Wabash National(US:WNC)2021-04-28 18:45Financial Data and Key Metrics Changes - First quarter revenue was $392 million, with consolidated new trailer shipments of 9,670 units [22] - Gross margin was 12% of sales, while operating margin came in at 2.9%, both above expectations due to strong cost control [22] - Net income for the quarter was $3.2 million, or $0.06 per diluted share [22] - Operating EBITDA for the first quarter was $26 million, or 6.7% of sales [22] Business Line Data and Key Metrics Changes - Commercial trailer products generated revenue of $240 million with operating income of $20.9 million; average selling price for new trailers was approximately $26,000, a 7.5% decrease year-over-year [24] - Diversified products group generated $74 million in revenue with operating income of $6.1 million and an EBITDA margin of 14.3%, the best since 2016; average selling price for new trailers was about $72,000, a 4% increase year-over-year [24] - Final Mile products generated $77 million in revenue but experienced an operating loss of $4 million; however, EBITDA turned positive with a gain of $621,000 [25][26] Market Data and Key Metrics Changes - Demand indicators for core transportation, logistics, and distribution markets remain strong, with record spot rates and expectations for continued increases in contract rates [6][7] - The company noted that labor availability and material cost increases are significant headwinds affecting operations [9][10] Company Strategy and Development Direction - The company is focusing on product development and innovation, particularly in structural composite technology, to capture market opportunities [13][14] - There is a commitment to reinvest in the business to support future organic growth and leverage flexible manufacturing across product lines [15] - The company aims to achieve an operating margin of 8% in the next two to three years, indicating confidence in overcoming current challenges [45][46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future as labor and supply chain challenges are expected to normalize over time, with strong freight growth and customer demand [20] - The company is maintaining its prior guidance and is pleased with the demand environment extending into 2022 and beyond [17][18] Other Important Information - Year-to-date operating cash flow was negative $22 million, with a focus on working capital efficiency [27] - Liquidity as of March 31 was $337 million, with $169 million in cash and $168 million available on the revolving credit facility [28] - The company plans to invest $35 million to $40 million in capital expenditures for 2021 [27] Q&A Session Summary Question: Can you provide more color on gross margin expectations by segment? - Management indicated that headwinds from commodity prices and labor are compressing gross margins across segments, with expectations for slight improvements in SG&A [36][37] Question: What is the outlook for earnings and operating margins in the back half of the year? - Management expects sequential improvement in operating margins and earnings in the second half of the year, driven by increased production and demand [39][40] Question: What is the timeline for Final Mile products to return to profitability? - Management anticipates significant EBITDA generation in 2021, with expectations for profitability in the Final Mile segment by 2022 [65][66] Question: Can you discuss the impact of working capital and the higher tax rate? - Management noted that working capital was a drain but better than expected, and the higher tax rate was due to a one-time adjustment related to incentive-based compensation [71][76] Question: How is MSC technology evolving within the company? - Management highlighted increased adoption potential for MSC technology across various products, indicating a shift in how it is marketed and engineered [78][79]