Press Contact: Allison Henk Marketing Communications Manager (765) 771-5674 | | Investor Relations: (765) 771-5310 |
FOR IMMEDIATE RELEASE
Wabash National Corporation Announces Second Quarter Results
Achieves Sequential Operating Income and EBITDA Improvement
LAFAYETTE, Ind. – August 3, 2010 – Wabash National Corporation (NYSE: WNC) reported year-over-year operating improvements across most financial and operating metrics. The Company reported an operating loss of $5.7 million for the second quarter of 2010, compared to an operating loss of $16.7 million for the second quarter of 2009. For the six months ended June 30, the Company reported operating losses of $16.9 million and $44.0 million for 2010 and 2009, respectively. The improvement in operating loss of $11.0 million and $27.1 million for the three and six month periods, respectively, resulted from higher production volumes and lower raw material and component costs, as well as the cost and manufacturing optimization enhancements implemented by the Company throughout 2008 and 2009.
The following is a summary of select operating and financial results for the past five quarters:
| | | Three Months Ended | |
| | | June 30, | | | September 30, | | | December 31, | | | March 31, | | | June 30, | |
| (Dollars in thousands) | | 2009 | | | 2009 | | | 2009 | | | 2010 | | | 2010 | |
| | | | | | | | | | | | | | | | |
| New Trailer Units Sold | | | 3,200 | | | | 3,600 | | | | 3,300 | | | | 2,600 | | | | 5,400 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Sales | | $ | 86,206 | | | $ | 88,324 | | | $ | 85,373 | | | $ | 78,274 | | | $ | 149,699 | |
| | | | | | | | | | | | | | | | | | | | | |
| Gross Profit Margin | | | -6.1 | % | | | -0.4 | % | | | -2.2 | % | | | -1.2 | % | | | 3.5 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Loss from Operations | | $ | (16,664 | ) | | $ | (10,207 | ) | | $ | (11,884 | ) | | $ | (11,232 | ) | | $ | (5,715 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net (Loss) Income | | $ | (17,935 | ) | | $ | (66,404 | )(1) | | $ | 10,858 | (1) | | $ | (139,079 | )(1) | | $ | (5,602 | )(1) |
| | | | | | | | | | | | | | | | | | | | | |
| Operating EBITDA (Non-GAAP) | | $ | (10,687 | ) | | $ | (4,607 | ) | | $ | (6,255 | ) | | $ | (5,975 | ) | | $ | (493 | ) |
| (1) | Quarterly Net (Loss) Income includes a non-cash benefit (charge) of approximately ($54.0) million, $20.5 million, ($126.8) million, and $1.9 million related to the change in the fair value of the Company’s warrant for the third and fourth quarters of 2009 and the first and second quarters of 2010, respectively. |
Dick Giromini, President and Chief Executive Officer, stated, “We are pleased to deliver significant year-over-year improvement in our operating results. Wabash National generated near-breakeven operating EBITDA and noteworthy gross margin improvement during the quarter. In addition, we were encouraged to see continued strength in quote and order activity throughout the second quarter and a stronger backlog, which was $377 million as of June 30, up from $137 million at year-end, and $128 million as of a year ago. This represents the third consecutive quarter of backlog expansion, which is a strong indicator of the recovery occurring in our industry as the second and third quarters are generally seasonally lower periods for orders. We are positioned well to capitalize on this improved demand environment, as our efforts to rationalize our cost base and streamline our manufacturing operations have provided us with more operating leverage. A direct result of these efforts will be improved profitability as demand continues to return to more historical levels.”
Giromini continued, “Taking all of this into consideration, including industry analyst expectations for 2010 and 2011, we are updating our projection of new trailer shipments for the year, from our prior estimate of 18,000 to 22,000 units to 23,000 to 25,000 units. Additionally, third quarter shipments are expected to be in the range of 7,000 to 8,000 units, further increasing our confidence of delivering positive Operating EBITDA during the third quarter.”
Operating results for the second quarter of 2010 showed sequential improvement across most areas and reached levels not experienced since 2008. On a non-GAAP basis, the Company’s Operating EBITDA loss of $0.5 million was better than the first quarter of 2010 by approximately $5.5 million on approximately 2,800 additional new trailer shipments. A discussion of the Company’s use of Operating EBITDA as a non-GAAP measure is included below, and a reconciliation of Operating EBITDA to net income (loss) is provided in the supplemental schedules included in this release.
Equity Offering
On May 28, 2010 the Company completed a public offering of its common stock. The Company sold 11,750,000 shares and Trailer Investments, LLC (a wholly-owned entity of Lincolnshire Equity Fund III, L.P., a private equity investment fund managed by Lincolnshire Management, Inc.) sold 16,137,500 shares, each at a purchase price per share of $6.50. The Company used the net proceeds from its offering of shares to redeem all of its outstanding preferred stock and to repay a portion of its outstanding indebtedness under its revolving credit facility without reducing its commitments.
Mark Weber, Senior Vice President and Chief Financial Officer, stated, “The equity offering completed during the second quarter successfully improved the Company’s capital structure and will reduce financing costs by eliminating all of the outstanding, high cost preferred stock and provided additional liquidity to meet the growth requirements already being experienced in our industry. As a result, our liquidity, or cash plus availability under our revolver, at June 30, 2010 was $67.7 million or approximately $39 million higher than at March 31, 2010. Completing this recapitalization of the balance sheet early in the cycle provides a solid foundation for the Company as volumes improve.”
As a result of the sale of shares by Trailer Investments, LLC, an amendment of the warrant held by Trailer Investments, LLC that was made in connection with the public offering and other adjustments, Trailer Investments, LLC now holds a warrant that remains exercisable for 9,362,581 shares as of June 30, 2010, subject to anti-dilutive upward adjustments provisions. Excluding the warrant, shares of common stock outstanding as of July 28, 2010 was 58,946,261.
Financial Results
The Company reported a net loss of $5.6 million and $0.72 per diluted share for the second quarter of 2010 on net sales of $150 million. For the same quarter last year, the Company reported a net loss of $17.9 million, or $0.59 per diluted share, on net sales of $86 million. Second quarter new trailer sales totaled 5,400 units, an increase of 2,200 from the 3,200 units from the prior year period.
Results for the three months ended June 30, 2010 include a non-cash benefit of $1.9 million related to the decrease in the fair value of the warrant and a non-cash asset impairment of $0.4 million. In addition, the Company incurred a loss on early extinguishment of preferred stock of $22.1 million and $0.3 million in financing fees associated with the amendment of its credit facility. Combined, these non-recurring items impacted results by $20.9 million, and considering the preferred stock dividends in the quarter of $1.3 million had an impact of $0.55 per diluted share.
Second Quarter 2010 Conference Call
Wabash National Corporation will conduct a conference call to review and discuss its second quarter results on August 4, 2010, at 10:00 a.m. EDT. The phone number to access the conference call is 877-407-8035. The call can also be accessed live on the Company’s website at www.wabashnational.com. For those unable to participate in the live webcast, the call will be archived at www.wabashnational.com within three hours of the conclusion of the live call and will remain available through October 27, 2010.
Non-GAAP Measures
In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), the financial information regarding the results of the three and six months ended June 30, 2010 contain the non-GAAP financial measure Operating EBITDA that excludes, among other things, charges incurred as a result of the fair value accounting of the Company’s outstanding stock warrants. The charge or benefit associated with these stock warrants is presented separately within Other Income and Expense on the Company’s Condensed Consolidated Statements of Operations for the three and six month periods ended June 30, 2010.
Operating EBITDA should not be considered a substitute for, or superior to, financial measures and results calculated in accordance with GAAP, including net loss, and reconciliations to GAAP financial statements should be carefully evaluated.
Operating EBITDA is defined as earnings before interest, taxes, preferred stock dividends, depreciation, amortization, stock based compensation, and other non-operating income and expense, as well as, any other non-cash special charges. Management believes Operating EBITDA provides useful information to investors regarding our results of operations because it helps us and our investors evaluate the ongoing operating performance of the Company. Management uses Operating EBITDA to evaluate consolidated as well as individual business segment results. Management uses Operating EBITDA when evaluating Company performance because we believe that the exclusion of the recurring and non-recurring items identified above provides management with a basis for assessing Company performance period to period. Management believes the presentation of Operating EBITDA, when combined with the primary GAAP presentation of operating income, is beneficial to an investor’s complete understanding of our operating performance. A reconciliation of Operating EBITDA to net income (loss) is included in the tables following this release.
About Wabash National Corporation
Headquartered in Lafayette, Indiana, Wabash National® Corporation (NYSE: WNC) is one of the leading manufacturers of semi trailers in North America. Established in 1985, the Company specializes in the design and production of dry freight vans, refrigerated vans, flatbed trailers, drop deck trailers, dump trailers, truck bodies and intermodal equipment. Its innovative core products are sold under the DuraPlate®, ArcticLite®, FreightProTM, Eagle®, and BensonTM brand names. The Company operates two wholly owned subsidiaries: Transcraft® Corporation, a manufacturer of flatbed, drop deck and dump trailers as well as truck bodies; and Wabash National Trailer Centers, trailer service centers and retail distributors of new and used trailers and aftermarket parts throughout the U.S.
Safe Harbor Statement
This press release contains certain forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements convey the Company’s current expectations or forecasts of future events. All statements contained in this press release other than statements of historical fact are forward-looking statements. These forward-looking statements include, among other things, statements regarding our outlook for new trailer shipments and Operating EBITDA, backlog, expectations regarding increases in trailer demand levels, the sufficiency of the Company’s capital structure, the needs of the Company in the future, whether profitability can be achieved and encouraging signs in the macroeconomic landscape. These and the Company’s other forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements. Without limitation, these risks and uncertainties include the uncertain economic conditions including the possibility that demand expectations may not result in order increases for us, increased competition, reliance on certain customers and corporate partnerships, risks of customer pick-up delays, shortages and costs of raw materials, risks in implementing and sustaining improvements in our manufacturing capacity and cost containment, and dependence on industry trends. Readers should review and consider the various disclosures made by the Company in this press release and in the Company’s reports to its stockholders and periodic reports on Forms 10-K and 10-Q.
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