Wabash National reported that net income for the third quarter of 2016 was $33.4 million, a 9% increase compared to the third quarter 2015 income of $31.9 million.
Third quarter 2016 non-GAAP adjusted earnings increased $1 million, or 3%, over the prior year period to $32.9 million. Non-GAAP adjusted earnings for the third quarter of 2016 excludes a $0.7 million gain related to the transition of a former branch location to a third-party dealer.
Net sales for the third quarter decreased 13% to $464 million from $531 million in the prior year quarter while operating income decreased 3% to $54.9 million compared to $56.4 million for the prior year period as favorable pricing and operational execution across the business was offset by lower volumes.
Operating EBITDA, a non-GAAP measure that excludes the effects of certain recurring and non-recurring items, for the third quarter of 2016 was $66.8 million, a decrease of $1.2 million, or 2%, compared to operating EBITDA for the prior year period. On a trailing twelve month basis, net sales totaled $1.9 billion, generating Operating EBITDA of $268.0 million, or 13.9% of net sales. The continued strong operating performances are attributable to the successful execution of the company’s growth and diversification strategy, strong demand within the Commercial Trailer Products segment and outstanding operational execution across the Company’s manufacturing facilities.
Dick Giromini, chief executive officer, stated, “Third quarter results represent another quarter of delivering strong financial results that validate our long-term strategic plan and further demonstrate the progress we have made in executing that plan to profitably grow and diversify the business. Despite lower top-line revenues as compared to the prior year, we were able to improve gross and operating profit margins by 180 basis points and 120 basis points, respectively. The continued strong financial performances of the company over the past several quarters further demonstrates our commitment to operational excellence leveraging our long-standing expertise in lean manufacturing and process improvements in addition to our ongoing strategy to favor margin over volume in the core trailer business.”
“New trailer shipments for the third quarter were approximately 15,450, just shy of previous guidance of 15,500 to 16,500 trailers, driven by timing of customer pick-ups and continued slow demand in our tank trailer business. With three quarters now complete, a seasonally strong backlog of $643 million and proven strong operational execution, we look forward to completing 2016 as our fifth consecutive year of record operating performance. In addition, we also now expect 2016 total units to be at the low end of our 60,000 to 62,000 shipment range communicated previously. Longer term, while we do expect to see order volumes moderate, we continue to believe the demand environment for trailers will remain healthy as fleet age, regulatory compliance requirements and customer profitability all support an extended trailer cycle. Additionally, we expect continued efforts driving productivity improvements throughout the business, developing growth opportunities through new product introductions and market expansion opportunities to contribute in growing our top line and margins as well as in capitalizing on macro growth trends.”
Commercial Trailer Products’ net sales decreased $26 million, or 6%, primarily due to a decline in new trailer shipments as compared to the prior year period related to the timing of customer pick-ups. Despite the lower revenues, gross profit and gross profit margin increased $9.3 million and 340 basis points, respectively, as compared to the same period last year due to continued execution of a pricing strategy committed to favoring margin over volume, operational excellence within our manufacturing facilities and continued material cost optimization. Operating income increased $9.3 million, or 20%, from the third quarter last year to $55.0 million.
Diversified Products’ net sales decreased $40 million, or 32%, due primarily to the decline in tank trailer shipments compared to the previous year period. The decrease in tank trailer demand is primarily due to continued softness in the chemical and energy end markets. As a result of the lower demand levels, gross profit and gross profit as a percentage of net sales decreased $12.0 million and 250 basis points, respectively. Operating income for the third quarter of 2016 was $6.2 million, or 7.1% of net sales, a decrease of $11.4 million compared to the same period last year.