Westport (NASDAQ: WPRT) reported Q3 EPS of ($0.09), $0.05 worse than the analyst estimate of ($0.04). Revenue for the quarter came in at $65.5 million versus the consensus estimate of $59.52 million.

• Consolidated revenue of $65.5 million compared with $56.4 million in Q3 2017, a 16% increase year-over-year primarily due to strong sales in the aftermarket and the OEM businesses, including shipments of the Westport HPDI 2.0™ product. Sequentially, consolidated revenue decreased by $15.0 million or 19% primarily due to lower sales from all businesses, partially resulting from the European summer shutdown, as well as the depreciation of the Euro against US dollar.
• A net loss from continuing operations of $12.1 million in Q3 2018 which represents a 25% improvement from $16.2 million in Q3 2017. Sequentially, net loss from continuing operations increased by $6.4 million from a Q2 2018 loss of $5.7 million, primarily due to a decline in revenue and associated gross margin.
• EBITDA in Q3 2018 was negative $3.0 million, an improvement from negative $11.1 million in Q3 2017. Adjusted EBITDA in Q3 2018 was positive $4.3 million, an improvement from negative $5.7 million in Q3 2017.
• As expected, research and development ("R&D") expenses declined to $7.8 million in Q3 2018, a 39% reduction from $12.8 million in Q3 2017. The reduction is largely due to the launch of Westport HPDI 2.0™ in 2017.
• A 33% increase in Cummins Westport Inc. ("CWI") net income to the company of $7.7 million in Q3 2018 from $5.8 million in Q3 2017.
• Cash and cash equivalents as of September 30, 2018 were $54.2 million compared with $51.2 million as of June 30, 2018.
• Closed the sale of the CNG compressor business to Snam S.p.A., a leading European gas utility company, for gross proceeds of approximately $14.7 million (€12.6 million), inclusive of a holdback released with the completion of an independent audit within Q3 2018.
• Entered into definitive development and supply agreements with Weichai Westport Inc. ("WWI") to develop, market, and commercialize a heavy-duty, natural gas engine utilizing the Westport HPDI 2.0™ technology in China. The new natural gas engine will be certified to meet China VI emissions standards and is expected to be launched in the second half of 2019. Westport Fuel Systems will supply HPDI 2.0 system components to WWI. The supply agreement has commitments to purchase a minimum of 18,000 units between WWI's launch and the end of 2023.
• Westport Fuel Systems is updating its expected consolidated revenue from continuing operations to be in the range of $260 million to $275 million for the full year 2018. This is a change from its previous guidance of a range of $235 million to $255 million.

"We have delivered our second consecutive quarter of positive adjusted EBITDA in Q3 2018," said Nancy Gougarty, Chief Executive Officer of Westport Fuel Systems. "This is a result of our full suite of ready-now products that are taking advantage of the shift away from traditional fuels, providing OEMs and consumers with solutions while continuing our focus on operational excellence. In addition, during the quarter we achieved another milestone of securing an HPDI customer in China, by signing development and supply agreements with Weichai Westport Inc. With their volume commitment, this presents an opportunity for economies of scale, which we expect to lever. Stronger regulations for reduced CO2 emissions continue to be a key driver for heavy-duty OEM engagement in Europe and China."

GUIDANCE:

Westport sees FY2018 revenue of $260-275 million, versus the consensus of $265.36 million.

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