Westport Innovations (WPRT, Financial) illustrated continued robust growth in its Chinese joint venture, Weichai Westport, and delivered significant 50,000 engines during the year. The combined performance of its two joint ventures gained approximately 2.8% market share of the overall worldwide medium and heavy-duty engine market during the previous year.
Product development focus
Westport’s focused investments in HPDI 2.0 and its sophisticated spark ignition technologies is believed to generate enhanced power, improved fuel economy, significant greenhouse gas performance and reduced costs. The smaller capital business model of Westport is forecasted to enable the company to accelerate its growth with the expanding market and offer enhanced shareholder returns.
The significant expansion of Westport’s key joint ventures, with some major players in China, is estimated to considerably boost the company’s market share. Also, the major investments of Westport into its unique spark ignition and HPDI 2.0technologies is expected to deliver higher power to the customers at reasonable costs and boost shareholder returns.
The initial OEM bi-fuel direct injection vehicles of Westport are forecasted to start shipments during the second quarter. In addition, this major shift in technology coupled with the unexpected modest price burden, owing to the present volatility and declining oil prices, is hugely burdening this conventionally split industry.
Westport has advanced its investment schedule for 2015, and expects the total spending in its technology and corporate investments to decline by approximately 40% without significantly upsetting its lasting product portfolio.
The benefits of notable prospective investments planned by Westport are believed to be partially offset by the current market volatility and falling oil prices.
The significant global investments executed by Westport across a portfolio of highly differentiated products, is expected to notably expand the company’s top line, bottom line and in line with its keen focus on delivering a superior shareholder value.
Prospects to consider
From the macroeconomic viewpoint, the huge availability of low cost natural gas (leveraged as commodity) compared to lesser availability of expensive oil is globally promoting the low-cost fuel for transportation purposes. This accelerated adoption of natural gas is estimated to be primarily driven by high-fuel-use fleets and transporters seeking reduced costs instead of OEMs or customers. However, this lower consumer demand is forecasted to accelerate with OEM factory-developed vehicles, and Westport superbly positioned to capture this expanding market growth opportunity. Further, the developing infrastructure players throughout the globe are creating fresh business model prospects.
The natural gas vehicles (NGVs) market is evolving rapidly, with a majority of these vehicles till date being “aftermarket” conversions delivered by third parties. Going forward, next-generation NGV OEM vehicles are forecasted to be having advanced performance and higher customer value, with Westport extremely well-positioned to be a leading provider of commercial vehicles.
This major macroeconomic shift in the type of fuel used from oil to natural gas for driving a majority of the light, medium, heavy and very heavy vehicles is believed to significantly benefit Westport in a long run.
Westport is co-investing with OEMs to expand a portfolio of innovatively developed natural gas vehicle technologies , linked components and systems. It has strategically planned the investments with 3 to 5 year development cycles from the start of product development to sales. The engine major is carefully managing the capital allocation and future growth schedules targeted towards delivering superior margin returns.
Conclusion
Westport has a robust balance sheet with total cash of $94.00 million compared to total debt of $78.54 million only, allowing the company to significantly invest into the future growth opportunities.
