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Westport Fuel Systems (WPRT) Posts Narrower Loss in Q3

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Westport Fuel Systems Inc. (WPRT - Free Report) recorded adjusted loss of 14 cents per share in the third quarter of 2016, narrower than the year-ago loss of 29 cents. Moreover, the adjusted loss, which excludes 16 cents from non-recurring items, was much narrower than the Zacks Consensus Estimate of a loss of 23 cents.

Including non-recurring items, net loss amounted to $33.3 million or 30 cents per share in the reported quarter, mainly due to a $17.5 million one-time restructuring charge associated with facilities closures and severance costs. The reported net loss for the third quarter of 2015 was $37.4 million, including a goodwill impairment charge of $18.7 million.

Westport Fuel Systems logged revenues of $76.1 million in the third quarter of 2016, up 241% year over year. While the increase was primarily driven by the addition of Fuel Systems’ revenues, an 8.1% rise in Westport’s revenues stemmed from the completion of an important milestone within the company's Westport HPDI programs. However, the top line missed the Zacks Consensus Estimate of $82 million.

Consolidated gross margin decreased 12.5% to $22.5 million (33.3% of sales) in third-quarter 2016 from $25.7 million (31.1% of sales) in the year-ago quarter. The increase in gross margin percentage was mainly due to higher part sales.

Consolidated adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) amounted to a negative $7.6 million, compared with a negative $9.8 million in the third quarter of 2015.

 

Segment Details

Automotive Business Unit recorded a 137% increase in revenues to $50.9 million due to the addition of Fuel Systems' revenues. Operating loss in the segment widened to $8.64 million in the reported quarter from $8.61 million in the third quarter of 2015.

Industrial Business Unit reported revenues of $22.7 million, which were solely generated from the Fuel Systems business. Operating income at the segment was $1.12 million in the reported quarter.

Corporate and Technology Investments Business Unit revenues soared 213% to $2.5 million from $0.8 million in the year-ago quarter due to the addition of Fuel Systems’ revenues. Operating loss amounted to $17.66 million compared with a loss of $20.05 million recorded a year ago.

The CWI joint venture recorded an 18% decrease in revenues to $67.5 million, mainly due to persistent market headwinds and an overall industry decline in truck volumes, offset partially through higher shipments in the transit market. CWI operating income attributable to Westport Fuel Systems was $2.6 million in the reported quarter compared with $3.5 million in the year-ago period. The decline in operating income was due to lower unit sales and higher engineering expenses, primarily associated with new products and compliance costs for upcoming regulations.

Financial Position

Westport Fuel Systems had cash and cash equivalents of $57.89 million as of Sep 30, 2016, up from $27.1 million as of Dec 31, 2015. Long-term debt was $79.4 million as of Sep 30, 2016, up from $62.4 million as of Dec 31, 2015.

In the first nine months of 2016, Westport Fuel Systems’ cash used in operations was $74.18 million, compared with $54.67 million in the year-ago period.

The company has not provided any guidance for revenue or earnings. However, management does not expect to meet the target of positive adjusted EBITDA for 2016.

WESTPORT FUEL Price, Consensus and EPS Surprise

 

WESTPORT FUEL Price, Consensus and EPS Surprise | WESTPORT FUEL Quote

Zacks Rank

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

Some better-ranked automobile stocks include Standard Motor Products Inc. (SMP - Free Report) , Visteon Corporation (VC - Free Report) and Gentex Corp. (GNTX - Free Report) .

Standard Motor, with a long-term expected growth rate of 15%, sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Visteon, a Zacks Rank #2 stock, has a long-term growth rate of 23.60%.

Gentex, with a Zacks Rank #2, has a long-term growth rate of 11.17%.

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