Wabash National Profit Increases
Lafayette-based Wabash National Corp. (NYSE: WNC) is reporting third quarter net income of $18.3 million, compared to $16.2 million for the same period a year earlier. Chief Executive Officer Dick Giromini says the company achieved record quarterly revenue and operating income. October 28, 2014
LAFAYETTE, Ind. – Wabash National Corporation (NYSE:WNC), a diversified industrial manufacturer and North America's leading producer of semi-trailers and liquid transportation systems, today reported results for the third quarter ended September 30, 2014.
Net income for the third quarter of 2014 was $18.3 million, or $0.25 per diluted share, compared to the third quarter of 2013 net income of $16.2 million, or $0.23 per diluted share. Third quarter 2014 non-GAAP adjusted earnings were $18.6 million, or $0.26 per diluted share, after excluding $0.5 million of charges related to the early extinguishment of debt incurred with the Company's term loan prepayment of $20 million in September 2014. The Company's prior year period results included the impact of non-recurring acquisition expenses and early extinguishment of debt charges related to a $20 million term loan prepayment made in September 2013. 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.
For the third quarter of 2014, the Company's net sales increased 12 percent to $492 million and operating income increased $1.1 million, or 3 percent, to $34.9 million compared to the prior year period. Operating EBITDA, a non-GAAP measure that excludes the effects of certain recurring and non-recurring items, was $46.6 million for the third quarter of 2014, an increase of $1.7 million compared to the prior year period. On a trailing twelve-month basis, the Company has generated net sales of $1.8 billion and operating EBITDA of $158.5 million, or 8.8 percent of net sales. Continued improvement in operating performance is attributable to the successful execution of the Company's growth and diversification strategy, as well as a disciplined approach to improving profitability.
Dick Giromini, president and chief executive officer, stated, “We are pleased with the overall results for the third quarter and the record performance levels in both revenue and operating income for the Company. We are especially pleased with the strong performance from our Commercial Trailer Products segment, which continues to demonstrate positive momentum toward achieving its objectives of profitable growth through selective order intake, disciplined pricing, manufacturing productivity optimization and supply chain cost reductions. Conversely, performance from our Diversified Products Group was below expectations due to productivity and yield issues within our Wood Products business, unfavorable product mix and competitive market pressures within certain parts of our composite and tank products businesses.”
Mr. Giromini continued, “New trailer shipments for the third quarter were 15,600, consistent with our previous guidance of 15,000 to 16,000 trailers. We anticipate continued strength in customer demand for our products as total new trailer shipments for the full year are now expected to be in the range of 54,500 to 56,000 units, representing an increase of 16 percent to 20 percent from the prior year. As expected, our backlog decreased sequentially but remains at a seasonally healthy level of $794 million as of September 30, 2014, an increase of $231 million, or 41 percent, compared to the prior year period. Longer term, we believe the demand environment for trailers will remain strong as customer profitability, fleet age and regulatory compliance requirements all support continued demand for new trailers. Additionally, current industry forecasts support strong demand levels with projections well above replacement demand and exceeding previous year levels.”
Third Quarter Business Segment Highlights
Commercial Trailer Products' net sales, prior to the elimination of intersegment sales, increased $58 million, or 19.8 percent, on shipments of 14,700 trailers, representing 3,000 more trailers than the prior year period. This increase in revenue was primarily driven by a 25.6 percent increase in trailer shipments during the quarter, offset by customer and product mix, which lowered average selling prices by 2.4 percent compared to the prior year period. As a result of higher volumes and improved pricing, gross profit and gross profit margin increased $8.4 million and 110 basis points, respectively, compared to the same period last year. Operating income increased by $9.1 million, or 52.6 percent, to $26.4 million compared to the third quarter last year, due to increased volume, improved pricing and continued operational improvements.
Diversified Products' net sales, prior to the elimination of intersegment sales, totaled $132 million for the third quarter of 2014, consistent with the prior year period, as the increase in non-trailer truck mounted equipment and other engineered products was offset by reduced sales of composite products. Gross profit and gross profit margin declined $7.4 million and 560 basis points, respectively, compared to the prior year period, primarily due to higher raw material and operating costs related to wood flooring operations, unfavorable product mix and competitive market pressures within certain product lines. Operating income for the third quarter of 2014 was $12.0 million, or 9.1 percent of net sales, a decrease of $6.5 million compared to the same period last year.
Retail's net sales, prior to the elimination of intersegment sales, totaled $45 million for the third quarter of 2014. Results for the current quarter, which were consistent with the prior year period, reflect continued strong demand for parts and services despite fewer locations as a result of the transition of three West Coast branches to independent dealers in May 2014. Gross profit margin declined 60 basis points compared to the prior year period to 10.8 percent, primarily the result of product mix. Operating income for the third quarter of 2014 was $0.9 million, an improvement of $0.1 million compared to the same period last year.
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 earnings 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, and other non-operating income and expense, as well as certain charges in connection with the Company's recent acquisitions of Walker Group Holdings, LLC (“Walker”) in May 2012 and certain assets of Beall Corporation (“Beall”) in February 2013. Management believes operating EBITDA provides useful information to investors regarding our results of operations. The Company provides this measure because we believe it is useful for investors to understand our performance period to period with the exclusion of the recurring and non-recurring items identified above. Management believes the presentation of operating EBITDA, when combined with the primary GAAP presentation of operating 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 earnings and adjusted earnings per diluted share reflect adjustments