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MarketScreener Homepage  >  Equities  >  Nyse  >  Wabash National Corporation    WNC

WABASH NATIONAL CORPORATION

(WNC)
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Wabash National Corporation Announces Second Quarter 2020 Results

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07/29/2020 | 06:56am EDT
  • Second quarter revenue of $339M, earnings per share of $0.00

  • Rapid cost containment leads to exceptional decremental margin management at 15%

  • Liquidity position strengthens sequentially, repaid previous advances on revolver

  • Second quarter backlog of approximately $750 million gives visibility into the second half of 2020

  • Anticipate positive free cash flow in 2020, remain committed to dividend

LAFAYETTE, Ind., July 29, 2020 (GLOBE NEWSWIRE) -- Wabash National Corporation (NYSE: WNC), the innovation leader of engineered solutions for the transportation, logistics and distribution industries, today reported results for the quarter ended June 30, 2020.

Net sales for the second quarter 2020 were $339.2 million as operations were able to maintain productivity levels in the face of unprecedented business and operating conditions brought on by COVID-19. Additionally, customer pick-ups of new equipment improved following disruption seen during the first quarter in the lead-up to COVID-19-related shutdowns. Operating income was $6.0 million during the quarter as rapid implementation of cost control measures limited decremental margins to 15 percent. Earnings per share was $0.00 for the second quarter.

Total Company backlog as of June 30, 2020 was approximately $750 million compared to backlog of approximately $1.0 billion ending March 2020 as normal seasonal trends indicate an expected sequential softening in backlog during the second quarter.

“The second quarter was the most uniquely challenging time I've experienced in my career. Balancing continued operations to support our customers during a global pandemic while implementing meaningful short-term cost control measures as well as longer-term initiatives to optimize our organizational structure took a remarkable level of dedication from every level of our organization, and I'd like to acknowledge the tremendous efforts of our people,” said Brent Yeagy, president and chief executive officer. "To limit decremental margins to fifteen percent during the second quarter reflects the dedication of our people as well as the long-term improvements we've made to our business portfolio and within our operating system. The cost reductions we've made allow us to control expense in the short-term while preserving the business' ability to quickly accelerate when market conditions invariably improve."

Liquidity as of the end of the second quarter was $304 million with cash of $136 million and a fully untapped revolving credit line of $168 million following the second quarter repayment of a proactive drawdown of the revolver during the first quarter. Overall liquidity increased by $27 million sequentially as positive cash flow from operations was supplemented by a release of working capital. The Company's nearest debt maturity, amounting to $135 million, is in March of 2022.  Additionally, the Company's debt carries no financial covenants. 

"Our backlog combined with second quarter shipments shows that orders continued to flow at a moderate pace during the second quarter, which normally sees sales outpace new orders. We continue to be pleased with the state of our order book and the visibility it provides for the second half of the year," continued Yeagy. "Our goal for 2020 remains positive free cash flow generation and our second quarter results serve to strengthen our expectations of achieving that target. We aim to demonstrate how our free cash flow profile has improved from previous cycles by maintaining our dividend through this challenging time and continuing to deploy capital in the best interest of our long-term shareowners."

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 2020 and 2019. 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, 2020 2019 2020 2019 2020 2019
  (dollars in thousands)
New trailers shipped 8,000  14,250  400  750  —    
Net sales $232,254  $400,864  $63,951  $97,026  $50,832  $134,817 
Gross profit $22,392  $46,906  $10,761  $20,123  $1,963  $21,289 
Gross profit margin 9.6% 11.7% 16.8% 20.7% 3.9% 15.8%
Income (loss) from operations $18,599  $39,918  $2,242  $8,911  $(6,569) $9,221 
Income (loss) from operations margin 8.0% 10.0% 3.5% 9.2% (12.9%) 6.8%

Commercial Trailer Products’ net sales for the second quarter were $232.3 million, a decrease of 42.1 percent as compared to the prior year quarter as a result of a reduction in market demand. Operating income was $18.6 million or 8.0% of sales during the quarter.

Diversified Products’ net sales for the second quarter were $64.0 million, a decrease of 34.1 percent as compared to the prior year as a result of lower market demand. Operating income was $2.2 million or 3.5 percent of sales during the quarter.

Final Mile Products’ net sales for the second quarter totaled $50.8 million, a decrease of 62.3 percent, as compared to the prior year, due to softer market demand. Operating loss was $6.6 million during the quarter as a result of weaker volume leverage over fixed 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, adjusted operating income (loss), adjusted net (loss) income and adjusted earnings per 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 (loss) 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, impairment and other, net, 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 (loss) and net (loss) income, is beneficial to an investor’s understanding of the Company’s operating performance. A reconciliation of operating EBITDA to net (loss) income is included in the tables following this release.

Free cash flow is defined as net cash provided by operating activities minus capital expenditures. Management believes providing free cash flow is useful for investors to understand the Company’s performance and results of cash generation period to period with the exclusion of the item identified above. Management believes the presentation of free cash flow, when combined with the GAAP presentations of cash provided by operating activities, is beneficial to an investor’s understanding of the Company’s operating performance. A reconciliation of free cash flow to cash provided by operating activities is included in the appendix to this release.

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

Adjusted net (loss) income and adjusted earnings per basic (2020) or diluted (2019) share, each reflect adjustments for non-cash impairment and other, net, and the related tax effects of these adjustments. 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 (loss) income and basic (2020) and diluted (2019) net (loss) income per share, is beneficial to an investor’s understanding of the Company’s performance. A reconciliation of each of adjusted net (loss) income and adjusted earnings per basic or diluted share to net (loss) income and net (loss) income per basic or diluted share is included in the tables following this release.

Second Quarter 2020 Conference Call

Wabash National will discuss its results during its quarterly investor conference call on Wednesday, July 29, 2020, 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 5580198.  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 (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 a continued or prolonged shutdown or reduction of our operations, substantially reduced customer orders or sales volumes and supply disruptions due to the coronavirus (COVID-19) outbreak, 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.

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

Investor Relations:
Ryan Reed
Director, Investor Relations
(765) 490-5664
ryan.reed@wabashnational.com


WABASH NATIONAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - dollars in thousands)

 June 30,
2020
 December 31,
2019
Assets   
Current assets:   
Cash and cash equivalents$135,993  $140,516 
Accounts receivable, net123,952  172,737 
Inventories201,068  186,914 
Prepaid expenses and other41,836  41,222 
Total current assets502,849  541,389 
Property, plant, and equipment, net218,637  221,346 
Goodwill204,418  311,026 
Intangible assets, net178,836  189,898 
Other assets37,525  40,932 
Total assets$1,142,265  $1,304,591 
Liabilities and Stockholders’ Equity   
Current liabilities:   
Current portion of long-term debt$  $ 
Current portion of finance lease obligations337  327 
Accounts payable124,747  134,821 
Other accrued liabilities107,030  124,230 
Total current liabilities232,114  259,378 
Long-term debt455,800  455,386 
Finance lease obligations206  378 
Deferred income taxes35,179  37,576 
Other non-current liabilities25,749  30,885 
Total liabilities749,048  783,603 
Commitments and contingencies   
Stockholders’ equity:   
Common stock 200,000,000 shares authorized, $0.01 par value, 52,906,115 and 53,473,620 shares outstanding, respectively753  750 
Additional paid-in capital639,330  638,917 
Retained earnings106,656  221,841 
Accumulated other comprehensive losses(6,915) (3,978)
Treasury stock at cost, 22,500,750 and 21,640,109 common shares, respectively(346,607) (336,542)
Total stockholders' equity393,217  520,988 
Total liabilities and stockholders’ equity$1,142,265  $1,304,591 
        


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,
 2020 2019 2020 2019
Net sales$339,153  $626,053  $726,227   $1,159,227 
Cost of sales304,832  538,403  655,163   1,002,887 
Gross profit34,321  87,650  71,064   156,340 
General and administrative expenses19,633  26,509  45,825   56,649 
Selling expenses4,886  8,494  12,884   16,717 
Amortization of intangible assets5,493  5,109  10,988   10,238 
Impairment and other, net(1,690)   105,424    
Income (loss) from operations5,999  47,538  (104,057)  72,736 
Other income (expense):       
Interest expense(5,882) (7,020) (12,154)  (14,110)
Other, net285  1,081  405   912 
Other expense, net(5,597) (5,939) (11,749)  (13,198)
Income (loss) before income tax expense (benefit)402  41,599  (115,806)  59,538 
Income tax expense (benefit)548  10,639  (9,013)  13,798 
Net (loss) income$(146) $30,960  $(106,793)  $45,740 
        
Net (loss) income per share:       
Basic$0.00  $0.56  $(2.01)  $0.83 
Diluted$0.00  $0.56  $(2.01)  $0.82 
Weighted average common shares outstanding (in thousands):       
Basic52,874  55,197  53,015   55,233 
Diluted52,874  55,668  53,015   55,719 
        
Dividends declared per share$0.08  $0.08  $0.160   $0.160 
                 


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

 Six Months Ended June 30,
 2020 2019
Cash flows from operating activities   
Net (loss) income$(106,793) $45,740 
Adjustments to reconcile net (loss) income to net cash provided by operating activities   
Depreciation11,657  10,957 
Amortization of intangibles10,988  10,238 
Net (gain) loss on sale of property, plant and equipment(1,690) 481 
Loss on debt extinguishment  53 
Deferred income taxes(2,648) (2,214)
Stock-based compensation416  5,377 
Impairment107,114   
Non-cash interest expense535  523 
Accounts receivable48,785  10,886 
Inventories(14,154) (80,163)
Prepaid expenses and other(8,195) (325)
Accounts payable and accrued liabilities(22,126) 58,210 
Other, net(1,235) 1,210 
Net cash provided by operating activities$22,654  $60,973 
Cash flows from investing activities   
Capital expenditures(10,921) (14,995)
Proceeds from the sale of property, plant, and equipment2,725  38 
Net cash used in investing activities$(8,196) $(14,957)
Cash flows from financing activities   
Proceeds from exercise of stock options  55 
Dividends paid(8,742) (9,061)
Borrowings under revolving credit facilities45,449  288 
Payments under revolving credit facilities(45,449) (288)
Principal payments under finance lease obligations(162) (152)
Principal payments under term loan credit facility  (15,470)
Debt issuance costs paid(12) (71)
Stock repurchase(10,065) (13,852)
Net cash used in financing activities$(18,981) $(38,551)
Cash and cash equivalents:   
Net (decrease) increase in cash, cash equivalents, and restricted cash$(4,523) $7,465 
Cash, cash equivalents and restricted cash at beginning of period140,516  132,690 
Cash, cash equivalents, and restricted cash at end of period$135,993  $140,155 
        


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
2020          
New trailers shipped 8,000  400      8,400 
Used trailers shipped 185  35      220 
           
New Trailers $218,753  $28,176  $  $  $246,929 
Used Trailers 2,273  1,323      3,596 
Components, parts and service 9,571  22,166  2,453  (7,884) 26,306 
Equipment and other 1,657  12,286  48,379    62,322 
Total net external sales $232,254  $63,951  $50,832  $(7,884) $339,153 
Gross profit $22,392  $10,761  $1,963  $(795) $34,321 
Income (loss) from operations $18,599  $2,242  $(6,569) $(8,273) $5,999 
           
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 


Six Months Ended June 30, Commercial
Trailer Products
 Diversified
Products
 Final Mile
Products
 Corporate and
Eliminations
 Consolidated
2020          
New trailers shipped 16,525  1,050      17,575 
Used trailers shipped 220  70      290 
           
New Trailers $456,654  $71,488  $  $  $528,142 
Used Trailers 2,591  2,533      5,124 
Components, parts and service 18,843  48,248  6,175  (14,984) 58,282 
Equipment and other 5,141  24,640  104,927  (29) 134,679 
Total net external sales $483,229  $146,909  $111,102  $(15,013) $726,227 
Gross profit $46,235  $25,902  $1,719  $(2,792) $71,064 
Income (loss) from operations $34,470  $(3,828) $(114,610) $(20,089) $(104,057)
           
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 
                     


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

 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2020 2019 2020 2019
Commercial Trailer Products       
Income from operations$18,599  $39,918  $34,470  $66,239 
Adjustments:       
Impairment    377   
Adjusted operating income$18,599  $39,918  $34,847  $66,239 
        
Diversified Products       
Income (loss) from operations2,242  8,911  (3,828) 16,955 
Adjustments:       
Impairment    10,971   
Adjusted operating income2,242  8,911  7,143  16,955 
        
Final Mile Products       
(Loss) income from operations(6,569) 9,221  (114,610) 11,090 
Adjustments:       
Impairment    95,766   
Adjusted operating (loss) income(6,569) 9,221  (18,844) 11,090 
        
Corporate       
Loss from operations(8,273) (10,512) (20,089) (21,548)
        
Consolidated       
Income (loss) from operations5,999  47,538  (104,057) 72,736 
Adjustments:       
Impairment    107,114   
Adjusted operating income$5,999  $47,538  $3,057  $72,736 
                


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,
 2020 2019 2020 2019
Net (loss) income$(146) $30,960  $(106,793) $45,740 
Income tax expense (benefit)548  10,639  (9,013) 13,798 
Interest expense5,882  7,020  12,154  14,110 
Depreciation and amortization11,526  10,646  22,645  21,195 
Stock-based compensation1,333  2,791  416  5,377 
Impairment and other, net(1,690)   105,424   
Other, net(285) (1,081) (405) (912)
Operating EBITDA$17,168  $60,975  $24,428  $99,308 


Adjusted Net (Loss) Income2:Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
Net (loss) income$(146) $30,960  $(106,793) $45,740 
Adjustments:       
Impairment    107,114   
Tax effect of aforementioned items    (2,786)  
Adjusted net (loss) income$(146) $30,960  $(2,465) $45,740 


Adjusted Basic (2020) and Diluted (2019) Earnings Per Share2:Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
Basic (2020) and diluted (2019) earnings per share$0.00  $0.56  $(2.01) $0.82 
Adjustments:       
Impairment    2.01   
Tax effect of aforementioned items    (0.05)  
Adjusted basic (2020) and diluted (2019) earnings per share$0.00  $0.56  $(0.05) $0.82 
        
Weighted average basic (2020) and diluted (2019) shares outstanding (in thousands)52,874  55,668  53,015  55,719 

Operating EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, impairment and other, net, and other non-operating income and expense.
2 Adjusted net (loss) income and adjusted basic (2020) and diluted (2019) earnings per share reflect adjustments for non-cash impairment and the related tax effects of these adjustments.


WABASH NATIONAL CORPORATION
RECONCILIATION OF FREE CASH FLOW
(Unaudited - dollars in thousands)

 Six Months Ended June 30,
 2020 2019
Net cash provided by operating activities$22,654  $60,973 
Capital expenditures(10,921) (14,995)
Free cash flow1$11,733  $45,978 

1 Free cash flow is defined as net cash provided by operating activities minus capital expenditures.

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Financials (USD)
Sales 2020 1 438 M - -
Net income 2020 -116 M - -
Net Debt 2020 - - -
P/E ratio 2020 -6,88x
Yield 2020 2,30%
Capitalization 782 M 782 M -
Capi. / Sales 2020 0,54x
Capi. / Sales 2021 0,45x
Nbr of Employees 6 900
Free-Float 69,2%
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 5
Average target price 14,50 $
Last Close Price 14,78 $
Spread / Highest target 21,8%
Spread / Average Target -1,89%
Spread / Lowest Target -29,0%
EPS Revisions
Managers
NameTitle
Brent L. Yeagy President, Chief Executive Officer, COO & Director
Larry J. Magee Chairman
Michael N. Pettit Chief Financial Officer & Senior Vice President
Scott K. Sorensen Independent Director
John E. Kunz Independent Director
Sector and Competitors