Wabash National Corporation (NYSE:WNC) had a massively successful third quarter, reporting record levels for net sales, gross profit, income from operations, operating margin and Operating EBITDA.
Net income for the third quarter of 2015 was $31.9 million, or $0.47 per diluted share, compared to third quarter 2014 net income of $18.3 million, or $0.25 per diluted share. Third quarter 2015 non-GAAP adjusted earnings increased $13.3 million to $31.9 million, or $0.47 per diluted share, from $18.6 million, or $0.26 per diluted share, for the third quarter 2014. Non-GAAP adjusted earnings for the third quarter of 2014 includes an early extinguishment of debt charge of $0.5 million incurred with regards to the company’s term loan prepayment.
For the third quarter of 2015, the company’s net sales increased 8 percent to a record $531 million from $492 million in the prior year quarter, and operating income increased 61 percent to a record quarter of $56.4 million compared to operating income of $34.9 million for the third quarter of 2014. Operating EBITDA, a non-GAAP measure that excludes the effects of certain recurring and non-recurring items, for the third quarter of 2015 was $68 million, an increase of $21.4 million compared to the prior year period. On a trailing 12-month basis through September 30, the company’s net sales exceeded $2 billion, net income totaled $90.1 million and Operating EBITDA increased to $207.0 million, or 10.3 percent of net sales.
“The overall strength in the company’s operating performance demonstrates that both the operational improvement initiatives and the transformative nature of our strategic growth efforts are paying strong dividends,” said Dick Giromini, president and chief executive officer. “All segments contributed significantly to the record performance this quarter as Commercial Trailer Products’ ongoing commitment to margin improvement and manufacturing excellence resulted in record level gross profit and operating income while Diversified Products’ performance provided significant year over year and sequential improvements. Through the first nine months of 2015 we have continued the momentum generated last year with strong operational execution and an accelerated pace of improvement from our record breaking 2014.”
Giromini said new trailer shipments for the third quarter were approximately 16,500, just within the range of the company’s previous guidance of 16,500 to 17,500 trailers. With three quarters now complete and a full order book for the remainder of the year, he said he fully expects to finish 2015 with the company’s fourth consecutive year of record performance.
“As such, we are now updating and tightening our full-year trailer shipment guidance to 63,000 to 64,000 trailers and increasing our adjusted earnings guidance to $1.38 to $1.43 per diluted share,” he said. “Longer term, supported by a healthy backlog of $1.1 billion, we believe the demand environment for trailers will remain strong as customer profitability, fleet age and regulatory compliance requirements all support an extended trailer cycle. Additionally, we expect continued growth from our strategic initiatives through new product introductions and market expansion opportunities.”
Commercial Trailer Products achieved new quarterly records for gross profit, operating income and operating margin. Net sales were $387 million, an increase of $35 million, or 10 percent, on shipments of 15,500 trailers, or 800 more trailers than the prior year period. This increase in revenue was primarily due to a 5.4 percent increase in trailer shipments during the quarter as well as the ongoing commitment to improve the financial performance within the core trailer business. Driven by higher volumes, an improved pricing environment and continued operational improvements, gross profit and gross profit margin increased $21.5 million and 480 basis points, respectively, as compared to the same period last year. Operating income increased by $20.4 million from the third quarter last year to $45.6 million.
Diversified Products’ net sales increased $4 million, or 3.8 percent, as compared to the previous year period as the increase in tank trailer shipments was partially offset by lower sales of aviation and other non-trailer equipment-related offerings. Gross profit margin for the third quarter of 24 percent improved 270 basis points from the prior year period. In addition, gross profit and operating income increased $4.2 million and $3.7 million, respectively, compared to the prior year period. These year-over-year improvements are due primarily to increased tank trailer shipments, strong demand for the ompany’s composite products, product mix and the successful execution of diversification initiatives to profitably grow the business.
Retail’s net sales of $42 million decreased 7.2 percent compared with the prior year period primarily due to lower shipments of new trailers, which were partially offset by the continued healthy demand for parts and service throughout the quarter. Gross profit margin improved 190 basis points compared to the prior year period due to a shift in product mix favoring higher-margined parts and service sales. Operating income of $1.3 million increased $0.5 million from the same period last year.