Wabash Q2 Earnings Miss Estimates, Up Y/Y on Higher Revenues

Zacks

Wabash National Corp. (WNC) reported adjusted earnings per share of 24 cents in the second quarter of 2014, which compared favorably with 21 cents in the corresponding quarter of last year. However, earnings missed the Zacks Consensus Estimate of 26 cents.

Adjusted earnings increased to $16.9 million from $14.7 million in the year-ago quarter. Meanwhile, reported earnings were $16.2 million or 23 cents per share against $14.1 million or 20 cents per share in the second quarter of 2013.

 

The company’s revenues for the quarter increased 18% to $486 million from $413 billion in the year-ago quarter. It also surpassed the Zacks Consensus Estimate of $481 million. The year-over-year revenue growth was driven by strong sales in the Commercial Trailer Products and Retail segments.

Gross profit improved to $61.6 million from $58.9 million in the year-ago quarter. Gross margin fell to 12.7% from 14.2% in the year-ago quarter. Operating income rose 11% to $33.9 million from $30.5 million in the second quarter of 2013.

Segment Results

Revenues from the Commercial Trailer Products segment went up 26.3% to $335.7 million owing to a sales increase of 29.9% to 13,900 units, partially offset by an unfavorable customer and product mix. The average selling prices declined 2.2% year over year. Gross profit from the segment increased to $28.8 million or 8.6% of sales from $21.1 million or 7.9% recorded in the year-ago quarter.

Revenues from the Diversified Products segment dropped to $135.0 million from $135.5 million. The decline was due to delayed shipments of non-trailer truck mounted equipment and other engineered products, which offset the increase in tank trailer shipments. Gross profit fell to $25.2 million or 18.6% of sales from $31.7 million or 23.4% a year ago. The decline in profits was due to higher raw material costs related to wood flooring operations, new product start-up costs and unfavorable product mix in the Wabash Composites and Walker Group businesses.

Revenues from the Retail segment increased 7.2% to $51.6 million from $48.1 million in the second quarter of 2013. The improvement was driven by increased shipment of new trailers to 950 units from 850 units a year ago, along with continued strong demand for parts and services. Gross profit went up to $5.7 million or 11.1% of sales in the quarter from $5.5 million or 11.5% of sales in the prior-year period.

Financial Update

Wabash had cash and cash equivalents of $82.3 million as of Jun 30, 2014, declining from $113.3 million as of Dec 31, 2013. Total debt amounted to $343.4 million as of Jun 30, 2014, compared with $362.1 million as of Dec 31, 2013.

In the first six months of 2014, the company had a cash outflow from operating activities of $8.5 million, compared to cash inflow of $6.6 million in the first half of 2013. Capital expenditure increased to $4.2 million in the period from $2.5 million in the first half of 2013.

Guidance

Total new trailer shipments for 2014 are expected in the range of 53,000–55,000 units, up 13–18% from the prior year.

Wabash National carries a Zacks Rank #2 (Buy). Other stocks in the same industry include Magna International Inc. (MGA), Visteon Corporation (VC) and Meritor, Inc. (MTOR). Magna International and Visteon sport a Zacks Rank #1 (Strong Buy), while Meritor holds a Zacks Rank #2.

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