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Westport Fuel (WPRT) Q3 Earnings and Sales Beat Estimates

Zacks Equity Research

Westport Fuel Systems Inc. WPRT incurred a loss of 1 cent per share in third-quarter fiscal 2019, narrower than the Zacks Consensus Estimate of a loss of 3 cents. The same was 9 cents in third-quarter 2018.

Net income from continuing operations in the reported quarter was $4.9 million against a net loss of $12.1 million in third-quarter fiscal 2018. The improvement was aided by higher gross margin from transportation businesses and lower operating expenses due to reduced Securities Exchange and Commission (SEC) expenses.

Westport Fuel logged consolidated revenues of $75.4 million in the reported quarter, up 15.1% year over year, mainly on strength in its transportation businesses and higher HPDI revenues. Moreover, the company’s revenues surpassed the Zacks Consensus Estimate of $73 million.

During the quarter under review, consolidated gross margin increased to $17.9 million from $15.6 million a year ago. Adjusted EBITDA amounted to $9.4 million compared with $4.3 million in the prior-year quarter.

Westport Fuel Systems Inc. Price and Consensus

 

Westport Fuel Systems Inc. Price and Consensus

Westport Fuel Systems Inc. price-consensus-chart | Westport Fuel Systems Inc. Quote

Operational Results

Transportation Business Segment: Net sales at the segment increased 15% year over year to $75.4 million in the reported quarter on increased revenues from the OEM business, mainly driven by higher HPDI 2.0 product sales and service revenues. The segment’s gross margin rose to $17.9 million from $15.6 million in third-quarter 2018, aided by higher revenues during the current quarter.

CWI Joint Venture: This segment’s revenues totaled $83.1 million, down from the year-ago quarter’s $86.2 million due to lower sales volume. Gross margin was $22.7 million, down from the third-quarter 2018 level of $27.3 million owing to lower revenues and a negative warranty adjustment of $3.8 million.

Corporate Business Segment: Research and Development expenses in the segment declined to $0.2 million from $0.4 million a year ago. This segment’s SG&A expenses was $3.4 million, down from the third-quarter 2018 level of $9.7 million, mainly driven by a reduction in legal and advisory cost for the SEC investigation and lower professional & consulting fees.

Financial Position

Westport Fuel had cash and cash equivalents of $37.4 million as of Sep 30, 2019, down from $61.1 million as of Dec 31, 2018. Long-term debt declined to $44.9 million in the quarter under review from $55.3 million as of Dec 31, 2018. The debt-to-capital ratio stands at 40.39%, as of Sep 30, 2019.

For the three months ended Sep 30, 2019, the company’s net cash used in operating activities of continuing operations was $3.2 million compared with $12.3 million in the three months ended Sep 30, 2018.

Guidance

For 2019, the company projects consolidated revenues from continuing operations of $295-$305 million, up from previously mentioned $285-$305 million.

Zacks Rank & Stocks to Consider

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

A few better-ranked stocks in the Auto-Tires-Trucks sector are Spartan Motors, Inc. SPAR, SPX Corporation SPXC and BRP Inc. DOOO, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Spartan Motors has an estimated earnings growth rate of 85.42% for the ongoing year. The company’s shares have surged 110.7% in a year’s time.

SPX has an expected earnings growth rate of 23.18% for 2019. The company’s shares have surged 57.6% in the past year.

BRP has a projected earnings growth rate of 18.49% for the current year. Its shares have gained around 18.9% over the past year.

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