WNC Wabash National Corporation

Wabash National Corporation (NYSE:WNC), a diversified industrial manufacturer and North America’s leading producer of semi-trailers and liquid transportation systems, today reported results for the quarter ending June 30, 2017.

Net income for the second quarter of 2017 was $22.9 million, or $0.36 per diluted share, compared to second quarter 2016 net income of $35.5 million, or $0.53 per diluted share.  Second quarter 2017 non-GAAP adjusted earnings decreased $13.4 million over the prior year period to $23.2 million, or $0.37 per diluted share.  Non-GAAP adjusted earnings for the second quarter of 2017 includes charges related to the early extinguishment of debt in connection with the Company’s repurchase of a portion of its outstanding convertible senior notes, one-time executive severance costs and losses on closure of former facilities.  Non-GAAP adjusted earnings for the second quarter of 2016 included a non-recurring charge in connection with the Company’s segment realignment.

Net sales for the second quarter of 2017 was $436 million, a decrease of 8 percent as compared to the second quarter of 2016.  Operating income decreased 34 percent to $38.7 million, due to lower trailer demand, compared to operating income of $58.9 million for the second quarter of 2016.  Operating EBITDA, a non-GAAP measure that excludes the effects of certain recurring and non-recurring items, for the second quarter of 2017 was $49.5 million, a decrease of $23.3 million, or 32 percent, compared to Operating EBITDA for the prior year period.  On a trailing twelve month basis, net sales totaled $1.7 billion, generating Operating EBITDA of $211.8 million, or 12.3 percent of net sales.  The continued solid operating performance is attributable to the strong demand environment and operational improvements within the Commercial Trailer Products segment, as well as the sustained benefits from the Company’s growth and diversification strategies.

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

Three Months Ended
(Dollars in thousands, except pershare amounts)	June 30,				September 30,				December 31,				March 31,				June 30,
		2016				2016				2016				2017				2017
Net Sales	$	471,438			$	464,272			$	462,057			$	362,716			$	435,903
Gross Profit Margin		19.3	%			18.0	%			15.5	%			16.4	%			15.5	%
Income from Operations	$	58,872			$	54,855			$	40,621			$	30,264			$	38,668
Income from Operations Margin		12.5	%			11.8	%			8.8	%			8.3	%			8.9	%
Net Income	$	35,531			$	33,378			$	23,000			$	20,173			$	22,945
Diluted EPS	$	0.53			$	0.51			$	0.36			$	0.32			$	0.36
Non-GAAP Measures(1):
Operating EBITDA	$	72,754			$	66,821			$	53,606			$	41,930			$	49,450
Operating EBITDA Margin		15.4	%			14.4	%			11.6	%			11.6	%			11.3	%
Adjusted Earnings	$	36,610			$	32,901			$	24,213			$	19,517			$	23,189
Adjusted Diluted EPS	$	0.55			$	0.50			$	0.38			$	0.31			$	0.37
Notes:
(1) See “Non-GAAP Measures” below for explanation of the non-GAAP results included above.

Dick Giromini, chief executive officer, stated, “While pleased to have delivered another solid quarter overall from a historical perspective, we recognize that we can do even better.  With gross profit margins and operating margins of 15.5 percent and 8.9 percent, respectively, the second quarter represented the second strongest second quarter in our Company’s history, only surpassed by the second quarter of last year.  The Commercial Trailer Products team successfully achieved targets in cost management and execution, which is reflected in the segment’s continued delivery of strong margins and operating performance.  We continue efforts to drive ongoing productivity improvements throughout the enterprise, accelerating actions to optimize the cost structure and performance of the Diversified Products segment while developing new opportunities to grow our top line and margins.” 

“Backlog totaling $762 million as of June 30, 2017 remains seasonally and historically strong, supporting our long-standing belief that trailer fleet age, regulatory compliance requirements, and customer profitability support a continued favorable demand environment.  Based on all these factors, we are updating our full-year guidance for trailer shipments to 53,000 to 56,000 new trailers, and adjusting our earnings guidance range to $1.44 to $1.50 per diluted share.”

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 second quarter of 2017 and 2016.  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
				2017				2016					2017				2016
New trailers shipped				13,600				15,350					550				550
Net sales			$	348,140			$	382,212				$	90,827			$	92,870
Gross profit			$	50,882			$	69,027				$	17,149			$	22,938
Gross profit margin				14.6	%			18.1	%				18.9	%			24.7	%
Income from operations			$	42,155			$	57,135				$	5,061			$	10,258
Income from operations margin				12.1	%			14.9	%				5.6	%			11.0	%

Commercial Trailer Products’ net sales for the second quarter were $348 million, a decrease of $34 million, or 9 percent, as compared to the prior year.  Gross profit margin for the second quarter decreased 340 basis points as compared to the prior year period but generally in line with expectations.  The year-over-year declines in net sales and gross profit margin were primarily due to lower new trailer shipments and increases in commodity costs.  Operating income decreased $15.0 million, or 26 percent, from the second quarter of last year to $42.2 million, or 12.1 percent of net sales.

Diversified Products’ net sales for the second quarter decreased $2 million, or 2 percent, as compared to the prior year period primarily due to reduced pricing within our liquid tank trailer business.  Gross profit and gross profit margin as compared to the prior year period decreased $5.7 million and 580 basis points, respectively, as continued softness within the chemical and energy end markets for tank trailers and increases in commodity costs negatively impacted this segment.  Operating income for the second quarter of 2017 was $5.1 million, or 5.6 percent of net sales, a decrease of $5.2 million compared to the same period last year.

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, impairment of goodwill and other intangible assets, 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 and six month periods ending June 30, 2017 and 2016 reflect adjustments for charges incurred in connection with the losses attributable to the Company’s extinguishment of debt, income or losses recognized on the sale and/or closure of former Company locations, one-time executive severance costs and impairment of goodwill charges.  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.

Second quarter 2017 Conference Call

Wabash National will conduct a conference call to review and discuss its second quarter results on July 26, 2017, 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 October 18, 2017.  Meeting access also will be available via conference call at 800-708-4540, participant code 45276585.

About Wabash National Corporation

Headquartered in Lafayette, Indiana, Wabash National Corporation (NYSE:WNC) is a diversified industrial manufacturer and North America’s leading producer of semi-trailers 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, Transcraft®, Walker Engineered Products, and Walker Transport. Visit www.wabashnational.com to learn more.

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 shipments, backlog, expectations regarding demand levels for trailers, 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 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 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 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 June 30,								Six Months Ended June 30,
				2017				2016				2017				2016
Net sales			$	435,903			$	471,438			$	798,619			$	919,114
Cost of sales				368,225				380,374				671,584				748,524
	Gross profit			67,678				91,064				127,035				170,590
General and administrative expenses				19,018				18,495				37,436				37,887
Selling expenses				5,897				7,045				12,070				14,006
Amortization of intangibles				4,095				4,989				8,597				9,978
Impairment of goodwill				-				1,663				-				1,663
	Income from operations			38,668				58,872				68,932				107,056
Other income (expense):
	Interest expense			(2,888	)			(3,937	)			(5,878	)			(8,032	)
	Other, net			325				(207	)			1,657				(604	)
	Income before income taxes			36,105				54,728				64,711				98,420
Income tax expense				13,160				19,197				21,593				35,365
Net income			$	22,945			$	35,531			$	43,118			$	63,055
Dividends declared per share			$	0.06			$	-			$	0.12			$	-
Basic net income per share			$	0.38			$	0.55			$	0.72			$	0.97
Diluted net income per share			$	0.36			$	0.53			$	0.68			$	0.95
Comprehensive income
	Net income		$	22,945			$	35,531			$	43,118			$	63,055
	Foreign currency translation adjustment			294				(559	)			772				(656	)
Net comprehensive income			$	23,239			$	34,972			$	43,890			$	62,399
Basic net income per share:
	Net income applicable to common stockholders		$	22,945			$	35,531			$	43,118			$	63,055
	Weighted average common shares outstanding			59,902				64,834				60,022				64,936
	Basic net income per share		$	0.38			$	0.55			$	0.72			$	0.97
Diluted net income per share:
	Net income applicable to common stockholders		$	22,945			$	35,531			$	43,118			$	63,055
	Weighted average common shares outstanding			59,902				64,834				60,022				64,936
	Dilutive shares from assumed conversion of convertible senior notes			1,831				1,057				1,762				529
	Dilutive stock options and restricted stock			1,474				1,224				1,519				1,205
	Diluted weighted average common shares outstanding			63,207				67,115				63,303				66,670
	Diluted net income per share		$	0.36			$	0.53			$	0.68			$	0.95

 

WABASH NATIONAL CORPORATION
SEGMENTS AND RELATED INFORMATION
(Dollars in thousands)
(Unaudited)
			Commercial			Diversified			Corporate and
Three Months Ended June 30,			Trailer Products			Products			Eliminations				Consolidated
	2017
New trailers shipped				13,600			550			-				14,150
Used trailers shipped				50			50			-				100
New Trailers			$	329,405		$	33,290		$	-			$	362,695
Used Trailers				1,236			637			-				1,873
Components, parts and service				13,102			32,194			(3,064	)			42,232
Equipment and other				4,398			24,705			-				29,103
	Total net external sales		$	348,140		$	90,827		$	(3,064	)		$	435,903
Gross profit			$	50,882		$	17,149		$	(352	)		$	67,678
Income (Loss) from operations			$	42,154		$	5,062		$	(8,548	)		$	38,668
	2016
New trailers shipped				15,350			550			-				15,900
Used trailers shipped				300			50			-				350
New Trailers			$	359,763		$	34,229		$	-			$	393,992
Used Trailers				3,427			1,093			-				4,520
Components, parts and service				14,869			31,958			(3,644	)			43,183
Equipment and other				4,153			25,590			-				29,743
	Total net external sales		$	382,212		$	92,870		$	(3,644	)		$	471,438
Gross profit			$	69,027		$	22,938		$	(901	)		$	91,064
Income (Loss) from operations			$	57,135		$	10,258		$	(8,521	)		$	58,872
Six Months Ended June 30,
	2017
New trailers shipped				24,000			1,050			-				25,050
Used trailers shipped				150			50			-				200
New Trailers			$	586,595		$	63,985		$	-			$	650,580
Used Trailers				2,123			1,856			-				3,979
Components, parts and service				25,845			65,869			(5,047	)			86,667
Equipment and other				8,367			49,026			-				57,393
	Total net external sales		$	622,929		$	180,737		$	(5,047	)		$	798,619
Gross profit			$	93,008		$	34,742		$	(715	)		$	127,035
Income (Loss) from operations			$	75,546		$	9,666		$	(16,280	)		$	68,932
	2016
New trailers shipped				29,350			1,050			-				30,400
Used trailers shipped				550			50			-				600
New Trailers			$	701,796		$	64,005		$	-			$	765,801
Used Trailers				7,279			1,994			-				9,273
Components, parts and service				29,070			59,345			(6,297	)			82,118
Equipment and other				8,107			53,815			-				61,922
	Total net external sales		$	746,252		$	179,159		$	(6,297	)		$	919,114
Gross profit			$	129,423		$	43,148		$	(1,981	)		$	170,590
Income (Loss) from operations			$	107,392		$	17,247		$	(17,583	)		$	107,056

 

WABASH NATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
				June 30,			December 31,
				2017			2016
				(Unaudited)
ASSETS
Current assets
	Cash and cash equivalents			$	178,633		$	163,467
	Accounts receivable				122,978			153,634
	Inventories				199,276			139,953
	Prepaid expenses and other				19,198			24,351
		Total current assets		$	520,085		$	481,405
Property, plant and equipment					136,299			134,138
Deferred income taxes					20,285			20,343
Goodwill					148,268			148,367
Intangible assets					85,909			94,405
Other assets					21,565			20,075
				$	932,411		$	898,733
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
	Current portion of long-term debt			$	45,822		$	2,468
	Current portion of capital lease obligations				427			494
	Accounts payable				109,595			71,338
	Other accrued liabilities				89,355			92,314
		Total current liabilities		$	245,199		$	166,614
Long-term debt					186,098			233,465
Capital lease obligations					1,172			1,409
Deferred income taxes					486			499
Other noncurrent liabilities					26,006			24,355
Stockholders' equity				$	473,450		$	472,391
				$	932,411		$	898,733

 

WABASH NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
									Six Months Ended June 30,
										2017				2016
Cash flows from operating activities
	Net income								$	43,118			$	63,055
	Adjustments to reconcile net income to net cash provided by operating activities
		Depreciation								8,412				8,173
		Amortization of intangibles								8,597				9,978
		Net (gain) loss on the sale of assets								(2,502	)			17
		Deferred income taxes								45				1,770
		Excess tax benefits from stock-based compensation								-				(605	)
		Loss on debt extinguishment								764				487
		Stock-based compensation								5,430				5,702
		Impairment of goodwill								-				1,663
		Non-cash interest expense								1,042				1,830
		Changes in operating assets and liabilities
			Accounts receivable							30,656				20,873
			Inventories							(60,748	)			(46,034	)
			Prepaid expenses and other							3,998				(16,911	)
			Accounts payable and accrued liabilities							35,285				25,154
			Other, net							1,147				1,113
				Net cash provided by operating activities					$	75,244			$	76,265
Cash flows from investing activities
	Capital expenditures									(10,856	)			(8,115	)
	Proceeds from the sale of property, plant, and equipment									3,736				17
	Other, net									1,220				-
				Net cash used in investing activities					$	(5,900	)		$	(8,098	)
Cash flows from financing activities
	Proceeds from exercise of stock options									5,630				1,397
	Excess tax benefits from stock-based compensation									-				605
	Dividends paid									(7,767	)			-
	Borrowings under revolving credit facilities									371				316
	Payments under revolving credit facilities									(371	)			(316	)
	Principal payments under capital lease obligations									(303	)			(443	)
	Proceeds from issuance of term loan credit facility									189,470				-
	Principal payments under term loan credit facility									(190,418	)			(964	)
	Principal payments under industrial revenue bond									(311	)			(256	)
	Debt issuance costs paid									(354	)			-
	Stock repurchase									(42,794	)			(17,698	)
	Convertible senior notes repurchase									(7,331	)			(42,061	)
				Net cash used in financing activities					$	(54,178	)		$	(59,420	)
Net increase in cash and cash equivalents									$	15,166			$	8,747
Cash and cash equivalents at beginning of period										163,467				178,853
Cash and cash equivalents at end of period									$	178,633			$	187,600

 

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 June 30,								Six Months Ended June 30,
		2017				2016				2017				2016
Net income	$	22,945			$	35,531			$	43,118			$	63,055
Income tax expense		13,160				19,197				21,593				35,365
Interest expense		2,888				3,937				5,878				8,032
Depreciation and amortization		8,315				8,987				17,009				18,151
Stock-based compensation		2,467				3,232				5,430				5,702
Impairment of intangibles		-				1,663				-				1,663
Other non-operating (income) expense		(325	)			207				(1,657	)			604
Operating EBITDA	$	49,450			$	72,754			$	91,371			$	132,572
	Three Months Ended																TrailingTwelveMonths
	September 30, 2016				December 31, 2016				March 31, 2017				June 30, 2017				June 30, 2017
Net income	$	33,378			$	23,000			$	20,173			$	22,945			$	99,496
Income tax expense		18,401				12,217				8,434				13,160				52,212
Interest expense		3,906				3,725				2,990				2,888				13,509
Depreciation and amortization		9,052				9,565				8,704				8,315				35,636
Stock-based compensation		2,915				3,420				2,963				2,467				11,765
Other non-operating (income) expense		(831	)			1,679				(1,333	)			(325	)			(810	)
Operating EBITDA	$	66,821			$	53,606			$	41,930			$	49,450			$	211,807
Adjusted Earnings2:
	Three Months Ended June 30,																Six Months Ended June 30,
		2017								2016								2017								2016
	$				Per Share				$				Per Share				$				Per Share				$				Per Share
Net Income	$	22,945			$	0.36			$	35,531			$	0.53			$	43,118			$	0.68			$	63,055			$	0.95
Adjustments:
Facility transactions3		18				-				-				-				(1,655	)			(0.03	)			-				-
Impairment of goodwill and other intangibles		-				-				1,663				0.02				-				-				1,663				0.02
Loss on debt extinguishment		125				-				-				-				765				0.01				487				0.01
Executive severance expense		238				-				-				-				238				-				-				-
Tax effect of aforementioned items		(137	)			-				(584	)			(0.01	)			235				-				(764	)			(0.01	)
Adjusted earnings	$	23,189			$	0.37			$	36,610			$	0.55			$	42,701			$	0.67			$	64,441			$	0.97
Weighted Average # of Diluted Shares O/S		63,207								67,115								63,303						66,670
	Three Months Ended
	September 30, 2016								December 31, 2016								March 31, 2017
	$				Per Share				$				Per Share				$				Per Share
Net Income	$	33,378			$	0.51			$	23,000			$	0.36			$	20,173			$	0.32
Adjustments:
Facility transactions3		(740	)			(0.01	)			450				0.01				(1,665	)			(0.03	)
Loss on debt extinguishment		-				-				1,408				0.02				640				0.01
Tax effect of aforementioned items		263				-				(645	)			(0.01	)			369				0.01
Adjusted earnings	$	32,901			$	0.50			$	24,213			$	0.38			$	19,517			$	0.31
Weighted Average # of Diluted Shares O/S		66,032								63,701								63,390
1Operating EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, impairment of intangibles, and other non-operating income and expense.
2Adjusted earnings and adjusted earnings per diluted share reflect adjustments for income (loss) recognized on the sale of the Company's former facilities, charges related to losses incurred in connection with the Company’s extinguishment of debt and impairment of goodwill or other intangible assets, and executive severance expenses.
3Facility transactions in 2016 and 2017 relate to gains and/or losses incurred for the sale or closure of our locations in Phoenix, Denver, Miami, and Findlay.

 

 

 

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

Investor Relations:
Mike Pettit
Vice President, Finance & Investor Relations
(765) 771-5581
michael.pettit@wabashnational.com