenue for the three and six months ended June 30, 2026

(in thousands of U.S. dollars)			Three months ended June 30,												Change												Six months ended June 30,												Change
			2026						2025						$						%						2026						2025						$						%
High-Pressure Controls			$	2,717					$	2,896					$	(179)					(6)		%				$	5,002					$	4,786					$	216					5		%
Heavy-Duty OEM			—						9,602						(9,602)						(100)		%				—						15,035						(15,035)						(100)		%
Total revenue from continuing operations			$	2,717					$	12,498					$	(9,781)					(78)		%				$	5,002					$	19,821					$	(14,819)					(75)		%

High-Pressure Controls

Revenue for the three and six months ended June 30, 2026 was $2.7 million and $5.0 million, respectively, compared with $2.9 million and $4.8 million for the three and six months ended June 30, 2025.

The decrease in revenue for the three months ended June 30, 2026 was primarily driven by lower volume of sales in the quarter compared to prior year. As at June 30, 2026, we have a backlog of demand from customers that are waiting to be fulfilled as we continue to improve the production output from our two main manufacturing plants in Canada and China.

Heavy-Duty OEM

The segment's transitional service agreement with Cespira ended in Q2 2025 and did not have any sales activity in the quarter.

Gross Profit for the three months ended June 30, 2026

(in thousands of U.S. dollars)						Three months ended June 30,						% of						Three months ended June 30,						% of						Change
						2026						Revenue						2025						Revenue						$						%
High-Pressure Controls						$	133					5		%				$	105					4		%				$	28					27		%
Heavy-Duty OEM						—						—		%				737						8		%				(737)						(100)		%
Total gross profit from continuing operations						$	133					5		%				$	842					7		%				$	(709)					(84)		%

High-Pressure Controls

Gross profit was $0.1 million or 5% of revenue, for the three months ended June 30, 2026 compared to $0.1 million or 4% of revenue, for the three months ended June 30, 2025. We anticipate that as the manufacturing plants in Canada and China continue to work on localizing its supply chain and improving its manufacturing processes and output, its gross profit and margin are expected to benefit.

Heavy-Duty OEM

The segment's transitional service agreement with Cespira ended in Q2 2025 and did not have any sales activity in the quarter.

8

Management's Discussion and Analysis

Gross Profit for the six months ended June 30, 2026

(in thousands of U.S. dollars)						Six months ended June 30,						% of						Six months ended June 30,						% of						Change
						2026						Revenue						2025						Revenue						$						%
High-Pressure Controls						$	649					13		%				$	618					13		%				$	31					5		%
Heavy-Duty OEM						—						—		%				1,759						12		%				(1,759)						(100)		%
Total gross profit from continuing operations						$	649					13		%				$	2,377					12		%				$	(1,728)					(73)		%

High-Pressure Controls

Gross profit was $0.6 million or 13.0% of revenue, for the six months ended June 30, 2026 compared to $0.6 million or 13% of revenue, for the six months ended June 30, 2025. Gross profit for the six months ended June 30, 2026 benefited from engineering services revenue generated during the first quarter of 2026. Gross profit in the second quarter of 2026 was lower than the first quarter of 2026 due to the completion of certain engineering services in Q1 2026. Engineering services provided to customers are not consistent quarterly and dependent on demand from customers for validation and testing.

Heavy-Duty OEM

The segment's transitional service agreement with Cespira ended in Q2 2025 and did not have any sales activity in the quarter.

Research and Development Expenses ("R&D")

(in thousands of U.S. dollars)						Three months ended June 30,												Change												Six months ended June 30,												Change
						2026						2025						$						%						2026						2025						$						%
High-Pressure Controls						790						1,552						(762)						(49)		%				$	1,738					$	2,734					$	(996)					(36)		%
Heavy-Duty OEM						—						22						(22)						(100)		%				—						133						(133)						(100)		%
Corporate & unallocated						421						—						421						100		%				696						—						696						100		%
Total R&D expenses						$	1,211					$	1,574					$	(363)					(23)		%				$	2,434					$	2,867					$	(433)					(15)		%

High-Pressure Controls

R&D expenses for the three and six months ended June 30, 2026 was $0.8 million and $1.7 million, respectively, compared to $1.6 million and $2.7 million for the three and six months ended June 30, 2025. The reduction in R&D expense in the quarter was primarily driven by an increase in reallocation of internal engineering resources to support improving the manufacturing process in Canada and also reduced spend in outside services and supplies.

Heavy-Duty OEM

There was no activity in the quarter.

Corporate & unallocated

We incurred research and development costs primarily for engineering labor, materials, and outside services support for product development, validation, and testing for our new high-pressure CNG fuel storage solution.

9

Management's Discussion and Analysis

Selling, General and Administrative Expenses ("SG&A")

(in thousands of U.S. dollars)						Three months ended June 30,												Change												Six months ended June 30,												Change
						2026						2025						$						%						2026						2025						$						%
High-Pressure Controls						692						409						283						69		%				$	1,338					$	855					$	483					56		%
Heavy-Duty OEM						—						37						(37)						(100)		%				—						122						(122)						(100)		%
Corporate & unallocated						3,706						3,950						(244)						(6)		%				6,101						6,534						(433)						(7)		%
Total SG&A expenses						$	4,398					$	4,396					$	2					—		%				$	7,439					$	7,511					$	(72)					(1)		%

High-Pressure Controls

SG&A expenses for the three and six months ended June 30, 2026 was $0.7 million and $1.3 million, respectively, compared with $0.4 million and $0.9 million for the three and six months ended June 30, 2025. The increase in SG&A expenses in the current quarter was mainly due to increased personnel and outside services costs required to support our operating facilities. In the prior year quarter 2025, certain support personnel costs and outside services were shared with the Light-Duty business.

Heavy-Duty OEM

There was no activity in the quarter.

Corporate & unallocated

SG&A expenses for the three and six months ended June 30, 2026 was $3.7 million and $6.1 million, respectively, compared with $4.0 million and $6.5 million for the three and six months ended June 30, 2025. In the current quarter, we incurred additional outside services costs for pursuing additional financing and cybersecurity remediation and prevention services.

Other significant expense and income items for the three and six months ended June 30, 2026

(in thousands of U.S. dollars)			Three months ended June 30,												Six months ended June 30,
			2026						2025						2026						2025
Foreign exchange loss (gain)			$	1,693					$	(4,224)					$	2,700					$	(5,427)
Depreciation and amortization:
Cost of sales depreciation and amortization			210						113						312						183
Operating expense depreciation and amortization			45						106						155						214
Total depreciation and amortization			$	255					$	219					$	467					$	397
Loss from investments accounted for by the equity method			$	(1,283)					$	(3,686)					$	(2,664)					$	(7,570)
Interest expense on long-term debt			$	68					$	166					$	158					$	358
Income tax expense			$	223					$	44					$	336					$	134

Foreign exchange gains and losses reflect net realized gains and losses on foreign currency transactions and net unrealized gains and losses on our net U.S. dollar denominated monetary assets and liabilities in our Canadian operations that were mainly comprised of cash and cash equivalents, accounts receivable and accounts payable. In addition, we have foreign exchange exposure on Euro denominated monetary assets and liabilities where the functional currency of the subsidiary is not the Euro. For the three and six months ended June 30, 2026, we recognized foreign exchange losses of

10

Management's Discussion and Analysis

$1.7 million and $2.7 million, respectively, compared to a foreign exchange gain of $4.2 million and $5.4 million for the three and six months ended June 30, 2025. The loss recognized in the current period primarily relates to unrealized foreign exchange losses resulting from the translation of U.S. dollar denominated debt in our Canadian legal entities.

Depreciation and amortization for the three and six months ended June 30, 2026 was $0.3 million and $0.5 million, respectively, compared to $0.2 million and $0.4 million for the three and six months ended June 30, 2025. The amounts included in cost of revenue for the three and six months ended June 30, 2026 were $0.2 million and $0.3 million, respectively, compared with $0.1 million and $0.2 million for the three and six months ended June 30, 2025.

Loss from investments accounted for by the equity method for the three and six months ended June 30, 2026 was a loss of $1.3 million and $2.7 million, respectively, compared to a loss of $3.7 million and $7.6 million for the three and six months ended June 30, 2025. This was driven by our 55% ownership interest in Cespira. Refer to "Selected Cespira Financial Information" for more details about Cespira's performance in the quarter.

Interest on long-term debt and amortization of discount

The decreases in interest expense on long-term debt for the three and six months ended June 30, 2026 compared to the prior year periods was driven by the reduction in the outstanding balance of the EDC term loan.

Income tax expense from continuing operations was $0.2 million and $0.3 million for the three and six months ended June 30, 2026 compared to income tax expense of $0.0 million and $0.1 million for the three and six months ended June 30, 2025. The income tax expense increase is primarily driven by profits in certain subsidiaries related to intercompany activity.

Related party transactions

Westport's related parties are Cespira, directors, officers and shareholders that own more than 10% of our shares.

We engage in transactions with Cespira primarily through cross-charges, provision of services and the sale of inventory under a transitional services agreement that ended on June 30, 2025.

Related party transactions with Cespira			Three months ended June 30,												Six months ended June 30,
			2026						2025						2026						2025
Sales of goods, services, and other income			$	6					$	9,721					$	12					$	15,280
Inventory purchased, services and other expenses			404						1,288						434						1,898

Related party balances with Cespira			June 30, 2026						December 31, 2025
Receivables (note 6 in the interim financial statements)			$	289					$	274
Payables (note 10 in the interim financial statements)			$	469					$	78

11

Management's Discussion and Analysis

Selected Cespira Financial Information

We account for Cespira using the equity method of accounting. However, due to its significance to our long-term strategy and operating results, we disclose selected Cespira financial information in notes 8 and 16 of our interim financial statements for the three and six months ended June 30, 2026.

The following table sets forth a summary of the financial results of Cespira for the three and six months ended June 30, 2026 and 2025.

						Three months ended June 30,												Change												Six months ended June 30,												Change
(in thousands of U.S. dollars)						2026						2025						$						%						2026						2025						$						%
Product revenue						$	18,918					$	8,344					$	10,574					127		%				$	34,049					$	18,450					$	15,599					85		%
Aftermarket revenue						5,517						2,647						2,870						108		%				9,878						5,719						4,159						73		%
Service revenue						2,636						1,029						1,607						156		%				5,393						4,650						743						16		%
Total revenue						27,071						12,020						15,051						125		%				$	49,320					$	28,819					$	20,501					71		%
Gross profit1						3,814						(1,926)						5,740						298		%				5,390						(1,411)						6,801						482		%
Gross margin %						14		%				(16)		%																11		%				(5)		%
Research & development						1,182						1,888						(706)						(37)		%				2,662						4,890						(2,228)						(46)		%
Selling, general, & administrative						3,590						3,014						576						19		%				6,114						6,037						77						1		%
Operating loss						(2,120)						(6,843)						4,723						(69)		%				(4,710)						(13,840)						9,130						(66)		%
Net loss						(2,375)						(6,746)						4,371						(65)		%				(4,897)						(13,744)						8,847						(64)		%

1Gross margin is a non-GAAP financial measure. See the section 'Non-GAAP Measures' for explanations and discussions of these non-GAAP financial measure or ratio.

Product Revenue for the three and six months ended June 30, 2026 was $18.9 million and $34.0 million compared to $8.3 million and $18.5 million for the three and six months ended June 30, 2025. The increase in revenue of 127% in the current quarter was primarily driven by significantly higher volumes of systems sold compared to the prior year quarter. The increase in revenue year to date is primarily driven by back to back quarters in Q1 and Q2 having significant increases in systems sold compared to the prior year. Cespira's growth is influenced by the resilient favorable price differential between diesel and natural gas and government regulation support in markets like Europe.

Aftermarket Revenue for the three and six months ended June 30, 2026 was $5.5 million and $9.9 million compared to $2.6 million and $5.7 million for the three and six months ended June 30, 2025. The increase in revenue of aftermarket products sold is primarily driven by increase in sales volumes.

Service Revenue for the three and six months ended June 30, 2026 was $2.6 million and $5.4 million compared to $1.0 million and $4.7 million for the three and six months ended June 30, 2025. The increase in service revenue in the current quarter was primarily driven by the milestones achieved. Service revenue allocated to project milestones are weighted differently across the phases of an engineering service revenue project. One of Cespira's significant long-term engineering service revenue project is expected to complete in Q4 2026 in advance of the anticipated launch of their Euro 7 product.

12

Management's Discussion and Analysis

Gross profit was $3.8 million and $5.4 million for the three and six months ended June 30, 2026 compared to gross loss of $1.9 million and $1.4 million for the three and six months ended June 30, 2025. The increase in gross profit was primarily driven by the increase in higher volumes of systems and aftermarket products sold along with cost reductions in materials and improvements in labor efficiency.

R&D expense was $1.2 million and $2.7 million for the three and six months ended June 30, 2026 compared to $1.9 million and $4.9 million for the three and six months ended June 30, 2025. This was primarily driven by lower travel, outside services, and labor costs as Cespira focuses more on engineering service revenue related projects compared to self-funded R&D projects.

SG&A expense was $3.6 million and $6.1 million for the three and six months ended June 30, 2026 compared to $3.0 million and $6.0 million for the three and six months ended June 30, 2025. SG&A expense increase in the quarter was primarily driven by increased personnel costs and outside services costs to support Cespira's growth.

Cespira had an operating loss of $2.1 million and $4.7 million for the three and six months ended June 30, 2026 compared to $6.8 million and $13.8 million for the three and six months ended June 30, 2025. Cespira significantly reduced its operating loss compared to the prior year quarter by meaningfully increasing its product revenue, gross margin and lowering its cost base as it continues to grow and scale the business.

13

Management's Discussion and Analysis

CAPITAL REQUIREMENTS, RESOURCES AND LIQUIDITY

Our cash and cash equivalents decreased by $0.6 million during the second quarter of 2026 to $23.9 million from $24.5 million as at March 31, 2026 and decreased by $3.2 million during the first six months of 2026 from $27.2 million at December 31, 2025. The decrease in cash during the three months ended June 30, 2026 was primarily driven by our operating losses, funding of the Cespira JV, and debt repayments, partially offset by the financing transaction.

Cash Flow from Operating Activities

For the three months ended June 30, 2026, our net cash used in operating activities from continuing operations was $4.6 million, compared to net cash used in operating activities from continuing operations of $5.6 million in the three months ended June 30, 2025. The decrease in net cash used in operating activities was primarily driven by the changes in working capital.

Cash Flow from Investing Activities

For the three months ended June 30, 2026, our net cash used in investing activities from continuing operations was $3.6 million compared to net cash used in investing activities from continuing operations of $5.0 million for the three months ended June 30, 2025. The decrease in net cash used in investing activities from continuing operations was primarily driven by the decrease in capital contributions to Cespira JV from $4.2 million to $3.5 million in the current quarter, reflecting the improvement of Cespira's financial performance. In the quarter, we reduced our purchase of property, plant, and equipment by nearly $0.8 million. in the prior year, we were preparing for the move of our plant operations from Italy to Canada and China which required significant capital expenditures.

Cash Flow from Financing Activities

For the three months ended June 30, 2026, our net cash provided by financing activities from continuing operations was $8.3 million compared to net cash used in financing activities from continuing operations of $1.0 million for the three months ended June 30, 2025. In the current quarter, we received $9.3 million proceeds from the financing transaction, net of transaction costs and paid $1.0 million in debt repayments to EDC. We have one remaining debt repayments outstanding with EDC at the end of the quarter.

14

Management's Discussion and Analysis

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

						Carrying amount						Contractual cash flows						< 1 year						1 - 3 years						4-5 years
Accounts payable and accrued liabilities						$	16,416					$	16,416					$	16,416					$	—					$	—
Long-term debt, principal,(1)						972						972						972						—						—
Long-term debt, interest(1)						—						49						49						—						—
Operating lease obligations						1,573						1,814						244						930						640
						$	18,961					$	19,251					$	17,681					$	930					$	640

Notes

(1) For details of our long-term debt, principal and interest, see note 11 in the interim financial statements.

SHARES OUTSTANDING

During the six months ended June 30, 2026 and June 30, 2025, the weighted average number of shares used in calculating the basic and diluted net loss per share was 17,609,725 and 17,330,527, respectively. The Common Shares and Share Units (comprising of performance share units, restricted share units and deferred share units) outstanding and exercisable as at the following dates are shown below:

(weighted average exercise prices are presented in Canadian dollars)
						June 30, 2026																					August 11, 2026
						Number						Weighted average exercise price															Number						Weighted average exercise price
												$																					$
Common Shares outstanding						18,995,734																					17,395,734
Share Units
Outstanding						687,834						5.20															557,834						N/A
Exercisable						491						31.07															491						N/A

15

Management's Discussion and Analysis

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our interim financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the amounts reported in our interim financial statements. We have identified several policies as critical to our business operations and in understanding our results of operations. These policies, which require the use of judgment, estimates and assumptions in determining their reported amounts, include the assessment of liquidity and going concern, fair value of warrant liability, and property, plant and equipment. The application of these and other accounting policies are described in note 3 of our annual consolidated financial statements and our MD&A for the year ended December 31, 2025, filed on April 23, 2026. Actual amounts may vary significantly from estimates used.

The Company's warrant liabilities consist of Pre-Funded Warrants and Common Warrants issued in connection with the June 2026 financing transaction. The warrants are classified as financial liabilities because they do not qualify for the equity classification under ASC 815-40, Contracts in Entity's Own Equity and therefore are required to be accounted for as liabilities. The warrants are initially recognized at fair value and subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in earnings.

i.The fair value of the Pre-Funded Warrant liability is based on the market price of the Company's common shares. Because the exercise price of the Pre-Funded Warrants is nominal ($0.00001 per warrant), the fair value of the Pre-Funded Warrants approximates the market value of the underlying common shares.

ii.     The fair value of the Common Warrant liability is determined using the Black-Scholes-Merton option pricing model. The valuation incorporates market-based inputs, including the Company's share price, exercise price, expected share price volatility, expected term, risk-free interest rate and expected dividend yield. The determination of fair value requires management to apply judgment in selecting the appropriate assumptions and valuation methodology.

As at June 30, 2026, the key assumptions used in the valuation of the warrant liabilities included a share price of $2.26, expected volatility of 55.0%, a remaining term of approximately 1.98 years years, a risk-free interest rate of 4.31%, and an expected dividend yield of nil. The determination of fair value is sensitive to changes in these assumptions. As a result, the fair value of the warrant liabilities and the amount of gains or losses recognized in earnings may vary from period to period due to changes in the Company's share price, expected volatility, risk-free interest rates, remaining term and other valuation inputs.

There have been no other significant changes in accounting policies applied to the June 30, 2026 interim financial statements, and we do not expect to adopt any significant changes at this time.

16

Management's Discussion and Analysis

NEW ACCOUNTING PRONOUNCEMENTS AND DEVELOPMENTS

Upcoming accounting standards not yet adopted:

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." It requires entities to disclose, in the notes to the financial statements, specified information related to certain costs and expenses disaggregated by type. The standard improves transparency by providing more detailed information about the component of costs and expenses that would enable users to better understand the major components of an entity's income statement by referencing disclosures in the notes to financial statements. This guidance is effective for annual reporting periods beginning after December 15, 2027. While this guidance may have an impact on the disclosures, the Company does not expect this guidance to have a material impact on its financial position, operations, and cash flows.

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

There have been no changes in our internal controls over financial reporting for the six months ended June 30, 2026, that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

17

Management's Discussion and Analysis

SUMMARY OF QUARTERLY RESULTS

Our revenues and operating results can vary significantly from quarter to quarter depending on the timing of product deliveries, product mix, product launch dates, R&D project cycles, timing of related government funding, impairment charges, restructuring charges, stock-based compensation awards and foreign exchange impacts. Net income and net loss has and can vary significantly from one quarter to another depending on operating results, gains and losses from investing activities, recognition of tax benefits and other similar events.

The following table provides summary unaudited consolidated financial data for the past years as comparison :

Selected Consolidated Quarterly Operations Data

Three months ended																											30-Sep-24						31-Dec-24												31-Mar-25						30-Jun-25						30-Sep-25						31-Dec-25						31-Mar-26						30-Jun-26
(in thousands of U.S. dollars except for per share amounts)
Total revenue																											$	66,251					$	75,088											$	70,955					$	88,870					$	21,617					$	1,880					$	2,285					$	2,717
Continuing operations																											$	4,877					$	7,284											$	7,323					$	12,498					$	1,617					$	1,880					$	2,285					$	2,717
Discontinued operations																											$	61,374					$	67,804											$	63,631					$	76,372					$	19,999					$	—					$	—					$	—
Gross profit1																											$	14,466					$	14,280											$	15,225					$	15,996					$	4,771					$	(169)					$	516					$	133
Continuing operations																											$	663					$	363											$	1,535					$	842					$	471					$	(169)					$	516					$	133
Discontinued operations																											$	13,803					$	13,917											$	13,690					$	15,153					$	4,299					$	—					$	—					$	—
Gross margin1																											22%						19%												21%						18%						22%						(9)%						23%						5%
Continuing operations																											14%						5%												21%						7%						29%						(9)%						23%						5%
Discontinued operations																											22%						21%												22%						20%						21%						—%						—%						—%
Loss from investments accounted for by the equity method (note 8)																											$(2,781)						$(1,964)												$(3,799)						$(3,299)						$(3,078)						$(5,078)						$(1,381)						$(1,283)
Continuing operations																											$(3,002)						$(2,611)												$(3,884)						$(3,686)						$(3,197)						$(5,078)						$(1,381)						$(1,283)
Discontinued operations																											$221						$647												$85						$387						$119						$—						$—						$—
Net income (loss)																											$(3,868)						$(10,141)												$(2,451)						$(34,344)						$(13,726)						$(11,105)						$(5,707)						$(11,375)
Continuing operations																											$(5,968)						$(13,665)												$(5,296)						$(5,053)						$(10,411)						$(8,811)						$(5,707)						$(11,375)
Discontinued operations																											$2,100						$3,524												$2,845						$(29,291)						$(3,315)						$(2,294)						$—						$—
EBITDA1																											$	(301)					$	(6,103)											$	(135)					$	(30,049)					$	(12,814)					$	(10,695)					$	(6,034)					$	(10,823)
Adjusted EBITDA1																											$	(778)					$	(1,883)											$	(7)					$	(1,017)					$	(6,313)					$	(9,939)					$	(4,859)					$	(6,273)
U.S. dollar to Euro average exchange rate																											0.91						0.94												0.95						0.88						0.86						0.86						0.85						0.86
U.S. dollar to Canadian dollar average exchange rate																											1.36						1.39												1.43						1.38						1.38						1.40						1.37						1.38
Earnings (Loss) income per share:
Basic & Diluted																											$	(0.22)					$	(0.57)											$	(0.14)					$	(1.98)					$	(0.79)					$	(0.65)					$	(0.33)					$	(0.64)
Continuing operations																											$	(0.35)					$	(0.77)											$	(0.31)					$	(0.29)					$	(0.60)					$	(0.51)					$	(0.33)					$	(0.64)
Discontinued operations																											$	0.12					$	0.20											$	0.16					$	(1.69)					$	(0.19)					$	(0.13)					$—						$—

Notes

(1) These financial measures or ratios are non-GAAP financial measures or ratios. See the section 'Non-GAAP Measures' for explanations and discussion of these non-GAAP financial measures or ratios.

18

Management's Discussion and Analysis

REPORTABLE SEGMENTS & RECONCILIATIONS

Westport reports its results in the following two reportable segments for its continuing operations: High-Pressure Controls and Cespira.

Segment earnings or losses before income taxes, interest, depreciation, and amortization ("Segment EBITDA") is the measure of segment profitability used by the Company. The accounting policies of our reportable segments are the same as those applied in our consolidated financial statements. Management prepared the financial results of the Company's reportable segments on basis that is consistent with the manner in which Management internally disaggregates financial information to assist in making internal operating decisions. Certain common costs and expenses, primarily corporate functions, among segments differently than we would for stand-alone financial information prepared in accordance with GAAP. These include certain costs and expenses of shared services, such as IT, human resources, legal, finance and supply chain management. Segment EBITDA is not defined under US GAAP and may not be comparable to similarly titled measures used by other companies and should not be considered a substitute for net earnings or other results reported in accordance with GAAP. Reconciliations of reportable segment information to condensed consolidated interim statement of operations can be found in section "Non-GAAP Measures & Reconciliation" within this MD&A.

									Three months ended June 30, 2026
									High-Pressure Controls												Cespira						Total Segment
Revenue									$	2,717											$	27,071					$	29,788
Cost of revenue									2,584												23,257						25,841
Gross profit									133												3,814						3,947
Operating expenses:
Research & development									790												1,182						1,972
General & administrative									561												2,969						3,530
Sales & marketing									131												621						752
Depreciation & amortization									11												899						910
									1,493												5,671						7,164
Add back: Depreciation & amortization									221												986						1,207
Segment EBITDA									$	(1,139)											$	(871)					$	(2,010)

19

Management's Discussion and Analysis

									Three months ended June 30, 2025
									High-Pressure Controls						Heavy-Duty OEM						Cespira						Total Segment
Revenue									$	2,896					$	9,602					$	12,020					$	24,518
Cost of revenue									2,791						8,865						13,946						25,602
Gross profit									105						737						(1,926)						(1,084)
Operating expenses:
Research & development									1,552						22						1,888						3,462
General & administrative									386						34						2,692						3,112
Sales & marketing									23						3						322						348
Depreciation & amortization									59						—						860						919
									2,020						59						5,762						7,841
Add back: Depreciation & amortization									172						—						772						944
Segment EBITDA									$	(1,743)					$	678					$	(6,916)					$	(7,981)

									Six months ended June 30, 2026
									High-Pressure Controls																		Cespira						Total Segment
Revenue									$	5,002																	$	49,320					$	54,322
Cost of revenue									4,353																		43,930						48,283
Gross profit									649																		5,390						6,039
Operating expenses:
Research and development									1,738																		2,662						4,400
General and administrative									1,112																		5,232						6,344
Sales and marketing									226																		882						1,108
Depreciation and amortization									96																		1,773						1,869
									3,172																		10,549						13,721
Add back: Depreciation and amortization1									408																		1,935						2,343
Segment EBITDA									$	(2,115)																	$	(3,224)					$	(5,339)

									Six months ended June 30, 2025
									High-Pressure Controls						Heavy-Duty OEM												Cespira						Total Segment
Revenue									$	4,786					$	15,035											$	28,819					$	48,640
Cost of revenue									4,168						13,276												30,230						47,674
Gross profit									618						1,759												(1,411)						966
Operating expenses:
Research and development									2,734						133												4,890						7,757
General and administrative									705						99												5,419						6,223
Sales and marketing									150						23												618						791
Depreciation and amortization									115						—												1,590						1,705
									3,704						255												12,517						16,476
Add back: Depreciation and amortization1									298						—												2,392						2,690
Segment EBITDA									$	(2,788)		0			$	1,504											$	(11,536)					$	(12,820)

20

Management's Discussion and Analysis

			Three months ended June 30, 2026
			Total Segment						Less: Cespira						Add: Corporate & unallocated												Total Consolidated
Revenue			$	29,788					$	27,071					$	—											$	2,717
Cost of revenue			25,841						23,257						—												2,584
Gross profit			3,947						3,814						—												133
Operating expenses:
Research & development			1,972						1,182						421												1,211
General & administrative			3,530						2,969						3,613												4,174
Sales & marketing			752						621						93												224
Depreciation & amortization			910						899						34												45
			7,164						5,671						4,161												5,654
Equity loss			—						—						(1,283)												(1,283)

			Three months ended June 30, 2025
			Total Segment						Less: Cespira						Add: Corporate & unallocated						Total Consolidated
Revenue			$	24,518					$	12,020					$	—					$	12,498
Cost of revenue			25,602						13,946						—						11,656
Gross profit			(1,084)						(1,926)						—						842
Operating expenses:
Research & development			3,462						1,888						—						1,574
General & administrative			3,112						2,692						3,686						4,106
Sales & marketing			348						322						264						290
Depreciation & amortization			919						860						47						106
			7,841						5,762						3,997						6,076
Equity loss			—						—						(3,686)						(3,686)

21

Management's Discussion and Analysis

			Six months ended June 30, 2026
			Total Segment						Less: Cespira						Add: Corporate & unallocated												Total Consolidated
Revenue			$	54,322					$	49,320					$	—											$	5,002
Cost of revenue			48,283						43,930						—												4,353
Gross profit			6,039						5,390						—												649
Operating expenses:
Research and development			4,400						2,662						696												2,434
General and administrative			6,344						5,232						5,896												7,008
Sales and marketing			1,108						882						205												431
Depreciation and amortization			1,869						1,773						59												155
			13,721						10,549						6,856												10,028
Equity loss			—						—						(2,664)												(2,664)

			Six months ended June 30, 2025
			Total Segment						Less: Cespira						Add: Corporate & unallocated												Total Consolidated
Revenue			$	48,640					$	28,819					$	—											$	19,821
Cost of revenue			47,674						30,230						—												17,444
Gross profit			966						(1,411)						—												2,377
Operating expenses:
Research and development			7,757						4,890						—												2,867
General and administrative			6,223						5,419						5,974												6,778
Sales and marketing			791						618						560												733
Depreciation and amortization			1,705						1,590						99												214
			16,476						12,517						6,633												10,592
Equity loss			—						—						(7,570)												(7,570)

Reconciliation of Segment EBITDA to Loss before income taxes						Three months ended June 30,												Six months ended June 30,
						2026						2025						2026						2025
Total Segment EBITDA						$	(2,010)					$	(7,981)					$	(5,339)					$	(12,820)
Adjustments:
Depreciation & amortization1						255						219						467						397
Cespira's Segment EBITDA						(871)						(6,916)						(3,224)						(11,536)
Cespira's equity loss						1,283						3,686						2,664						7,570
Corporate and unallocated operating expenses						4,127						3,950						6,797						6,534
Foreign exchange loss (gain)						1,693						(4,224)						2,700						(5,427)
Change in fair value of warrant liability						1,496						—						1,496						—
Financing transaction costs						1,085						—						1,085						—
Interest on long-term debt						68						166						158						358
Interest and other income, net of bank charges						6						147						(736)						(502)
Loss before income taxes						$	(11,152)					$	(5,009)					$	(16,746)					$	(10,214)

1Depreciation and amortization expenses used in computation for Segment EBITDA and reconciliation to consolidated loss before income taxes are included in cost of revenue and operating expenses on our statement of operations and comprehensive income (loss).

22

Management's Discussion and Analysis

NON-GAAP FINANCIAL MEASURES & RECONCILIATIONS:

In addition to the results presented in accordance with U.S. GAAP, we used EBIT, EBITDA, Adjusted EBITDA, gross margin, net working capital, and other non-current liabilities (collectively, the “Non-GAAP Measures") throughout this MD&A. We believe these non-GAAP measures provide additional information that is useful to stakeholders in understanding our underlying performance and trends through the same financial measures employed by our management. We believe that EBIT, EBITDA, and Adjusted EBITDA are useful to both management and investors in their analysis of our ability to generate liquidity by producing operating cash flow to fund working capital needs, service debt obligations and fund capital expenditures. Management also uses these non-GAAP measures in its review and evaluation of the financial performance of the Company. EBITDA is also frequently used by stakeholders for valuation purposes whereby EBITDA is multiplied by a factor or "EBITDA multiple" that is based on an observed or inferred relationship between EBITDA and market values to determine the approximate total enterprise value of a company. We believe these non-GAAP financial measures also provide additional insight to stakeholders as supplemental information to our U.S. GAAP results and as a basis to compare our financial performance period-over-period and to compare our financial performance with that of other companies. We believe that these non-GAAP financial measures facilitate comparisons of our core operating results from period to period and to other companies by, in the case of EBITDA, removing the effects of our capital structure (net interest income on cash deposits, interest expense on outstanding debt and debt facilities), asset base (depreciation and amortization) and tax consequences. Adjusted EBITDA provides this same indicator of Westport's EBITDA from operations and removing such effects of our capital structure, asset base and tax consequences, but additionally excludes any unrealized foreign exchange gains or losses, stock-based compensation charges and other one-time impairments and costs that are not expected to be repeated in order to provide greater insight into the cash flow being produced from our operating business, without the influence of extraneous events. Readers should be aware that non-GAAP measures have no standardized meaning under U.S. GAAP and accordingly may not be comparable to the calculation of similar measures by other companies. Non-GAAP measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP.

Three months ended																																																																																																																					30-Jun-26						30-Jun-25
Revenue																																																																																																																					$	2,717					$	12,498
Less: Cost of revenue																																																																																																																					2,584						11,656
Gross profit																																																																																																																					$	133					$	842
Gross margin %																																																																																																																					5		%				7		%

23

Management's Discussion and Analysis

EBIT, EBITDA and ADJUSTED EBITDA

Three months ended																																																																																													30-Sep-24						31-Dec-24						31-Mar-25						30-Jun-25						30-Sep-25						31-Dec-25						31-Mar-26						30-Jun-26
Net income (loss)																																																																																													$	(3,868)					$	(10,141)					$	(2,451)					$	(34,344)					$	(13,726)					$	(11,105)					$	(5,707)					$	(11,375)
Tax expense (recovery)																																																																																													1,427						1,858						579						1,673						203						242						113						223
Income (loss) before income taxes																																																																																													$	(2,441)					$	(8,283)					$	(1,872)					$	(32,671)					$	(13,523)					$	(10,863)					$	(5,594)					$	(11,152)
Interest expense (income), net1																																																																																													350						272						(193)						571						(532)						9						(652)						74
EBIT																																																																																													(2,091)						(8,011)						(2,065)						(32,100)						(14,055)						(10,854)						(6,246)						(11,078)
Depreciation and amortization																																																																																													1,790						1,908						1,930						2,051						1,241						159						212						255
EBITDA																																																																																													$	(301)					$	(6,103)					$	(135)					$	(30,049)					$	(12,814)					$	(10,695)					$	(6,034)					$	(10,823)
Stock based compensation																																																																																													(140)						5						285						451						(221)						(108)						168						276
Unrealized foreign exchange (gain) loss																																																																																													(1,069)						5,440						(456)						(2,362)						839						(1,220)						1,007						1,693
Severance costs																																																																																													380						4						299						96						798						39						—						—
Loss on disposal of operations																																																																																													—						—						—						30,183						5,085						2,045						—						—
Gain on deconsolidation																																																																																													—						(1,932)						—						—						—						—						—						—
Loss on sale of assets																																																																																													—						703						—						—						—						—						—						—
Loss on sale of investment																																																																																													352						—						—						—						—						—						—						—
Impairment of long-term investments and long-term assets																																																																																													—						—						—						664						—						—						—						—
Change in fair value of warrant liability																																																																																													—						—						—						—						—						—						—						1,496
Financing transaction costs																																																																																													—						—						—						—						—						—						—						1,085
Adjusted EBITDA																																																																																													(778)						(1,883)						(7)						(1,017)						(6,313)						(9,939)						(4,859)						(6,273)

Notes

(1) Interest expense, net is calculated as interest income, net of bank charges and interest on long-term debt.

(2) The above table presents the current and comparative periods for both continuing and discontinued operations on a consolidated basis.

24

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Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars)

WESTPORT FUEL SYSTEMS INC.

For the three and six months ended June 30, 2026 and 2025

WESTPORT FUEL SYSTEMS INC.

Condensed Consolidated Interim Balance Sheets (unaudited)

(Expressed in thousands of United States dollars, except share amounts)

June 30, 2026 and December 31, 2025

						June 30, 2026						December 31, 2025
Assets
Current assets:
Cash and cash equivalents (including restricted cash)						$	23,946					$	27,158
Accounts receivable (note 6)						6,146						10,177
Inventories (note 7)						2,745						3,037
Prepaid expenses						632						1,182
Total current assets						33,469						41,554
Long-term investments (note 8)						44,028						42,714
Property, plant and equipment (note 9)						5,552						5,605
Operating lease right-of-use assets						1,537						1,756
Other long-term assets						421						2,380
Total assets						$	85,007					$	94,009
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable and accrued liabilities (note 10)						$	16,416					$	17,933
Warrant liabilities (note 12)						11,337						—
Current portion of operating lease liabilities						491						493
Current portion of long-term debt (note 11)						972						2,924
Current portion of warranty liability						113						199
Total current liabilities						29,329						21,549
Long-term operating lease liabilities						1,082						1,292
Warranty liability						937						966
Other long-term liabilities						1,388						1,389
Total liabilities						32,736						25,196
Shareholders’ equity:
Share capital (note 13):
Unlimited common and preferred shares, no par value
18,995,734 (2025 - 17,351,005) common shares issued and outstanding						1,247,185						1,246,793
Other equity instruments						8,898						8,968
Additional paid in capital						11,516						11,516
Accumulated deficit						(1,174,983)						(1,157,901)
Accumulated other comprehensive loss						(40,345)						(40,563)
Total shareholders' equity						52,271						68,813
Total liabilities and shareholders' equity						$	85,007					$	94,009
Commitments and contingencies (note 15)

See accompanying notes to condensed consolidated interim financial statements.

Approved on behalf of the Board: Brad Kotush Director Daniel Sceli Director

1

WESTPORT FUEL SYSTEMS INC.

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

						Three months ended June 30,												Six Months Ended June 30,
						2026						2025						2026						2025
Revenue						$	2,717					$	12,498					$	5,002					$	19,821
Cost of revenue						2,584						11,656						4,353						17,444
Gross profit						133						842						649						2,377
Operating expenses:
Research and development						1,211						1,574						2,434						2,867
General and administrative						4,174						4,106						7,008						6,778
Sales and marketing						224						290						431						733
Foreign exchange loss (gain)						1,693						(4,224)						2,700						(5,427)
Depreciation and amortization						45						106						155						214
						7,347						1,852						12,728						5,165
Loss from operations						(7,214)						(1,010)						(12,079)						(2,788)
Loss from investments accounted for by the equity method (note 8)						(1,283)						(3,686)						(2,664)						(7,570)
Change in fair value of warrant liabilities (note 12)						(1,496)						—						(1,496)						—
Financing transaction costs						(1,085)						—						(1,085)						—
Interest on long-term debt						(68)						(166)						(158)						(358)
Interest and other income, net of bank charges						(6)						(147)						736						502
Loss before income taxes						(11,152)						(5,009)						(16,746)						(10,214)
Income tax expense						223						44						336						134
Net loss from continuing operations						(11,375)						(5,053)						(17,082)						(10,348)
Net loss from discontinued operations (note 5)						—						(29,291)						—						(26,447)
Net loss for the period						(11,375)						(34,344)						(17,082)						(36,795)
Other comprehensive income (loss):
Cumulative translation adjustment						863						6,921						2,737						10,562
Ownership share of equity method investments' other comprehensive loss						(337)						(1,464)						(2,519)						(2,293)
						526						5,457						218						8,269
Comprehensive loss						$	(10,849)					$	(28,887)					$	(16,864)					$	(28,526)
Net loss per share:
From continuing operations - basic and diluted						$	(0.64)					$	(0.29)					$	(0.97)					$	(0.60)
From discontinued operations - basic and diluted						$	—					$	(1.69)					$	—					$	(1.53)
Net loss per share - basic and diluted						$	(0.64)					$	(1.98)					$	(0.97)					$	(2.12)
Weighted average common shares outstanding:
Basic and diluted						17,822,491						17,338,288						17,609,725						17,330,527

    

See accompanying notes to condensed consolidated interim financial statements.

2

WESTPORT FUEL SYSTEMS INC.

Condensed Consolidated Interim Statements of Shareholders' Equity (unaudited)

(Expressed in thousands of United States dollars, except share amounts)

 Three months and six months ended June 30, 2026 and 2025

						Common Shares Outstanding						Share capital						Other equity instruments						Additional paid in capital						Accumulated deficit						Accumulated other comprehensive loss						Total shareholders' equity
						Three months ended June 30, 2025
April 1, 2025						17,326,732						$	1,246,408					$	9,081					$	11,516					$	(1,098,726)					$	(30,681)					$	137,598
Issuance of common shares on exercise of share units						24,273						235						(235)						—						—						—						—
Stock-based compensation						—						—						181						—						—						—						181
Net loss for the period						—						—						—						—						(34,344)						—						(34,344)
Other comprehensive income						—						—						—						—						—						5,457						5,457
June 30, 2025						17,351,005						$	1,246,643					$	9,027					$	11,516					$	(1,133,070)					$	(25,224)					$	108,892
						Six months ended June 30, 2025
January 1, 2025						17,282,934						$	1,245,805					$	9,472					$	11,516					$	(1,096,275)					$	(33,493)					$	137,025
Issuance of common shares on exercise of share units						68,071						838						(838)						—						—						—						—
Stock-based compensation						—						—						393						—						—						—						393
Net loss for the period						—						—						—						—						(36,795)						—						(36,795)
Other comprehensive income						—						—						—						—						—						8,269						8,269
June 30, 2025						17,351,005						$	1,246,643					$	9,027					$	11,516					$	(1,133,070)					$	(25,224)					$	108,892
						Three months ended June 30, 2026
April 1, 2026						17,395,734						$	1,247,059					$	8,788					$	11,516					$	(1,163,608)					$	(40,871)					$	62,884
Issuance of common shares, net						1,600,000						126																														126
Stock-based compensation						—						—						110						—						—						—						110
Net loss for the period						—						—						—						—						(11,375)						—						(11,375)
Other comprehensive income						—						—						—						—						—						526						526
June 30, 2026						18,995,734						$	1,247,185					$	8,898					$	11,516					$	(1,174,983)					$	(40,345)					$	52,271
						Six months ended June 30, 2026
January 1, 2026						17,375,213						$	1,246,793					$	8,968					$	11,516					$	(1,157,901)					$	(40,563)					$	68,813
Issuance of common shares on exercise of share units						20,521						266						(266)						—						—						—						—
Issuance of common shares, net						1,600,000						126																														126
Stock-based compensation						—						—						196						—						—						—						196
Net loss for the period						—						—						—						—						(17,082)						—						(17,082)
Other comprehensive income						—						—						—						—						—						218						218
June 30, 2026						18,995,734						$	1,247,185					$	8,898					$	11,516					$	(1,174,983)					$	(40,345)					$	52,271

See accompanying notes to condensed consolidated interim financial statements.

3

WESTPORT FUEL SYSTEMS INC.

Condensed Consolidated Interim Statements of Cash Flows (unaudited)

(Expressed in thousands of United States dollars)

 Three months and six months ended June 30, 2026 and 2025

						Three months ended June 30,												Six Months Ended June 30,
						2026						2025						2026						2025
Operating activities:
Net loss for the period from continuing operations						$	(11,375)					$	(5,053)					$	(17,082)					$	(10,348)
Adjustments to reconcile net income (loss) to net cash used in continuing operating activities:
Depreciation and amortization						255						219						467						397
Stock-based compensation expense						110						126						196						304
Unrealized foreign exchange loss (gain)						1,693						(4,224)						2,700						(5,427)
Deferred income tax (recovery)						—						(6)						—						(9)
Loss from investments accounted for by the equity method						1,283						3,686						2,664						7,570
Interest on long-term debt						23						23						47						45
Inventory write-downs						54						140						54						110
Bad debt expense						14						—						2						—
Change in fair value of warrant liabilities (note 12)						1,496						—						1,496						—
Financing transaction costs						1,085						—						1,085						—
Warranty provision						(124)						—						(124)						—
Changes in working capital						923						(533)						594						(6,869)
Net cash used in operating activities from continuing operations						(4,563)						(5,622)						(7,901)						(14,227)
Net cash (used in) provided by operating activities from discontinued operations						—						(582)						—						3,125
Investing activities:
Purchase of property, plant and equipment (note 9)						(48)						(822)						(480)						(1,395)
Proceeds from holdback receivable (note 6)						—						—						5,844						10,450
Capital contributions to investments accounted for by the equity method (note 8)						(3,512)						(4,185)						(6,364)						(8,871)
Net cash (used in) provided by investing activities from continuing operations						(3,560)						(5,007)						(1,000)						184
Net cash used in investing activities from discontinued operations						—						(460)						—						(2,947)
Financing activities:
Repayments of operating lines of credit and long-term facilities						(1,000)						(1,000)						(2,000)						(2,000)
Drawings on operating lines of credit and long-term facilities						—						—												—
Proceeds from issuance of common share, warrants, and pre-funded warrants						10,000						—						10,000						—
Payment of shares and warrants issuance costs						(700)						—						(700)						—
Net cash (used in) provided by financing activities from continuing operations						8,300						(1,000)						7,300						(2,000)
Net cash used in financing activities from discontinued operations						—						(3,176)						—						(6,094)
Effect of foreign exchange on cash and cash equivalents						(734)						4,593						(1,611)						5,696
Net decrease in cash and cash equivalents						(557)						(11,254)						(3,212)						(16,263)
Cash and cash equivalents, beginning of period (including restricted cash)						24,503						32,637						27,158						37,646
Cash and cash equivalents, end of period (including restricted cash)						$	23,946					$	21,383					$	23,946					$	21,383
Less: cash and cash equivalents from discontinued operations, end of period (including restricted cash)						$	—					$	15,319					$	—					$	15,319
Cash and cash equivalents from continuing operations, end of period (including restricted cash)						$	23,946					$	6,064					$	23,946					$	6,064

4

WESTPORT FUEL SYSTEMS INC.

Condensed Consolidated Interim Statements of Cash Flows (unaudited)

(Expressed in thousands of United States dollars)

 Three months and six months ended June 30, 2026 and 2025

Supplementary information						Three Months Ended June 30,												Six months ended June 30,
						2026						2025						2026						2025
Interest paid						$	45					$	536					$	111					$	1,182
Taxes paid, net of refunds						31						1,050						87						1,406
Changes in working capital:
Accounts receivable						(393)						(8,160)						505						(8,324)
Inventories						159						5,879						197						3,770
Prepaid expenses						498						600						524						920
Accounts payable and accrued liabilities						647						1,056						(675)						(3,240)
Warranty liability						12						92						43						5
						923						(533)						594						(6,869)

See accompanying notes to condensed consolidated interim financial statements.

5

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

1. Company organization and operations:

Westport Fuel Systems Inc. (the “Company” or "Westport") was incorporated under the Business Corporations Act (Alberta) on March 20, 1995. Westport is a technology and innovation company connecting synergistic technologies to power a cleaner tomorrow. As a supplier of affordable, alternative fuel, low-emissions transportation technologies, Westport designs, manufactures, and supplies advanced components and systems that enable the transition from traditional fuels to alternative energy solutions. The Company's technologies support a wide range of alternative fuels - including natural gas, renewable natural gas, and hydrogen - enabling original equipment manufacturers ("OEMs") and commercial transportation industries to meet performance demands, regulatory requirements, and climate targets in a cost effective way.

2. Liquidity and going concern:

For the six months ended June 30, 2026, the Company reported loss from operations of $12,079. Cash used in operating activities from continuing operations was $7,901 for the six months ended June 30, 2026 and was primarily driven by operating losses and decreases in working capital. The Company continues to use cash to support its business activities and support the growth of Cespira. As at June 30, 2026, the Company had cash and cash equivalents of $23,946 and long-term debt borrowed from Export Development Canada ("EDC") of $972, net of deferred financing fees, of which all is current. On May 25, 2026, the Company amended its term loan agreement with EDC and reduced its cash covenant requirement to $3,000 from $15,000. If the Company's cash and cash equivalents fall below the minimum cash requirement, the Company may be required to repay the outstanding amount of the term loan.

On September 29, 2025, the Company filed a final short form base shelf prospectus (the "Shelf Prospectus") with the relevant Canadian securities regulatory authorities allowing the Company to offer up to USD $100,000 of common shares, preferred shares, subscription receipts, warrants, debt securities, or units, or any combination thereof during the 25-month period that the Shelf Prospectus will be effective.

On June 22, 2026, Westport entered into a securities purchase agreement with CVI Investments Inc. ("Selling Shareholder") and agreed to issue and sell to the selling shareholder an aggregate of: (i) 1,600,000 commons shares, (ii) pre-funded warrants to purchase up to 3,254,369 common shares (the "Pre-Funded Warrants"), and (iii) private placement warrants to purchase up to 4,854,369 common shares (the "Warrants"). The closing of the issuance and the sale of the shares, the Pre-Funded Warrants and the Warrants took place on June 23, 2026. Refer to note 12 for more details.

6

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

2. Liquidity and going concern (continued):

In connection with preparing consolidated financial statements for each annual and interim reporting period, the Company is required to evaluate whether there are conditions or events, considered in aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued. Substantial doubt exists when conditions and events, considered in aggregate, indicate that it is probable a company will be unable to meet its obligations as they become due within one year after the date the consolidated financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans and actions that have not been fully implemented as of the date the consolidated financial statements are issued. When substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both: (1) it is probable the plans will be effectively implemented within one year after the date the consolidated financial statements are issued; and (2) it is probable the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued.

Based on the Company's projected capital expenditures, debt servicing obligations and operating requirements under its current business plan, management is projecting that its existing cash and cash equivalents will not be sufficient to fund its operations through the next twelve months from the date of the issuance of these condensed consolidated interim financial statements ("interim financial statements"). These conditions raise substantial doubt about the Company's ability to continue as a going concern within one year after the date these interim financial statements are issued.

Although the Company was able to raise equity financing during the quarter ended June 30, 2026, Management continues to evaluate different options to improve Westport's liquidity position, including raising additional funds from the public markets, borrowing debt or other financing alternatives. These plans are not final and are subject to market and other conditions not in the Company's control. As such, there can be no assurances that Westport will be successful in obtaining sufficient funding. Accordingly, the Company concluded under the accounting standards that these plans do not alleviate the substantial doubt about Westport's ability to continue as a going concern.

These interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The interim financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary if the Company were unable to continue as a going concern.

3. Basis of preparation:

(a)    Basis of presentation:

The interim financial statements have been prepared by the Company and do not include all of the information and disclosures required by accounting principles generally accepted in the United States ("GAAP"). In the opinion of management, all normal recurring accruals and adjustments considered necessary for a fair presentation have been included. The results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. The interim financial statements should be read in conjunction with the audited consolidated financial statements and notes to the consolidated financial statements for the year ended December 31, 2025.

7

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

3. Basis of preparation (continued):

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the interim financial statements and accompanying notes. Actual results could differ from those estimates. Certain prior period figures have been adjusted to conform to current period presentation in the interim financial statements.

(b)    Foreign currency translation:

The Company’s functional currency is the Canadian dollar and its reporting currency for its interim financial statement presentation is the United States dollar ("U.S. Dollar"). The functional currencies for the Company's significant subsidiaries include the following: U.S. Dollar, Canadian dollar, Euro, and Chinese Renminbi (“RMB”). The Company translates assets and liabilities of non-U.S. dollar functional currency operations using the period end exchange rates, shareholders’ equity balances using the weighted average of historical exchange rates, and revenues and expenses using the monthly average rate for the period with the resulting exchange differences recognized in other comprehensive income (loss). 

Transactions that are denominated in currencies other than the functional currencies of the Company’s or its subsidiaries' operations are translated at the rates in effect on the date of the transaction. Foreign currency denominated monetary assets and liabilities are translated to the applicable functional currency at the exchange rates in effect on the balance sheet date. Non-monetary assets and liabilities are translated at the historical exchange rate. All foreign exchange gains and losses are recognized in the condensed consolidated interim statements of operations, except for the translation gains and losses arising from available-for-sale instruments, which are recorded through other comprehensive income (loss) until realized through disposal or impairment.

Except as otherwise noted, all amounts in these interim financial statements are presented in thousands of U.S. dollars. For the periods presented, the Company used the following exchange rates:

			Period ended												Average for the three months ended												Average for the six months ended
			June 30, 2026						December 31, 2025						June 30, 2026						June 30, 2025						June 30, 2026						June 30, 2025
Canadian Dollar			1.42						1.37						1.38						1.38						1.38						1.41
Euro			0.88						0.85						0.86						0.88						0.86						0.91
RMB			6.79						6.99						6.80						7.23						6.86						7.25

8

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

3. Basis of preparation (continued):

(c) Warrant liabilities:

The Company's warrant liabilities consist of Pre-Funded Warrants and Common Warrants issued in connection with the June 2026 financing transaction. The warrants are classified as financial liabilities because they do not qualify for the equity classification under ASC 815-40, Contracts in Entity's Own Equity and therefore are required to be accounted for as liabilities. The warrants are initially recognized at fair value and subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in earnings.

i.The fair value of the Pre-Funded Warrant liability is based on the market price of the Company's common shares. Because the exercise price of the Pre-Funded Warrants is nominal ($0.00001 per warrant), the fair value of the Pre-Funded Warrants approximates the market value of the underlying common shares.

ii.     The fair value of the Common Warrant liability is determined using the Black-Scholes-Merton option pricing model. The valuation incorporates market-based inputs, including the Company's share price, exercise price, expected share price volatility, expected term, risk-free interest rate and expected dividend yield. The determination of fair value requires management to apply judgment in selecting the appropriate assumptions and valuation methodology.

As at June 30, 2026, the key assumptions used in the valuation of the warrant liabilities included a share price of $2.26, expected volatility of 55.0%, a remaining term of approximately 1.98 years years, a risk-free interest rate of 4.31%, and an expected dividend yield of nil. The determination of fair value is sensitive to changes in these assumptions. As a result, the fair value of the warrant liabilities and the amount of gains or losses recognized in earnings may vary from period to period due to changes in the Company's share price, expected volatility, risk-free interest rates, remaining term and other valuation inputs.

4. New accounting pronouncements

Upcoming accounting standards not yet adopted:

In November 2024, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." It requires entities to disclose, in the notes to the financial statements, specified information related to certain costs and expenses disaggregated by type. The standard improves transparency by providing more detailed information about the component of costs and expenses that would enable users to better understand the major components of an entity's income statement by referencing disclosures in the notes to financial statements. This guidance is effective for annual reporting periods beginning after December 15, 2027. While this guidance may have an impact on the disclosures, the Company does not expect this guidance to have a material impact on its financial position, operations, and cash flows.

9

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

5. Discontinued operations:

On July 29, 2025, the Company sold its Light-Duty segment to a wholly-owned investment vehicle of Heliaca Investments ("Purchaser"), a Netherlands based investment firm supported by Ramphastos Investments Management B.V. for consideration of $59,975 (€51,424). Purchase price adjustments may impact the final proceeds received from the Purchaser pending satisfaction of certain general representations and warranties provided by the Company that are customary in nature. There was no activity related to the discontinued operations in the three and six months ended June 30, 2026 nor were there purchase price adjustments affecting the loss on disposal recorded in the prior year.

Further, up to $3,790 (€3,250) in potential earnouts will be payable to the Company if certain conditions are achieved in accordance with the terms and conditions of the sale and purchase agreement.

Revenue and expenses of the discontinued operation were as follows:

												Three Months Ended June 30,												Six Months Ended June 30,
												2025												2025
Revenue												$	76,372											$	140,004
Cost of revenue												61,219												111,160
Gross profit												15,153												28,844
Operating expenses:
Research and development												2,979												5,738
General and administrative												3,756												7,481
Sales and marketing												2,854												5,169
Foreign exchange loss												1,862												2,609
Depreciation and amortization												646												1,279
												12,097												22,276
Income from discontinued operations												3,056												6,568
Income from investment accounted for by the equity method												387												472
Loss on disposal of operations												(30,183)												(30,183)
Impairment of long-lived assets												(664)												(664)
Interest on long-term debt												(391)												(875)
Interest and other income, net of bank charges												133												353
Loss from discontinued operations before income tax												(27,662)												(24,329)
Income tax expense												1,629												2,118
Net loss from discontinued operations												$	(29,291)											$	(26,447)

10

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

6. Accounts receivable:

						June 30, 2026						December 31, 2025
Customer trade receivables						$	3,175					$	2,675
Holdback receivable						2,069						5,811
Other receivables						1,085						2,032
Due from related parties (note 14)						289						274
Allowance for expected credit losses						(472)						(615)
						$	6,146					$	10,177

The Company originally had $9,391 (€8,000) of proceeds held in escrow, which are included in holdback receivable. During the six months ended June 30, 2026 the Company collected in full the first tranche of holdback receivables of $6,493 (€5,500) and recognized a gain in other income of $649. The remaining proceeds held in escrow will be released to the Company in tranches by early and mid-year 2027. Purchase price adjustments may impact the final proceeds received from the Purchaser pending satisfaction of certain general representations and warranties provided by the Company that are customary in nature.

7. Inventories:

						June 30, 2026						December 31, 2025
Purchased parts						$	1,872					$	2,034
Work-in-process						271						199
Finished goods						602						804
						$	2,745					$	3,037

During the three and six months ended June 30, 2026, the Company recorded inventory write-downs to net realizable value of approximately $54 and $54, respectively (three and six months ended June 30, 2025 - $140 and $110, respectively).

8. Long-term investments:

						June 30, 2026						December 31, 2025
Cespira Canada LP						$	16,993					$	19,385
Cespira Sweden AB						27,035						23,329
						$	44,028					$	42,714

During the three and six months ended June 30, 2026, the Company recognized its share of Cespira's losses of $1,283 and $2,664, respectively as a loss from investment accounted for by the equity method (three and six months ended June 30, 2025 - $3,686 and $7,570).

During the three and six months ended June 30, 2026, the Company contributed additional capital of $3,512 and $6,364, respectively, into Cespira (three and six months ended June 30, 2025 - $4,185 and $8,871, respectively).

11

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

8. Long-term investments (continued):

The carrying amount and maximum exposure to losses relating to Cespira were as follows:

						June 30, 2026
						Carrying amount						Maximum exposure to loss
Equity method investment in Cespira						$	44,028					$	44,028
Accounts receivable due from Cespira						289						289

Combined assets, liabilities, revenue and expenses of Cespira, are as follows:

						June 30,						December 31,
						2026						2025
Current assets:
Cash and cash equivalents						$	16,164					$	14,869
Accounts receivable						18,840						18,718
Inventories						9,026						11,566
Prepaid expenses						849						1,157
						44,879						46,310
Property, plant and equipment and right-of-use assets						45,459						46,352
Intangible assets and goodwill						7,000						7,516
Other long-term assets						$	16,626					$	17,139
Total assets						$	113,964					$	117,317
Current liabilities:
Accounts payable						$	16,670					$	20,810
Current portion of provisions						2,034						2,519
Other current liabilities						5,481						6,266
						24,185						29,595
Long-term portion of provisions						2,342						1,618
Onerous contract provisions						1,230						2,890
Total liabilities						$	27,757					$	34,103
Net assets						$	86,207					$	83,214

12

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

8. Long-term investments (continued):

						Three Months Ended June 30,												Six Months Ended June 30,
						2026						2025						2026						2025
Product revenue						$	18,918					$	8,344					$	34,049					$	18,450
Aftermarket revenue						5,517						2,647						9,878						5,719
Service revenue						2,636						1,029						5,393						4,650
						$	27,071					$	12,020					$	49,320					$	28,819
Cost of revenue						23,257						13,946						43,930						30,230
Gross profit						3,814						(1,926)						5,390						(1,411)
Operating expenses:
Research and development						1,182						1,888						2,662						4,890
General and administrative						2,969						2,692						5,232						5,419
Sales and marketing						621						322						882						618
Foreign exchange (gain) loss						263						(845)						(449)						(88)
Depreciation and amortization						899						860						1,773						1,590
						5,934						4,917						10,100						12,429
Loss from operations						(2,120)						(6,843)						(4,710)						(13,840)
Interest income, net of bank charges						(73)						25						(19)						32
Loss before income taxes						(2,193)						(6,818)						(4,729)						(13,808)
Income tax (recovery) expense						182						(72)						168						(64)
Net loss						$	(2,375)					$	(6,746)					$	(4,897)					$	(13,744)

9. Property, plant and equipment:

												Accumulated						Net Book
June 30, 2026						Cost						Depreciation						Value
Computer equipment and software						3,596						2,859						737
Furniture and fixtures						117						90						27
Machinery and equipment						13,371						9,445						3,926
Leasehold improvements						4,936						4,074						862
						$	22,020					$	16,468					$	5,552

												Accumulated						Net Book
December 31, 2025						Cost						Depreciation						Value
Computer equipment and software						3,598						2,855						743
Furniture and fixtures						119						90						29
Machinery and equipment						13,584						9,505						4,079
Leasehold improvements						4,864						4,110						754
						$	22,165					$	16,560					$	5,605

13

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

10. Accounts payable and accrued liabilities:

						June 30, 2026						December 31, 2025
Trade accounts payable						$	8,722					$	11,147
Accrued payroll						3,047						2,704
Taxes payable						3,974						3,533
Deferred revenue						204						471
Due to related parties (note 14)						469						78
						$	16,416					$	17,933

11. Long-term debt:

Term loan facility			Maturity date			Interest rate			June 30, 2026						December 31, 2025
EDC			September 15, 2026			U.S. Prime Rate plus 2.01%			$	972					$	2,924
Current portion									972						2,924
Term loan facilities, net of debt issuance costs									$	972					$	2,924

On December 13, 2021, the credit facility and non-revolving term facility with EDC were refinanced into one $20,000 term loan, with quarterly principal and interest payments. On May 31, 2024, the Company amended the loan agreement with EDC to permit the asset transfer of certain property, plant, and equipment previously pledged to the loan into Cespira, removal of Fuel System Solutions Inc. as a borrower, added Westport Fuel Systems Canada Inc. as a borrower and modified the securities pledged to the loan. The loan is secured by share pledges in the Company's equity interest in Cespira. Throughout the term of certain of these financing arrangements, the Company is required to meet certain financial and non-financial covenants. In May 2026, the Company entered into an amendment agreement with EDC that reduced the minimum consolidated cash balance covenant requirement from $15.0 million to $3.0 million. As at June 30, 2026, the Company is in compliance with all covenants under the financing arrangements.

14

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

12. Warrant liabilities:

On June 23, 2026, the Company completed a private placement pursuant to a Securities Purchase Agreement, issuing 1,600,000 common shares, 3,254,369 Pre-Funded Warrants and 4,854,369 Common Warrants for aggregate gross proceeds of approximately $10,000.

The Pre-Funded Warrants are exercisable for up to 3,254,369 common shares at an exercise price of $0.00001 per share and remain exercisable until exercised in full. The Pre-Funded Warrants were classified as liabilities and recorded at fair value on the issuance date due to the US dollar denominated exercise price relative to the Company's Canadian dollar functional currency. The initial fair value of Pre-Funded Warrants was $6,639 at issuance.

The Common Warrants are exercisable for up to 4,854,369 common shares at an exercise price of $2.06 per share and expire two years from the initial exercise date. The Common Warrants contain certain provisions that may, under specified circumstances, require settlement based on the Black-Scholes value of the warrants in cash. The Common Warrants have a US dollar denominated exercise price relative to the Company's Canadian dollar functional currency. The Common Warrants were classified as a liabilities and recorded at fair value on the issuance date. The initial fair value of the Common Warrants was $3,220 at issuance.

During the quarter ended June 30, 2026, the Company recorded a change in the fair value of warrant liabilities of $1,496 in the condensed consolidated statement of operations. At the end of June 30, 2026, the fair value of warrant liabilities was $11,337.

The fair value of the Pre-Funded Warrant liability approximates the market value of the underlying common shares due to its nominal exercise price.

The fair value of the Common Warrants, at the date of issuance on June 23, 2026 and reporting date on June 30, 2026, using the Black-Scholes-Merton ("BSM") option pricing model and the following assumptions:

June 23, 2026

June 30, 2026

Expected volatility

54.0%

55.0%

Share price

$2.04

$2.26

Risk-free interest rate (%)

4.38%

4.31%

Expected life (years)

2.0 years

1.98 years

Dividend yield (%)

nil

nil

The following table presents the changes in the warrant liability during the period:

						June 30, 2026
						Pre-Funded Warrants						Common Warrants						Total
Initial balance						$	6,639					$	3,220					$	9,859
Change in fair value of warrant liability						725						771						1,496
Foreign currency remeasurement						(9)						(9)						(18)
Ending balance						$	7,355					$	3,982					$	11,337

15

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

13. Share capital, stock options and other stock-based plans:

On June 23, 2026, the Company issued 1,600,000 common shares as part of the securities purchase agreement. The Company estimated the fair value of the common shares of $126 using the residual allocation approach. Under this approach, the fair value of the Pre-Funded Warrant and Common Warrant liabilities was first determined and recognized at fair value, with the remaining proceeds allocated to the common shares based on their residual fair value.

During the three and six months ended June 30, 2026, the Company issued nil and 20,521 common shares, respectively, net of cancellations, upon exercises of share units (three and six months ended June 30, 2025 – 24,273 and 68,071 common shares, respectively). The Company issues shares from treasury to satisfy share unit exercises.

(a)    Share Units (“Units”):

The value assigned to issued Units and the amounts accrued are recorded as other equity instruments. As Units are exercised or vest and the underlying shares are issued from treasury of the Company, the value is reclassified to share capital.

During the three and six months ended June 30, 2026, the Company recognized $276 and $444, respectively, (three and six months ended June 30, 2025 - $451 and $736) of stock-based compensation associated with the Westport Omnibus Plan. The Westport Omnibus Plan aims to advance the Company's interests by encouraging employees, consultants and non-employee directors to receive equity-based compensation and incentives. The plan outlines the stock-based options types, eligibility and vesting terms.

A continuity of the Units issued under the Westport Omnibus Plan are as follows:

						Six months ended June 30, 2026												Six months ended June 30, 2025
						Number of Units						Weighted average grant date fair value (CDN $)						Number of Units						Weighted average grant date fair value (CDN $)
Outstanding, beginning of period						713,061						$	11.75					524,322						$	11.75
Granted						130,000						2.02						137,151						3.99
Exercised						(20,521)						17.80						(68,071)						17.48
Forfeited/expired						(134,706)						8.55						(117,296)						11.36
Outstanding, end of period						687,834						$	5.20					476,106						$	8.78
Units outstanding and exercisable, end of period						491						$	31.07					491						$	31.07

During the six months ended June 30, 2026, 130,000 share units were granted to certain employees (six months ended June 30, 2025 - 137,151).

Values of PSUs are determined using the Monte–Carlo Simulation Model. RSUs typically vest over a three-year period so the actual value received by the individual depends on the share price on the day such RSUs are settled for common shares, not the date of grant. Vesting of DSUs shall occur immediately prior to the resignation, retirement or termination of directorship, in accordance with the terms of Westport's Omnibus Plan.

16

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

13. Share capital, stock options and other stock-based plans (continued):

As at June 30, 2026, $595 of compensation expense related to Units awarded has yet to be recognized in results from operations and will be recognized ratably over 1.5 years.

(b)    Aggregate intrinsic values:

The aggregate intrinsic value of the Company’s share units at June 30, 2026 as follows:

						June 30, 2026
						(CDN $)
Share units:
Outstanding						$	2,179
Exercisable						15
Exercised						65

(c)    Stock-based compensation:

Stock-based compensation associated with the Unit plans is included in operating expenses as follows:

						Three Months Ended June 30,												Six Months Ended June 30,
						2026						2025						2026						2025
Research and development						5						15						13						28
General and administrative						271						433						431						680
Sales and marketing						—						3						—						28
						$	276					$	451					$	444					$	736

						Three Months Ended June 30,												Six Months Ended June 30,
						2026						2025						2026						2025
Stock-based compensation - equity or cash settled						110						181						196						393
Stock-based compensation - cash settled only						166						270						248						343
						$	276					$	451					$	444					$	736

Units outstanding settled in cash only are remeasured at each reporting period based on the Company's closing share price. The outstanding liability is reported within accrued payroll in note 10.

17

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

14. Related party transactions:

The Company's related parties are Cespira, directors, officers and shareholders that own more than 10% of the Company's shares.

The Company engages in transactions with Cespira primarily through cross charges, the provision of services and in the prior year, the sale of inventory under a transitional services agreement that ended on June 30, 2025.

Related party transactions with Cespira			Three Months Ended June 30,												Six months ended June 30,
			2026						2025						2026						2025
Sales of goods, services, and other income			$	6					$	9,721					$	12					$	15,280
Inventory purchased, services and other expenses			404						1,288						434						1,898

Related party balances with Cespira			June 30, 2026						December 31, 2025
Receivables (note 6)			$	289					$	274
Payables (note 10)			$	469					$	78

15. Commitments and contingencies:

(a)    Contractual commitments

The Company is a party to a variety of agreements in the ordinary course of business under which it is obligated to indemnify a third party with respect to certain matters. Typically, these obligations arise as a result of contracts for sale of the Company’s product to customers where the Company provides indemnification against losses arising from matters such as product liabilities. The potential impact on the Company’s financial results is not subject to reasonable estimation because considerable uncertainty exists as to whether claims will be made and the final outcome of potential claims. To date, the Company has not incurred significant costs related to these types of indemnifications.

(b)     Contingencies

The Company is engaged in certain legal actions and tax audits in the ordinary course of business and believes that, based on the information currently available, the ultimate outcome of these actions will not have a material adverse effect on our operating results, liquidity or financial position.

18

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

16. Segment information:

The Company discloses segment information under two reportable segments, consistent with the manner in which its Chief Operating Decision Maker ("CODM") evaluates its businesses. The Company's CODM is its Chief Executive Officer. These segments are the strategic pillars of the Company and are managed separately as each represents a specific grouping of related automotive components and systems. The reportable segments are further described below. In the prior years, the Company presented its results under three reportable segments: High-Pressure Controls, Heavy-Duty OEM, and Cespira.

On June 30, 2025, the Company ended its transitional service agreement with Cespira providing inventory manufacturing services previously reported under Heavy-Duty OEM in 2025. On July 29, 2025, the Company sold its Light-Duty segment to the Purchaser (note 5). The Company now reports its results in the following two reportable segments: High-Pressure Controls and Cespira.

•High-Pressure Controls: This segment's products include fuel cell and hydrogen fuel system solutions and components.

•Heavy-Duty OEM: Prior to June 3, 2024, this segment's products include HPDI related fuel system solutions and components. Subsequently, this segment's operations were related to the transitional services agreement between Company and Cespira for inventory and contract manufacturing. The transitional service agreement for these services ended June 30, 2025 when Cespira completed their independent set up for inventory manufacturing.

•Cespira: This segment's products include HPDI related fuel system solutions and components after June 3, 2024.

Segment earnings or losses before income taxes, interest, depreciation, and amortization ("Segment EBITDA") is the measure of segment profitability used by the Company. The accounting policies of our reportable segments are the same as those applied in our consolidated financial statements. Management prepared the financial results of the Company's reportable segments on basis that is consistent with the manner in which Management internally disaggregates financial information to assist in making internal operating decisions. Certain common costs and expenses were allocated among segments and presented differently than the Company would for stand-alone financial information prepared in accordance with GAAP. These include certain costs and expenses of shared services, such as IT, human resources, legal, finance and supply chain management. Segment EBITDA is not defined under US GAAP and may not be comparable to similarly titled measures used by other companies and should not be considered a substitute for net earnings or other results reported in accordance with GAAP.

The Company's CODM uses segment EBITDA disclosed below to evaluate the performance of its reportable segments. The Company believes Segment EBITDA is most reflective of the operational profitability or loss of its reportable segments. The CODM uses this information to drive decisions and resource allocations. Segment EBITDA is used as the key profitability measure when we set our annual budget.

19

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

16. Segment information (continued):

Financial information by reportable segment as follows:

									Three months ended June 30, 2026
									High-Pressure Controls																		Cespira						Total Segment
Revenue									$	2,717																	$	27,071					$	29,788
Cost of revenue									2,584																		23,257						25,841
Gross profit									133																		3,814						3,947
Operating expenses:
Research and development									790																		1,182						1,972
General and administrative									561																		2,969						3,530
Sales and marketing									131																		621						752
Depreciation and amortization									11																		899						910
									1,493																		5,671						7,164
Add back: Depreciation and amortization1									221																		986						1,207
Segment EBITDA									$	(1,139)																	$	(871)					$	(2,010)

									Three months ended June 30, 2025
									High-Pressure Controls						Heavy-Duty OEM												Cespira						Total Segment
Revenue									$	2,896					$	9,602											$	12,020					$	24,518
Cost of revenue									2,791						8,865												13,946						25,602
Gross profit									105						737												(1,926)						(1,084)
Operating expenses:
Research and development									1,552						22												1,888						3,462
General and administrative									386						34												2,692						3,112
Sales and marketing									23						3												322						348
Depreciation and amortization									59						—												860						919
									2,020						59												5,762						7,841
Add back: Depreciation and amortization1									172						—												772						944
Segment EBITDA									$	(1,743)					$	678											$	(6,916)					$	(7,981)

20

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

16. Segment information (continued):

									Six months ended June 30, 2026
									High-Pressure Controls																		Cespira						Total Segment
Revenue									$	5,002																	$	49,320					$	54,322
Cost of revenue									4,353																		43,930						48,283
Gross profit									649																		5,390						6,039
Operating expenses:
Research and development									1,738																		2,662						4,400
General and administrative									1,112																		5,232						6,344
Sales and marketing									226																		882						1,108
Depreciation and amortization									96																		1,773						1,869
									3,172																		10,549						13,721
Add back: Depreciation and amortization1									408																		1,935						2,343
Segment EBITDA									$	(2,115)																	$	(3,224)					$	(5,339)

									Six months ended June 30, 2025
									High-Pressure Controls						Heavy-Duty OEM												Cespira						Total Segment
Revenue									$	4,786					$	15,035											$	28,819					$	48,640
Cost of revenue									4,168						13,276												30,230						47,674
Gross profit									618						1,759												(1,411)						966
Operating expenses:
Research and development									2,734						133												4,890						7,757
General and administrative									705						99												5,419						6,223
Sales and marketing									150						23												618						791
Depreciation and amortization									115						—												1,590						1,705
									3,704						255												12,517						16,476
Add back: Depreciation and amortization1									298						—												2,392						2,690
Segment EBITDA									$	(2,788)					$	1,504											$	(11,536)					$	(12,820)

21

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

16. Segment information (continued):

Reconciliations of reportable segment financial information to consolidated statement of operations:

			Three months ended June 30, 2026
			Total Segment						Less: Cespira						Add: Corporate & unallocated												Total Consolidated
Revenue			$	29,788					$	27,071					$	—											$	2,717
Cost of revenue			25,841						23,257						—												2,584
Gross profit			3,947						3,814						—												133
Operating expenses:
Research and development			1,972						1,182						421												1,211
General and administrative			3,530						2,969						3,613												4,174
Sales and marketing			752						621						93												224
Depreciation and amortization			910						899						34												45
			7,164						5,671						4,161												5,654
Equity loss			—						—						(1,283)												(1,283)

			Three months ended June 30, 2025
			Total Segment						Less: Cespira						Add: Corporate & unallocated												Total Consolidated
Revenue			$	24,518					$	12,020					$	—											$	12,498
Cost of revenue			25,602						13,946						—												11,656
Gross profit			(1,084)						(1,926)						—												842
Operating expenses:
Research and development			3,462						1,888						—												1,574
General and administrative			3,112						2,692						3,686												4,106
Sales and marketing			348						322						264												290
Depreciation and amortization			919						860						47												106
			7,841						5,762						3,997												6,076
Equity loss			—						—						(3,686)												(3,686)

			Six months ended June 30, 2026
			Total Segment						Less: Cespira						Add: Corporate & unallocated												Total Consolidated
Revenue			$	54,322					$	49,320					$	—											$	5,002
Cost of revenue			48,283						43,930						—												4,353
Gross profit			6,039						5,390						—												649
Operating expenses:
Research and development			4,400						2,662						696												2,434
General and administrative			6,344						5,232						5,896												7,008
Sales and marketing			1,108						882						205												431
Depreciation and amortization			1,869						1,773						59												155
			13,721						10,549						6,856												10,028
Equity loss			—												(2,664)												(2,664)

22

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

16. Segment information (continued):

			Six months ended June 30, 2025
			Total Segment						Less: Cespira						Add: Corporate & unallocated												Total Consolidated
Revenue			$	48,640					$	28,819					$	—											$	19,821
Cost of revenue			47,674						30,230						—												17,444
Gross profit			966						(1,411)						—												2,377
Operating expenses:
Research and development			7,757						4,890						—												2,867
General and administrative			6,223						5,419						5,974												6,778
Sales and marketing			791						618						560												733
Depreciation and amortization			1,705						1,590						99												214
			16,476						12,517						6,633												10,592
Equity loss			—												(7,570)												(7,570)

Reconciliation of Segment EBITDA to Loss before income taxes						Three months ended June 30,												Six months ended June 30,
						2026						2025						2026						2025
Total Segment EBITDA						$	(2,010)					$	(7,981)					$	(5,339)					$	(12,820)
Adjustments:
Depreciation and amortization1						255						219						467						397
Cespira's Segment EBITDA						(871)						(6,916)						(3,224)						(11,536)
Loss on investments accounted for under the equity method (note 8)						1,283						3,686						2,664						7,570
Corporate and unallocated operating expenses						4,127						3,950						6,797						6,534
Foreign exchange gain (loss)						1,693						(4,224)						2,700						(5,427)
Change in fair value of warrant liability						1,496						—						1,496						—
Financing transaction costs						1,085						—						1,085						—
Interest on long-term debt						68						166						158						358
Interest and other income, net of bank charges						6						147						(736)						(502)
Loss before income taxes in continuing operations						$	(11,152)					$	(5,009)					$	(16,746)					$	(10,214)

1Depreciation and amortization expenses used in computation for Segment EBITDA and reconciliation to consolidated loss before income taxes are included in cost of revenue and operating expenses on our statement of operations and comprehensive income (loss).

23

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

16. Segment information (continued):

						Three months ended June 30,												Six months ended June 30,
Total additions to long-lived assets, excluding business combinations						2026						2025						2026						2025
High-Pressure Controls						48						821						480						1,379
Corporate and unallocated						—						1						—						16
Total consolidated						$	48					$	822					$	480					$	1,395

Cespira's total additions to long-lived assets, excluding business combinations for the three and six months ended June 30, 2026 was $1,515 and $2,543 (three and six months ended June 30, 2025 $322 and $1,571 ).

Revenues are attributable to geographical regions based on the location of the Company’s customers and are presented as a percentage of the Company's continuing revenues, as follows:

						% of revenue
						Three months ended June 30,												Six months ended June 30,
						2026						2025						2026						2025
Asia						34		%				5		%				45		%				7		%
Americas						50		%				16		%				41		%				14		%
Europe						16		%				79		%				14		%				79		%

The measure of segment assets evaluated by the CODM are total assets as reported on the consolidated balance sheet. Total assets are allocated as follows:

						Total assets by segment
						June 30, 2026						December 31, 2025
High-Pressure Controls						18,237						17,392
Corporate & unallocated						66,770						76,617
Total consolidated assets						$	85,007					$	94,009

17. Financial instruments:

Financial management risk

The Company has exposure to liquidity risk, credit risk, foreign currency risk and interest rate risk.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they are due. The Company has a history of operating losses and negative cash flows from operations. At June 30, 2026, the Company had $23,946 of cash and cash equivalents, including $359 in restricted cash.

24

WESTPORT FUEL SYSTEMS INC.

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

(Expressed in thousands of United States dollars, except share and per share amounts)

 Three months and six months ended June 30, 2026 and 2025

17. Financial Instruments (continued):

The following are the contractual maturities of financial obligations as at June 30, 2026:

						Carrying amount						Contractual cash flows						< 1 year						1-3 years						4-5 years
Accounts payable and accrued liabilities						$	16,416					$	16,416					$	16,416					$	—					$	—
Term loan facility (note 11)						972						1,021						1,021						—						—
Operating lease obligations						1,573						1,814						244						930						640
						$	18,961					$	19,251					$	17,681					$	930					$	640

Fair value of financial instruments

As at June 30, 2026, cash and cash equivalents are measured at fair value on a recurring basis and are included in Level 1. The carrying amounts reported in the unaudited condensed consolidated interim balance sheets for accounts receivable, and accounts payable and accrued liabilities approximate their fair values due to the short-term period to maturity of these instruments. The long-term investments represent the Company's interests in Cespira and is accounted for using the equity method. The carrying values reported in the condensed consolidated interim balance sheets for obligations under operating leases, which are based upon discounted cash flows, approximate their fair values. The carrying value of the term loan facility included in long-term debt (note 11) is carried at amortized cost, which approximate its fair value as at June 30, 2026.

The Company has classified the Pre-Funded Warrants and Common Warrants as warrant liabilities (note 12). These warrant liabilities are measured at fair value on a recurring basis and are classified within Level 2 of the fair value hierarchy. The fair value of the Pre-Funded Warrant liability approximates the market value of the underlying common shares due to its nominal exercise price. The fair value of the Common Warrant liability is determined using the Black-Scholes-Merton option pricing model, which incorporates observable and market-corroborated inputs, including the Company's share price, expected volatility, expected term, risk-free interest rate and expected dividend yield. Changes in the fair value of the warrant liabilities are recognized in earnings in the period in which they occur.

The Company categorizes its fair value measurements for items measured at fair value on a recurring basis into three categories as follows:

			Level 1 –			Unadjusted quoted prices in active markets for identical assets or liabilities.
			Level 2 –			Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
			Level 3 –			Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When available, the Company uses quoted market prices to determine fair value and classify such items in Level 1.  When necessary, Level 2 valuations are performed based on quoted market prices for similar instruments in active markets and/or model–derived valuations with inputs that are observable in active markets. Level 3 valuations are undertaken in the absence of reliable Level 1 or Level 2 information.

25

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