A month has gone by since the last earnings report for Westport Innovations (WPRT - Free Report) . Shares have added about 11.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Westport due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Westport Fuel Q4 Earnings Breakeven, Sales Up Y/Y
Westport Fuel Systems reported break-even earnings per share in fourth-quarter 2019, as against the Zacks Consensus Estimate of a loss of a penny. The metric also compared favourably with the year-ago quarter’s loss of 8 cents a share. Higher revenues and lower operating expenses led to this outperformance.
Net income from continuing operations in the reported quarter was $0.7 million, as against net loss of $10.4 million posted in fourth-quarter 2018.
Westport logged consolidated revenues of $74.3 million in the fourth quarter, up 23% 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 $71 million.
During the reported quarter, consolidated gross margin increased to $13.8 million from the prior year’s $12.3 million. Adjusted EBITDA amounted to $3.6 million compared with the prior-year quarter’s $0.2 million.
Operational Results
Transportation Business Segment: Net sales of the segment increased 23% year over year to $74.3 million in the reported quarter on solid revenues from the OEM business, mainly driven by higher HPDI 2.0 product sales. The segment’s gross margin rose to $13.8 million from $12.3 million in fourth-quarter 2018, aided by higher revenues during the current quarter.
CWI Joint Venture: This segment’s revenues totaled $102.5 million, up from the year-ago quarter’s $94.1 million on higher sales volume. Gross margin was $28.3 million, up from the fourth-quarter 2018 level of $21 million owing to higher revenues and lower warranty expense.
Corporate Business Segment: Corporate R&D expenses slumped 150% year over year from the $0.2 million recorded in the fourth quarter of 2018. The segment’s SG&A expenses came in at $3.8 million, down from the fourth-quarter 2018 level of $6.9 million, mainly owing to a reduction in legal cost for the Securities and Exchange Commission (SEC) investigation.
Financial Position
Westport had cash and cash equivalents of $46 million as of Dec 31, 2019, down from $61.1 million as of Dec 31, 2018. Long-term debt declined to $48.9 million in the reported quarter from $55.3 million as of Dec 31, 2018. The debt-to-capital ratio stands at 35.36%, as of Dec 31, 2019.
For the year ended Dec 31, 2019, the company’s net cash used in operating activities of continuing operations was $15.7 million compared with $27.4 million as of Dec 31, 2018.
How Have Estimates Been Moving Since Then?
Estimates revision followed a downward path over the past two months.
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A month has gone by since the last earnings report for Westport Innovations (WPRT - Free Report) . Shares have added about 11.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Westport due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Westport Fuel Q4 Earnings Breakeven, Sales Up Y/Y
Westport Fuel Systems reported break-even earnings per share in fourth-quarter 2019, as against the Zacks Consensus Estimate of a loss of a penny. The metric also compared favourably with the year-ago quarter’s loss of 8 cents a share. Higher revenues and lower operating expenses led to this outperformance.
Net income from continuing operations in the reported quarter was $0.7 million, as against net loss of $10.4 million posted in fourth-quarter 2018.
Westport logged consolidated revenues of $74.3 million in the fourth quarter, up 23% 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 $71 million.
During the reported quarter, consolidated gross margin increased to $13.8 million from the prior year’s $12.3 million. Adjusted EBITDA amounted to $3.6 million compared with the prior-year quarter’s $0.2 million.
Operational Results
Transportation Business Segment: Net sales of the segment increased 23% year over year to $74.3 million in the reported quarter on solid revenues from the OEM business, mainly driven by higher HPDI 2.0 product sales. The segment’s gross margin rose to $13.8 million from $12.3 million in fourth-quarter 2018, aided by higher revenues during the current quarter.
CWI Joint Venture: This segment’s revenues totaled $102.5 million, up from the year-ago quarter’s $94.1 million on higher sales volume. Gross margin was $28.3 million, up from the fourth-quarter 2018 level of $21 million owing to higher revenues and lower warranty expense.
Corporate Business Segment: Corporate R&D expenses slumped 150% year over year from the $0.2 million recorded in the fourth quarter of 2018. The segment’s SG&A expenses came in at $3.8 million, down from the fourth-quarter 2018 level of $6.9 million, mainly owing to a reduction in legal cost for the Securities and Exchange Commission (SEC) investigation.
Financial Position
Westport had cash and cash equivalents of $46 million as of Dec 31, 2019, down from $61.1 million as of Dec 31, 2018. Long-term debt declined to $48.9 million in the reported quarter from $55.3 million as of Dec 31, 2018. The debt-to-capital ratio stands at 35.36%, as of Dec 31, 2019.
For the year ended Dec 31, 2019, the company’s net cash used in operating activities of continuing operations was $15.7 million compared with $27.4 million as of Dec 31, 2018.
How Have Estimates Been Moving Since Then?
Estimates revision followed a downward path over the past two months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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