Despite an operating environment that has been “unusual to say the least,” Wabash National Corp. President and CEO Brent Yeagy reported net sales for the first quarter 2021 of $392 million, an increase of 1.3% versus the prior year quarter. Consolidated gross profit was $47.2 million, or 12% of sales. Operating income was $11.2 million, or 2.9% of sales.
Backlog as of March 31 was approximately $1.5 billion, a 4% increase compared to December 2020 and 57% above March 2020.
“It's typical for Q1 backlog to decline sequentially after we book large deals in the fourth quarter of the previous year,” Yeagy explained in conference call with investment analysts. “This year new orders kept pace with our shipment activity during the quarter as we saw strong demand for our non-van business, which is sold out for 2021 and honestly unable to book new orders for the year.
For the full year of 2021, the company increased its sales guidance to $1.95-$2.05 billion—this comes even as US manufacturing and Wabash struggle with material cost increases and finding the labor to keep up with high demand.
“It is fair to say that supply chains were already stressed heading into this year, and we had some unique quarter-one weather events that compounded supply chain issues and winter storms impacted production both with ourselves and our suppliers,” Yeagy said. “I would say the rise in material cost has been greater than anything we could have reasonably expected, given that we are in uncharted territory with all-time highs in a number of commodities.”
The bulk of the labor and supply chain challenges “will not carry over in 2022,” he added.
In terms of product pricing during this period of surging costs, Wabash is having a discussion with “literally” every customer—“and it doesn't matter what product market, or which segment,” Yeagy noted.
“The implicit demand for our product exceeds our ability to deliver, based on the world that we live in right now,” Yeagy said. “We're creating our own reality, because of the demand for our product—that gives us opportunities to be bolder, more confident in the way that we talk to our customers. Those are just real and transparent conversations that you're going to have with the customer, in order to maintain a viable business.
“No one likes it, nor has anyone said, ‘thank you, may I have another,’ but that’s just the way we approach it.”
Recent customer discussions regarding growth and innovation, however, “have been some of the most interesting conversations from some of the most interesting names in logistics, transportation and distribution that I have had the pleasure of dealing with in my career,” Yeagy added. “And it feels like we're just touching the tip of the iceberg.
“They all deal with how these customers want to act on their markets over the next three, four or five years. And how Wabash could uniquely provide them solutions that no one else is talking to them about. So we are we're pretty jazzed up with that type of conversation and what we're getting so far.”
Business segments
Commercial Trailer Products net sales for the first quarter were $247.7 million, a decrease of 1.3% as compared to the prior year quarter, as operations scale to meet improved customer demand. Operating income was $20.9 million or 8.4% of sales during the quarter. The CTP unit shipped 9,250 trailers for the quarter, up from 8,525 the year before.
Diversified Products net sales for the first quarter were $74.0 million, a decrease of 10.8% as compared to the prior year, as operations work to ramp up. Additionally, the revenue decline was influenced by a divestiture completed in the prior year. Operating income was $6.1 million, or 8.2% of sales during the quarter. The unit shipped 420 trailers in the quarter, down from 625 in the 2019 quarter.
Final Mile Products net sales for the first quarter totaled $77.1 million, an increase of 27.9% as compared to the prior year, as operations scale to be able to satisfy stronger market demand. Operating loss was $3.9 million during the quarter.
See additional coverage in the May issue of Trailer/Body BUILDERS magazine.
