Wabash National(US:WNC)2022-02-24 21:12Part I Business Wabash National Corporation, a leader in engineered solutions for transportation, logistics, and distribution, strategically realigned into two segments and rebranded in 2022, focusing on cold chain, e-commerce, and parts growth - In September 2021, the company realigned its operating structure from three segments into two new reportable segments: Transportation Solutions (TS) and Parts & Services (P&S)2028298 - In January 2022, the company rebranded its entire portfolio under the single "Wabash" brand, discontinuing legacy names, which led to a $28.3 million non-cash impairment charge in Q4 20212124 - The company's strategic growth initiatives are focused on three key areas: expanding in the cold chain market, capitalizing on e-commerce and logistics disruption, and growing its parts and services offerings33 Key Business Indicators | Indicator | Value (as of Dec 31, 2021) | Change (YoY) | | :--- | :--- | :--- | | Order Backlog | $2,526 million | +70% | | Full-time Employees | ~6,200 | N/A | | US Patents (held/applied) | 147 | N/A | | Foreign Patents (held/applied) | 152 | N/A | - The five largest customers accounted for approximately 30% of aggregate net sales in 2021, with no single customer accounting for more than 10% of net sales60 Risk Factors The company faces significant risks including the cyclical nature of the truck trailer industry, reliance on limited raw material suppliers, challenges in workforce attraction and retention, execution of strategic growth, and the ability to service its $433.1 million total indebtedness - Business & Operational Risks: The truck trailer manufacturing industry is highly cyclical, and demand is sensitive to economic conditions, with the company relying on a limited number of suppliers, facing risks of shortages and price volatility in key materials like foam insulation, steel, and aluminum818391 - Human Capital Risks: The inability to attract and retain key personnel or a sufficient manufacturing workforce, especially in a tight labor market, could materially impact operations and growth93 - Strategic & Competitive Risks: The company's success depends on executing its strategic plan, including diversification into higher-margin products and services, while facing significant competition on product quality, innovation, and price9495100 - Financial & Debt Risks: As of Dec 31, 2021, the company had $433.1 million in total indebtedness, with its ability to service this debt subject to operating performance and economic conditions, and debt agreements containing restrictive covenants that limit financial and operating flexibility121125128 Unresolved Staff Comments The company reports no unresolved staff comments - None133 Properties Wabash operates major manufacturing and corporate facilities across the United States and in Mexico, including key sites in Lafayette, IN, and Cadiz, KY, which are deemed adequate for current operations - The company has major manufacturing and retail operations throughout the United States and a facility in Mexico, with key locations including Lafayette, IN; Cadiz, KY; Fond du Lac, WI; Goshen, IN; and San Jose Iturbidé, Mexico134135 Legal Proceedings The company is involved in ordinary course legal proceedings, including two environmental cases as a potentially responsible party in South Carolina and Indiana, neither of which is expected to have a material financial impact - The company is a potentially responsible party (PRP) in two environmental cases: one in South Carolina (Philip Services Site) and one in Indiana (Lafayette site), with management not currently expecting either case to have a material adverse effect137138 Mine Safety Disclosures This section is not applicable to the company - Not Applicable139 Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Wabash common stock trades on the NYSE under 'WNC', maintains a quarterly dividend, and authorized a $150 million share repurchase program in August 2021, with $136.1 million remaining as of year-end - The company pays a regular quarterly cash dividend, which was reinstated in December 2016141 - In August 2021, the Board approved a new three-year, $150 million share repurchase program, with $136.1 million remaining available as of December 31, 2021146 Share Repurchase Activity | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Amount Remaining Under Program ($M) | | :--- | :--- | :--- | :--- | :--- | | Q4 2021 Total | 655,128 | $17.88 | 649,630 | $136.1 | Reserved This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations In 2021, Wabash achieved a significant recovery with 21.7% net sales growth to $1.80 billion, improved operating income, and executed a $400 million debt refinancing, though operations faced supply chain and labor constraints leading to $7.5 million cash used in operations Consolidated Financial Highlights | Metric | 2021 ($M) | 2020 ($M) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,803.3 | $1,481.9 | 21.7% | | Gross Profit | $196.5 | $159.8 | 23.0% | | Gross Margin | 10.9% | 10.8% | +10 bps | | Income (Loss) from Operations | $33.5 | ($85.6) | N/A | | Net Income (Loss) | $1.2 | ($97.4) | N/A | | Diluted EPS | $0.02 | ($1.84) | N/A | - Net sales growth was driven by a 23.9% increase in new trailer shipments and a 23.3% increase in new truck body shipments, reflecting stronger market demand185186 - The company recorded a $28.3 million non-cash impairment charge in Q4 2021 related to the discontinuation of certain trade names as part of its rebranding initiative197253 - In October 2021, the company refinanced its debt by issuing $400 million of 4.50% Senior Notes due 2028 and used the proceeds to redeem its 5.50% Senior Notes due 2025 and repay its New Term Loan Credit Agreement, resulting in a $9.1 million debt extinguishment charge204210346 - Cash used in operating activities was $7.5 million, a significant decrease from $124.1 million provided in 2020, primarily due to a $94.5 million increase in working capital as inventories and receivables grew with higher demand and supply chain constraints239 Quantitative and Qualitative Disclosures about Market Risk The company manages market risks from commodity prices, interest rates, and foreign exchange, with a hypothetical 10% commodity price change impacting COGS by $13.0 million and interest rate risk tied to $33.0 million in floating-rate debt - The company is exposed to commodity price fluctuations for materials like aluminum, steel, and lumber, managing this risk via fixed-price contracts and derivatives, where a hypothetical 10% price change would impact COGS by about $13.0 million267 - Interest rate risk is linked to the $33.0 million of floating-rate debt under the Revolving Facility, where a 100 basis-point change in rates would change annual interest expense by approximately $0.3 million268 Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements and Ernst & Young LLP's unqualified opinion on both financial statements and internal controls, detailing segment realignment, a $28.3 million impairment charge, and debt refinancing - The financial statements were audited by Ernst & Young LLP, which issued an unqualified opinion on the financial statements and internal controls over financial reporting274275 - The critical audit matter identified was the valuation of goodwill due to the significant estimation required in determining the fair values of reporting units, which are sensitive to assumptions like discount rates and EBITDA margins278279280 Consolidated Balance Sheet Highlights | Balance Sheet Item | Dec 31, 2021 ($M) | Dec 31, 2020 ($M) | | :--- | :--- | :--- | | Total Current Assets | 529.7 | 545.8 | | Total Assets | 1,107.1 | 1,161.5 | | Total Current Liabilities | 289.3 | 235.8 | | Total Liabilities | 781.5 | 756.6 | | Total Stockholders' Equity | 325.5 | 404.9 | - Note 5 details the $28.3 million non-cash impairment charge in Q4 2021 for trade name and trademark intangible assets due to the company's rebranding initiative329 - Note 19 explains the realignment from three former segments into two new segments, Transportation Solutions (TS) and Parts & Services (P&S), effective September 2021418421 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None430 Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2021, with no material changes during Q4 2021 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021430 - Management assessed the effectiveness of internal control over financial reporting based on the COSO 2013 framework and concluded it was effective as of December 31, 2021434 - There were no changes in internal control over financial reporting during Q4 2021 that materially affected, or are reasonably likely to materially affect, internal controls431 Other Information The company reports no other information - None443 Disclosure Regarding Foreign Jurisdictions That Prevent Inspections This section is not applicable to the company - Not applicable444 Part III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the company's definitive Proxy Statement for its 2022 Annual Meeting of Stockholders - This section incorporates information by reference from the company's definitive Proxy Statement to be filed within 120 days of fiscal year-end445446 Executive Compensation Information regarding executive compensation is incorporated by reference from the company's definitive Proxy Statement for its 2022 Annual Meeting of Stockholders - This section incorporates information by reference from the company's definitive Proxy Statement to be filed within 120 days of fiscal year-end448 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information on security ownership of beneficial owners and management, including equity compensation plans, is incorporated by reference from the company's definitive Proxy Statement - This section incorporates information by reference from the company's definitive Proxy Statement to be filed within 120 days of fiscal year-end449 Certain Relationships and Related Transactions, and Director Independence Information regarding related party transactions and director independence is incorporated by reference from the company's definitive Proxy Statement - This section incorporates information by reference from the company's definitive Proxy Statement to be filed within 120 days of fiscal year-end450 Principal Accounting Fees and Services Information regarding principal accounting fees and services is incorporated by reference from the company's definitive Proxy Statement - This section incorporates information by reference from the company's definitive Proxy Statement to be filed within 120 days of fiscal year-end451 Part IV Exhibits and Financial Statement Schedules This section lists financial statements included in Item 8 and provides an index of all exhibits filed with or incorporated by reference into the Annual Report - Refers to the Exhibit Index for a list of all exhibits filed with the report453 Form 10-K Summary The company provides no summary in this section - None454