Wabash National Corporation reported operating income of $202.5 million in 2016, an increase of 12 percent over the prior year, achieving a record performance for the fifth consecutive year.
Strong operating performance continued as the full-year operating income margin increases to 11.0 percent, a year-over-year improvement of 210 basis points
There were fourth-quarter and full-year GAAP earnings of $0.36 and $1.82 per diluted share, down 28 percent and up 21 percent, respectively, over the prior year period, and fourth-quarter and full-year non-GAAP adjusted earnings of $0.38 and $1.85 per diluted share, down 25 percent and up 24 percent, respectively.
Wabash National has initiated 2017 shipment guidance of 51,000 to 55,000 trailers and full-year earnings per diluted share guidance of $1.40 to $1.55.
“We are extremely pleased with our consolidated results for 2016 as we set new records in gross profit, gross profit margin, operating income and operating margin,” said Dick Giromini, chief executive officer. “The overall strength in the company’s operating performance highlights the significant progress made through our growth and diversification initiatives driven by our long-term strategic plan to transform the company into a diversified industrial manufacturer with a higher growth and margin profile, while leveraging our expertise in lean and six sigma optimization initiatives.
“New trailer shipments of 60,950 for the year exceeded our previous guidance, driven by strong customer pick-up. We enter 2017 with a strong backlog of orders totaling $802 million, an increase of 25 percent compared to the previous quarter. While we expect order volumes to moderate from the historically elevated levels experienced in 2016 and 2015, we continue to believe the demand environment for trailers will remain healthy as fleet age, regulatory compliance requirements and customer profitability all support a continuation of an extended trailer cycle.
“That said, we remain laser-focused on driving further productivity improvements throughout the business, optimizing the cost structure and performance of our Diversified Products segment, and developing new growth opportunities through new product and market expansion efforts.”
For the year, Wabash reported net income of $119.4 million, or $1.82 per diluted share, on net sales of $1.85 billion, compared to net income of $104.3 million, or $1.50 per diluted share, on net sales of $2.03 billion for 2015. Full-year 2016 results included charges, net of tax, totaling $2.1 million, or $0.03 per diluted share, related to the early extinguishment of debt incurred with the company’s purchase of a portion of the outstanding convertible senior notes and the impairment of intangible assets in connection with the company’s segment realignment announced earlier this year. These charges were slightly offset by gains from the transition and sale of former branch locations.
Excluding the impact of these items, non-GAAP adjusted earnings for the full-year 2016 were $121.5 million, or $1.85 per diluted share.
For 2016, the company achieved record operating EBITDA of $253 million, or 13.7 percent of net sales, as compared to $229.5 million, or 11.3 percent of net sales, for the previous year. The year-over-year improvement in operating performance is attributable to the continued strong demand and outstanding operational execution within the Commercial Trailer Products segment, effective cost management within the Diversified Products segment, along with the realized impact of capital investments in automation and productivity.
Commercial Trailer Products’ gross profit margin for the fourth quarter increased 150 basis points as compared to the prior year period in spite of the $55 million, or 13 percent, decrease in net sales. The year-over-year decline in net sales is primarily due to lower new trailer shipments, while the increase in gross profit margin is due to continued execution of a pricing strategy committed to favoring margin over volume, operational excellence within manufacturing facilities and continued material cost optimization. Operating income decreased $1.5 million, or 3 percent, from the fourth quarter last year to $49.9 million, or 13.2 percent of net sales.
Diversified Products’ net sales for the fourth quarter decreased $27 million, or 24 percent, due primarily to the decline in tank trailer shipments compared to the previous year period. The decrease in tank trailer demand is attributed to continued softness in the chemical and energy end markets. As a result of the lower demand levels, gross profit and gross profit margin decreased $13.5 million and 820 basis points, respectively. Operating income for the fourth quarter of 2016 was $1.1 million, or 1.3 percent of net sales, a decrease of $11.2 million compared to the same period last year.
“We enter 2017 with great momentum from a record 2016, a healthy trailer demand environment generating a strong backlog, continued excellence in operational performance, and the potential for organic growth through diversification and innovative new product introductions,” Giromini said. “Coupled with an industry demand forecast that is meaningfully above replacement demand levels for a fourth consecutive year, our full-year new trailer and earnings guidance for 2017 is 51,000 to 55,000 units and $1.40 to $1.55 per diluted share.”