Wabash National(US:WNC)2021-07-28 20:06PART I – FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for the quarterly period ended June 30, 2021, including balance sheets, statements of operations, comprehensive income, cash flows, and stockholders' equity, along with accompanying notes Condensed Consolidated Balance Sheets As of June 30, 2021, total assets increased slightly to $1,180.5 million from $1,161.5 million at December 31, 2020, driven by higher inventories and accounts receivable, partially offset by decreased cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $134,375 | $217,677 | | Inventories, net | $252,550 | $163,750 | | Total current assets | $587,984 | $545,764 | | Total assets | $1,180,500 | $1,161,470 | | Liabilities & Equity | | | | Accounts payable | $171,377 | $104,425 | | Long-term debt | $418,900 | $447,979 | | Total liabilities | $780,520 | $756,591 | | Total stockholders' equity | $399,980 | $404,879 | Condensed Consolidated Statements of Operations For Q2 2021, the company reported $12.3 million net income, a significant turnaround from a $0.1 million net loss in Q2 2020, driven by a 32.5% increase in net sales to $449.4 million Statement of Operations Highlights (in thousands, except per share amounts) | Metric | Q2 2021 | Q2 2020 | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $449,422 | $339,153 | $841,425 | $726,227 | | Gross profit | $55,608 | $34,321 | $102,774 | $71,064 | | Income (loss) from operations | $22,684 | $5,999 | $33,899 | $(104,057) | | Net income (loss) | $12,252 | $(146) | $15,469 | $(106,793) | | Diluted EPS | $0.24 | $0.00 | $0.29 | $(2.01) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2021, net cash used in operating activities was $13.1 million, a significant shift from the $22.7 million provided by operations in the same period of 2020, primarily due to increased working capital needs and inventory Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(13,086) | $22,654 | | Net cash provided by (used in) investing activities | $9,915 | $(8,196) | | Net cash used in financing activities | $(78,461) | $(18,981) | | Net decrease in cash | $(81,632) | $(4,523) | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, financial statement line items, including a Q1 2020 goodwill impairment of $106.7 million, debt composition, hedging, the Q2 2021 divestiture of Extract Technology, and segment performance - In Q1 2020, the company recorded goodwill impairment charges of $95.8 million for the Final Mile Products (FMP) reporting unit and $11.0 million for the Tank Trailers reporting unit26 - In Q2 2021, the company sold its Extract Technology business for net proceeds of approximately $20.8 million, recognizing a gain of $1.9 million, with $11.1 million of goodwill allocated and disposed of8625 Long-Term Debt Composition (in thousands) | Debt Instrument | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Senior Notes due 2025 | $315,000 | $315,000 | | New Term Loan Credit Agreement due 2027 | $108,835 | $138,835 | | Total Principal | $423,835 | $453,835 | | Less: unamortized discount and fees | $(4,935) | $(5,856) | | Total Long-term debt | $418,900 | $447,979 | Segment Performance - Six Months Ended June 30, 2021 (in thousands) | Segment | Total Net Sales | Income (loss) from Operations | | :--- | :--- | :--- | | Commercial Trailer Products | $544,051 | $53,164 | | Diversified Products | $150,586 | $11,913 | | Final Mile Products | $158,088 | $(7,194) | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant operational and financial improvements in Q2 and H1 2021, highlighting 32.5% year-over-year net sales growth, strong liquidity of $304.3 million, increased capital expenditure forecasts, and a $1.34 billion order backlog, despite ongoing industry uncertainties Results of Operations Q2 2021 saw a strong recovery with net sales rising to $449.4 million from $339.2 million in Q2 2020, driven by a 38.0% increase in new trailer unit shipments and an improved gross profit margin of 12.4% Q2 2021 vs Q2 2020 Sales by Segment (in thousands) | Sales by Segment | Q2 2021 | Q2 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Commercial Trailer Products | $296,342 | $232,254 | 27.6% | | Diversified Products | $76,578 | $63,951 | 19.7% | | Final Mile Products | $81,023 | $50,832 | 59.4% | | Total Net Sales | $449,422 | $339,153 | 32.5% | - Gross profit margin increased to 12.4% in Q2 2021 from 10.1% in Q2 2020, driven by higher volumes and cost containment measures99107 - For the six months ended June 30, 2021, net sales increased 15.9% year-over-year, driven by a 21.0% increase in new trailer shipments119 Liquidity and Capital Resources The company maintained a strong liquidity position of $304.3 million as of June 30, 2021, returning capital through $8.4 million in dividends and $40.0 million in share repurchases, while increasing its 2021 capital expenditure forecast to $55-$60 million - The company's liquidity position (cash and available borrowing) was $304.3 million as of June 30, 2021136149 - Capital allocation in the first six months of 2021 included $8.4 million in dividends, $40.0 million in share repurchases, and a $30.0 million debt prepayment135160 - The 2021 capital expenditure forecast was increased by $20 million to a range of $55 million to $60 million to retool existing capacity for expanded dry van production162 - Cash used in operations for the first six months of 2021 was $13.1 million, driven by an $89.7 million increase in inventories to meet anticipated production158 Backlog and Outlook The company reported a strong order backlog of approximately $1.34 billion at June 30, 2021, a 77% increase year-over-year, with industry forecasts predicting significant recovery in U.S. trailer production for 2021 and strong outlooks for 2022 Order Backlog Comparison | Date | Backlog (in millions) | | :--- | :--- | | June 30, 2021 | $1,342 | | December 31, 2020 | $1,482 | | June 30, 2020 | $757 | - Industry forecasters (ACT and FTR) estimate total U.S. trailer production for 2021 to be between 291,000 and 295,000 units, a significant recovery from 206,000 units in 2020176 - Forecasts for 2022 trailer production are also strong, with ACT estimating 333,000 units and FTR estimating 320,000 units177 Quantitative and Qualitative Disclosures about Market Risk The company faces market risks from commodity price volatility, interest rate changes, and foreign exchange fluctuations, which are managed through fixed-price contracts, financial derivatives, and monitoring of floating-rate debt - The company manages commodity price risk through fixed-price contracts and financial derivatives, with $110.8 million in raw material purchase commitments as of June 30, 2021183172 - A hypothetical 100 basis-point change in the floating interest rate on its outstanding debt would change annual interest expense by approximately $1.1 million184 - Exposure to fluctuations in the Mexican peso exchange rate is considered to have an immaterial impact on results of operations185 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the second quarter - The Company's disclosure controls and procedures were deemed effective as of June 30, 2021186 - No material changes to internal control over financial reporting occurred during the second quarter of fiscal year 2021187 PART II – OTHER INFORMATION Legal Proceedings This section refers to Note 12 of the financial statements for information on legal proceedings, which are not expected to have a material impact on the company's financial condition or liquidity - For details on legal proceedings, the report refers to Note 12, which states that existing proceedings are not expected to have a material impact18872 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020, and investors are advised to consider those risks - The report directs investors to the risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2020189 Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2021, the company repurchased 1,304,214 shares of common stock for approximately $21.9 million under its repurchase program, with $11.4 million remaining available as of June 30, 2021 Share Repurchases for Quarter Ended June 30, 2021 | Period | Total Shares Purchased | Average Price Paid per Share | Total Shares Purchased (Public Program) | Max Amount Remaining ($ in millions) | | :--- | :--- | :--- | :--- | :--- | | April 2021 | 282,662 | $18.56 | 282,662 | $28.0 | | May 2021 | 412,307 | $16.67 | 412,307 | $21.2 | | June 2021 | 616,060 | $16.01 | 609,245 | $11.4 | | Total | 1,311,029 | $16.77 | 1,304,214 | $11.4 | Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, a Section 906 certification, and iXBRL-formatted financial statements - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and iXBRL data files (101, 104)192