A favorable product mix and strong results from parts and services, tanks and truck bodies helped Wabash post solid third-quarter earnings while dry van sales fell as consumer spending on goods slowed.
Wabash is realizing efficiencies from the multiyear reorganization of its business into two units — one for van and body production across first- to final-mile products and one that focuses on growing parts and service revenue.
Long-term supply deals like one Wabash announced with J.B. Hunt Transport Services in January protects against economic swings that result in canceled orders. Those agreements allow Wabash to sign suppliers to longer terms like a multiyear agreement in September with Rockland Flooring for laminated wood trailer flooring.
Wabash in August completed the conversion of a former refrigerated van factory capable of 5,000 units a year to produce 10,000 dry vans, demand for which has slowed since peak demand during the pandemic.
“As we navigate softer near-term demand conditions within the dry van market, we expect the strength of our first to final mile portfolio to be apparent as truck bodies, tank trailers and parts and services support our results leading to what we anticipate will be our best-ever trough performance in 2024,” CEO Brent Yeagy said in a news release.
Those are the same factors the company cited in reporting record Q2 earnings. Wabash expects orders to come toward the later end of typical seasonal patterns for the industry.
Revenue falls as profits rise
Wabash reported quarterly revenue of $632.8 million, down 3.4% from the year-ago quarter. The company lowered full-year revenue guidance to about $2.6 billion.
The company reported Q3 operating income of $78 million with a 12.3% margin. Gross profit of $123 million equaled 19.4% of sales. Both exceeded earlier expectations.
Quarterly diluted earnings per share (EPS) were $1.16 compared to 73 cents a year ago. Wabash raised its full-year earnings per share estimate by 20 cents to $4.65, the midpoint of a $4.60-$4.70 range.
Through the first three quarters of 2023, Wabash outpaced its 2025 EPS goal of $3.50, Yeagy said.
“We are raising the bar considerably for the peak earnings potential of Wabash. We are also poised to generate significant free cash flow in 2023 even while making meaningful investments in our operations.”
The Lafayette, Indiana-based company said its total backlog of orders to build fell 20% to $1.9 billion compared with the July-September period in 2022. Backlogged orders shipped over the next 12 months should amount to about $1.4 billion.
Related articles:
Wabash reports record Q2 earnings
Wabash cuts multiyear trailer supply deal with J.B. Hunt
Big bet raises Wabash dry van capacity by 20%
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