Wabash National Corporation Announces Second Quarter 2020 Results

July 29, 2020 at 6:55 AM EDT
  • Second quarter revenue of $339M, earnings per share of $0.00

  • Rapid cost containment leads to exceptional decremental margin management at 15%

  • Liquidity position strengthens sequentially, repaid previous advances on revolver

  • Second quarter backlog of approximately $750 million gives visibility into the second half of 2020

  • Anticipate positive free cash flow in 2020, remain committed to dividend

LAFAYETTE, Ind., July 29, 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 June 30, 2020.

Net sales for the second quarter 2020 were $339.2 million as operations were able to maintain productivity levels in the face of unprecedented business and operating conditions brought on by COVID-19. Additionally, customer pick-ups of new equipment improved following disruption seen during the first quarter in the lead-up to COVID-19-related shutdowns. Operating income was $6.0 million during the quarter as rapid implementation of cost control measures limited decremental margins to 15 percent. Earnings per share was $0.00 for the second quarter.

Total Company backlog as of June 30, 2020 was approximately $750 million compared to backlog of approximately $1.0 billion ending March 2020 as normal seasonal trends indicate an expected sequential softening in backlog during the second quarter.

“The second quarter was the most uniquely challenging time I've experienced in my career. Balancing continued operations to support our customers during a global pandemic while implementing meaningful short-term cost control measures as well as longer-term initiatives to optimize our organizational structure took a remarkable level of dedication from every level of our organization, and I'd like to acknowledge the tremendous efforts of our people,” said Brent Yeagy, president and chief executive officer. "To limit decremental margins to fifteen percent during the second quarter reflects the dedication of our people as well as the long-term improvements we've made to our business portfolio and within our operating system. The cost reductions we've made allow us to control expense in the short-term while preserving the business' ability to quickly accelerate when market conditions invariably improve."

Liquidity as of the end of the second quarter was $304 million with cash of $136 million and a fully untapped revolving credit line of $168 million following the second quarter repayment of a proactive drawdown of the revolver during the first quarter. Overall liquidity increased by $27 million sequentially as positive cash flow from operations was supplemented by a release of working capital. The Company's nearest debt maturity, amounting to $135 million, is in March of 2022.  Additionally, the Company's debt carries no financial covenants. 

"Our backlog combined with second quarter shipments shows that orders continued to flow at a moderate pace during the second quarter, which normally sees sales outpace new orders. We continue to be pleased with the state of our order book and the visibility it provides for the second half of the year," continued Yeagy. "Our goal for 2020 remains positive free cash flow generation and our second quarter results serve to strengthen our expectations of achieving that target. We aim to demonstrate how our free cash flow profile has improved from previous cycles by maintaining our dividend through this challenging time and continuing to deploy capital in the best interest of our long-term shareowners."

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 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 June 30,   2020   2019   2020   2019   2020   2019
    (dollars in thousands)
New trailers shipped   8,000     14,250     400     750     —       
Net sales   $ 232,254     $ 400,864     $ 63,951     $ 97,026     $ 50,832     $ 134,817  
Gross profit   $ 22,392     $ 46,906     $ 10,761     $ 20,123     $ 1,963     $ 21,289  
Gross profit margin   9.6 %   11.7 %   16.8 %   20.7 %   3.9 %   15.8 %
Income (loss) from operations   $ 18,599     $ 39,918     $ 2,242     $ 8,911     $ (6,569 )   $ 9,221  
Income (loss) from operations margin   8.0 %   10.0 %   3.5 %   9.2 %   (12.9 %)   6.8 %

Commercial Trailer Products’ net sales for the second quarter were $232.3 million, a decrease of 42.1 percent as compared to the prior year quarter as a result of a reduction in market demand. Operating income was $18.6 million or 8.0% of sales during the quarter.

Diversified Products’ net sales for the second quarter were $64.0 million, a decrease of 34.1 percent as compared to the prior year as a result of lower market demand. Operating income was $2.2 million or 3.5 percent of sales during the quarter.

Final Mile Products’ net sales for the second quarter totaled $50.8 million, a decrease of 62.3 percent, as compared to the prior year, due to softer market demand. Operating loss was $6.6 million during the quarter as a result of weaker volume leverage over fixed costs.

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 (loss), 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, net, 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 (loss) 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.

Free cash flow is defined as net cash provided by operating activities minus capital expenditures. Management believes providing free cash flow is useful for investors to understand the Company’s performance and results of cash generation period to period with the exclusion of the item identified above. Management believes the presentation of free cash flow, when combined with the GAAP presentations of cash provided by operating activities, is beneficial to an investor’s understanding of the Company’s operating performance. A reconciliation of free cash flow to cash provided by operating activities is included in the appendix to this release.

Adjusted operating income (loss), a non-GAAP financial measure, excludes certain costs, expenses, other charges, gains or income that are included in the determination of operating income (loss) 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 income (loss) 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 income (loss) 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 income (loss) to operating income (loss), 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 impairment and other, net, 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.

Second Quarter 2020 Conference Call

Wabash National will discuss its results during its quarterly investor conference call on Wednesday, July 29, 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 5580198.  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.

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
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - dollars in thousands)

  June 30,
2020
  December 31,
2019
Assets      
Current assets:      
Cash and cash equivalents $ 135,993     $ 140,516  
Accounts receivable, net 123,952     172,737  
Inventories 201,068     186,914  
Prepaid expenses and other 41,836     41,222  
Total current assets 502,849     541,389  
Property, plant, and equipment, net 218,637     221,346  
Goodwill 204,418     311,026  
Intangible assets, net 178,836     189,898  
Other assets 37,525     40,932  
Total assets $ 1,142,265     $ 1,304,591  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Current portion of long-term debt $     $  
Current portion of finance lease obligations 337     327  
Accounts payable 124,747     134,821  
Other accrued liabilities 107,030     124,230  
Total current liabilities 232,114     259,378  
Long-term debt 455,800     455,386  
Finance lease obligations 206     378  
Deferred income taxes 35,179     37,576  
Other non-current liabilities 25,749     30,885  
Total liabilities 749,048     783,603  
Commitments and contingencies      
Stockholders’ equity:      
Common stock 200,000,000 shares authorized, $0.01 par value, 52,906,115 and 53,473,620 shares outstanding, respectively 753     750  
Additional paid-in capital 639,330     638,917  
Retained earnings 106,656     221,841  
Accumulated other comprehensive losses (6,915 )   (3,978 )
Treasury stock at cost, 22,500,750 and 21,640,109 common shares, respectively (346,607 )   (336,542 )
Total stockholders' equity 393,217     520,988  
Total liabilities and stockholders’ equity $ 1,142,265     $ 1,304,591  
               


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

  Three Months Ended June 30,   Six Months Ended June 30,
  2020   2019   2020   2019
Net sales $ 339,153     $ 626,053     $ 726,227       $ 1,159,227  
Cost of sales 304,832     538,403     655,163       1,002,887  
Gross profit 34,321     87,650     71,064       156,340  
General and administrative expenses 19,633     26,509     45,825       56,649  
Selling expenses 4,886     8,494     12,884       16,717  
Amortization of intangible assets 5,493     5,109     10,988       10,238  
Impairment and other, net (1,690 )       105,424        
Income (loss) from operations 5,999     47,538     (104,057 )     72,736  
Other income (expense):              
Interest expense (5,882 )   (7,020 )   (12,154 )     (14,110 )
Other, net 285     1,081     405       912  
Other expense, net (5,597 )   (5,939 )   (11,749 )     (13,198 )
Income (loss) before income tax expense (benefit) 402     41,599     (115,806 )     59,538  
Income tax expense (benefit) 548     10,639     (9,013 )     13,798  
Net (loss) income $ (146 )   $ 30,960     $ (106,793 )     $ 45,740  
               
Net (loss) income per share:              
Basic $ 0.00     $ 0.56     $ (2.01 )     $ 0.83  
Diluted $ 0.00     $ 0.56     $ (2.01 )     $ 0.82  
Weighted average common shares outstanding (in thousands):              
Basic 52,874     55,197     53,015       55,233  
Diluted 52,874     55,668     53,015       55,719  
               
Dividends declared per share $ 0.08     $ 0.08     $ 0.160       $ 0.160  
                                 


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

  Six Months Ended June 30,
  2020   2019
Cash flows from operating activities      
Net (loss) income $ (106,793 )   $ 45,740  
Adjustments to reconcile net (loss) income to net cash provided by operating activities      
Depreciation 11,657     10,957  
Amortization of intangibles 10,988     10,238  
Net (gain) loss on sale of property, plant and equipment (1,690 )   481  
Loss on debt extinguishment     53  
Deferred income taxes (2,648 )   (2,214 )
Stock-based compensation 416     5,377  
Impairment 107,114      
Non-cash interest expense 535     523  
Accounts receivable 48,785     10,886  
Inventories (14,154 )   (80,163 )
Prepaid expenses and other (8,195 )   (325 )
Accounts payable and accrued liabilities (22,126 )   58,210  
Other, net (1,235 )   1,210  
Net cash provided by operating activities $ 22,654     $ 60,973  
Cash flows from investing activities      
Capital expenditures (10,921 )   (14,995 )
Proceeds from the sale of property, plant, and equipment 2,725     38  
Net cash used in investing activities $ (8,196 )   $ (14,957 )
Cash flows from financing activities      
Proceeds from exercise of stock options     55  
Dividends paid (8,742 )   (9,061 )
Borrowings under revolving credit facilities 45,449     288  
Payments under revolving credit facilities (45,449 )   (288 )
Principal payments under finance lease obligations (162 )   (152 )
Principal payments under term loan credit facility     (15,470 )
Debt issuance costs paid (12 )   (71 )
Stock repurchase (10,065 )   (13,852 )
Net cash used in financing activities $ (18,981 )   $ (38,551 )
Cash and cash equivalents:      
Net (decrease) increase in cash, cash equivalents, and restricted cash $ (4,523 )   $ 7,465  
Cash, cash equivalents and restricted cash at beginning of period 140,516     132,690  
Cash, cash equivalents, and restricted cash at end of period $ 135,993     $ 140,155  
               


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

Three Months Ended June 30,   Commercial
Trailer Products
  Diversified
Products
  Final Mile
Products
  Corporate and
Eliminations
  Consolidated
2020                    
New trailers shipped   8,000     400             8,400  
Used trailers shipped   185     35             220  
                     
New Trailers   $ 218,753     $ 28,176     $     $     $ 246,929  
Used Trailers   2,273     1,323             3,596  
Components, parts and service   9,571     22,166     2,453     (7,884 )   26,306  
Equipment and other   1,657     12,286     48,379         62,322  
Total net external sales   $ 232,254     $ 63,951     $ 50,832     $ (7,884 )   $ 339,153  
Gross profit   $ 22,392     $ 10,761     $ 1,963     $ (795 )   $ 34,321  
Income (loss) from operations   $ 18,599     $ 2,242     $ (6,569 )   $ (8,273 )   $ 5,999  
                     
2019                    
New trailers shipped   14,250     750             15,000  
Used trailers shipped       25             25  
                     
New Trailers   $ 385,842     $ 49,325     $     $     $ 435,167  
Used Trailers   13     739             752  
Components, parts and service   10,622     29,007     4,447     (6,575 )   37,501  
Equipment and other   4,387     17,955     130,370     (79 )   152,633  
Total net external sales   $ 400,864     $ 97,026     $ 134,817     $ (6,654 )   $ 626,053  
Gross profit   $ 46,906     $ 20,123     $ 21,289     $ (668 )   $ 87,650  
Income (loss) from operations   $ 39,918     $ 8,911     $ 9,221     $ (10,512 )   $ 47,538  


Six Months Ended June 30,   Commercial
Trailer Products
  Diversified
Products
  Final Mile
Products
  Corporate and
Eliminations
  Consolidated
2020                    
New trailers shipped   16,525     1,050             17,575  
Used trailers shipped   220     70             290  
                     
New Trailers   $ 456,654     $ 71,488     $     $     $ 528,142  
Used Trailers   2,591     2,533             5,124  
Components, parts and service   18,843     48,248     6,175     (14,984 )   58,282  
Equipment and other   5,141     24,640     104,927     (29 )   134,679  
Total net external sales   $ 483,229     $ 146,909     $ 111,102     $ (15,013 )   $ 726,227  
Gross profit   $ 46,235     $ 25,902     $ 1,719     $ (2,792 )   $ 71,064  
Income (loss) from operations   $ 34,470     $ (3,828 )   $ (114,610 )   $ (20,089 )   $ (104,057 )
                     
2019                    
New trailers shipped   26,650     1,450             28,100  
Used trailers shipped   50     50             100  
                     
New Trailers   $ 711,661     $ 95,124     $     $     $ 806,785  
Used Trailers   150     1,326             1,476  
Components, parts and service   20,955     64,891     7,863     (14,495 )   79,214  
Equipment and other   9,143     35,333     227,803     (527 )   271,752  
Total net external sales   $ 741,909     $ 196,674     $ 235,666     $ (15,022 )   $ 1,159,227  
Gross profit   $ 82,846     $ 40,222     $ 34,813     $ (1,541 )   $ 156,340  
Income (loss) from operations   $ 66,239     $ 16,955     $ 11,090     $ (21,548 )   $ 72,736  
                                         


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

  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2020   2019   2020   2019
Commercial Trailer Products              
Income from operations $ 18,599     $ 39,918     $ 34,470     $ 66,239  
Adjustments:              
Impairment         377      
Adjusted operating income $ 18,599     $ 39,918     $ 34,847     $ 66,239  
               
Diversified Products              
Income (loss) from operations 2,242     8,911     (3,828 )   16,955  
Adjustments:              
Impairment         10,971      
Adjusted operating income 2,242     8,911     7,143     16,955  
               
Final Mile Products              
(Loss) income from operations (6,569 )   9,221     (114,610 )   11,090  
Adjustments:              
Impairment         95,766      
Adjusted operating (loss) income (6,569 )   9,221     (18,844 )   11,090  
               
Corporate              
Loss from operations (8,273 )   (10,512 )   (20,089 )   (21,548 )
               
Consolidated              
Income (loss) from operations 5,999     47,538     (104,057 )   72,736  
Adjustments:              
Impairment         107,114      
Adjusted operating income $ 5,999     $ 47,538     $ 3,057     $ 72,736  
                               


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 June 30,   Six Months Ended June 30,
  2020   2019   2020   2019
Net (loss) income $ (146 )   $ 30,960     $ (106,793 )   $ 45,740  
Income tax expense (benefit) 548     10,639     (9,013 )   13,798  
Interest expense 5,882     7,020     12,154     14,110  
Depreciation and amortization 11,526     10,646     22,645     21,195  
Stock-based compensation 1,333     2,791     416     5,377  
Impairment and other, net (1,690 )       105,424      
Other, net (285 )   (1,081 )   (405 )   (912 )
Operating EBITDA $ 17,168     $ 60,975     $ 24,428     $ 99,308  


Adjusted Net (Loss) Income2: Three Months Ended June 30,   Six Months Ended June 30,
  2020   2019   2020   2019
Net (loss) income $ (146 )   $ 30,960     $ (106,793 )   $ 45,740  
Adjustments:              
Impairment         107,114      
Tax effect of aforementioned items         (2,786 )    
Adjusted net (loss) income $ (146 )   $ 30,960     $ (2,465 )   $ 45,740  


Adjusted Basic (2020) and Diluted (2019) Earnings Per Share2: Three Months Ended June 30,   Six Months Ended June 30,
  2020   2019   2020   2019
Basic (2020) and diluted (2019) earnings per share $ 0.00     $ 0.56     $ (2.01 )   $ 0.82  
Adjustments:              
Impairment         2.01      
Tax effect of aforementioned items         (0.05 )    
Adjusted basic (2020) and diluted (2019) earnings per share $ 0.00     $ 0.56     $ (0.05 )   $ 0.82  
               
Weighted average basic (2020) and diluted (2019) shares outstanding (in thousands) 52,874     55,668     53,015     55,719  

Operating EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, impairment and other, net, and other non-operating income and expense.
2 Adjusted net (loss) income and adjusted basic (2020) and diluted (2019) earnings per share reflect adjustments for non-cash impairment and the related tax effects of these adjustments.


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

  Six Months Ended June 30,
  2020   2019
Net cash provided by operating activities $ 22,654     $ 60,973  
Capital expenditures (10,921 )   (14,995 )
Free cash flow1 $ 11,733     $ 45,978  

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


Wabash National Corporation Logo

Source: Wabash National Corporation