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Earnings Soon/Westport Fuel Systems Receives Egyptian Order

Jul. 12, 2020 12:48 PM ETCLNE, WPRT7 Comments
Mark Krieger profile picture
Mark Krieger's Blog
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  • second Q results are due in 30 days.
  • estimates are in the cellar.
  • all eyes are on Weichai HPDI 2.0 launch.
  • GASTEC award for 6300 units is promising.
  • CLNE and WPRT should and could merge.

(WPRT) is set to release its second quarter  results next month. Sales expectations of $32 million, coupled  with a 7 cent bottom line loss, can be blamed on the shutdown of Italian manufacturing operations, due to covid 19. In addition, things are not anticipated to improve much,for  the balance of the year. Sales are foretasted to fall to the $211 million vicinity, culminating with a 22 cent loss.

Fortunately 2021 estimates are much brighter, as the company is expected to generate a 62% sales improvement to $341 million, resulting in earnings of 9 cents per share.logo

The Weichai launch: all the testing has been completed, the last step is the final certification from the Chinese government. During last month's conference call, WPRT officials indicated that this certification could come any day now. If and when it comes, you could see an immediate doubling in the share price, as this contract, is definitely a game changer.  The contract calls out a minimum of 18,000 systems to be delivered in a five year period. WPRT will receive royalty income on each unit sold. The great news?  Mr. Market is so skeptical, that he  has priced the stock, as if the deal will never materialize. That presents real opportunity. In addition, the company was fortunate enough to receive a 6300 unit order from Eygpt's International Gas Tech Company (GASTEC) to produce sequential injection fuel systems. 

One last thought> Shouldn't WPRT and (CLNE) merge? of course they should. this would enable duplicate/redundant departments to close, while obtaining strong synergies. Costs would plummet. This combination make all the sense in the world. Let's do it, and let's do it fast. About seven years ago, I made the same prediction about Westport Innovations and Fuel Systems Solutions,a nd  that came true. Will I be right again?

Analyst's Disclosure: I am/we are long wprt.

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