Wabash Reports Net Income Increase in Second Quarter But Decline in Revenues
Wabash National Corp. reported its net income rose in the second quarter and six-month periods as margins and operating efficiencies improved; however, revenues in both periods declined.
Net income for the second quarter, ended June 30, was $36 million, or 53 cents per share, compared with $29 million, or 41 cents.
Net sales for its trailer and diversified products for the quarter fell by $44 million to $471 million, compared with $515 million a year earlier, according to the trailer maker.
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Net sales for trailers, its largest unit, fell to $382 million from $412 million.
The Lafayette, Indiana-based company said in its earnings, however, quarterly gross profit rose by $20 million and its gross profit margin climbed to 18.1% from 11.9% a year earlier “due to continued execution of a pricing strategy committed to favoring margin over volume and operational excellence within our manufacturing facilities.”
Wabash said new trailers shipped during the second quarter fell 4.7% to 15,350 compared with 16,100 trailers in the prior year period. Also, the trailers’ average selling price fell about 4% due to product mix as compared with the prior year period, “and that primarily drove the decrease in sales,” Wabash disclosed in its earnings report.
Also, used trailer sales in the quarter fell 50% to 300 units from 600.
Wabash is the nation’s only publicly traded trailer manufacturer.
“A healthy backlog of $860 million, overall trailer market projections well above replacement levels for the remainder of 2016 and outstanding operational execution across the business have put us on pace to deliver another record year in 2016, our fifth consecutive year of record performance,” Wabash CEO Dick Giromini said in a statement.
Michael Baudendistel, an analyst with Stifel, Nicolaus & Co., wrote in a note to investors that the company’s backlog declined more than 20% from the first quarter “as the implied orders placed during the quarter were the lowest since the first quarter of 2012.”
He described the $154 million of implied orders as “a possible precursor for disappointing semi-trailer orders during the traditional order season this fall. On the positive side with regard to orders, however, the company has verbal commitments on 5,000 units expected to be booked in August.”
On the other hand, orders placed in the second quarter are not typically among the highest and “were somewhat constrained by the company’s 2017 order book not being open for the full duration of the quarter,” according to the analyst.
Year-to-date, Wabash’s net income jumped to $63 million, or 95 cents, up from $39 million, or 55 cents, in the 2015 period. Net sales slipped to $919 million from $952 million.
Wabash said in its quarterly report, “We continue to be encouraged by the strong demand within the dry and refrigerated trailer segment throughout the first six months of 2016, and our expectation is that overall industry shipment and production levels will remain above replacement demand for the remainder of 2016 as many key structural and market drivers continue to support healthy demand for new trailers.”
Wabash said it was increasing its full-year adjusted earnings guidance to $1.80 to $1.90 per diluted share, “representing a year-over-year improvement of 24% at the midpoint of this range.”
