Lafayette-based trailer and truck body manufacturer Wabash (NYSE: WNC) appears well-positioned for economic uncertainty, as demand shows no sign of easing from the e-commerce and logistics customers that rely on Wabash products. The evidence appears in the most recent earnings report that shows the company has booked a record backlog of orders. “Demand conditions remain strong as evidenced by our order book, which set a third quarter record at $2.3 billion and implies $1.7 billion of orders in 2023,” said Wabash President and Chief Executive Officer Brent Yeagy.
In an interview with Inside INdiana Business, Yeagy said the process of booking orders has changed.
“We have a very discreet way, very process-oriented way that we look to fill our backlog with strategic customers and making sure that we meet their needs, but at the same time not getting out over our skis with rising inflation,” said Yeagy.
LISTEN: Yeagy explains to Inside INdiana Business reporter Wes Mills about 2023 orders provide stability to the company in an logistics industry filled with uncertainty.
He says the company is signing multiyear contracts with key customers that have a strong financial outlook. Yeagy says there is less risk of contract cancellation from those buyers.
“Our process of booking orders has shifted from transactional to strategic as we engage with customers to plan for how Wabash can serve their needs from across our first to final mile portfolio for the next several years as opposed to the usual one-year out conversation,” said Yeagy in a recent news release.
In late October, the company reported third quarter net income of $36.3 million, compared to $11 million during the same period a year ago. Wabash also says it generated record Q3 sales of $655 million, an increase of 35% over the same quarter in 2021.
Yeagy says there are multiple factors in play, but they are all rooted in the global pandemic. Supply chain challenges, explosive growth in e-commerce, and the logistics of moving all of that raw material and finished goods created an analytical nightmare, which illustrated inefficiencies.
But it also presents opportunities for companies like Wabash.
“When you roll all those things together, trailers and truck bodies become a very important piece of managing that inefficiency, because they’re rolling warehouses. And in today’s market, one of the ways that you manage that inefficiency, is to make sure that freight never stops moving,” said Yeagy.
Yeagy, who was named CEO in 2018, has steered the Lafayette-based company not only through the pandemic and supply chain disruption, but also through the repercussions of a tariff spat.
In early 2018, President Donald Trump imposed tariffs of up to 50% on solar panels and washing machines shipped into the U.S. In March of that year, the tariffs expanded to steel and aluminum, two key products in the Wabash manufacturing line.
Yeagy explains even before the pandemic, Wabash was exploring changes to its own supply of materials.
“We actually started changing our supply chain going all the way back to 2018. When the tariffs came through, and we saw the handwriting on the wall. A little bit less than 20% of our supply chain was Asian based. And today, it’s about two to three percent. And that work was primarily done prior to the pandemic,” said Yeagy.
He says the company’s proactive move five years ago actually helped isolate it from supply chain challenges that others in the industrial space face.
Looking ahead, the company seems to be embracing the electric vehicle movement. Yeagy says Wabash has 10 different relationships with startups, many of which offer battery-powered trucks.
“EV is a dynamic that is permeating our industry, not as much on the trailer side, but absolutely on the truck body side, the smaller vehicles that we produce,” said Yeagy. “We are absolutely looking at innovative materials, innovative design, as well as body construction to enable that technology to be adopted.”
Wabash has developed a lightweight composite, EcoNex Technology, that reduces overall truck body weight.
In September, California-based vehicle maker Mullen, through its subsidiary Bollinger, announced it was it was teaming up with Wabash to produce a stronger, lighter, refrigerated truck body on electric chassis.
“Wabash’s EcoNex composite technology reduces the amount of electricity needed to maintain cold temperatures,” Mark Ehrlich, vice president of new business development at Wabash said in a news release. “The all-electric truck we’re developing with Bollinger Motors will be highly efficient with more uptime and less charging compared to conventional construction.”
As part of the EcoNex product line, Wabash says it is investing an additional $20 million at a factory in Minnesota and adding over 200 jobs by the end of 2023.
While economic uncertainty remains for the nation as a whole, Yeagy salutes his customer’s resiliency through it all. “And we think that’s going to continue that translates to great performance for Wabash.”
Yeagy is a veteran of the U.S. Navy. Click here to read how his military service helped mold him into a business executive.