Westport Innovations Inc. (WPRT, Financial), last week, announced that it has acquired Netherlands-based Prins Autogassystemen Holding B.V. (Prins) for Euro 12.2 million through a combination of Euro 6.6 million in assumed liabilities and Euro 5.6 million in cash.
Management comments
"Prins' globally respected product line, their strong track record in continuous innovation and new product introductions combined with its Original Equipment Manufacturer (OEM) relationships complement our products and OEM coverage to provide us with a great position as the go-to partner for alternative fuels solutions," said Mehran Rahbar, executive vice president, On-Road Systems & Applied Technologies of Westport. "Westport has a great deal of experience with natural gas direct injection and believes that the combination of Prins' and Westport's team and technologies will further strengthen Westport's dominant technology portfolio."
"I have been in the automotive industry for more than 20 years with companies like Continental and Siemens VDO, and most recently focused on our Italian businesses," added Rahbar. "Based on my experience, this acquisition is a significant opportunity for Westport to scale, innovate and derive sales and operations synergies from the combined business."
"Westport is the leader in natural gas technologies and well-respected by engine and vehicle OEMs in the industry," said Bart van Aerle, CEO of Prins. "Together, we can create the best-in-class alternative fuel systems across multiple fuel platforms and deliver on superior technology and performance characteristics."
Opportunities for WPRT
- Products – Prins' alternative fuel systems will expand Westport's product portfolio to include direct injection technology for LPG and CNG systems, and a well-developed portfolio of diesel dual fuel aftermarket systems
- Sales – Prins' relationships with global OEMs complement Westport's existing strength in Europe, Asia and North America and will allow for increased cross-channel sales
- Geographies – Prins' established footprint in large emerging markets for alternative fuels including Turkey and Africa opens access to new markets for
- Westport's products
- Operations – Larger scale allows Westport and Prins to capture cost efficiencies
Above all, the company being acquired has been strong in terms of numbers and figures. It will therefore be beneficial for WPRT to have acquired the company. The strategic acquisition has also expanded the acquirer’s scopes in the regions where Prins was operational. Let’s have a look into the financial results from Prins.
Financial results
- Euro 19.7 million (approximately U.S. $26.8 million) in revenue for the nine months ended September 30, 2014 compared with Euro 15.1 million (approximately U.S. $20.1 million) for same period last year
- Euro 23.2 million (approximately U.S. $30.9 million) in revenue for the year ended December 31, 2013 compared with Euro 29.2 million (approximately U.S. $37.7 million) for year ended December 31, 2012
- Reported EBITDA was Euro 1.5 million (approximately U.S. $2.0 million) for the nine months ended September 30, 2014 compared with Euro 0.4 million (approximately U.S. $0.5 million) for same period last year
- Reported EBITDA was Euro 0.7 million (approximately U.S. $0.9 million) for the year ended December 31, 2013 compared with Euro 5.3 million (approximately U.S. $6.8 million) for the year ended December 31, 2012
- Comprehensive product offering – a full suite of alternative fuel systems for bi-fuel, mono-fuel, and dual-fuel applications using LPG, CNG and LNG
- Global distribution network – sells to end customers in over 50 countries through OEMs, country importers and distributors
- Systems available for top six European OEM truck brands – as well as global OEMs such as Hyundai and Kia
- Longstanding relationship with top quality suppliers such as Keihin and Bosch
- Current supplier of Westport Volvo Car business
- Strong direct injection LPG technology – LPG has a broad application of uses and is a popular alternative fuel in Europe, Asia, and North America
- A well-developed dual-fuel system – an add-on system for diesel engines with over 100 calibrations for LPG, CNG and LNG to optimize the diesel replacement rate
- Unique position with a joint venture in Nigeria with a large industrial customer, operating one of the largest truck fleets in Africa – moving to natural gas trucks built by one of China's largest truck manufacturers with Prins' dual fuel systems
- Deep engineering and research and development capabilities – extensive multidisciplinary knowledge of systems, software, engineering, electronics, testing, calibration, and certification
- Proprietary fuel control software – developed in-house, Prins' fuel controller software is an integral part of its product platforms that drives exceptional performance
- Testing and certification capabilities – the majority of components are tested in-house and comply with European and U.S. Environmental Protection Agency regulations
To conclude
While global sales of light duty LPG vehicles are projected to grow by 2.6% annually from 2014 to 2035, the Middle East and Africa will show faster growth at 4.7% CAGR. In North America, the annual growth rate of all LPG vehicle sales and conversions will average 4.7% between 2014 and 2035. WPRT, thus, has a bright future on this front. The financial stability of Prins comes as a boon for WPRT and ensures good revenues for a few days to come. These results are however hypothetical and the real life results might be slightly different. It therefore waits to be seen how the company utilizes these new opportunities.
