Wabash National Corporation (NYSE:WNC) reported operating income of $30.3 million that represents the second-strongest first quarter in company history. Wabash also increased full-year guidance for trailer shipments from 52,000 to 56,000.
Net income for the first quarter of 2017 was $20.2 million, or $0.32 per diluted share, compared to first quarter 2016 net income of $27.5 million, or $0.42 per diluted share. First quarter 2017 non-GAAP adjusted earnings decreased $8.3 million over the prior year period to $19.5 million, or $0.31 per diluted share.
Non-GAAP adjusted earnings for the first quarter of 2017 includes the net gain on closure of former facilities offset by charges related to the early extinguishment of debt in connection with the company’s amendment to its term loan credit facility. Non-GAAP adjusted earnings for the first quarter of 2016 included an early extinguishment of debt charge related to the company’s repurchase of a portion of its outstanding convertible senior notes.
Net sales for the first quarter decreased 19 percent to $363 million while operating income decreased 37 percent, or to $30.3 million, due to lower trailer demand, compared to operating income of $48.2 million for the first quarter of 2016. Operating EBITDA, a non-GAAP measure that excludes the effects of certain recurring and non-recurring items, for the first quarter of 2017 was $41.9 million, a decrease of $17.9 million, or 30 percent, compared to operating EBITDA for the prior year period.
On a trailing 12-month basis, net sales totaled $1.8 billion, generating operating EBITDA of $235.1 million, or 13.4 percent of net sales, a year-over-year improvement of 110 basis points. The solid operating performance is attributable to the successful execution of the company’s growth and diversification strategies, strong pricing environment within its Commercial Trailer Products segment and operational improvements across the Company’s manufacturing facilities.
“We are pleased with first-quarter operating results,” said Dick Giromini, chief executive officer. “Performance targets in cost management and execution were achieved within both Commercial Trailer Products and Diversified Products, as gross margins delivered were consistent with expectations previously communicated, despite trailer shipments slightly below prior guidance due strictly to timing of customer pick-up. Backlog grew once again, coming in at a seasonally and historically strong $863 million, continuing to support our long-standing belief that trailer fleet age, regulatory compliance requirements, and customer profitability provide strong support for a continued favorable demand environment.
“Additionally, we remain focused on driving further productivity improvements throughout the business, optimizing the cost structure and performance of our Diversified Products segment, and developing growth opportunities through new product and market expansion efforts. Based on all these factors, we are updating and increasing our full-year guidance for both trailer shipments and earnings to 52,000 to 56,000 new trailers and $1.44 to $1.56 earnings per diluted share, respectively.”
Commercial Trailer Products’ net sales for the first quarter were $275 million, a decrease of $89 million, or 25 percent, as compared to the prior year. Gross profit margin for the first quarter decreased 130 basis points as compared to the prior year period. The year-over-year declines in net sales and gross profit margin were primarily due to lower new trailer shipments. Operating income decreased $16.9 million, or 34 percent, from the first quarter last year to $33.4 million, or 12.2 percent of net sales.
Diversified Products’ net sales for the first quarter increased $4 million, or 4 percent, due primarily to higher demand for the company’s composite product offerings as tank trailer shipments were comparable to the prior year period. Gross profit and gross profit margin as compared to the prior year period decreased $2.6 million and 380 basis points, respectively, as the historically weak industry demand for tank trailers driven by continued softness within the chemical and energy end markets negatively impacted this segment. Operating income for the first quarter of 2017 was $4.6 million, or 5.1 percent of net sales, a decrease of $2.4 million compared to the same period last year.