Westport (WPRT) Misses Q4 EPS by 61c

Westport (NASDAQ: WPRT) reported Q4 EPS of ($1.02), $0.61 worse than the analyst estimate of ($0.41). Revenue for the quarter came in at $27.4 million versus the consensus estimate of $24.77 million.

"Despite volatile energy markets in 2014, market interest in alternative fuels continues to grow in many parts of the world," said David Demers, CEO of Westport. "Achieving over $1 billion in sales in 2014 highlights the dramatic growth in our market presence and prospects going forward, with 55% CAGR over the past five years. Our joint ventures posted record annual revenue with over 61,000 combined units sold during the year, representing approximately 2.7% of the global medium- and heavy-duty on-road engines sold in 2014. Development of our HPDI 2.0 heavy duty vehicle products also made strong progress with development partners such as Delphi."

"Given current energy market and global economic volatility, we took significant steps in 2014 to advance our business model as we shift from many years of market creation and product demonstrations to full commercial operation and profitability. Q4 2014 saw us rapidly re-prioritize investment programs and reduce strategic investments resulting in a roughly 40% reduction going into 2015. We have prioritized investments and product development efforts to maximize our near term success by focusing on those markets that have the conditions needed for the adoption of natural gas and where we have tangible partner commitments. Some segments and applications like transit and refuse in North America, trucks and buses in China, and taxis and urban delivery vehicles in Europe and South America are already shifting from niche to mainstream."

"Our operating business units and joint ventures are all positioned for improved bottom line profitability in 2015, and if markets stabilize and recover, we should see strong leverage to the upside. That said, we remain committed to our strategic investment in HPDI 2.0 products and expect 2015 to be a breakthrough year for OEM commitments to HPDI 2.0 as the technology platform for their heavy-duty natural gas products."

"We made our commitment to company-wide adjusted EBITDA by the end of 2015 during a time of higher energy prices and stable demand growth. While confident in the variables that we can control, Q4 2014 has injected more risk and uncertainty from forces we do not control into our plans. We remain committed to the goal of consolidated positive cash flow from our global operations, and joint ventures by improving sales of existing products, maintaining a tight control of expenses and investments, completing our product development commitments for future products, reducing our core cash burn rate, and unlocking greater value from our joint ventures."

Four Key Components to Westport Strategy in 2015

1. Westport will continue to invest with committed OEM partners in commercial products for the next decade that contain strong technology content including HPDI 2.0 and enhanced spark ignited direct injection, but defer investments with uncertain market timing or commercialization risk.
2. Westport will continue to rationalize and consolidate the Westport product portfolio for cost reduction and margin improvement, ensure customer value with leading price/performance, and achieve full system sales, creating and extracting value beyond individual component sales.
3. Westport will look at non-core asset sales and are confident our portfolio of long-term investments can be supported from internal re-allocation and OEM partner co-investment.

Westport sees FY2015 revenue of $110-120 million, versus the consensus of $155.6 million.

For earnings history and earnings-related data on Westport (WPRT) click here.

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