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Westport Innovations Falls on Wider-than-Expected Q3 Loss

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Westport Innovations Inc. 's WPRT share price fell 9.8% to close at $3.03 on Nov 11 after the company reported a significant wider-than-expected loss in the third quarter of 2015. The stock plunged further, losing 15.2% in the three trading sessions following the announcement of results.

Loss per share in the reported quarter widened to 58 cents from 40 cents in the prior-year quarter. Also, the loss was much wider than the Zacks Consensus Estimate of a loss of 25 cents per share. Net loss amounted to $37.4 million, wider than $25.5 million in the third quarter of 2014.

Consolidated revenue for the Westport Operations and Corporate & Technology Investments segments was $22.3 million in the third quarter, down 11.8% year over year owing to unfavorable foreign currency translation and weakness in certain North American product lines. Moreover, the figure missed the Zacks Consensus Estimate of $27 million.

Consolidated gross margin stood at $1.3 million (5.8% of sales) in third-quarter 2015, compared with $8 million (31.5% of sales) in the year-ago quarter.

Consolidated adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA) amounted to a negative $9.7 million, narrower than $22 million in the third quarter of 2014. The improvement can be attributed to cost reduction and higher net income from the Cummins Westport Inc. ("CWI") joint venture.

Segment Details

Westport Operations recorded a 14% decrease in revenues to $21.5 million. Operating loss in the segment widened to $7 million in the reported quarter from $6.4 million in the third quarter of 2014.

Corporate and Technology Investments reported a 300% surge in revenues to $0.8 million. Operating loss amounted to $18.3 million compared with a loss of $18.5 million recorded a year ago.

The CWI joint venture recorded a 16.7% increase in revenues to $82.4 million, mainly on strong performance in the core North American segments. Net income attributable to Westport Innovations was $3.5 million compared with $0.9 million in the prior-year quarter due to improved warranty expenses and stronger sales in the transit and refuse businesses.

The Weichai Westport Inc. ("WWI") joint venture reported an 81.3% plunge in revenues to $33.6 million. Net income attributable to Westport Innovations was $0.1 million compared with $1.2 million in the prior-year quarter.

Financial Position

Westport Innovations had cash and cash equivalents of $41.4 million as of Sep 30, 2015, down from $93.3 million as of Dec 31, 2014. Long-term debt was $66.2 million as of Sep 30, 2015, down from $78.5 million as of Dec 31, 2014.

For the nine months ended Sep 30, 2015, Westport Innovations' cash used in operations was $54.7 million compared with $83.4 million in the first nine months of 2014.

Outlook

Westport Innovations projects consolidated revenue from the Westport Operations and Corporate & Technology Investments segments in the $110-$125 million range for 2015. The company hopes to achieve consolidated positive adjusted EBITDA by mid-2016.

Stocks to Consider

Westport Innovations currently carries a Zacks Rank #3 (Hold). Better-ranked automobile stocks include General Motors Co. GM , O'Reilly Automotive Inc. ORLY and Pep Boys - Manny, Moe & Jack PBY . All these stocks carry a Zacks Rank #2 (Buy).

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WESTPORT INNOV (WPRT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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