Westport Innovations Can Be a Huge Investment

Westport Innovations (WPRT) announced fourth quarter ended December 31, 2015 total adjusted revenue of $32.1 million, up 16.1 percent year-over-year from $27.4 million during the same period last year.

Westport declared fourth quarter of 2015 total adjusted EBITDA loss of $12.3 million, up 46.5 percent year-over-year from net adjusted EBITDA loss of $23.0 million in the fourth quarter of 2014.

The innovative engines manufacturer reported continued year-over-year improvement in both its top and bottom lines primarily due to significant cost-optimization initiatives being undertaken by the company all through its key operations while investing strategically into major growth operations.

Westport is notably focused on delivering visible improvements in year-over-year adjusted EBITDA by getting superior contributions from the operations of its key business units, achieving net income growth through strategic joint venture formations, getting funding from strategic growth partners and unique prioritization major investment programs.
The engines manufacturing major is strategically aligning its growth plans with the ongoing tough global operating environment through right-sizing the business by strategic layoffs and postponing of non-major schedules in addition to sustaining core OEM growth commitments.

Westport is among the top 10 global engine manufacturers in the world, delivering impressive top line growth. The international commodity demand and pricing environment are believed to improve gradually with natural gas expected to continue to expand quickly and develop over 20% of the worldwide share of net fleet vehicles. Going forward, Westport is expected to be a key source for OEM go-to technology for implementing core component supply, systems solutions, and natural gas technology.

Further, the engine manufacturer targets on completing and launching Westport HPDI 2.0 products comprising of several partners in the heavy-duty segment. The global crude oil prices have declined over 50% since their latest highest improvement witnessed in June and primarily due to expanding shale-oil production in the US, a decision by OPEC (Saudi Arabia) in November regarding not reducing the crude production to support prices and subdued worldwide demand expansion.

The engines manufacturing company is closely aligning with the global commodity demand and pricing conditions by strategically enhancing production and delivery of LNG-based engines considering the weaker fuel-pricing environment which is expected to boost the engine sales. These growth efforts are further supported by planned cost-cutting programs of the company through strategic layoffs and delaying of major capital-intensive projects.

Westport recently declared the strategic introduction of globally the most technologically-superior Bi-Fuel Volvo cars in Luxembourg and Belgium linked with the advanced Volvo Car Belux. Volvo V60 Bi-Fuel car is estimated to start sales at the key Volvo dealers from January 2016 for the entire region.

The key engine manufacturing company has strategically declared to merge with Fuel Systems Solutions, Inc. and somewhat offset the impact of a currently tough global operating environment by uniquely adopting a collar-based exchange ratio compared to a fixed exchange ratio to allow shareholders of Fuel Systems with higher conviction and to minimize any interruptions owing to continuing market volatility. In addition, this strategic merger would provide enhanced scale, greater financial strength, worldwide reach, better efficiencies with superior OEM relationships and improved R&D with product development.

Westport’s planned growth agreements with Volvo and Fuel Systems are expected to drive higher company value, improve upon its key operational expertise while delivering attractive shareholder returns, in line with its continued commitment to offer enhanced shareholder value.

Gas is increasingly capturing the global truck market share in China with nearly 11% share of about 246,000 10L WP10 annual natural gas engine sales and WP12 natural gas engine capturing about 32% of nearly 37,000 12L annual engine sales. Also, there’s expanding global demand for Westport HPDI advanced engines with estimated average engine sales volume for over 9L engine capacity to consolidate to about 1.03 million units per year from 2016 till 2019.

Conclusion                    

Overall, the investors are advised to “Hold” their position in Westport Innovations Inc. considering the company’s significant long-term growth prospects but current weaker financial condition with notable total debt of $66.19 million against weaker total cash position of $42.06 million only, restricting the company to continue its daily operations profitably. The profit margin of -132.59% seems disappointing and indicate no profit but loss. The PEG ratio of -0.10 signifies no growth but decline.
Published on May 5, 2016
By Yaggyaseni Mittra

Copyrighted 2016. Content published with author's permission.

Posted in ...