Wabash National Posts Slight Profit DecreasePosted: Updated:
Lafayette-based Wabash National Corp. (NYSE: WNC) is reporting third quarter net income of $16.2 million, compared to $18.4 million during the same period last year. Chief Executive Officer Dick Giromini says despite the profit decrease, its Commercial Trailer Products division recorded some of the best results since before the recession. Wabash National Corporation Announces Third Quarter 2013 Results
Achieves Record Quarterly Net Sales, Operating Income and Operating EBITDA; GAAP EPS of $0.23 and Non-GAAP Adjusted EPS of $0.24 per Diluted Share
October 29, 2013
LAFAYETTE, Ind. - Wabash National Corporation (NYSE: WNC) reported third quarter 2013 net income of $16.2 million, or $0.23 per diluted share on net sales of $440 million compared to third quarter 2012 net income of $18.4 million, or $0.27 per diluted share on net sales of $406 million. The Company's third quarter 2013 results include the impact of an early extinguishment of debt charge related to a $20 million term loan prepayment made in September 2013 as well as other non-recurring acquisition expenses, totaling $0.6 million. Excluding the impact of these items, non-GAAP adjusted earnings for the quarter ended September 30, 2013 were $16.6 million, or $0.24 per diluted share. In comparison, the non-GAAP adjusted earnings for the quarter ended September 30, 2012 were $20.9 million, or $0.30 per diluted share, which excluded the impact of non-recurring charges related to the Company's acquisition of Walker Group Holdings LLC ("Walker"), totaling $2.4 million. If the tax rate used in computing prior period results was 40.0 percent, consistent with the current period, non-GAAP earnings per share for the third quarter of 2012 would have been lower by $0.11 per diluted share.
The Company reported operating income totaling $33.8 million for the third quarter of 2013, compared to operating income of $27.2 million for the third quarter of 2012. Non-GAAP operating EBITDA, which excludes the effects of costs related to the acquisitions of Walker and certain assets of Beall, as well as other recurring and non-recurring items, for the third quarter of 2013 was $44.9 million, an improvement of $7.2 million compared to the previous year period. On a trailing twelve months basis, the Company's net sales increased to approximately $1.59 billion, generating operating EBITDA of $153.1 million, or 9.6 percent of net sales. The improvement in operating performance is attributed to the successful execution of the Company's growth strategy and disciplined approach to improving profitability, including an improved mix of higher-margin trailer orders driven by its focus on margin over volume, diversification into higher-margin opportunities through the acquisitions of Walker and certain assets of Beall as well as organic growth of the Diversified Products Group, and operational improvements in the manufacturing facilities.
Dick Giromini, president and chief executive officer, stated, "We are extremely pleased with the financial and operating results across all our strategic segments. The record performances achieved in the third quarter again validate the significant progress we have made in our long-term strategy to transform Wabash National into a diversified manufacturer while continuing to implement operational improvements throughout the business and further enhance our long-term margin and growth profile through the integration of strategic acquisitions. In particular, our Commercial Trailer Products segment reported another strong quarter achieving our highest levels of gross profit and profit margin since the second quarter of 2007. In addition, our Diversified Products segment, representing higher-margin specialty products, achieved near record levels for both net sales and gross profit as we continue to realize benefits from both our organic and strategic diversification efforts."
Mr. Giromini continued, "New trailer shipments for the third quarter were approximately 12,600, consistent with our previous guidance of 12,500 to 13,500 trailers. We anticipate continued strong demand for our products as well as an improvement in customer pickups during the fourth quarter with full year trailer shipments forecast to be between 46,000 and 47,000 units. As expected, our backlog decreased sequentially but remains at a seasonally healthy level of approximately $563 million as of September 30, 2013. Longer term, we believe the demand environment for trailers remains strong as fleet age, customer profitability, used trailer values, regulatory compliance and access to financing all support continued demand for new trailers."
Third Quarter 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 third quarter of 2013 and 2012, respectively. A complete disclosure of the results by individual segment is included in the tables following this release.
Commercial Trailer Products' net sales increased $12 million or 4.4 percent, on 11,700 trailers, or 300 more trailers than the prior year period. This increase was primarily due to the increase in trailer shipments during the quarter as well as the Company's continued efforts to improve product pricing and recapture lost margins. The Company's average selling prices increased $200, or 0.9 percent compared to the prior year period. As a result, gross margin improved 80 basis points to 8.0 percent compared to the prior year period. Operating income increased to $17.3 million, or $2.7 million higher than the third quarter last year due to improved pricing and continued operational improvements.
Diversified Products' net sales increased $23 million, or 21.4 percent, driven by the continued strong demand for both our composite and Walker product offerings, as well as the acquisition of certain assets of Beall earlier this year. Gross profit improved $7.1 million compared to the prior year period, while gross margin increased 150 basis points from 22.2 percent to 23.7 percent, primarily attributed to the favorable mix of products within our composite product offerings. Operating income increased 24.7 percent, or $3.7 million, as compared to the same period last year, primarily due to increased net sales.
Retail's net sales decreased $2 million, or 3.4 percent, primarily due to a 100 unit decrease in new trailer shipments. However, gross profit margins improved 40 basis points to 11.4 percent as a larger percentage of net sales was generated from higher margin parts and services activities. Operating income decreased $0.7 million during the third quarter of 2013 as compared to the same period last year due to lower net sales and higher selling and administrative expenses.
Term Loan Voluntary Partial Prepayment
The Company made its second voluntary term loan partial prepayment in the amount of $20 million on September 25. At current interest rate levels, these partial payments in addition to the closing of the amendment and repricing of the term loan facility in May 2013, have successfully reduced the Company's annual cash interest costs by approximately $6 million. Jeff Taylor, vice president and acting chief financial officer commented, "We are pleased with our strong financial performance and our ability to generate cash flow which provided us the flexibility to voluntarily prepay a portion of our outstanding balances on our term loan facility. As we have previously stated, managing our capital structure is a priority and the third quarter debt payment, our second $20 million voluntary prepayment of 2013, demonstrates our continued commitment to execute against our plan."
In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), the financial information included in this release contain non-GAAP financial measu