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 Wabash National Corporation Announces Fourth Quarter and Full Year 2018 Results
   Tuesday, January 29, 2019 4:36:00 PM ET
  • Strong demand drives 12 percent year-over-year increase in Q4 2018 revenue
  • Full year revenue of $2.3 billion is highest in company history
  • Q4 2018 backlog increased 47 percent year-over-year to $1.8 billion
  • Q4 2018 gross margin declined 210 basis points year-over-year as a result of operational headwinds
  • GAAP earnings per share of $0.21 in Q4 2018, $0.38 adjusted Non-GAAP earnings per share
  • 2019 EPS outlook revised to $1.50 to $1.70 per diluted share

LAFAYETTE, Ind., Jan. 29, 2019 (GLOBE NEWSWIRE) -- Wabash National Corporation (NYSE: WNC), a diversified industrial manufacturer and a leading producer of semi-trailers, truck bodies and liquid transportation systems, today reported results for the quarter and full year periods ending December 31, 2018.

Net sales for the fourth quarter 2018 increased 12 percent to $610 million from $543 million in the prior year quarter while each of the Company’s three segments contributed to the strong top-line growth as market demand remained strong. Gross profit margin contracted 210 basis points as compared to the prior year period as a result of continued cost pressures due to the current operating environment. Operating income was $22.8 million in the fourth quarter of 2018 or $36.4 million, on a non-GAAP adjusted basis, after excluding a non-cash impairment charge of $13 million related to the sale of the Aviation and Truck Equipment business in the Diversified Products reportable segment.

“In a quarter impacted by challenges in the operating environment, we continued to strengthen long-term relationships with our customers by shipping near-record volumes. We generated quarterly net sales of $610 million in the fourth quarter, a 12 percent increase versus the prior year quarter, and full year sales of $2.3 billion, the highest in the Company’s 33-year history," explained Brent Yeagy, president and chief executive officer. "Due in part to the strength in demand conditions, all three of our reporting segments faced continued operating pressures which negatively impacted our margins. We are highly focused on reducing the cost pressures that included a shortage of chassis and other components, as well as increased labor and material costs. We have taken action to improve pricing across all three business segments in order to recover higher materials and manufacturing costs. We launched additional productivity initiatives and bolstered supply chain effectiveness through both resourcing and planning improvements. We are confident that these actions will address the short-term operating pressures to clear the way for improved margin performance in 2019.”

Net income for the fourth quarter 2018 was $11.6 million, or 21 cents per diluted share. Adjusted non-GAAP net income for the fourth quarter was $21.5 million or 38 cents per share, compared to 36 cents in the fourth quarter of 2017.

Operating EBITDA, a non-GAAP measure that excludes the effects of certain items, for the fourth quarter 2018 was $47.6 million, or 7.8 percent of net sales, and full year operating EBITDA of $186.9 million, or 8.2 percent of net sales.

Mr. Yeagy continued, “While we expect strong industry volumes in 2019, we also anticipate some level of short-term supplier and cost challenges continuing into the new year. I am confident in our team's ability to successfully navigate these issues as we focus on mitigating supplier disruptions and driving increased productivity.  With strong market conditions, a solid balance sheet and six consecutive years of converting free cash flow in excess of net income, I expect 2019 to be a strong year for Wabash National. We expect 2019 full-year revenue to be between $2.25 billion to $2.35 billion based on our current backlog and we feel it is prudent to revise our full-year earnings outlook to $1.50 to $1.70 per diluted share based on the carryover of supply disruption and cost pressures moving into 2019.”

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 fourth quarter of 2018 and 2017. 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 December 31, 2018 2017 2018 2017 2018 2017
  (dollars in thousands)
New trailers shipped 16,750  15,500  750  650     
Net sales $438,667  $385,961  $102,322  $91,771  $74,532  $70,461 
Gross profit $45,170  $47,055  $17,420  $18,040  $7,362  $8,150 
Gross profit margin 10.3% 12.2% 17.0% 19.7% 9.9% 11.6%
Income (loss) from operations $39,075  $40,134  $(6,111) $5,532  $(1,463) $(2,098)
Income (loss) from operations margin 8.9% 10.4% (6.0)% 6.0% (2.0)% (3.0)%

Commercial Trailer Products’ net sales for the fourth quarter increased $52.7 million, or 14 percent, to $439 million. Gross profit margin for the fourth quarter decreased 190 basis points as compared to the prior year period primarily due to the impact of supplier disruptions, as well as increased labor and material costs.  Operating income decreased $1.1 million, or 2.6 percent, from the fourth quarter last year to $39.1 million, or 8.9 percent of net sales.

Diversified Products’ net sales for the fourth quarter were $102 million, an increase of $10.6 million, or 11 percent, as compared to the prior year, due primarily to the increased demand for liquid tank trailers. Gross profit and profit margin as compared to the prior year period decreased $0.6 million and 270 basis points, respectively, primarily due to increased material and labor costs, including higher overtime levels to meet strong demand requirements and supplier induced production interruptions. Operating income in the fourth quarter of 2018, excluding a $13.0 million non-cash impairment charge, was $6.9 million, or 6.7 percent of net sales, representing an increase of $1.3 million as compared to the prior year period.

Final Mile Products’ net sales for the fourth quarter totaled $75 million. Gross profit and gross profit margin for the fourth quarter were $7.4 million and 9.9 percent, respectively. Operating loss was $1.5 million, or 2.0 percent of net sales. Operating results were negatively impacted during the quarter by chassis supply issues and other supplier shortages causing operating inefficiencies as well as higher labor 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, operating EBITDA margin, 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, impairments, 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, impairment charges, executive severance costs, income or losses recognized on the sale and/or closure of former Company locations, adjustments related to the Company’s deferred tax assets as a result of IRS guidance on application of the Tax Cuts and Jobs Act of 2017, and reversal of reserves for uncertain tax positions. 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.

Fourth Quarter 2018 Conference Call

Wabash National will discuss its results during its quarterly investor conference call on Wednesday, January 30th, starting at 10:00 a.m. EST.  The call and an accompanying slide presentation will be webcast on the "Investors" section of the Company’s website www.wabashnational.com . A replay of the webcast will be available in the same section of Wabash National's website shortly after the conclusion of the call and will remain available for approximately 3 months. Meeting access also will be available via conference call at 844-778-4139, participant code 1851979.

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 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)
 
 December 31,
2018
 December 31,
2017
Assets   
Current assets:   
Cash and cash equivalents$132,690  $191,521 
Accounts receivable, net181,064  146,836 
Inventories184,404  180,735 
Prepaid expenses and other51,261  57,299 
Total current assets549,419  576,391 
Property, plant, and equipment, net206,991  195,363 
Deferred income taxes   
Goodwill311,084  317,464 
Intangible assets210,328  237,030 
Other assets26,571  25,265 
Total assets$1,304,393  $1,351,513 
Liabilities and Stockholders' Equity   
Current liabilities:   
Current portion of long-term debt$1,880  $46,020 
Current portion of capital lease obligations299  290 
Accounts payable153,113  108,448 
Other accrued liabilities116,384  128,910 
Total current liabilities271,676  283,668 
Long-term debt503,018  504,091 
Capital lease obligations714  1,012 
Deferred income taxes34,905  36,955 
Other non-current liabilities20,231  19,724 
Total liabilities830,544  845,450 
Commitments and contingencies   
Stockholders' equity:   
Common stock, $0.01 par value:  200,000,000 shares authorized; 55,135,788 and 57,564,493 shares outstanding, respectively744  737 
Additional paid-in capital629,039  653,435 
Retained earnings150,244  98,728 
Accumulated other comprehensive loss(3,343) (2,385)
Treasury stock, at cost: 19,372,735 and 16,207,740 common shares, respectively(302,835) (244,452)
Total stockholders' equity473,849  506,063 
Total liabilities and stockholders' equity$1,304,393  $1,351,513 


 
WABASH NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - dollars in thousands, except per share amounts)
 
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2018 2017 2018 2017
Net sales$610,196  $543,444  $2,267,278  $1,767,161 
Cost of sales541,140  470,568  1,983,627  1,506,286 
Gross profit69,056  72,876  283,651  260,875 
General and administrative expenses21,194  24,314  95,114  77,825 
Selling expenses7,455  8,020  33,046  25,588 
Amortization of intangible assets4,650  4,348  19,468  17,041 
Acquisition expenses  901  68  9,605 
Impairment12,979    24,968   
Income from operations22,778  35,293  110,987  130,816 
Other income (expense):       
Interest expense(7,110) (7,335) (28,759) (16,400)
Other, net1,290  194  13,776  8,122 
Other expense, net(5,820) (7,141) (14,983) (8,278)
Income before income tax16,958  28,152  96,004  122,538 
Income tax expense5,374  (21,204) 26,583  11,116 
Net income$11,584  $49,356  $69,421  $111,422 
Net income per share:       
Basic$0.21  $0.84  $1.22  $1.88 
Diluted$0.21  $0.80  $1.19  $1.78 
Weighted average common shares outstanding (in thousands):       
Basic55,543  58,416  56,996  59,358 
Diluted56,290  61,567  58,430  62,599 
        
Dividends declared per share$0.080  $0.075  $0.305  $0.255 


 
WABASH NATIONAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - dollars in thousands)
 
 Year Ended December 31,
 2018 2017 2016
Cash flows from operating activities:     
Net income$69,421  $111,422  $119,433 
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation21,215  18,012  16,830 
Amortization of intangibles19,468  17,041  19,940 
Net (gain) loss on sale of property, plant and equipment(10,148) (8,046) 101 
Loss on debt extinguishment280  799  1,895 
Deferred income taxes(1,984) (14,682) 4,044 
Stock-based compensation10,169  10,429  12,038 
Non-cash interest expense1,745  2,258  3,475 
Impairment24,968    1,663 
Changes in operating assets and liabilities     
Accounts receivable(39,539) 31,943  (809)
Inventories(18,713) (13,158) 24,969 
Prepaid expenses and other4,548  (2,014) (10,147)
Accounts payable and accrued liabilities32,653  (963) (13,002)
Other, net(1,612) (8,662) (1,680)
Net cash provided by operating activities112,471  144,379  178,750 
Cash flows from investing activities:     
Capital expenditures(34,009) (26,056) (20,342)
Proceeds from sale of property, plant and equipment17,776  10,860  19 
Acquisitions, net of cash acquired  (323,487)  
Other, net3,060  6,443  3,014 
Net cash used in investing activities(13,173) (332,240) (17,309)
Cash flows from financing activities:     
Proceeds from exercise of stock options961  5,790  4,831 
Borrowings under senior notes  325,000   
Dividends paid(17,768) (15,315)  
Borrowings under revolving credit facilities937  713  618 
Payments under revolving credit facilities(937) (713) (618)
Principal payments under capital lease obligations(290) (600) (779)
Proceeds from issuance of term loan credit facility  377,519   
Principal payments under term loan credit facility(1,880) (386,577) (1,928)
Principal payments under industrial revenue bond(93) (583) (473)
Debt issuance costs paid(476) (6,783)  
Convertible senior notes repurchase(80,200) (8,045) (98,922)
Stock repurchase(58,383) (74,491) (79,556)
Net cash (used in) provided by financing activities(158,129) 215,915  (176,827)
Cash, cash equivalents, and restricted cash:     
Net (decrease) increase for the period(58,831) 28,054  (15,386)
At beginning of period191,521  163,467  178,853 
At end of period$132,690  $191,521  $163,467 
Supplemental disclosures of cash flow information:     
Cash paid for interest$16,975  $8,394  $12,656 
Cash paid for income taxes$24,243  $41,391  $68,870 


 
WABASH NATIONAL CORPORATION
SEGMENTS AND RELATED INFORMATION
(Unaudited - dollars in thousands)
 
Three Months Ended December 31, Commercial
Trailer Products
 Diversified
Products
 Final Mile
Products
 Corporate and
Eliminations
 Consolidated
2018          
New trailers shipped 16,750  750      17,500 
Used trailers shipped 100  50      150 
           
New Trailers $424,131  $48,950  $  $  $473,081 
Used Trailers 824  1,025      1,849 
Components, parts and service 9,214  27,141  2,628  (5,282) 33,701 
Equipment and other 4,498  25,206  71,904  (43) 101,565 
Total net external sales $438,667  $102,322  $74,532  $(5,325) $610,196 
Gross profit $45,170  $17,420  $7,362  $(896) $69,056 
Income (Loss) from operations $39,075  $(6,111) $(1,463) $(8,723) $22,778 
           
2017          
New trailers shipped 15,500  650      16,150 
Used trailers shipped 550  50      600 
           
New Trailers $367,526  $40,895  $  $  $408,421 
Used Trailers 5,352  821      6,173 
Components, parts and service 9,908  23,931  1,877  (4,749) 30,967 
Equipment and other 3,175  26,124  68,584    97,883 
Total net external sales $385,961  $91,771  $70,461  $(4,749) $543,444 
Gross profit $47,055  $18,040  $8,150  $(369) $72,876 
Income (Loss) from operations $40,134  $5,532  $(2,098) $(8,275) $35,293 


Twelve Months Ended December 31, Commercial
Trailer Products
 Diversified
Products
 Final Mile
Products
 Corporate and
Eliminations
 Consolidated
2018          
New trailers shipped 59,500  2,650      62,150 
Used trailers shipped 950  150      1,100 
           
New Trailers $1,473,583  $164,790  $  $  $1,638,373 
Used Trailers 9,618  3,514      13,132 
Components, parts and service 34,994  122,099  9,968  (21,811) 145,250 
Equipment and other 18,743  103,568  348,281  (69) 470,523 
Total net external sales $1,536,938  $393,971  $358,249  $(21,880) $2,267,278 
Gross profit $168,343  $68,428  $48,771  $(1,891) $283,651 
Income (Loss) from operations $141,793  $(3,033) $7,909  $(35,682) $110,987 
           
2017          
New trailers shipped 52,800  2,250      55,050 
Used trailers shipped 1,050  100      1,150 
           
New Trailers $1,273,584  $140,105  $  $  $1,413,689 
Used Trailers 10,720  3,278      13,998 
Components, parts and service 48,008  117,681  1,877  (13,040) 154,526 
Equipment and other 16,070  100,294  68,584    184,948 
Total net external sales $1,348,382  $361,358  $70,461  $(13,040) $1,767,161 
Gross profit $183,912  $70,159  $8,150  $(1,346) $260,875 
Income (Loss) from operations $151,999  $20,376  $(2,098) $(39,461) $130,816 


 
WABASH NATIONAL CORPORATION
SEGMENT and COMPANY FINANCIAL INFORMATION
(Unaudited - dollars in thousands)
 
 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
 2018 2017 2018 2017
Commercial Trailer Products       
Income from operations$39,075  $40,134  $141,793  $151,999 
        
Diversified Products       
Income from operations(6,111) 5,532  (3,033) 20,376 
Adjustments:       
Impairment12,979    24,968   
Adjusted operating income6,868  5,532  21,935  20,376 
        
Final Mile Products       
Income from operations(1,463) (2,098) 7,909  (2,098)
Adjustments:       
Acquisition expenses and related charges  5,407  751  5,407 
Adjusted operating income(1,463) 3,309  8,660  3,309 
        
Corporate       
Income from operations(8,723) (8,275) (35,682) (39,461)
Adjustments:       
Acquisition expenses and related charges  901  68  9,605 
Executive severance180    180  238 
Facility transactions413    413   
Adjusted operating income(8,130) (7,374) (35,021) (29,618)
        
Consolidated       
Income from operations22,778  35,293  110,987  130,816 
Adjustments:       
Impairment12,979    24,968   
Acquisition expenses and related charges  6,308  819  15,012 
Executive severance180    180  238 
Facility transactions413    413   
Adjusted operating income$36,350  $41,601  $137,367  $146,066 


 
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 December 31, Twelve Months Ended December 31,
 2018 2017 2018 2017
Net income$11,584  $49,356  $69,421  $111,422 
Income tax expense5,374  (21,204) 26,583  11,116 
Interest expense7,110  7,335  28,759  16,400 
Depreciation and amortization10,163  9,651  40,682  35,053 
Stock-based compensation1,690  2,117  10,169  10,429 
Acquisition expenses  4,002  68  12,706 
Impairment12,979    24,968   
Other non-operating income(1,289) (194) (13,775) (8,122)
Operating EBITDA$47,611  $51,063  $186,875  $189,004 


Adjusted Net Income2:Three Months Ended December 31, Twelve Months Ended December 31,
 2018 2017 2018 2017
Net income$11,584  $49,356  $69,421  $111,422 
Adjustments:       
Facility transactions3194  274  (10,585) (6,546)
Loss on debt extinguishment106  32  280  800 
Impairment12,979    24,968   
Acquisition expenses and related charges  6,308  819  15,012 
Executive severance expense180    180  238 
Tax effect of aforementioned items(3,499) (2,381) (4,072) (3,421)
Tax reform and other discrete tax adjustments  (31,339) 3,084  (31,339)
Adjusted net income$21,544  $22,250  $84,095  $86,166 


Adjusted Diluted Earnings Per Share2:Three Months Ended December 31, Twelve Months Ended December 31,
 2018 2017 2018 2017
Diluted earnings per share$0.21  $0.80  $1.19  $1.78 
Adjustments:       
Facility transactions3  0.01  (0.18) (0.10)
Loss on debt extinguishment    0.01  0.01 
Impairment0.23    0.43   
Acquisition expenses and related charges  0.10  0.01  0.24 
Executive severance expense       
Tax effect of aforementioned items(0.06) (0.04) (0.07) (0.05)
Tax reform and other discrete tax adjustments  (0.51) 0.05  (0.50)
Adjusted diluted earnings per share$0.38  $0.36  $1.44  $1.38 
        
Weighted Average # of Diluted Shares O/S56,290  61,567  58,430  62,599 

1Operating EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, acquisition expenses and related charges, impairments, 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, impairment charges, executive severance costs, income or losses recognized on the sale and/or closure of former Company locations, adjustments related to the Company’s deferred tax assets as a result of IRS guidance on application of the Tax Cuts and Jobs Act of 2017, and reversal of reserves for uncertain tax positions.
3Facility transactions in 2017 and 2018 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 of Investor Relations
(765) 771-5805
ryan.reed@wabashnational.com

 

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Source: Wabash National Corporation


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