Wabash National Corporation Announces First Quarter 2018 Results; Increases Full-Year 2018 Guidance on Continued Strong Demand

  • First quarter GAAP and non-GAAP earnings of $0.35 and $0.28 per diluted share, respectively
  • Achieved best-ever first quarter net sales of $491 million, an increase from prior year of 36 percent
  • Strong quote and order activity increases backlog to record level of $1.3 billion
  • Company increases full-year 2018 guidance for new trailer shipments to 58,000 to 62,000 trailers and GAAP and non-GAAP earnings to $2.01 to $2.13 per diluted share and $1.94 to $2.06 per diluted share, respectively

LAFAYETTE, Ind., May 01, 2018 (GLOBE NEWSWIRE) -- Wabash National Corporation (NYSE:WNC), a diversified industrial manufacturer and a leading producer of semi-trailers, truck bodies and liquid transportation systems, today reported results for the quarter ending March 31, 2018.

Net sales for the first quarter 2018 increased 36 percent to $491 million from $363 million in the prior year quarter.  This increase reflects growth in each of the Company’s three operating segments due to strong demand and the favorable impact of the acquisition of Supreme Industries, Inc. (“Supreme”) in September 2017.  Operating income decreased 15 percent to $25.7 million compared to operating income of $30.3 million for the first quarter 2017 due primarily to increased material costs, new product development initiatives and labor costs attributable to increased production to meet current demand.

“We are pleased to report record first quarter top-line results, driven by a strong overall demand environment, greater than anticipated new trailer shipments of 13,200, and further supported by the revenue delivered from our expanded Final Mile business,” stated Dick Giromini, chief executive officer.  “Backlog grew once again, reaching record levels of $1.3 billion, with significant sequential backlog increases of 40% and 50% within the Diversified Products and Final Mile segments, respectively.  Additionally, trailer orders received during the quarter within our Commercial Trailer segment remained strong, leading to its third highest first quarter backlog on record.  As expected and previously discussed, raw material inflation, along with normal seasonally higher operating costs, further impacted margins throughout the quarter.  However, expectations are that this past quarter will represent the low-water mark of operating performance for the year as a combination of higher shipments, lower operating costs, and repricing actions already taken to offset the impact of material cost increases, will all help to contribute strong results throughout the balance of the year.  As such, we are increasing our previous full-year guidance for 2018 new trailer shipment to 58,000 to 62,000 units and GAAP and non-GAAP earnings to $2.01 to $2.13 per diluted share and $1.94 to $2.06 per diluted share, respectively.”

Net income for the first quarter 2018 was $21.3 million, or $0.35 per diluted share, compared to the first quarter 2017 net income of $20.2 million, or $0.32 per diluted share.  First quarter 2018 non-GAAP adjusted earnings were $16.8 million, or $0.28 per diluted share, a $2.7 million decrease as compared to the prior year period.  Non-GAAP adjusted earnings for the first quarter 2018 excludes net gains on sale of former facilities offset by expenses related to acquisition and integration costs associated with the Company’s acquisition of Supreme and the early extinguishment of debt in connection with the Company’s repurchase of a portion of its outstanding convertible senior notes.  Non-GAAP adjusted earnings for the first quarter 2017 excluded net gains on sale of former facilities offset by charges related to the early extinguishment of debt in connection with the Company’s amendment to its term loan credit facility.

Operating EBITDA, a non-GAAP measure that excludes the effects of certain items, for the first quarter 2018 was $39.0 million, a decrease of $2.9 million compared to operating EBITDA for the prior year period.  On a trailing twelve month basis, net sales totaled $1.9 billion, generating operating EBITDA of $186.1 million, or 9.8 percent of net sales.

The following is a summary of select operating and financial results for the past five quarters:

  
Three Months Ended 
(Dollars in thousands, except per
share amounts)
March 31, June 30, September 30, December 31, March 31,  
2017 2017 2017 2017 2018 
           
Net Sales$  362,716  $  435,903  $  425,098  $  543,444  $   491,319   
           
Gross Profit Margin 16.4%  15.5%  14.3%  13.4%  13.1% 
           
Income from Operations$  30,264  $  38,668  $  26,591  $  35,293  $   25,656   
           
Income from Operations Margin 8.3%  8.9%  6.3%  6.5%  5.2% 
           
Net Income$  20,173  $  22,945  $  18,947  $  49,356  $   21,272   
           
Diluted EPS$  0.32  $  0.36  $  0.30  $  0.80  $   0.35   
           
Non-GAAP Measures(1):          
                     
Operating EBITDA$  41,930  $  49,450  $  46,561  $  51,062  $   38,984   
           
Operating EBITDA Margin 11.6%  11.3%  11.0%  9.4%  7.9% 
           
Adjusted Earnings$  19,517  $  23,189  $  21,214  $  22,250  $   16,857   
           
Adjusted Diluted EPS$  0.31  $  0.37  $  0.34  $  0.36  $   0.28   
    

Notes:

 

  (1)  See “Non-GAAP Measures” below for explanation of the non-GAAP results included above.

Business Segment Highlights
The table below is a summary of select segment operating and financial results prior to the elimination of intersegment sales for the first quarter of 2018 and 2017.  Final Mile Products segment did not exist as a separate segment in the first quarter of 2017; therefore, only 2018 highlights are shown.  A complete disclosure of the results by individual segment is included in the tables following this release.

             
(dollars in thousands) Commercial Trailer Products Diversified Products Final Mile
Products
 
             
Three months ended March 31          
    2018   2017   2018   2017   2018  
New trailers shipped    12,650      10,400     550      500     -   
Net sales $   327,422   $  274,789  $   95,203   $  89,910  $   75,459   
Gross profit $   36,522   $  42,127  $   17,298   $  17,593  $   11,532   
Gross profit margin  11.2%  15.3%  18.2%  19.6%  15.3% 
Income from operations $   29,481   $  33,392  $   5,028   $  4,604  $   609   
Income from operations margin 9.0%  12.2%  5.3%  5.1%  0.8% 
             

Commercial Trailer Products’ net sales for the first quarter were $327 million, an increase of $53 million, or 19 percent, as compared to the prior year.  Gross profit margin for the first quarter decreased 410 basis points as compared to the prior year period primarily due to increases in material costs, start-up expenses associated with the ramp-up of new product initiatives, as well as increased labor costs resulting from higher wage rates and increased overtime requirements to meet current demand.  Operating income decreased $3.9 million, or 12 percent, from the first quarter last year to $29.5 million, or 9.0 percent of net sales.

Diversified Products’ net sales for the first quarter were $95 million, an increase of $5 million, or 6 percent, as compared to the prior year, due primarily to the increased demand for liquid tank trailers as compared to the previous year period.  Gross profit and profit margins as compared to the prior year period decreased $0.3 million and 140 basis points, respectively, primarily due to increased material and labor costs related to the ramp-up of production in order to meet higher demand requirements.  Operating income for the first quarter 2018 was $5.0 million, or 5.3 percent of net sales, an increase of $0.4 million compared to the prior year. 

Final Mile Products’ net sales for the first quarter totaled $75 million.  Gross profit and gross profit margin for the first quarter were $11.5 million and 15.3 percent, respectively.  Excluding non-recurring acquisition and integration related costs, gross profit and operating margins for the first quarter were 16.1 percent and 2.0 percent, respectively.  Truck body demand continues to be strong as backlog increased 50 percent compared to the prior quarter.

Non-GAAP Measures

In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), the financial information included in this release contains non-GAAP financial measures, including operating EBITDA, operating EBITDA margin, adjusted earnings and adjusted earnings per diluted share.

These non-GAAP measures should not be considered a substitute for, or superior to, financial measures and results calculated in accordance with GAAP, including net income, and reconciliations to GAAP financial statements should be carefully evaluated.

Operating EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, charges incurred in connection with the acquisition and integration of Supreme, and other non-operating income and expense.  Management believes providing operating EBITDA is useful for investors to understand the Company’s performance and results of operations period to period with the exclusion of the items identified above.  Management believes the presentation of operating EBITDA, when combined with the GAAP presentations of operating income and net income, is beneficial to an investor’s understanding of the Company’s operating performance.  A reconciliation of operating EBITDA to net income is included in the tables following this release.

Adjusted earnings and adjusted earnings per diluted share for the three-month period ending March 31, 2018 and 2017 reflect adjustments for charges incurred in connection with acquisition and integration of Supreme, the losses attributable to the Company’s extinguishment of debt, executive severance costs, income or losses recognized on sale of former branch locations as well as tax benefits associated with the adjustment of the Company’s net deferred income tax liability as a result of the Tax Cuts and Jobs Act of 2017 and reversal of reserves for uncertain tax positions.  Management believes providing adjusted measures and excluding certain items facilitates comparisons to the Company’s prior year periods and, when combined with the GAAP presentation of net income and diluted net income per share, is beneficial to an investor’s understanding of the Company’s performance.  A reconciliation of adjusted earnings and adjusted earnings per diluted share to net income and net income per diluted share is included in the tables following this release.

First Quarter and Full-Year 2018 Conference Call
Wabash National will conduct a conference call to review and discuss its first quarter results on May 2, 2018 at 10:00 a.m. EDT.  Access to the live webcast will be available on the Company’s website at www.wabashnational.com.  For those unable to participate in the live webcast, the call will be archived at www.wabashnational.com within three hours of the conclusion of the live call and will remain available through July 25, 2018.  Meeting access also will be available via conference call at 800-708-4539, participant code 46816128.

About Wabash National Corporation

Headquartered in Lafayette, Indiana, Wabash National Corporation (NYSE:WNC) is a diversified industrial manufacturer and a leading producer of semi-trailers, truck bodies and liquid transportation systems. Established in 1985, the Company manufactures a diverse range of products including: dry freight and refrigerated trailers, platform trailers, bulk tank trailers, dry and refrigerated truck bodies, truck-mounted tanks, intermodal equipment, aircraft refueling equipment, structural composite panels and products, trailer aerodynamic solutions, and specialty food grade and pharmaceutical equipment. Its innovative products are sold under the following brand names: Wabash National®, Beall®, Benson®, Brenner® Tank, Bulk Tank International, DuraPlate®, Extract Technology®, Garsite, Progress Tank, Supreme®, Transcraft®, Walker Engineered Products, and Walker Transport. Learn more at www.wabashnational.com.

Safe Harbor Statement

This press release contains certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.  Forward-looking statements convey the Company’s current expectations or forecasts of future events.  All statements contained in this press release other than statements of historical fact are forward-looking statements.  These forward-looking statements include, among other things, all statements regarding the Company’s outlook for trailer and truck body shipments, backlog, expectations regarding demand levels for trailers, truck bodies, non-trailer equipment and our other diversified product offerings, pricing, profitability and earnings, cash flow and liquidity, opportunity to capture higher margin sales, new product innovations, our growth and diversification strategies, our expectations for improved financial performance during the course of the year and our expectations with regards to capital allocation.  These and the Company’s other forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements.  Without limitation, these risks and uncertainties include the continued integration of Supreme into the Company’s business, adverse reactions to the transaction by customers, suppliers or strategic partners, uncertain economic conditions including the possibility that customer demand may not meet our expectations, increased competition, reliance on certain customers and corporate partnerships, risks of customer pick-up delays, shortages and costs of raw materials, risks in implementing and sustaining improvements in the Company’s manufacturing operations and cost containment, dependence on industry trends and timing, customer acceptance of and reactions to pricing changes and costs of indebtedness.  Readers should review and consider the various disclosures made by the Company in this press release and in the Company’s reports to its stockholders and periodic reports on Forms 10-K and 10-Q.

 
WABASH NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
       
   Three Months Ended
March 31,
 
   2018 2017 
       
Net sales $  491,319  $  362,716  
Cost of sales    427,200     303,360  
   Gross profit    64,119     59,356  
       
General and administrative expenses    25,109     18,418  
Selling expenses    8,345     6,173  
Amortization of intangibles    4,941     4,501  
Acquisition expenses    68     -   
 Income from operations    25,656     30,264  
       
Other income (expense):     
 Interest expense    (7,454)    (2,990) 
 Other, net    7,916     1,333  
 Income before income taxes    26,118     28,607  
Income tax expense    4,846     8,434  
Net income  $  21,272  $  20,173  
Dividends declared per share $  0.075  $  0.06  
Basic net income per share $  0.37  $  0.34  
Diluted net income per share $  0.35  $  0.32  
           
Comprehensive income     
 Net income $  21,272  $  20,173  
 Foreign currency translation adjustment    474     478  
 Unrealized holding loss on investments    (65)    -   
Net comprehensive income $  21,681  $  20,651  
           
       
Basic net income per share:     
 Net income applicable to common stockholders $  21,272  $  20,173  
 Weighted average common shares outstanding    57,793     65,037  
 Basic net income per share $  0.37  $  0.31  
           
Diluted net income per share:     
 Net income applicable to common stockholders $  21,272  $  20,173  
       
 Weighted average common shares outstanding    57,793     60,143  
 Dilutive shares from assumed conversion of convertible senior notes    1,789     1,683  
 Dilutive stock options and restricted stock    1,268     1,564  
 Diluted weighted average common shares outstanding    60,850     63,390  
 Diluted net income per share $  0.35  $  0.32  
           

 

  
WABASH NATIONAL CORPORATION 
SEGMENTS AND RELATED INFORMATION 
(Dollars in thousands) 
(Unaudited) 
             
   Commercial  Diversified Final Mile Corporate and   
Three Months Ended March 31, Trailer Products Products Products Eliminations Consolidated 
 2018           
New trailers shipped    12,650    550    -     -      13,200 
Used trailers shipped    500    50    -     -      550 
             
New Trailers $  310,318 $  33,839 $  -  $  -   $  344,157 
Used Trailers $  4,407 $  1,086 $  -  $  -      5,493 
Components, parts and service $  8,648 $  33,968 $  2,413 $  (6,762)    38,267 
Equipment and other $  4,049 $  26,310 $  73,046 $  (3)    103,402 
   Total net external sales $  327,422 $  95,203 $  75,459 $  (6,765) $  491,319 
             
Gross profit $  36,522 $  17,298 $  11,532 $  (1,233) $  64,119 
Income (Loss) from operations $  29,481 $  5,028 $  609 $  (9,462) $  25,656 
             
 2017           
New trailers shipped    10,400    500    -     -      10,900 
Used trailers shipped    50    50    -     -      100 
             
New Trailers $  257,190 $  30,695 $  -  $  -   $  287,885 
Used Trailers $  887 $  1,219 $  -  $  -      2,106 
Components, parts and service $  12,743 $  33,675 $  -  $  (1,983)    44,435 
Equipment and other $  3,969 $  24,321 $  -  $  -      28,290 
 Total net external sales $  274,789 $  89,910 $  -  $  (1,983) $  362,716 
             
Gross profit $  42,127 $  17,593 $  -  $  (364) $  59,356 
Income (Loss) from operations $  33,392 $  4,604 $  -  $  (7,732) $  30,264 
             

 

 
WABASH NATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
       
    March 31, December 31,
    2018 2017
    (Unaudited)  
ASSETS
Current assets    
 Cash and cash equivalents $  152,529 $  191,521
 Accounts receivable    192,796    146,836
 Inventories    236,715    180,735
 Prepaid expenses and other    55,167    57,299
  Total current assets $  637,207 $  576,391
       
Property, plant and equipment    196,298    195,363
       
Goodwill     317,778    317,464
       
Intangible assets    231,658    237,030
       
Other assets    26,607    25,265
    $  1,409,548 $  1,351,513
       
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities    
 Current portion of long-term debt $  37,106 $  46,020
 Current portion of capital lease obligations    285    290
 Accounts payable    168,532    108,448
 Other accrued liabilities    128,461    128,910
  Total current liabilities $  334,384 $  283,668
       
Long-term debt    503,825    504,091
       
Capital lease obligations    946    1,012
       
Deferred income taxes    36,932    36,955
       
Other noncurrent liabilities    20,190    19,724
       
Stockholders' equity    513,271    506,063
    $  1,409,548 $  1,351,513
         

 

  
WABASH NATIONAL CORPORATION 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Dollars in thousands) 
(Unaudited) 
  
 Three Months Ended March 31, 
 2018 2017 
     
Cash flows from operating activities      
 Net income$  21,272  $  20,173  
 Adjustments to reconcile net income to net cash provided by operating activities    
 Depreciation   5,163     4,202  
  Amortization of intangibles   4,941     4,501  
  Net gain on the sale of assets     (6,013)    (2,456) 
  Loss on debt extinguishment   174     640  
  Deferred income taxes   (23)    (13) 
 Stock-based compensation   2,657     2,963  
  Non-cash interest expense   675     520  
 Changes in operating assets and liabilities    
 Accounts receivable   (45,910)    36,353  
 Inventories   (58,393)    (51,692) 
 Prepaid expenses and other   591     8,286  
 Accounts payable and accrued liabilities   63,943     41,395  
 Other, net   (1,120)    428  
 Net cash (used in) provided by operating activities$  (12,043) $  65,300  
             
Cash flows from investing activities      
 Capital expenditures   (6,060)    (3,173) 
 Proceeds from the sale of property, plant, and equipment    9,523     3,761  
 Other, net       3,060     1,218  
 Net cash provided by investing activities$  6,523  $  1,806  
             
Cash flows from financing activities      
   Proceeds from exercise of stock options     861     5,408  
 Dividends paid       (4,692)    (3,893) 
 Borrowings under revolving credit facilities    254     152  
 Payments under revolving credit facilities     (254)    (152) 
 Principal payments under capital lease obligations    (71)    (171) 
 Proceeds from issuance of term loan credit facility    -      189,470  
 Principal payments under term loan credit facility    (471)    (189,944) 
 Principal payments under industrial revenue bond    (92)    (177) 
 Debt issuance costs paid      -      (354) 
 Convertible senior notes repurchase     (17,183)    -   
 Stock repurchase       (5,412)    (16,625) 
 Net cash used in financing activities$  (27,060) $  (16,286) 
             
Net (decrease) increase in cash, cash equivalents, and restricted cash$  (32,580) $  50,820  
Cash, cash equivalents, and restricted cash at beginning of period   191,521     163,467  
Cash, cash equivalents, and restricted cash at end of period$  158,941  $  214,287  
         

 

  
WABASH NATIONAL CORPORATION 
RECONCILIATION OF GAAP FINANCIAL MEASURES TO 
NON-GAAP FINANCIAL MEASURES 
(Dollars in thousands, except per share amounts) 
(Unaudited) 
              
Operating EBITDA1:             
 Three Months Ended
March 31,
          
 2018 2017          
Net income$  21,272  $  20,173           
Income tax expense   4,846     8,434           
Interest expense   7,454     2,990           
Depreciation and amortization   10,104     8,704           
Stock-based compensation   2,657     2,963           
Acquisition expenses   567     -            
Other non-operating (income) expense   (7,916)    (1,333)          
Operating EBITDA$  38,984  $  41,930           
              
              
 Three Months Ended Trailing Twelve Months    
 June 30,
2017
 September 30,
2017
 December 31,
2017
 March 31,
2018
 March 31,
2018
    
Net income $  22,945  $  18,947  $  49,356  $  21,272  $  112,520     
Income tax expense   13,160     10,728     (21,204)    4,846     7,530     
Interest expense   2,888     3,187     7,335     7,454     20,864     
Depreciation and amortization   8,315     8,386     9,651     10,104     36,456     
Stock-based compensation   2,467     2,881     2,117     2,657     10,122     
Acquisition expenses   -      8,704     4,002     567     13,273     
Other non-operating (income) expense   (325)    (6,271)    (194)    (7,916)    (14,706)    
Operating EBITDA$  49,450  $  46,561  $  51,062  $  38,984  $  186,057     
              
              
Adjusted Earnings2:             
 Three Months Ended March 31,      
 2018 2017      
 $ Per Share $ Per Share      
              
Net Income$  21,272  $  0.35  $  20,173  $  0.32       
              
Adjustments:             
Facility transactions3   (7,123)    (0.12)    (1,665)    (0.03)      
Loss on debt extinguishment   174     -      640     0.01       
  Acquisition expenses and related charges   983     0.02     -      -        
Tax effect of aforementioned items   1,551     0.03     369     0.01       
              
Adjusted earnings$  16,857  $  0.28  $  19,517  $  0.31       
              
Weighted Average # of Diluted Shares O/S   60,850       63,390         
              
              
 Three Months Ended  
 June 30, 2017 September 30, 2017 December 31, 2017  
 $ Per Share $ Per Share $ Per Share  
              
Net Income$  22,945  $  0.36  $  18,947  $  0.30  $  49,356  $  0.80   
              
Adjustments:             
Facility transactions3   18     -      (5,165)    (0.08)    274     -    
Loss on debt extinguishment   125     -      3     -      32     -    
Executive severance expense   238     -      -      -      -      -    
  Acquisition expenses and related charges   -      -      8,704     0.14     6,308     0.10   
Tax effect of aforementioned items   (137)    -      (1,275)    (0.02)    (2,381)    (0.04)  
Tax reform and other discrete tax adjustments   -      -      -      -      (31,339)    (0.51)  
              
Adjusted earnings$  23,189  $  0.37  $  21,214  $  0.34  $  22,250  $  0.36   
              
Weighted Average # of Diluted Shares O/S   63,207       62,236       61,567     
              
1Operating EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, acquisition expenses and related charges, and other non-operating income and expense.  
              
2Adjusted earnings and adjusted earnings per diluted share reflect adjustments for charges incurred in connection with acquisition expense and related costs, the losses attributable to the Company's extinguishment of debt, income or losses recognized on the sale and/or closure of former Company locations, and one-time executive severance costs. 
              
3Facility transactions in 2017 and 2018 relate to gains and/or losses incurred for the sale or closure of former Company locations. 
              

Media Contact:
Dana Stelsel
Corporate Communications Manager
(765) 771-5766
dana.stelsel@wabashnational.com

Investor Relations:
Jeff Taylor
Senior Vice President, Chief Financial Officer
(765) 771-5310
jeff.taylor@wabashnational.com

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