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Wabash National Corporation Announces Second Quarter 2017 Results
  • GAAP and non-GAAP earnings of $0.36 per diluted share and $0.37 per diluted share, respectively
  • Net sales of $436 million
  • Operating income of $38.7 million and 8.9 percent of net sales, up $8.4 million and 60 basis points, respectively, as compared to first quarter 2017  
  • 2017 full-year shipment guidance updated to 53,000 to 56,000 trailers; full-year earnings per diluted share guidance adjusted to $1.44 to $1.50 per diluted share

LAFAYETTE, Ind., July 25, 2017 (GLOBE NEWSWIRE) -- 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 per
share 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   Trailing
Twelve
Months
           
  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.      
                               

 

 

 

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(765) 771-5766
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(765) 771-5581
michael.pettit@wabashnational.com

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