It was a record fourth quarter and a record year for Wabash National Corporation (NYSE: WNC).
The records: net sales of $1.64 billion for full year 2013, up 11.9 percent over the prior year; operating income of $103.2 million for full year 2013, up 46.4 percent; quarterly net sales of $458 million for the fourth quarter 2013, up 10.2 percent; and annual gross profit and profit margins of $215.1 million and 13.2 percent, respectively.
"Overall, 2013 was truly a transformational and record-setting year for Wabash National,” said Dick Giromini, president and chief executive officer. “Growth initiatives driven by our long-term strategic plan to transform the company into a diversified industrial manufacturer continued to gain traction and momentum throughout the year. We're now beginning to realize the full benefits of the strategic actions we've taken in the financial and operating performance being delivered by all segments of the business, as demonstrated by record net sales of $1.64 billion, record gross profit of $215.1 million, and a 200 basis point improvement in gross margin to 13.2 percent.
“Our performance for the year further substantiates the significant progress we have made in our transformation efforts, and underscores our commitment to long-term profitable growth. Additionally, we continue to implement further operational improvements throughout the business while integrating our strategic acquisitions, and remain committed to enhancing our long-term margin and growth profile."
He said new-trailer shipments of 46,800 for the year were consistent with the company’s previous full year guidance of 46,000 to 47,000 trailers.
“We look forward to 2014 with a healthy backlog of orders totaling $711 million and a trailer demand forecast well above replacement levels for the third consecutive year,” he said. “As fleet age, customer profitability, used trailer values, regulatory compliance and access to financing all support continued demand for new trailers, we believe 2014 has the potential to exceed the record performances achieved in 2013."
The company's fourth quarter 2013 results include the impact of an early extinguishment of debt charge totaling $0.6 million related to a $20 million term loan prepayment made in December 2013. Excluding the impact of this item, non-GAAP adjusted earnings for the fourth quarter were $10.8 million, or $0.15 per diluted share.
Earnings for the quarter ended December 31, 2012, included an income tax benefit of $59.0 million, or $0.86 per diluted share, primarily related to the reversal of the company's valuation allowance against its net deferred tax assets. Excluding the income tax benefit and other one-time charges of $0.5 million related to the acquisitions of Walker Group Holdings on May 8, 2012 and certain assets of Beall Corporation on February 4, 2013, non-GAAP adjusted earnings were $21.7 million, or $0.32 per diluted share for the fourth quarter of 2012.
The company reported operating income of $24.1 million for the fourth quarter of 2013, compared to operating income of $29.2 million for the fourth quarter of 2012. Operating EBITDA, a non-GAAP measure that excludes the effects of costs related to the acquisitions of Walker and certain assets of Beall, as well as other recurring and non-recurring items, for the fourth quarter of 2013 was $35.6 million, a decrease of $3.2 million compared to operating EBITDA for the previous year period. For full year 2013, the company generated operating EBITDA of $149.9 million, or 9.2 percent of net sales, as compared to $118.5 million, or 8.1 percent of net sales, for the previous year period.
Commercial Trailer Products' net sales increased $66 million or 25.5 percent, on 13,500 trailers, or 3,300 more trailers than the prior year period. This increase in revenue was primarily due to the 32.4 percent increase in trailer shipments during the quarter offset by a 6.1% reduction in average selling prices compared to the prior year period due to customer and product mix. As a result, gross profit increased $2.2 million as compared to the same period last year, but gross margins declined 80 basis points to 6.5 percent compared to the prior year period. Operating income increased to $14.3 million, or $1.5 million higher than the fourth quarter last year due to increased volume and continued operational improvements.
Diversified Products' net sales decreased $21 million, or 14.7 percent, primarily attributed to a change in mix of product shipments as compared to the previous year period. Compared to the prior year period, gross profits and margins declined $4.7 million and 20 basis points, respectively, due primarily to the reduced volume levels. Operating income decreased $6.8 million, as compared to the same period last year, primarily due to lower net sales and increased intangible amortization charges associated with the recent acquisitions of Walker and certain assets of Beall.
Retail's net sales of $47 million were consistent with the prior year period as lower shipments of new trailers were offset by higher parts and service demand. However, gross profit margins declined 80 basis points to 9.7 percent due to increased cost of services in order to support strategic growth initiatives. Operating income decreased $0.6 million during the fourth quarter of 2013 as compared to the same period last year due to higher selling and administrative expenses related to our strategic growth initiatives.
“We expect to continue the momentum from 2013 into 2014 with strong trailer demand, top-line and bottom-line growth across all business segments and the continued execution of our growth and diversification strategy,” Giromini said. “The demand environment for trailers remained healthy throughout 2013, as evidenced by our current backlog exceeding $711 million, an increase from the prior year of approximately $45 million or 7%. In addition, current industry forecasts point to strong demand levels throughout 2014 with projections well above replacement demand and exceeding 2013 levels. Based on our current quote and order activities, our existing backlog and customer feedback regarding their current year needs, we expect 2014 demand will exceed 2013."