Wabash National Corporation (NYSE:WNC) reported that second-quarter results represent the best performance in company history as records were set for gross profit, income from operations and operating EBITDA.
Wabash established new records for gross profit margin and operating income margin of 19.3 percent and 12.5 percent, respectively. Operating EBITDA, a non-GAAP measure that excludes the effects of certain recurring and non-recurring items, for the second quarter was $72.8 million, an increase of $19.1 million, or 36 percent, compared to operating EBITDA for the prior year period.
Net sales for the second quarter decreased 8 percent to $471 million from $515 million in the prior year quarter while operating income increased 40 percent on improved pricing and operational execution to $58.9 million, compared to $42.1 million for the second quarter of 2015. On a trailing 12-month basis, net sales totaled $2 billion, generating operating EBITDA of $269.2 million, or 13.5 percent of net sales. The continued year-over-year improvement in operating performance is attributable to the successful execution of the company’s growth and diversification strategies, strong demand within the Commercial Trailer Products segment and outstanding operational execution across the company’s manufacturing facilities.
Net income for the second quarter of 2016 was $35.5 million, or $0.53 per diluted share, compared to the second quarter 2015 net income of $28.6 million, or $0.41 per diluted share. Second quarter 2016 non-GAAP adjusted earnings increased $13 million, or 55 percent, over the prior year period. Non-GAAP adjusted earnings for the second quarter of 2016 excludes a non-recurring charge of $1.7 million in connection with the company’s segment realignment announced during the quarter and effective for reporting purposes beginning with the second quarter. Non-GAAP adjusted earnings for the second quarter of 2015 excludes $8.3 million of gains from the sale of two former branch locations and a $0.3 million charge in connection with the refinancing of the Company’s asset based lending facility.
“The record financial performances of the company over the past several quarters further demonstrate our commitment to operational excellence leveraging our long-standing expertise in lean manufacturing and process improvements, our continued strategy to favor margin over volume in the core trailer business as well as a strong demand environment within our Commercial Trailer Products segment,” said Dick Giromini, president and chief executive officer.
“New trailer shipments for the second quarter were approximately 15,900, in-line with our previous guidance of 15,500 to 16,500 trailers driven by strong customer pick-ups. 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. As such, we are increasing our full-year adjusted earnings guidance to $1.80 to $1.90 per diluted share, representing a year-over-year improvement of 24 percent at the midpoint of this range.”
As previously announced, the company has realigned its reporting segments. The former Retail segment will now be reported within both Commercial Trailer Products and Diversified Products, as applicable. The decision to strategically realign the Retail segment was made to strengthen the alignment between the company’s manufacturing businesses and its retail sales and service operations, improve profitability and capitalize on growth opportunities.
Commercial Trailer Products’ net sales decreased $30 million, or 7 percent, primarily due to a decline in new trailer shipments of 5 percent as compared to the prior year period related to the timing of customer pick-ups. Despite the lower revenues, gross profit and gross profit margin increased $20 million and 620 basis points, respectively, as compared to the same period last year due to continued execution of a pricing strategy committed to favoring margin over volume and operational excellence within the manufacturing facilities. Operating income increased $17.9 million, or 46 percent, from the second quarter last year to $57.1 million.
Diversified Products’ net sales decreased $12 million, or 12 percent, primarily the result of lower tank trailer shipments and lower sales of non-trailer truck mounted equipment which was partially offset by increased demand for process systems and composite products as compared with the previous year period. Gross profit and operating income were comparable to the prior year period while gross profit margin and operating margins improved 220 basis points and 170 basis points, respectively, as compared to the prior year as a result of continued strong operational execution and product mix.