Wabash National Corp reported net sales for the fourth quarter 2019 were $579 million while operating income was $31.8 million or 5.5 percent of net sales. This brought the full year of 2019 total revenue to a new record of $2.3 billion while generating operating income of $142.8 million or 6.2 percent of net sales.
Net income for the fourth quarter 2019 was $18.4 million, and $89.6 million or for the year. Operating EBITDA, a non-GAAP measure that excludes the effects of certain items, for the fourth quarter 2019 was $44.2 million, or 7.6 percent of net sales, and full year operating EBITDA of $194.2 million, or 8.4 percent of net sales.
“Overall, top line for the year and the quarter were driven by strong market performance and pricing in all three operating segments,” Brent Yeagy, president and chief executive officer, said in a conference call with investment analysts. “Operating conditions in the quarter were somewhat challenging as we navigated through the end-of-year scheduling and demand fluctuations. Our CTP and DPG segments were able to mitigate the majority of these challenges through pricing actions and their ability to leverage leaner and more nimble operations characterized by their overall Wabash Management System maturity.
“However, our FMP business had a more difficult time executing through those challenges. As such, profitability for the quarter was slightly below expectations on a consolidated basis. And as previously stated, CTP and DPG were solid performers, but unable to offset FMP's challenges for the quarter.”
By business segment, Commercial Trailer Products’ net sales for the fourth quarter totaled $399.3 million, a decrease of $39.4 million, or 9 percent. Gross profit margin for the fourth quarter increased 230 basis points as compared to the prior year period primarily due to successful efforts to recover cost pressures as well as product and customer mix, Wabash reported. Operating income increased $4.1 million, or 10.4 percent, from the fourth quarter last year to $43.1 million, or 10.8 percent of net sales.
Diversified Products’ net sales for the fourth quarter were $94.7 million, a decrease of $7.7 million, or 7.5 percent, as compared to the prior year quarter, due primarily to the impact from the divestiture of a business. Gross profit margin as compared to the prior year period increased 20 basis points, primarily due to product and customer mix. Operating income in the fourth quarter of 2019 was $5.6 million, or 5.9 percent of net sales, compared to a loss of $6.1 million on a GAAP basis or income of $6.9 million on a non-GAAP Adjusted basis during the fourth quarter 2018.
Final Mile Products’ net sales for the fourth quarter totaled $92.7 million, an increase of $18.2 million or 24.4 percent. Gross profit and gross profit margin for the fourth quarter were $6.2 million and 6.7 percent, respectively. Operating loss during the fourth quarter was $5.9 million, or 6.4 percent of net sales. While the business saw continued growth, operating results were negatively impacted during the quarter by operational inefficiencies as the business encountered headwinds relating to demand fluctuations and product mix.
“New customer inflow and traditional customer order pattern variation challenged the operating systems within Final Mile Products, which weighed on profitability in the quarter,” Yeagy said, and he noted changing trends in the final mile marketplace. “The reality is that our operating systems within Final Mile Products have further improvements to make in order to more efficiently execute on its growth trajectory.”
Yeagy also noted that the Wabash backlog ended the fourth quarter at $1.1 billion, up by about $300 million from the end of the third quarter.
“For the trailer market specifically, industry reports have shown backlog effectively flat from the end of Q3 to Q4. So we expect at this early stage that we've outperformed the market, just as we expected,” he said. “The market has certainly taken on a more normal seasonal pattern for 2020, and we expect fleets to manage orders in a more traditional manner heading into 2020.
For the full year ending December 31, 2020, the company issued guidance of $2.05 to $2.15 billion in sales, based on a trailer market demand estimate of about 250,000 units.
