Hogan Lovells US LLP Harbor East 100 International Drive Suite 2000 Baltimore, MD 21202 T +1 410 659 2700 F +1 410 659 2701 www.hoganlovells.com |
August 25, 2017
By EDGAR
Lyn Shenk
Branch Chief
Office of Transportation and Leisure
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Re: | Wabash National Corporation Form 10-K for the Fiscal Year Ended December 31, 2016 Filed February 27, 2017 File No.: 001-10883 |
Dear Mr. Shenk:
On behalf of Wabash National Corporation (“Wabash National” or the “Company”), this letter is in response to your letter dated August 16, 2017 (the “Comment Letter”) to Mr. Jeffery L. Taylor, Senior Vice President and Chief Financial Officer of Wabash National, regarding the Company’s Form 10-K for the fiscal year ended December 31, 2016. We have reviewed the comments of the staff with respect to the above-referenced filing. Enclosed herewith are the staff’s comments followed by responses on behalf of Wabash National.
Form 10-K for the Fiscal Year Ended December 31, 2016
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations, page 36
Comment:
1. We note your discussion and analysis of cost of sales is limited to the context of gross profit which does not address your cost of sales directly. Please expand your disclosure to provide a separate discussion and analysis of cost of sales. Also include separate quantification and discussion of changes in significant components of cost of sales that caused the item to materially vary from the prior period. Refer to Item 303(a)(3) of Regulation S-K.
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Lyn Shenk Division of Corporation Finance | - 2 - | August 25, 2017 |
Response:
The Company confirms that in future Form 10-K and Form 10-Q filings it will expand its disclosure of cost of sales, consistent with the staff’s comments. Below, using the 2016 10-K periods, is an illustrative example of the disclosure the Company will include in future filings:
Cost of Sales
Cost of sales in 2016 was $1,519.9 million, a decrease of $204.1 million, or 11.8%, as compared to 2015. Cost of sales is comprised of material costs, a variable expense, and other manufacturing costs, comprised of both fixed and variable expenses, including direct and indirect labor, overhead expenses and outbound freight.
Commercial Trailer Products segment cost of sales, prior to the elimination of intersegment sales, was $1,252.8 million in 2016, a decrease of $131.6 million, or 9.5%, compared to 2015. The decrease was primarily driven by a $131.2 reduction in material costs attributable to lower new trailer production volumes, as well as lower commodity costs and continued cost optimization through product design and sourcing.
Diversified Products segment cost of sales, prior to the elimination of intersegment sales, was $276.8 million in 2016, a decrease of $73.1 million, or 20.9%, compared to 2015. The decrease was primarily driven by a $58.7 million reduction in material costs and a $14.4 million decrease in other manufacturing costs due primarily to decreased sales volumes resulting from weaker tank trailer demand, lower material costs and continued operational efficiencies as compared to the prior year.
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If you have any questions concerning this letter or if you would like any additional information, please do not hesitate to call me at (410) 659-2778 or Michael J. Silver at (212) 918-8235.
Sincerely,
/s/ William I. Intner |
William I. Intner
Partner
william.intner@hoganlovells.com
D +1 410 659 2778
cc: | Jeffery L. Taylor, Chief Financial Officer, Wabash National Corporation Erin J. Roth, General Counsel, Wabash National Corporation Raymond T. Barrett, Ernst & Young LLP |