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Wabash National Corporation Announces Second Quarter 2019 Results

  • Revenue grew at 2 percent year-over-year, all-time quarterly sales record of $626M

  • Operating margin reached a two-year high of 7.6 percent

  • Strong cash generation and active capital deployment in Q2

  • Earnings Per Share of $0.56

  • Full year 2019 EPS outlook raised at midpoint by $.05 to $1.65, range narrowed to $1.58 to $1.72 per share

LAFAYETTE, Ind., July 31, 2019 (GLOBE NEWSWIRE) -- Wabash National Corporation (WNC), a diversified industrial manufacturer and a leading producer of semi-trailers, truck bodies and liquid transportation systems, today reported results for the quarter ended June 30, 2019.

Net sales for the second quarter 2019 increased 2 percent to $626 million from $613 million in the prior year quarter, as growth was led by the Company’s Final Mile and Diversified Products Group Segments. Operating income was $47.5 million in the second quarter of 2019 and the Company achieved a consolidated operating margin of 7.6 percent during the second quarter of 2019, which represents an improvement of 10 basis points from the second quarter of 2018, highlighting the success of both short and long-term initiatives targeting margin expansion.

“I am very pleased with our operating performance during the second quarter.  We delivered revenue of $626 million which is an all-time record for Wabash National and we generated our strongest operating margins in two years, driven by the Wabash Management System," explained Brent Yeagy, president and chief executive officer. "The strength of our free cash generation allowed us the flexibility not only to pay our regular quarterly dividend and make progress on debt-reduction, but also to repurchase shares during the quarter.”

Net income for the second quarter 2019 was $31.0 million, or 56 cents per diluted share, which compares to 54 cents  in the second quarter of 2018 or 49 cents on a Non-GAAP Adjusted basis. Operating EBITDA, a non-GAAP measure that excludes the effects of certain items, for the second quarter 2019 was $61.0 million, or 9.7 percent of net sales.

Mr. Yeagy continued, “We are pleased to raise the midpoint of our full-year EPS outlook by 5 cents to $1.65 based on our strong second quarter performance.  The midpoint of our outlook for the second half of the year remains unchanged as our stable backlogs give us visibility to strong revenue.”

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 2019 and 2018. 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,   2019   2018   2019   2018   2019   2018
                         
    (dollars in thousands)
New trailers shipped   14,250     15,650     750     650          
Net sales   $ 400,864     $ 402,507     $ 97,026     $ 94,085     $ 134,817     $ 121,209  
Gross profit   $ 46,906     $ 47,513     $ 20,123     $ 16,692     $ 21,289     $ 20,923  
Gross profit margin   11.7 %   11.8 %   20.7 %   17.7 %   15.8 %   17.3 %
Income (loss) from operations   $ 39,918     $ 40,784     $ 8,911     $ 4,395     $ 9,221     $ 10,258  
Income (loss) from operations margin   10.0 %   10.1 %   9.2 %   4.7 %   6.8 %   8.5 %

Commercial Trailer Products’ net sales for the second quarter was $401 million, a decrease of $1.6 million, or 0.4 percent as compared to the prior year quarter. Gross profit margin for the second quarter decreased 10 basis points as compared to the prior year period primarily due to product and customer mix.  Operating income decreased $0.9 million, or 2.1 percent, from the second quarter last year to $39.9 million, or 10.0 percent of net sales.

Diversified Products’ net sales for the second quarter were $97 million, an increase of $2.9 million, or 3.1 percent, as compared to the prior year, due primarily to increased demand for liquid tank trailers. Gross profit and profit margin as compared to the prior year period increased $3.4 million and 300 basis points, respectively, as the segment benefited from product mix and cost recovery among other internal initiatives driven by the Wabash Management System. Operating income in the second quarter of 2019 was $8.9 million, or 9.2 percent of net sales, representing an increase of $4.5 million as compared to the prior year period.

Final Mile Products’ net sales for the second quarter totaled $135 million, an increase of $13.6 million, or 11.2 percent, as compared to the prior year, due to strong market and customer demand. Gross profit margin for the second quarter decreased 150 basis points as compared to the prior year period primarily due to product mix and higher employee-related costs. Operating income was $9.2 million, or 6.8 percent of net sales, compared to $10.3 million, or 8.5 percent of net sales in the prior year period.

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 income 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, acquisition expenses and related charges, 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 operating income, a non-GAAP financial measure, excludes certain costs, expenses, other charges, gains or income that are included in the determination of operating 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 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 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 income to operating income, the most comparable GAAP financial measure, is included in the tables following this press release.

Adjusted net income and adjusted earnings per diluted share, each reflect adjustments for acquisition expenses, the losses attributable to the Company’s extinguishment of debt, income or losses recognized on the sale and/or closure of former Company locations. 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 each of adjusted net income 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 2019 Conference Call

Wabash National will discuss its results during its quarterly investor conference call on Wednesday, July 31, 2019, 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 7848058.  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 (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 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)

  June 30,
2019
  December 31,
2018
Assets      
Current assets:      
Cash and cash equivalents $ 140,155     $ 132,690  
Accounts receivable, net 170,177     181,064  
Inventories 264,567     184,404  
Prepaid expenses and other 40,550     51,261  
Total current assets 615,449     549,419  
Property, plant, and equipment, net 208,718     206,991  
Goodwill 311,085     311,084  
Intangible assets 200,089     210,328  
Other assets 39,488     26,571  
Total assets $ 1,374,829     $ 1,304,393  
Liabilities and Stockholders' Equity      
Current liabilities:      
Current portion of long-term debt $     $ 1,880  
Current portion of finance lease obligations 317     299  
Accounts payable 200,641     153,113  
Other accrued liabilities 120,356     116,384  
Total current liabilities 321,314     271,676  
Long-term debt 489,865     503,018  
Finance lease obligations 544     714  
Deferred income taxes 32,691     34,905  
Other non-current liabilities 28,850     20,231  
Total liabilities 873,264     830,544  
Commitments and contingencies      
Stockholders' equity:      
Common stock 200,000,000 shares authorized, $0.01 par value, 54,675,691 and 55,135,788 shares outstanding, respectively 749     744  
Additional paid-in capital 634,465     629,039  
Retained earnings 186,934     150,244  
Accumulated other comprehensive loss (3,896 )   (3,343 )
Treasury stock at cost, 20,331,511 and 19,372,735 common shares, respectively (316,687 )   (302,835 )
Total stockholders' equity 501,565     473,849  
Total liabilities and stockholders' equity $ 1,374,829     $ 1,304,393  



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,
  2019   2018   2019   2018
Net sales $ 626,053     $ 612,690     $ 1,159,227     $ 1,104,009  
Cost of sales 538,403     527,375     1,002,887     954,576  
Gross profit 87,650     85,315     156,340     149,433  
General and administrative expenses 26,509     25,778     56,649     50,887  
Selling expenses 8,494     8,556     16,717     16,901  
Amortization of intangible assets 5,109     4,940     10,238     9,881  
Acquisition expenses             68  
Income from operations 47,538     46,041     72,736     71,696  
Other income (expense):              
Interest expense (7,020 )   (7,151 )   (14,110 )   (14,605 )
Other, net 1,081     4,037     912     11,953  
Other expense, net (5,939 )   (3,114 )   (13,198 )   (2,652 )
Income before income tax 41,599     42,927     59,538     69,044  
Income tax expense 10,639     11,025     13,798     15,870  
Net income $ 30,960     $ 31,902     $ 45,740     $ 53,174  
Net income per share:              
Basic $ 0.56     $ 0.55     $ 0.83     $ 0.92  
Diluted $ 0.56     $ 0.54     $ 0.82     $ 0.89  
Weighted average common shares outstanding (in thousands):              
Basic 55,197     57,879     55,233     57,836  
Diluted 55,668     59,274     55,719     60,023  
               
Dividends declared per share $ 0.080     $ 0.075     $ 0.160     $ 0.150  



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

  Six Months Ended June 30,
  2019   2018
Cash flows from operating activities:      
Net income $ 45,740     $ 53,174  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation 10,957     10,330  
Amortization of intangibles 10,238     9,881  
Net loss (gain) on sale of property, plant and equipment 481     (9,743 )
Loss on debt extinguishment 53     174  
Deferred income taxes (2,214 )   (81 )
Stock-based compensation 5,377     5,390  
Non-cash interest expense 523     1,110  
Changes in operating assets and liabilities      
Accounts receivable 10,886     (46,564 )
Inventories (80,163 )   (56,057 )
Prepaid expenses and other (325 )   1,756  
Accounts payable and accrued liabilities 58,210     72,792  
Other, net 1,210     (1,691 )
Net cash provided by operating activities 60,973     40,471  
Cash flows from investing activities:      
Capital expenditures (14,995 )   (11,117 )
Proceeds from sale of property, plant and equipment 38     16,426  
Other, net     3,060  
Net cash (used in) provided by investing activities (14,957 )   8,369  
Cash flows from financing activities:      
Proceeds from exercise of stock options 55     910  
Dividends paid (9,061 )   (9,271 )
Borrowings under revolving credit facilities 288     423  
Payments under revolving credit facilities (288 )   (423 )
Principal payments under finance lease obligations (152 )   (143 )
Principal payments under term loan credit facility (15,470 )   (940 )
Principal payments under industrial revenue bond     (92 )
Debt issuance costs paid (71 )    
Convertible senior notes repurchase     (80,200 )
Stock repurchase (13,852 )   (21,413 )
Net cash used in financing activities (38,551 )   (111,149 )
Cash, cash equivalents, and restricted cash:      
Net increase (decrease) for the period 7,465     (62,309 )
At beginning of period 132,690     191,521  
At end of period $ 140,155     $ 129,212  
Supplemental disclosures of cash flow information:      
Cash paid for interest $ 13,661     $ 14,071  
Cash paid for income taxes $ 10,567     $ 12,700  



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
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  
                     
2018                    
New trailers shipped     15,650     650             16,300  
Used trailers shipped   250     50             300  
                     
New Trailers   $ 385,131     $ 37,602     $     $     $ 422,733  
Used Trailers   2,499     628             3,127  
Components, parts and service   9,042     31,926     2,623     (5,091 )   38,500  
Equipment and other   5,835     23,929     118,586     (20 )   148,330  
Total net external sales   $ 402,507     $ 94,085     $ 121,209     $ (5,111 )   $ 612,690  
Gross profit   $ 47,513     $ 16,692     $ 20,923     $ 187     $ 85,315  
Income (Loss) from operations   $ 40,784     $ 4,395     $ 10,258     $ (9,396 )   $ 46,041  


Six Months Ended June 30,   Commercial
Trailer Products
  Diversified
Products
  Final Mile
Products
  Corporate and
Eliminations
  Consolidated
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  
                     
2018                    
New trailers shipped   28,300     1,200             29,500  
Used trailers shipped   750     50             800  
                     
New Trailers   $ 695,449     $ 71,441     $     $     $ 766,890  
Used Trailers   6,906     1,714             8,620  
Components, parts and service   17,690     65,894     5,036     (11,853 )   76,767  
Equipment and other   9,884     50,239     191,632     (23 )   251,732  
Total net external sales   $ 729,929     $ 189,288     $ 196,668     $ (11,876 )   $ 1,104,009  
Gross profit   $ 84,036     $ 33,990     $ 32,455     $ (1,048 )   $ 149,433  
Income (Loss) from operations   $ 70,265     $ 9,423     $ 10,867     $ (18,859 )   $ 71,696  



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

  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2019   2018   2019   2018
Commercial Trailer Products              
Income from operations $ 39,918     $ 40,784     $ 66,239     $ 70,265  
               
Diversified Products              
Income from operations 8,911     4,395     16,955     9,423  
               
Final Mile Products              
Income from operations 9,221     10,258     11,090     10,867  
Adjustments:              
Acquisition expenses and related charges     (164 )       751  
Adjusted operating income 9,221     10,094     11,090     11,618  
               
Corporate              
Income from operations (10,512 )   (9,396 )   (21,548 )   (18,859 )
Adjustments:              
Acquisition expenses and related charges             68  
Adjusted operating income (10,512 )   (9,396 )   (21,548 )   (18,791 )
               
Consolidated              
Income from operations 47,538     46,041     72,736     71,696  
Adjustments:              
Acquisition expenses and related charges     (164 )       819  
Adjusted operating income $ 47,538     $ 45,877     $ 72,736     $ 72,515  



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,
  2019   2018   2019   2018
Net income $ 30,960     $ 31,902     $ 45,740     $ 53,174  
Income tax expense 10,639     11,025     13,798     15,870  
Interest expense 7,020     7,151     14,110     14,605  
Depreciation and amortization 10,646     10,107     21,195     20,211  
Stock-based compensation 2,791     2,733     5,377     5,390  
Acquisition expenses             68  
Other non-operating income (1,081 )   (4,037 )   (912 )   (11,953 )
Operating EBITDA $ 60,975     $ 58,881     $ 99,308     $ 97,365  


Adjusted Net Income2: Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018
Net income $ 30,960     $ 31,902     $ 45,740     $ 53,174  
Adjustments:              
Facility transactions3     (3,506 )       (10,629 )
Loss on debt extinguishment             174  
Acquisition expenses and related charges     (164 )       819  
Tax effect of aforementioned items     954         2,505  
Adjusted net income $ 30,960     $ 29,186     $ 45,740     $ 46,043  


Adjusted Diluted Earnings Per Share2: Three Months Ended June 30,   Six Months Ended June 30,
  2019   2018   2019   2018
Diluted earnings per share $ 0.56     $ 0.54     $ 0.82     $ 0.89  
Adjustments:              
Facility transactions3     (0.06 )       (0.18 )
Acquisition expenses and related charges             0.01  
Tax effect of aforementioned items     0.02         0.04  
Adjusted diluted earnings per share $ 0.56     $ 0.49     $ 0.82     $ 0.77  
               
Weighted average number of diluted shares outstanding (in thousands) 55,668     59,274     55,719     60,023  

1Operating EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, acquisition expenses and related charges, and other non-operating income and expense.

2Adjusted net income and adjusted earnings per diluted share reflect adjustments for acquisition expenses, the losses attributable to the Company’s extinguishment of debt, income or losses recognized on the sale and/or closure of former Company locations.

3Facility transactions in 2018 and 2019 relate to gains and/or losses incurred for the sale or closure of former Company locations.

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

Investor Relations:
Ryan Reed
Director, Investor Relations
(765) 771-5805
ryan.reed@wabashnational.com