Decoding the numbers
Demand in Westport's light-duty business grew, contributing $10.9 million to quarterly revenues. Revenues in its joint-venture business with Cummins
Westport's joint venture with China's largest heavy-duty engine maker, Weichai Power, has also been gaining ground, with 148% higher units being shipped in the first quarter.
What ate into the company's growing top line this quarter was higher operating expenses, which nearly doubled to $25.1 million from last year. Research and product development formed the major chunk of higher costs. The negative operating margin thus widened from a negative 18.2% to 24% year on year. Because of these higher expenses, Westport's net losses widened to $18.1 million from $8.1 million year on year.
Flurry of deals
Westport seems to be on a roll, bagging one deal after another with big companies during the first quarter. It entered into an agreement with equipment maker Caterpillar
Westport also completed the acquisition of Emer S.p.A. of Italy, a CNG-LPG (compressed natural gas-liquified petroleum gas) fuel-system provider. The Canadian company expects this acquisition to contribute around $31 million to $34 million to revenues this calendar year.
Clearly, orders are flowing in for Westport, and the company seems to be using its cash for productive purposes such as acquisitions. The company's cash and equivalents currently stand at $162.4 million, up from $98.3 million in the same quarter last year. Its total debt-to-equity ratio is also low at 14.2%. The company's strong balance sheet suggests that it has further balance-sheet capacity to expand.
Further validating the business' future, natural gas producers plan to make investments that compliment Westport's business. Chesapeake Energy
The Foolish bottom line
If you have an eye for hedge-fund moves, the tidbit for you to watch is billionaire George Soros' increased investment in Westport recently. Does that move suggest passage of the NAT GAS Act? It's hard to say, but even if Westport is yet to see profits in its books, its cutting-edge technology seems reason enough to keep a close watch on the stock, at least in the longer run.
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Fool contributor Neha Chamaria owns no shares of any of the companies mentioned in this article. The Motley Fool owns shares of UPS. Motley Fool newsletter services have recommended buying shares of Westport Innovations, Chesapeake Energy, and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.