Case Analysis: Westport Innovations
Westport Innovations
Things are improving for Westport. Although its revenue has not grown, it has shown great resilience in the face of the headwinds that this turbulent oil price environment has brought with itself. Due to a 50 % decline in oil prices the inclination of fleet owners towards gas engine driven vehicles has also declined. This has caused a drop in sales and hence the drop in revenue. But the company was able to make a comeback this year by containing its costs within levels that allowed the operating margins to rise from -4.40 % in the last Dec quarter to 34.90 % in the most recently reported quarter. The EBITDA for a quarter has also leapfrogged from -$ 23 million to -$ 7.7 million within a time period of 6 months. Quarterly …show more content…
But to the relief of investors, the pace of usage of cash has slowed down. In the last 4 quarters the amount of reduction in cash balance has been sequentially $ 38.6 million, $ 36.2 million, $ 22.7 million and $ 10.7 million. So it’s a good idea to conserve cash when the times are tough and this will go a long way in providing the much needed strength to the company’s balance sheet. Further, the company has identified some non-core assets to be divested soon which will yield a net of $ 50 million after all related expenses and tax. Therefore, Westport Innovations is well on its way to achieve the targets it has set for …show more content…
As a result diesel has got cheaper to a greater extent than natural gas. Due to similar reasons, whenever the petroleum based fuel market will improve the liquid fuels are expected to get expensive at a faster rate than natural gas. And that improvement in fuel prices is just round the corner as the industry as a whole has decided to produce and explore for less and less of petroleum especially crude oil. Hence, we are going to see the gap between the prices of natural gas and diesel increase in the near future. Therefore, the users of medium and heavy duty vehicles especially fleet owners are going to prefer natural gas vehicles more and more for its sheer economy. And based on this we can say that being in the business of natural gas vehicles is going to be more profitable. So the prospects of natural gas vehicle market are
Things are improving for Westport. Although its revenue has not grown, it has shown great resilience in the face of the headwinds that this turbulent oil price environment has brought with itself. Due to a 50 % decline in oil prices the inclination of fleet owners towards gas engine driven vehicles has also declined. This has caused a drop in sales and hence the drop in revenue. But the company was able to make a comeback this year by containing its costs within levels that allowed the operating margins to rise from -4.40 % in the last Dec quarter to 34.90 % in the most recently reported quarter. The EBITDA for a quarter has also leapfrogged from -$ 23 million to -$ 7.7 million within a time period of 6 months. Quarterly …show more content…
But to the relief of investors, the pace of usage of cash has slowed down. In the last 4 quarters the amount of reduction in cash balance has been sequentially $ 38.6 million, $ 36.2 million, $ 22.7 million and $ 10.7 million. So it’s a good idea to conserve cash when the times are tough and this will go a long way in providing the much needed strength to the company’s balance sheet. Further, the company has identified some non-core assets to be divested soon which will yield a net of $ 50 million after all related expenses and tax. Therefore, Westport Innovations is well on its way to achieve the targets it has set for …show more content…
As a result diesel has got cheaper to a greater extent than natural gas. Due to similar reasons, whenever the petroleum based fuel market will improve the liquid fuels are expected to get expensive at a faster rate than natural gas. And that improvement in fuel prices is just round the corner as the industry as a whole has decided to produce and explore for less and less of petroleum especially crude oil. Hence, we are going to see the gap between the prices of natural gas and diesel increase in the near future. Therefore, the users of medium and heavy duty vehicles especially fleet owners are going to prefer natural gas vehicles more and more for its sheer economy. And based on this we can say that being in the business of natural gas vehicles is going to be more profitable. So the prospects of natural gas vehicle market are