Wabash Posts Mixed Earnings as Backlog Sets Record
Trailer maker Wabash National Corp. posted its second-highest revenue ever in the third quarter, but the news wasn’t all good.
Net income fell sharply amid increasing operating pressures that have prompted the company to raise prices.
At the same time, its order backlog reached a new record as it increased 80% to $1.3 billion compared with a year earlier.
Net income for the period ended Sept. 30 plunged to $4.7 million, or 8 cents per diluted share, compared with $18.9 million, or 30 cents, year-over-year.
Revenue rose 30% to $553 million from $425 million a year earlier, aided by the inclusion of body builder Supreme Industries Inc. that Wabash acquired at the end of third quarter 2017. Additionally, market demand remained strong at each of its three segments, according to the Lafayette, Ind.-based company.
Wabash’s all-time record quarterly income was notched in its 2018 second quarter when it hit $613 million.
“The third quarter was a difficult quarter for the company as a whole,” said Wabash CEO Brent Yeagy, as the company saw more spikes in the cost of raw materials, labor shortages, delays in chassis deliveries, a build up in completed trailers sitting waiting to be taken away by customers, and, in some divisions, an unfavorable sales mix.
Yeagy
The Commercial Trailer Products division’s income from operations slipped to $32.4 million from $36.3 million a year earlier. Its quarterly revenue increased to $368 million, climbing $28.9 million, or 8%, compared with a year earlier.
The division shipped 14,450 new trailers compared with 13,350 a year earlier.
Commercial trailer products’ gross profit margin for the quarter slid to 10.6% from 12.9% a year earlier.
Wabash’s Diversified Products unit reported a loss in income from operations of $6.3 million, compared with a gain of $5.1 million a year earlier. Revenue rose to $102.3 million, an increase of $13.5 million, or 15%, compared with the prior year, due primarily to the increased demand for liquid tank trailers.
Diversified Products shipped 700 trailers in the quarter compared with 550 year-over-year.
Its gross profit margin fell 3 percentage points to 16.6%.
The Final Mile Products division operations showed a loss of $1.49 million on sales of $87 million. Its gross profit margin was 10.3%.
All business units’ earnings reflected difficulties in getting chassis, Yeagy said.
Yeagy said Wabash was “working hard and hand-in-hand with the chassis manufacturers to increase visibility of supply, and adapting our scheduling methods to manage” and early results point to improvement.
Many suppliers serve both the trailer market and the truck market, which is booming alongside trailer demand, compounding supply chain constraints.
In the meantime, at the top of the company’s watch list are tariffs, Yeagy said.
“While the vast majority of our materials are purchased domestically, some secondary components may be sourced on a global level and, as such, be subject to tariffs, particularly the latest round of tariffs. We continue to manage as much of the risk as possible using every lever available to us, including pricing of our products, managing our supply base and expanding our commodity-hedging program,” Yeagy said.
“This is a pseudo regulatory-related pressure. Our customers understand that. They are dealing with it in other ways. We feel confident that we will be able to recover a very significant portion of that amount going forward,” Yeagy added.
Wabash is maintaining its full-year guidance for 2018 new trailer shipments of 60,000 to 62,000 units based on expectations of stronger pricing and a more favorable sales mix.
