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Westport Fuel Systems (TSE:WPRT)
TSX:WPRT
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Westport Fuel Systems
(TSX:WPRT)
Rating:54Neutral
Price Target:
C$4.00
▼(-10.31%Downside)
Positive Factors
Gross Margins Improvement
Gross margins for the quarter improved significantly to 21.5% from 15.1%.
Strategic Focus
The company's future business model will focus on leveraging HPDI technology for alternative fuel solutions.
Negative Factors
Divestiture Impact
The divestiture of interest in Westport Fuel Systems Italia S.r.l. is a primary reason for lowering the price target to $7.
Revenue Decline
Westport reported consolidated revenues of $75.1M, marking a 14% year-over-year decrease.
Westport Fuel Systems (WPRT) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$75.37M
Dividend YieldN/A
Average Volume (3M)2.78K
Price to Earnings (P/E)―
Beta (1Y)2.19
Revenue Growth-6.80%
EPS Growth78.75%
CountryCA
Employees1,509
SectorConsumer Cyclical
Sector Strength60
IndustryAuto - Parts
Share Statistics
EPS (TTM)-0.14
Shares Outstanding17,326,733
10 Day Avg. Volume4,626
30 Day Avg. Volume2,779
Financial Highlights & Ratios
PEG Ratio0.01
Price to Book (P/B)0.64
Price to Sales (P/S)0.00
P/FCF Ratio-2.85
Enterprise Value/Market Cap1.61
Enterprise Value/Revenue0.10
Enterprise Value/Gross Profit2.11
Enterprise Value/Ebitda-1.12
Forecast
1Y Price Target
$7.47Price Target Upside67.45% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Westport Fuel Systems Business Overview & Revenue Model
Company DescriptionWestport Fuel Systems Inc. engages in the engineering, manufacturing, and supplying alternative fuel systems and components for use in transportation applications worldwide. The company operates through Original Equipment Manufacturer and Independent Aftermarket segments. It offers alternative fuel systems and components, which include a range of alternative fuels, such as liquefied petroleum gas, compressed natural gas, liquefied natural gas, renewable natural gas, and hydrogen; and independent aftermarket, light and heavy-duty original equipment manufacturers (OEMs) and delayed OEMs, electronics, hydrogen, and fuel storage activities. The company also provides Westport High Pressure Direct Injection 2.0, a fully integrated fuel systems that enables diesel engines using primarily natural gas fuel to match the power, torque, and fuel economy benefits found in traditional compression ignition diesel engines, which reduces greenhouse gas emissions. Its products and services are used for passenger cars; light-, medium-, and heavy-duty trucks; and cryogenics and hydrogen applications under the Cummins Westport, BRC Gas Equipment, Westport, OMVL, Prins, GFi Control systems, Emer, Zavoli, TA Gas Technology, Valtek, and AFS brands. The company was formerly known as Westport Innovations Inc. and changed its name to Westport Fuel Systems Inc. in June 2016. Westport Fuel Systems Inc. was incorporated in 1995 and is headquartered in Vancouver, Canada.
How the Company Makes MoneyWestport Fuel Systems generates revenue primarily through the sale of its alternative fuel systems and components to OEMs and the aftermarket. The company earns money by designing and manufacturing systems that are integrated into vehicles powered by natural gas, propane, and hydrogen, thus catering to the growing demand for low-emission transportation solutions. Key revenue streams include sales of high-pressure direct injection technology, fuel storage, and delivery systems. Westport also benefits from strategic partnerships with major automotive manufacturers who are transitioning to alternative fuel vehicles, as well as from government regulations and incentives that promote the adoption of cleaner fuels. Through these avenues, Westport secures a steady income from both product sales and strategic collaborations in the global automotive market.
Westport Fuel Systems Earnings Call Summary
Earnings Call Date:May 13, 2025
(Q1-2025)
| % Change Since: 5.69%|
Next Earnings Date:Aug 11, 2025
Earnings Call Sentiment Positive
The earnings call highlights significant progress in revenue growth, loss reduction, strategic partnerships, and innovation in fuel solutions. However, challenges such as a slowdown in the hydrogen industry and decreased cash reserves were noted. Despite these challenges, the strategic divestment and focus on high-potential growth areas indicate strong future potential.Q1-2025 Updates
Positive Updates
Revenue Growth and Loss Reduction
Reported revenue was $71 million for Q1 2025. When adjusting for the 55% ownership share in Cespira, total revenue would have exceeded $80 million, higher than the $77.6 million reported in Q1 2024. Net loss improved significantly to $2.5 million from a net loss of $13.6 million in Q1 2024.
Improved Gross Profit and Operating Expenditures
Gross profit rose by $3.5 million while operating expenditures dropped by $8 million. Adjusted EBITDA improved year-over-year, showing improved financial performance.
Successful Partnership with Volvo
Volvo Trucks highlighted the success achieved with their gas-powered solution using Cespira's HPDI technology, with sales increased by more than 25% in 2024, and continued demand growth into Q1 2025.
Strategic Divestment of Light Duty Business
Announced the proposed sale of the light duty business to align Westport more with the hardest-to-decarbonize applications, expected to deliver immediate cash proceeds to strengthen the balance sheet and fuel growth in both Cespira and high pressure controls and systems business.
Innovative Fuel Solutions Development
Development of a CNG HPDI solution running on 700 bar storage without a compressor, expanding cleaner fuel alternatives and opening up new decarbonization pathways.
New Production Facility in China
Upcoming completion of a new hydro innovation center and manufacturing facility in China, anticipated to come online later this year, focusing on delivering to the Chinese market.
Negative Updates
Revenue Decrease in High Pressure Control and Systems
High Pressure Control and Systems revenues for Q1 2025 were $1.4 million, a decrease from $2.4 million for Q1 2024. The decline was driven by a slowdown in the hydrogen industry.
Challenges with Hydrogen Infrastructure Development
There is a reported slowing in hydrogen infrastructure development, leading to slower adoption of automotive and industrial applications powered by hydrogen.
Decrease in Cash and Cash Equivalents
Cash and cash equivalents at March 31, 2025, were $32.6 million, compared to $37.6 million at December 31, 2024, with net cash used in operating activities being $4.9 million.
Company Guidance
During Westport Fuel Systems' first-quarter 2025 earnings call, the company provided a comprehensive overview of its financial and operational performance. Reported revenue for the quarter was $71 million, with Cespira contributing an additional $16.7 million, not reflected in the top line due to equity accounting, which, when adjusted for Westport's 55% ownership, would surpass $80 million. This is higher than the $77.6 million reported in Q1 2024. The net loss significantly improved to $2.5 million from $13.6 million in the previous year, and gross profit increased by $3.5 million while operating expenditures decreased by $8 million. Adjusted EBITDA showed marked improvement, and light-duty revenue increased slightly to $64.2 million from $63.3 million in Q1 2024. The company highlighted the proposed sale of its light-duty business to focus on heavy-duty and alternative fuel solutions, with an anticipated closing in Q2 2025. High pressure controls and systems revenue decreased to $1.4 million, affected by a slowdown in the hydrogen industry. The call emphasized Westport's strategic pivot towards decarbonizing long-haul transport, driven by innovations like the CNG HPDI solution, and underscored its commitment to sustainable growth and strengthening its financial outlook.Westport Fuel Systems Financial Statement Overview
Summary
Westport Fuel Systems shows improvement in gross profit margin and operating cash flow. However, challenges remain with persistent negative net income and free cash flow, indicating underlying profitability issues.Income Statement
Westport Fuel Systems has shown improvement in its gross profit margin from 14.7% to 19.0% over the last year. However, the company continues to face challenges with negative EBIT and net income, resulting in negative net profit and EBIT margins. Revenue growth has been volatile, with a decline in the latest year, indicating instability in revenue streams.45
Neutral
Balance Sheet
The company's debt-to-equity ratio has improved from 0.52 to 0.39, indicating reduced leverage. However, return on equity remains negative due to the negative net income. The equity ratio has slightly decreased, suggesting a moderate reliance on debt financing.55
Neutral
Cash Flow
Westport Fuel Systems has managed to improve its operating cash flow from a significant negative to a positive figure. However, free cash flow remains negative, reflecting ongoing challenges in generating cash after capital expenditures. The company has shown a better operating cash flow to net income ratio, but the free cash flow to net income ratio is still concerning.50
Neutral
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 302.30M | 331.80M | 305.70M | 312.41M | 252.50M |
| Gross Profit | 57.59M | 48.94M | 36.20M | 48.15M | 39.54M |
| EBITDA | -5.40M | -33.24M | -28.81M | -18.18M | -11.78M |
| Net Income | -21.84M | -49.72M | -32.70M | 13.66M | -7.36M |
Balance Sheet | |||||
| Total Assets | 291.62M | 355.75M | 407.45M | 471.31M | 346.26M |
| Cash, Cash Equivalents and Short-Term Investments | 37.24M | 54.75M | 86.18M | 124.89M | 64.26M |
| Total Debt | 52.78M | 82.83M | 76.42M | 97.92M | 113.36M |
| Total Liabilities | 154.60M | 195.30M | 203.49M | 234.89M | 242.20M |
| Stockholders Equity | 137.03M | 160.45M | 203.97M | 236.42M | 104.06M |
Cash Flow | |||||
| Free Cash Flow | -9.74M | -28.77M | -46.11M | -57.95M | -42.27M |
| Operating Cash Flow | 7.18M | -13.19M | -31.58M | -43.79M | -35.15M |
| Investing Cash Flow | 4.47M | -15.41M | 17.65M | 2.29M | 13.84M |
| Financing Cash Flow | -25.21M | -2.22M | -22.46M | 104.73M | 39.69M |
Westport Fuel Systems Technical Analysis
Positive
4.46
Price Trends
4.02
Positive
4.64
Negative
5.28
Negative
Market Momentum
0.08
Negative
69.18
Neutral
68.74
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:WPRT, the sentiment is Positive. The current price of 4.46 is above the 20-day moving average (MA) of 4.08, above the 50-day MA of 4.02, and below the 200-day MA of 5.28, indicating a neutral trend. The MACD of 0.08 indicates Negative momentum. The RSI at 69.18 is Neutral, neither overbought nor oversold. The STOCH value of 68.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:WPRT.
Westport Fuel Systems Peers Comparison
Overall Rating
UnderperformOutperform
Sector (56)
Financial Indicators
Performance Comparison
TSE:WPRT
Westport Fuel Systems
4.46
-3.45
-43.62%
TSE:ATHR
Aether Catalyst Solutions
0.08
0.00
0.00%
FHYDF
First Hydrogen
0.51
0.07
15.91%
Westport Fuel Systems Corporate Events
Executive/Board ChangesM&A TransactionsShareholder MeetingsBusiness Operations and Strategy
Westport Fuel Systems Approves Key Resolutions at Annual Meeting
Neutral
May 15, 2025
Westport Fuel Systems held its Annual General and Special Meeting of Shareholders virtually, where all proposed resolutions were approved. Key decisions included the election of directors, appointment of KPMG LLP as auditors, an advisory vote on executive compensation, and the sale of Westport Fuel Systems Italia S.r.l. These approvals signify a strategic shift and operational realignment for Westport, potentially impacting its market positioning and stakeholder interests.
The most recent analyst rating on (TSE:WPRT) stock is a Buy with a C$22.00 price target. To see the full list of analyst forecasts on Westport Fuel Systems stock, see the TSE:WPRT Stock Forecast page.
M&A TransactionsBusiness Operations and Strategy
Westport Fuel Systems Announces Strategic Divestment of Light-Duty Segment
Positive
Apr 30, 2025
Westport Fuel Systems has entered into lock-up agreements with shareholders, executives, and board members to support the sale of its Light-Duty segment to Heliaca Investments. This transaction, valued at $73.1 million with potential earnouts, aims to improve Westport’s financial stability and focus on growth initiatives in hard-to-decarbonize mobility and industrial applications. The sale is expected to close in late Q2 2025, subject to shareholder approval and customary conditions, allowing Westport to streamline its operations and enhance efficiency.
Shareholder MeetingsFinancial Disclosures
Westport Fuel Systems Schedules Q1 2025 Financial Results Release and Annual Meeting
Neutral
Apr 17, 2025
Westport Fuel Systems has announced the release of its Q1 2025 financial results on May 13, 2025, followed by a conference call and webcast on May 14, 2025, to discuss the results and other corporate developments. Additionally, the company will hold its 2025 Annual General and Special Meeting virtually on May 15, 2025, encouraging shareholders to vote in advance to streamline the process. These events reflect Westport’s ongoing commitment to transparency and engagement with its stakeholders.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.