Wabash National Corporation Announces First Quarter 2020 Results

May 14, 2020 at 6:58 AM EDT
  • First Quarter GAAP Earnings Per Share of $(2.01) or non-GAAP Adjusted Earnings Per Share of $(0.04)
  • First Quarter Backlog of $1.0 billion shows relative stability
  • Strong liquidity position, patient debt structure with no financial covenants at present borrowing levels
  • Capital allocation focused on liquidity, maintaining dividend and debt reduction
  • Strategy deployment being accelerated during pandemic, new organizational structure takes shape

LAFAYETTE, Ind., May 14, 2020 (GLOBE NEWSWIRE) -- Wabash National Corporation (NYSE: WNC), the innovation leader of engineered solutions for the transportation, logistics and distribution industries, today reported results for the quarter ended March 31, 2020.

Net sales for the first quarter 2020 were $387 million as customer pickups of equipment trailed expectations. Operating loss was $110 million principally driven by goodwill impairment of $107 million during the quarter, while non-GAAP adjusted operating loss was $2.9 million resulting from lower revenue and previously anticipated manufacturing inefficiencies in the company's Final Mile segment compounded by the initial impact of COVID-19. GAAP earnings per share was $(2.01) while non-GAAP earnings per share was $(0.04) for the quarter.

Total Company backlog ending March 2020 was approximately $1.0 billion compared to backlog of $1.1 billion ending December 2019.

“While the environment we encountered during the first quarter began as expected, the end of the quarter did not align to anyone's plans. Our primary objective has been the safety and well-being of our employees. Thanks to their dedication and rapid adaptation to working under social distancing protocols, we have continued to support our customers' equipment needs as they facilitate the movement of essential goods throughout our nation's economy. The COVID-19 pandemic is sure to have a significant impact on the economy in 2020, though we have been encouraged by the relative stability of our backlog through this time,” explained Brent Yeagy, president and chief executive officer.

Liquidity as of the end of the first quarter was $277 million with cash of $155 million and available borrowings of $122 million. The company's nearest debt maturity, amounting to $135 million, is in March of 2022. Additionally, the Company's debt carries no financial covenants at present borrowing levels. 

"Over the last several years we have been preparing the company for an eventual downturn in our end markets and have taken steps to fortify our balance sheet by building cash, repaying debt and ensuring credit availability. These steps have positioned us well to successfully navigate this extraordinary time, while the continued execution of our strategic plan during this period will allow us to emerge stronger," continued Yeagy. "While we are diligently managing our cash position, the resilience we are seeing in our business allows us to maintain our dividend and evaluate opportunities for further debt reduction."

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 2020 and 2019. A complete disclosure of the results by individual segment is included in the tables following this release.

    Commercial Trailer Products   Diversified Products   Final Mile Products
Three Months Ended March 31,   2020   2019   2020   2019   2020   2019
    (dollars in thousands)
New trailers shipped   8,525     12,400     625     700          
Net sales   $ 250,975     $ 341,045     $ 82,958     $ 99,648     $ 60,270     $ 100,849  
Gross profit   $ 23,843     $ 35,940     $ 15,141     $ 20,099     $ (244 )   $ 13,524  
Gross profit margin   9.5 %   10.5 %   18.3 %   20.2 %   (0.4 %)   13.4 %
Income (loss) from operations   $ 15,871     $ 26,321     $ (6,070 )   $ 8,044     $ (108,041 )   $ 1,869  
Income (loss) from operations margin   6.3 %   7.7 %   (7.3 %)   8.1 %   (179.3 %)   1.9 %
Adjusted income (loss) from operations   $ 16,248     $ 26,321     $ 4,901     $ 8,044     $ (12,275 )   $ 1,869  
Adjusted income (loss) from operations margin   6.5 %   7.7 %   5.9  %   8.1 %   (20.4 %)   1.9 %

Commercial Trailer Products’ net sales for the first quarter were $251 million, a decrease of $90.1 million, or 26.4 percent as compared to the prior year quarter as a result of an anticipated normalization of market demand as well as slower customer pickups of equipment. Operating income decreased $10.5 million, or 39.7 percent, from the first quarter last year to $15.9 million as a result of volume leverage on lower revenues during the quarter.

Diversified Products’ net sales for the first quarter were $83 million, a decrease of $16.7 million, or 16.7 percent, as compared to the prior year. While the tank trailer business showed relative stability, revenue was more than offset by lower volumes in the composites business. Operating loss in the first quarter of 2020 was $6.1 million, impacted by a noncash goodwill impairment of $11.0 million during the quarter related to the 2012 acquisition of the Walker Group. Operating income on a non-GAAP adjusted basis was $4.9 million

Final Mile Products’ net sales for the first quarter totaled $60 million, a decrease of $40.6 million, or 40.2 percent, as compared to the prior year, due to slower customer pickups and softer demand compounded by COVID-19. Operating loss was $108 million after a noncash goodwill impairment charge of $95.8 million during the quarter related to the 2017 acquisition of Supreme Industries. Operating loss on a non-GAAP adjusted basis was $12.3 million due to previously anticipated manufacturing inefficiencies related to demand patterns and product mix as well as negative impacts from COVID-19.

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, adjusted operating income, adjusted net (loss) income and adjusted earnings per 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 (loss) 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, 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 (loss) income and net (loss) income, is beneficial to an investor’s understanding of the Company’s operating performance. A reconciliation of operating EBITDA to net (loss) income is included in the tables following this release.

Adjusted operating (loss) income, a non-GAAP financial measure, excludes certain costs, expenses, other charges, gains or income that are included in the determination of operating (loss) income under U.S. GAAP, but that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company presents adjusted operating (loss) income excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends. Further, the Company presents adjusted operating (loss) income to provide investors with a better understanding of the Company’s view of our results as compared to prior periods. A reconciliation of adjusted operating (loss) income to operating (loss) income, the most comparable GAAP financial measure, is included in the tables following this press release.

Adjusted net (loss) income and adjusted earnings per basic (2020) or diluted (2019) share, each reflect adjustments for non-cash goodwill impairment and gains and/or losses incurred for the sale or closure of former Company locations, and the related tax effects of these adjustments. 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 (loss) income and basic (2020) and diluted (2019) net (loss) income per share, is beneficial to an investor’s understanding of the Company’s performance. A reconciliation of each of adjusted net (loss) income and adjusted earnings per basic or diluted share to net (loss) income and net (loss) income per basic or diluted share is included in the tables following this release.

First Quarter 2020 Conference Call

Wabash National will discuss its results during its quarterly investor conference call on Thursday, May 14, 2020, beginning at 10:00 a.m. EDT. The call and an accompanying slide presentation will be accessible on the "Investors" section of the Company’s website www.wabashnational.com. The conference call will also be accessible by dialing (844) 778-4139, conference ID 8099552. A replay of the call will be available on the site shortly after the conclusion of the presentation.

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, 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®, 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 a continued or prolonged shutdown or reduction of our operations, substantially reduced customer orders or sales volumes and supply disruptions due to the coronavirus (COVID-19) outbreak, 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 including the impact of tariffs or other international trade developments, risks in implementing and sustaining improvements in the Company’s manufacturing operations and cost containment, dependence on industry trends and timing, supplier constraints, labor costs and availability, 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 BALANCE SHEETS
(Unaudited - dollars in thousands)

    March 31,
2020
  December 31,
2019
Assets        
Current assets:        
Cash and cash equivalents   $ 154,587     $ 140,516  
Accounts receivable, net   138,215     172,737  
Inventories   245,915     186,914  
Prepaid expenses and other   38,340     41,222  
Total current assets   577,057     541,389  
Property, plant, and equipment, net   220,546     221,346  
Goodwill   204,420     311,026  
Intangible assets, net   184,332     189,898  
Other assets   39,056     40,932  
Total assets   $ 1,225,411     $ 1,304,591  
Liabilities and Stockholders’ Equity        
Current liabilities:        
Current portion of long-term debt   $     $  
Current portion of finance lease obligations   332     327  
Accounts payable   148,331     134,821  
Other accrued liabilities   120,872     124,230  
Total current liabilities   269,535     259,378  
Long-term debt   500,591     455,386  
Finance lease obligations   293     378  
Deferred income taxes   34,276     37,576  
Other non-current liabilities   26,747     30,885  
Total liabilities   831,442     783,603  
Commitments and contingencies        
Stockholders’ equity:        
Common stock 200,000,000 shares authorized, $0.01 par value, 52,848,721 and 53,473,620 shares outstanding, respectively   753     750  
Additional paid-in capital   637,997     638,917  
Retained earnings   111,309     221,841  
Accumulated other comprehensive losses   (9,497 )   (3,978 )
Treasury stock at cost, 22,498,930 and 21,640,109 common shares, respectively   (346,593 )   (336,542 )
Total stockholders' equity   393,969     520,988  
Total liabilities and stockholders’ equity   $ 1,225,411     $ 1,304,591  


WABASH NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - dollars in thousands, except per share amounts)

    Three Months Ended March 31,
    2020   2019
Net sales   $ 387,074     $ 533,174  
Cost of sales   350,331     464,484  
Gross profit   36,743     68,690  
General and administrative expenses   26,192     30,140  
Selling expenses   7,998     8,223  
Amortization of intangible assets   5,495     5,129  
Impairment   107,114      
(Loss) income from operations   (110,056 )   25,198  
Other income (expense):        
Interest expense   (6,272 )   (7,090 )
Other, net   120     (169 )
Other expense, net   (6,152 )   (7,259 )
(Loss) income before income tax (benefit) expense   (116,208 )   17,939  
Income tax (benefit) expense   (9,561 )   3,159  
Net (loss) income   $ (106,647 )   $ 14,780  
         
Net (loss) income per share:        
Basic   $ (2.01 )   $ 0.27  
Diluted   $ (2.01 )   $ 0.27  
Weighted average common shares outstanding (in thousands):        
Basic   53,156     55,268  
Diluted   53,156     55,770  
         
Dividends declared per share   $ 0.08     $ 0.08  


WABASH NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - dollars in thousands)

    Three Months Ended March 31,
    2020   2019
Cash flows from operating activities        
Net (loss) income   $ (106,647 )   $ 14,780  
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities        
Depreciation   5,624     5,420  
Amortization of intangibles   5,495     5,129  
Net gain on sale of property, plant and equipment   (3 )   486  
Deferred income taxes   (1,849 )   (2,281 )
Stock-based compensation   (917 )   2,586  
Impairment   107,114      
Non-cash interest expense   265     260  
Accounts receivable   34,522     (4,681 )
Inventories   (59,001 )   (72,576 )
Prepaid expenses and other   (838 )   (1,279 )
Accounts payable and accrued liabilities   8,235     84,770  
Other, net   (2,054 )   1,152  
Net cash (used in) provided by operating activities   $ (10,054 )   $ 33,766  
Cash flows from investing activities        
Capital expenditures   (6,278 )   (6,802 )
Proceeds from the sale of property, plant, and equipment   25     29  
Net cash used in investing activities   $ (6,253 )   $ (6,773 )
Cash flows from financing activities        
Proceeds from exercise of stock options       55  
Dividends paid   (4,482 )   (4,627 )
Borrowings under revolving credit facilities   45,040     140  
Payments under revolving credit facilities   (40 )   (140 )
Principal payments under finance lease obligations   (80 )   (75 )
Principal payments under term loan credit facility       (470 )
Debt issuance costs paid   (9 )   (15 )
Stock repurchase   (10,051 )   (2,635 )
Net cash provided by (used in) financing activities   $ 30,378     $ (7,767 )
Cash and cash equivalents:        
Net increase in cash, cash equivalents, and restricted cash   $ 14,071     $ 19,226  
Cash, cash equivalents and restricted cash at beginning of period   140,516     132,690  
Cash, cash equivalents, and restricted cash at end of period   $ 154,587     $ 151,916  



WABASH NATIONAL CORPORATION
SEGMENTS AND RELATED INFORMATION
(Unaudited - dollars in thousands)

Three Months Ended March 31,   Commercial
Trailer Products
  Diversified
Products
  Final Mile
Products
  Corporate and
Eliminations
  Consolidated
2020                    
New trailers shipped   8,525     625             9,150  
Used trailers shipped   35     35             70  
                     
New Trailers   $ 237,901     $ 43,312     $     $     $ 281,213  
Used Trailers   318     1,210             1,528  
Components, parts and service   9,272     26,082     3,722     (7,100 )   31,976  
Equipment and other   3,484     12,354     56,548     (29 )   72,357  
Total net external sales   $ 250,975     $ 82,958     $ 60,270     $ (7,129 )   $ 387,074  
Gross profit   $ 23,843     $ 15,141     $ (244 )   $ (1,997 )   $ 36,743  
Income (loss) from operations   $ 15,871     $ (6,070 )   $ (108,041 )   $ (11,816 )   $ (110,056 )
                     
2019                    
New trailers shipped     12,400       700             13,100  
Used trailers shipped     50       25             75  
                     
New Trailers   $ 325,819     $ 45,799     $     $     $ 371,618  
Used Trailers   137     587             724  
Components, parts and service   10,333     35,884     3,416     (7,920 )   41,713  
Equipment and other   4,756     17,378     97,433     (448 )   119,119  
Total net external sales   $ 341,045     $ 99,648     $ 100,849     $ (8,368 )   $ 533,174  
Gross profit   $ 35,940     $ 20,099     $ 13,524     $ (873 )   $ 68,690  
Income (loss) from operations   $ 26,321     $ 8,044     $ 1,869     $ (11,036 )   $ 25,198  


WABASH NATIONAL CORPORATION
SEGMENT AND COMPANY FINANCIAL INFORMATION
(Unaudited - dollars in thousands)

    Three Months Ended
March 31,
    2020   2019
Commercial Trailer Products        
Income from operations   $ 15,871     $ 26,321  
Adjustments:        
Impairment   377      
Adjusted operating income   $ 16,248     $ 26,321  
         
Diversified Products        
(Loss) income from operations   (6,070 )   8,044  
Adjustments:        
Impairment   10,971      
Adjusted operating income   4,901     8,044  
         
Final Mile Products        
(Loss) income from operations   (108,041 )   1,869  
Adjustments:        
Impairment   95,766      
Adjusted operating (loss) income   (12,275 )   1,869  
         
Corporate        
Loss from operations   (11,816 )   (11,036 )
         
Consolidated        
(Loss) income from operations   (110,056 )   25,198  
Adjustments:        
Impairment   107,114      
Adjusted operating (loss) income   $ (2,942 )   $ 25,198  


WABASH NATIONAL CORPORATION
RECONCILIATION OF GAAP FINANCIAL MEASURES TO
NON-GAAP FINANCIAL MEASURES
(Unaudited - dollars in thousands, except per share amounts)

Operating EBITDA¹:   Three Months Ended March 31,
    2020   2019
Net (loss) income   $ (106,647 )   $ 14,780  
Income tax (benefit) expense   (9,561 )   3,159  
Interest expense   6,272     7,090  
Depreciation and amortization   11,119     10,549  
Stock-based compensation   (917 )   2,586  
Impairment   107,114      
Other, net   (120 )   169  
Operating EBITDA   $ 7,260     $ 38,333  


Adjusted Net (Loss) Income²:   Three Months Ended March 31,
    2020   2019
Net (loss) income   $ (106,647 )   $ 14,780  
Adjustments:        
Facility transactions³       488  
Impairment   107,114      
Tax effect of aforementioned items   (2,786 )   (126 )
Adjusted net (loss) income   $ (2,319 )   $ 15,142  


Adjusted Basic (2020) and Diluted (2019) Earnings Per Share²:   Three Months Ended March 31,
    2020   2019
Basic (2020) and diluted (2019) earnings per share   $ (2.01 )   $ 0.27  
Adjustments:        
Facility transactions³        
Impairment   2.02      
Tax effect of aforementioned items   (0.05 )    
Adjusted basic (2020) and diluted (2019) earnings per share   $ (0.04 )   $ 0.27  
         
Weighted average basic (2020) and diluted (2019) shares outstanding (in thousands)   53,156     55,770  

¹Operating EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, impairment, and other non-operating income and expense.
²Adjusted net (loss) income and adjusted basic (2020) and diluted (2019) earnings per share reflect adjustments for non-cash impairment and gains and/or losses incurred for the sale or closure of former Company locations, and the related tax effects of these adjustments.
³Facility transactions in 2019 relate to gains and/or losses incurred for the sale or closure of former Company locations.


WABASH NATIONAL CORPORATION
RECONCILIATION OF FREE CASH FLOW AND
FREE CASH FLOW CONVERSION
(Unaudited - dollars in thousands)

    Three Months Ended March 31,
    2020   2019
Net cash (used in) provided by operating activities   $ (10,054 )   $ 33,766  
Capital expenditures   (6,278 )   (6,802 )
Free cash flow¹   $ (16,332 )   $ 26,964  

¹Free cash flow is defined as net cash (used in) provided by operating activities minus capital expenditures.


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

Investor Relations:
Ryan Reed
Director, Investor Relations
(765) 490-5664
ryan.reed@wabashnational.com

Wabash National Corporation Logo

Source: Wabash National Corporation