Westport Fuel Systems (WPRT) Q4 Loss Wider than Expected

Zacks Equity Research

Westport Fuel Systems Inc.’s WPRT adjusted loss came in at 24 cents per share in the fourth quarter of 2016, narrower than the year-ago loss of 35 cents. However, the adjusted loss, which excludes 19 cents from non-recurring items, was wider than the Zacks Consensus Estimate of a loss of 15 cents.

Including non-recurring items, net loss amounted to $43.2 million or 43 cents per share in the reported quarter. The reported net loss for the fourth quarter of 2015 was $24.5 million.

Westport Fuel Systems logged revenues of $80.4 million in the reported quarter, up 220.3% year over year. The growth was primarily driven by the addition of Fuel Systems’ revenues. Moreover, the top line surpassed the Zacks Consensus Estimate of $74 million.

Consolidated gross margin increased to $18.6 million (23.1% of sales) in the fourth quarter of 2016 from $3.1 million (12.4% of sales) in the year-ago quarter. The improvement in gross margin percentage was mainly due to the merger as well as improved operating performance.

Consolidated adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) amounted to a negative $11.9 million, compared with a negative $10.3 million in the fourth quarter of 2015.

Full-Year 2016 Performance

Westport Fuel Systems’ adjusted loss came in at $1.20 per share in 2016, narrower than a loss of $1.53 incurred in 2015. However, the loss was wider than the Zacks Consensus Estimate of a loss of $1.10.

Consolidated revenues for the company were $224.9 million in 2016, up 117.7% from $103.3 million in the prior year, mainly due the merger. However, the top line beat the Zacks Consensus Estimate of $219 million.

Segment Details

Automotive Business Unit recorded a 112.6% increase in revenues to $55.7 million in the quarter due to the addition of Fuel Systems' revenues. Gross margin increased to $11.2 million (20%) from $6 million (11.8%) in the prior-year quarter.

Industrial Business Unit reported revenues of $23.8 million, which were solely generated from the Fuel Systems business. Gross margin was pegged at $6.7 million (28.2%).

Corporate and Technology Investments Business Unit revenues were $0.9 million in the quarter, compared to negative revenues of $1.4 million in the year-ago period.

The CWI joint venture recorded a 17% decrease in revenues to $55.4 million, mainly owing to persistent market headwinds and lower engine sales, offset partly by higher parts revenue. CWI operating income attributable to Westport Fuel Systems was $1.2 million in the reported quarter compared with $3.1 million in the year-ago period.

Westport Fuel Systems Inc Price, Consensus and EPS Surprise

 

Westport Fuel Systems Inc Price, Consensus and EPS Surprise | Westport Fuel Systems Inc Quote

Financial Position

Westport Fuel Systems had cash and cash equivalents of $60.1 million as of Dec 31, 2016, up from $27.1 million as of Dec 31, 2015. Long-term debt was $79 million as of Dec 31, 2016, up from $62.4 million as of Dec 31, 2015.

In 2016, Westport Fuel Systems’ cash used in operations was $79.63 million, compared with $69.07 million in the year-ago period.

The company has not provided any guidance for revenues or earnings. It is in the final development stage of the launch of commercial components of HPDI 2.0.

Zacks Rank & Key Picks

Westport Fuel Systems currently carries a Zacks Rank #3 (Hold).

Some better-ranked automobile stocks include Allison Transmission Holdings, Inc. ALSN, Visteon Corporation VC and Ferrari N.V. RACE. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has a long-term expected growth rate of 11%.

Visteon has an expected long-term growth rate of 15%.

Ferrari has an expected long-term growth rate of 16.5%.

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