Wabash National Corporation (NYSE: WNC) reported net income of $1.9 million, or $0.03 per diluted share, for the second quarter on net sales of $362 million.
Results for the three months ending June 30 include the results of Walker Group Holdings LLC, a leading manufacturer of liquid-transportation systems and engineered products, from its date of acquisition on May 8 forward and were adversely impacted by certain costs related to the acquisition of Walker totaling $13.6 million, or $0.20 per diluted share.
Excluding the impact of these items, non-GAAP adjusted earnings for the quarter were $15.5 million, or $0.23 per diluted share. For the same quarter last year, the company reported net income of $3.3 million, or $0.05 per diluted share, on net sales of $287 million.
The company reported income from operations of $8.6 million for the second quarter of 2012, compared to operating income of $5.1 million for the second quarter of 2011. Non-GAAP operating EBITDA, which excludes the effects of certain costs related to the Walker acquisition as well as other recurring and non-recurring items, for the second quarter of 2012 was $29.7 million, an improvement of $20 million compared to the previous year period of $9.7 million. This improvement in operating performance resulted from an improved mix of higher-margin trailer orders, continued organic growth within the Diversified Products segment and diversification into higher margin opportunities through the acquisition of Walker, which was completed in the second quarter and accounted for $44 million of the current quarter’s net sales.
“The considerable improvement in the second quarter results reflects the ongoing execution of multiple strategic initiatives and the continuous evolution of Wabash National into a diversified industrial manufacturer,” said Dick Giromini, president and chief executive officer. “Key strategic imperatives include the diversification beyond our core product offering to address new market opportunities, enhance our financial profile and reduce cyclicality. Specifically, our Wabash Composites and Wabash Energy & Environmental Solutions products continue to garner considerable interest and generate strong revenue and earnings growth. Additionally, the acquisition and integration of Walker further diversifies our business and complements our existing leadership position in trailer manufacturing related products and technologies, while providing a new platform for growth and value creation.
“Lastly, we remain focused on improving price and enhancing margins in our core Commercial Trailer Products business. The combination of these initiatives drove gross margins during the second quarter to double digits for the first time since 2005 as the mix of higher margin trailer orders improved during the quarter, while our higher-margined Diversified Products segment more than doubled in size with the addition of Walker. As a result, adjusted earnings were up more than 290 percent as compared to the previous year period, generating adjusted diluted earnings per share of $0.23 for the second quarter.
“New trailer shipments improved sequentially and year-over-year to approximately 12,000 units for the second quarter. In addition, the company continues to realize a healthy backlog of approximately $713 million as of June 30, including Walker’s backlog of approximately $190 million which improved from the first quarter by 8 percent. While recent economic data has been mixed, both ACT and FTR continue to forecast a healthy demand environment for trailers in 2012 with current volume estimates of 247,000 and 246,000 units, respectively, reflecting approximate increases of more than 15% over 2011 levels.
“While our view of industry volumes is consistent with ACT and FTR, we remain selective in our order acceptance consistent with our intent to enhance the margin profile in our core trailer business. As such, we are revising our guidance for full year new trailer shipments to 48,000 to 52,000 units, inclusive of Walker. However, as we look to the remainder of 2012, we expect to continue to deliver quarterly improvement in our financial and operational results as we further optimize the shop floor, implement Walker synergies, and continue to expand our Diversified Products’ customer base and product offerings.”