WNC - Earnings call transcript Q3 2017 | Wabash National Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Third Quarter 2017 Wabash National Earnings Conference Call. My name is Allen and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. the to turn Pettit. now will call Mike over I Mr. Pettit, begin. you may

Mike Pettit

Mike Welcome and Quarter the is of Allen, you, Relations. everyone and Earnings Vice Investor Finance good This Third Thank XXXX morning. to President Corporation Wabash Call. Pettit, National

as from you’ll outlook XXXX Chief and current and Giromini, Chief Officer, operating early quarter, for the on of results an environment Following Brent hear Executive well XXXX. our our Yeagy, the at this remainder as Dick introduction, third and President Operating Officer; look for the

In addition, call a the financial the Jeff listening Taylor, Officer the will of questions for Chief results. detail provide Financial prepared conclusion open audience. the overview we’ll from remarks, of At

I’d Before like to we begin, brief two items. cover

recorded. please First, is note that this being call

types call guidance, share and financial all this statements other presentations, including information, matters. with information, contains forward-looking industry the as Company’s earnings morning’s about condition outlook, backlog Second, these prospects, certain the per of

projected could Dick statements As forward-looking CEO. my and you cautionary the is time-to-time results set statements actual Risk the turn Commission. statements. to in call know, from the Factors differ Exchange filings that, forth With in be via Securities with to Company’s These pleasure it from the should viewed the over those and materially Giromini,

Dick Giromini

Mike. Thanks

couple the third environment. stated accustomed standards to become pleased of but muddied. that As Through nonetheless more challenging is we’re in in in a the past to strong in in said, never acquisition, delivered get record lofty somewhat prior even the years. to quarter, That historically year a performance an not up have the release, we’ve following easy more our performance press operating especially when headlines and

with in Industries of third recent about year create delays our the totaling recent impacted the family. we excluding that a cost all going season as Supreme backlog hurricanes, and trends by initiative are of business investment bring in over set we leverage XXXX. entered our has along combination strong molded quarter a to its XXXX Facing labor With addition million Industries, our and what good of a structural a are pick-up our composite the including encourage as things market September in demand the Looking on all period. that strongest in ongoing and for associated $XXX tighter integrate order acquisition factors forward, us to combined next are XX, XXXX, with now newest up will veil Supreme, market by position excited Supreme a solid the as we shipment

to anticipating Group Diversified segment of early finally that favorably Our impact we businesses demand has and since have start Products market too but been late to year, see improve fourth quarter. this the pace its

profitability, efforts to improvement the needed on As optimization prompted today call, improve during we will segment this. this his in we greater the tool activities has more quarter’s our discussed us past along available accelerate opportunities market. and million us details the investment labor the we more specifics operating to staffing built projects, but but help more implemented growth already talent provide related by and these profitability these months. project Products costs In going effectively actions in I’m and and the by Lafayette remarks. and leading in in $X cost beyond, be urgency delivered area quarter an Trailer address while our in implemented address In operating impact four benefits also forward plan. on that that overtime encouraged over these productivity tight to the Commercial a market have a million this, the productivity total, with profitability available and suddenly savings only go increase we’ve will other to current will during not achieve the improvements place labor expense approximately To of last a year. projects, year-to-date projects include tighter $XX on in benefit of remarks throughout obviously will unplanned annualized delivering helps actions XXXX. into balance labor on launch utilized enhancement the Brent to higher the related in in Brent XXXX impacted beginning accelerated the his of segment, will cost emphasis which invested realities in and

to growth front, closed our based had Supreme. the late late important acquisition to mile medium our increases further segments. of of reduces significantly truck entered body largest in launch pleased Supreme, the drive on diversify the and miles The a first It presence to the us accelerate light final Company. our increased in demand in with establishes acquisition dry customer significantly truck in third efforts the path the body our and duty we of reach. in we XXXX the second acquisition dependence growth propels have On cycle This manufacturer our position final refrigerated are the U.S. and distribution allows This our acquisition also greater offerings. with and on very in quarter leadership and and

after production with ramped and months MSC. organic just as under we have there underway just proprietary continue structural activity tooling machinery install the acquisition, composite the significant On on of front or for support property our up panels six to to the molded and the closing we Falls workforce necessary associates XX short Little

facility facility final serve refrigerated trailers. primary the thermal the flexible of As as stated previously, the MSCT, site well the for as this manufacturing assembly launch MSC a will for as

commercialization and engineering optimize continues performance as to we the weight process. designs product for move team through Our

today very and are organic our progress this Supreme. are equally the made fits of overall pleased with well acquisition recent with how excited We with initiative

term the XXXX, level aforementioned when anticipated by provided more headwinds. the operating along short-term of guidance somewhat near many are balance of issues operational would a throughout continue the will stated in with driven earnings us, environment others competitive the February, In we from initial XXXX behind to while achieved As material in be step cost year. the in first share prove XXXX back our a down per record

As based of for diluted updating full trailers, result on shipments XX,XXX earnings our guidance range trailer XX,XXX to share. factors, a and mix to adjusting guidance these our to new per year we year full to are $X.XX $X.XX the

including Products deliver segment projected demand beyond. for XXXX in will to Commercial both strong and year, inflection next the trucking forward our the to along EPS economy tank is as Overall we conditions are in also year we A strengthening next and within internal point serve several by growing trailers XXXX carrier driving for historically factors, Looking behaviors combined dry refresh now trailers further based strong projected analysis, market current increased on the performance. for a confident flatbed with will and structural belief increased van driver cycle This the me supported operations, is the XXXX-XXXX Supreme and continued productivity-enhancing addition in year-over-year market more technology, and with of much-improved need molded environment our for equipment. to in and van get in proprietary about environment a our equipment. a what vans, remain technologies demand, payback composite from demand replacement excited all regulatory influencing stringent backlog, increasing investment interest upcoming Trailer

trailers a support very X.X% X.X% FTR up XXX.X recently now year-over-year a index numerous projections improve are and projections indicators very X% now industry, forecasting XXX,XXX capacity trailers Both December ACT of XXX,XXX for of adaptors leading for lose in XXXX strong remaining shipped. to indicative or increased Both for XXXX. lead recent more and year-to-date. up strong XXXX. produced the fleets. forecasting increased further strong ATA’s stock and up September outlook their demand impact with Additionally, rates a a as productivity September was FTR strong ACT profitability truck XXXX tonnage this simply will ELD equipment. as And fleet by drivers were and equipment August demand year and implementation for the leading levels from the effective strong

well Diversified expect addition, market as segment, improvements by and addition as our reporting by share. segments. improving productivity full that, line segment, two segment years CTP initiatives of of the realization in Mile backlog to In their driven project opportunities with and With provide our of growth currently serve these strongest performance Couple conditions top this improvement both and Products DPG. and in various Product XXXX we to in some our $X.XX Brent? per Brent expectation ask the $X.XX each of earnings I’ll Final year of Supreme detail we results bottom on

Brent Yeagy

Thanks, Dick.

developing concurrently expanded across ensure have best for in of the the we With to collaboration with the we that all revenue assure functional family levels the demand and ongoing line leverage operations is Supreme that has growth. the quarter, the of current addition Rightsizing been segments. practice gross late Wabash within while identify in to staffing to business opportunities

businesses. -- to million, quarter over $XX bottom Despite slightly of quarter has and process income now Real place The optimize to million highest levels our that the XXXX down with help DPG operating trailer, or of million action calls. third on trailer We pace cost. Wabash sequentially QX third systems I on to and the increased XXXX. Revenue update serves specifics of detailed the SG&A into quarters is million, the A to continue and ensure deliver the our start effectiveness improved XX the is some quarter and basis of at actions margins year-over-year Management segment, in our highest composite the of revenues I in past cost or from excess levels in progress implemented revenue quarter. for System continue XX.X%, the X.X%. to quarter. steady manufacturing, to for about been fully goal will the chain acquisition aviation $XX Products on levels be we supply third you sequentially also will leverage the year two savings will since in With improve levels, segment of market tank includes down with business points. results organization. of XXXX X.X% improvement improving $X three third the equipment, tank line visible at truck progress related business flat $X.X and let subsequent with in demand achieve backlogs achieving years sales that, Group that our Diversified from as with by the excluding get to end the me will continue up XXXX experience an WMS, Gross third to across plan end in which as

do unusually it prove not does to we activity As but appear recovery be in we levels trailer soon, anytime demand order in and court a shipment. we tank trailer return market previously the seeing to will for tank the low are XXXX discussed, clearly anticipate have a XXXX-XXXX that the strong point

year-over-year XX% XXXX. to expect tank XX% in trailer to We shipments increase by

strong Jose will the continue While as and further tank our we remain us periods. than Fond improvement Lean trailers are environment at obvious Lac, improving allow more serve to to benefits, in Iturbide, demand efficiently Wisconsin within our reality. capacity San provide adjust opportunities du underway will in actions which ultimately tank demand operations, Mexico previous to near-term

Over on backlog inventories commercial trailer reduction operating front and readership use The cash to costs My the out flow our we plan. business efforts as business of truck business months, or the year-over-year. supporting efforts Management XX% the aviation our the in have past the engaged in have Wabash a and remains above, our into turned detailed results the improve to processes. of team expand identified of greater driving our expect go-to-market the the improvements Based and future. AVTE, continue the savings equipment tank operation raw opportunities four remains of the positive, in execution increased System, WIP QX successfully optimization than specifically leaned areas to we’ve XXXX. we AVTE In and on well with to

demand and healthy mixers coupled along beverage manufacturing pharmaceutical and for our with are efforts implementation food, backlog produces to we should of much isolators lean process Now for with principles, systems downflow we the performance XXXX. which realize stationary sales industry momentum in dairy silos begin stronger with and and optimization to and continuing the levels. improved industry, see In operating booths business labor

less with four prior contribution top believe opportunities delivering line of and We strong of key being well of are unit have months. again inventory par long and quarter. profit WIP on we focus Wabash by truck continue term during panels resources to once delivered growth. that in XX% body now well, served perform shifted in Implementation quarters to areas, an market capacity adjacent in the line principles constraints QX explore in and line. poised have as grow or continues current lean growth speed With velocity reducing to for for we lifted, Composites The as excess as improvements the business while new demand remain XX% door markets than

to on the continuing into growth reminder the actions of profitability the in and perforated expect demand to-date, is the we this profit where the future in now the of To the will continued a its their contribute demand the of markets the As focus contribution in DPG initiatives. execute Overall, technologies. reductions, performance bottom business efficiently our development material honeycomb unit of which more be business by of improving line pace consistent Based our improving this will organic positioning XXXX overall, are QX improvements to XXXX, addition and begin panels of growth years, year seasonally aggressive we in with we increasing the space. driving is leadership the lowest launch to core weakest increase to on unit new trailer serve summarize quarter, see is truck in to year. recent progress for witnessed backlogs, their for meaningful past technology growth be as to in business Key so segment. in panel bodies cost to steel skin, adoption

our discuss retail wood the van operations. our results Commercial and and of Products parts service products, consisting platform let’s or CTP, flooring dry Now, refrigerated and Trailer of trailers,

lower performed doing expect, the of daily XX.X result current way and shipped XXX As pick-up lower units million. be was handful will million customer and we in delivering than as revenue headwinds the in have during with the and we of delayed anticipated income, the management of while segment in in gross absorption operating impacting resulting business, overhead the come a the XXX revenue of came along the income CTP to of These as also well margin. operating of but Southeast, not hurricane approximately timing Shipments quarter. only units

While in margin compression QX out we’ve be of delivered setting the into levels in expected QX to would the we CTP over are XXXX. ending QX to second XXXX. quarters QX, quarters, from to in helping and margins levels, seen flatten the gross third points Gross and declines margin comparison these past QX and of we margin couple expect year-over-year experienced that the know most maintain difficult record CTP XXXX

tightening to margins with of material due was higher market impact the commodity local labor than along recent Additional to and anticipated cost.

was a unit. As achieve in a result, overtime the resulting an excess of commitments cost per to required higher plan built

give the is subside detail We as like front, to On implementing several and to labor improvement unfortunately projects requirements. we large the this I’d the QX but On bit manufacturing process a productivity last and a that and and optimize call, note, the labor scale continue hour CTP will of labor then scope. and quality most mentioned pool into are will actions XXXX. likely further briefly on headwind reduce these expect positive but making headway in process more the the QX of we team in refinishing our

has combine already We was operation projects Wood two yield the eliminate have step material annually projects $X over -- improve and implemented full XX ramped of at Arkansas step significant by This Products midyear manual first to will X%, operations. these Harrison, is our first capability. reducing up million by cost that and

main to improvement effects past offset as providing margin healthy effort continuation the years of maintain demand be fully range a in in project day, refer of assembly projects XXXX half dry are by the the environments. hour help defecting market. tight and second, lines installed wide per as the projects the demand are XXXX. In to well that The over to CPP label hours levels and that a several Lafayette labor went operational be in implemented an These XXX of end reduced second over by for set and automation will several grow auto margin installed there and of our allow

like important strategic Now, updates key initiatives. I’d Wabash some some provide to other on National

patent will actively as technology trailer as pending body composite CTP team both broad refrigerated truck dry that in and well our markets molded structural space. continues to developing refrigerated its applications have First, the

Falls final primary as composite well for of as components has MSC refrigerated Little a facility location new Our site structural bodies. assembly flexible launch molded manufacturing for truck and the the trailers

previously XX excitement the we We potential are components already producing landscape actively National expectations our now refrigerated exceeding foot product And with site for of related MSC out lastly, the customers. stated as final and the enough both cultural refrigerated in the launched about Supreme is van change how of the meeting and Mile van reporting the to-date. pleased products truck progress space. full of Industries to-date is from Products I body assembly our the and we segment can’t these or have the and are and say of the is cornerstone began underway product integration Final will of within Wabash all synergy refrigerated

fourth the was actively Mile which and segment reporting CTP Mile place Products We now of the now Supreme going being growth. Mile Wabash engaged Products in With on forward. of of the XXXX reporting our body next within have found Final to in Supreme call. Final to organic advantage take family, quarter truck the path team begin will partner for Products earnings as synergy National opportunities Final be launched eager for initiative the with part reside significant will

National. items update to like that Wabash an regulatory provide on some Now, I’d pertain to

filed Court actually a require The agencies Air goes January compliance Act. were presently review relates regulations X greenhouse whether Rules sent introduced the Gas And ultimately Clean into Truck starting XXXX Greenhouse of are to of has to of under trailers Phase they in Appeals effect. review this the The can the Congress, As seeking under NHTSA. EPA this and in of in it previously discussed, the the determine Association rule petition U.S. in rule as Trailer to XXXX. authority to Manufacturing the regulate gas

enforcement the the and provision. Appeals the through for Court Trailer Association for as rule for rule addition, trailers. stay of motion the trailer of suspend also the of Manufactures to week, Last the the allow the Truck stay to gas EPA filed In reconsider NHTSA applies greenhouse a granted to time it the

on the the the a be ruling compliance impact we lawsuit. TPNA is final on not will While on trailers industry known final have hold, until

the continue for we these we with monitor rule, new greenhouse compliance While prepare gas activities. will also to

monitor In December recap, all effect mandate the must common addition, to to drive Safety very we seems this improved or in stronger point, focused capacity pricing Carrier ultimately XXXX. continue we assuming in will go ELDs of and this the implementation, To into we response for Federal and this that mandate and practices install Devices Electronic as Motor the reaction best that segments. all of within fleets improving likely business Administration’s December by Logging the rule on demand it result At trailers. remain industry fleets tightening, dynamics across

improve over financial also XXXX. discuss manufacturing system bottom accelerating in additional call top in line now details. and as efforts overall to the forward Jeff turn continue efficiency to the We I some we to to will our look all of businesses growth

Jeff Taylor

solid were years. Good Brent. all from the a strong of Brent indicators delivering everyone. That positive strong CTP with strong stabilized Dick businesses. during has the with third perspective, of couple has past challenging Thanks, will expectations that the said, after despite quarter results especially DPG a comments Wabash results delivered record higher the its now And have performance I historic we in from morning environment. echo overall and

that improve invest projects We need lower of address automation by content productivity products. overall continue operating improvement and proactively the to to in will our labor continuing and that areas efficiencies our will the

of environment to performance. while overhead In current our and costs and and to business the business addition to support growth continuing costs the ensure to address SG&A being level appropriate future the cognizant of

to X.X In shareholders the dividend capital return we million regular discussing I’d like recent for on Before through on quarter, comment more shareholders. the results to specifically, activities, third allocation of to in quarter of and quarterly detail, repurchase. capital capital approximately returned the share our our

capital corporate of capital, exceed highest terms the on XX% return remain In deployment our of goal returns in areas of efficiency the the capital annually. efficient focused our support importance, and strategic on to or with efforts, meet we invested

Wabash announced, Texas, the previously in we our Trailer quarter. to branch independent we Center completed an dealer the of transition location As third National

completed capital that, compared the results of Lastly late high-yield and purchase purchase financial to On notable acquisition was most financed consolidated $XX $XXX trailer in with structure our for to shipments million a debt the let’s a revenue year. third price Consolidated of quarter the the the a basis, the the new new of or units we change quarter, the XX,XXX decrease the of quarter and to the million our $XXX last Supreme quarter. With approximately turn were for range third guidance. for slightly portion quarter of $XXX million offering during below X% of million. shipment prior the

quarter a approximately quarter. supports fourth shipment levels shipments still which units to these the Third in exceeded XX,XXX shift fourth are level build quarter expected units customer and units are as strong of

from quarter, on revenue was the locations XXXX shift. by period parts a in basis. fewer the a to service New primarily and in due million DPG. trailer to $XXX year revenue non-trailer The revenue levels, sales lower lower and of down Components, million $XX was million lower in prior year-over-year approximately equipment CTP from sales unit $X the down of and due result million as increased equipment retail other $X

Company The of operating respectively. X.X% terms $XX million, gross of of down the sales. $XX.X $X.X and profit generated results, year-over-year was and million was margin XX.X% In million or million quarter operating $XX.X Gross profit income for consolidated sequentially.

would and income adjusting have of operating after X.X% million acquisition for $XX.X and been respectively. related expenses non-recurring However, million, $X.X margin

segments discuss operating experiencing margin Third down decline momentarily. year-over-year I both will quarter business quarter, during for which was margin the

XX.X% level, operating the bringing sales revenue. products $X a year-over-year XX.X% $XXX.X net this of group second operating trailing EBITDA In a the XX to months in sequentially diversified increase million DPG addition, million. segment of for decrease million of was margin was quarter $X At quarter and EBITDA gross the DPG $XX $XX.X or or an basis million, Products year-over-year was by trailer offset XX basis million and points cost new attributable quarter for down commodity margin on decrease pricing. shipment XX,XXX represents units. points. increased CTP year-over-year and a by by Trailer or net sales million up partially Commercial decline were XXX The or to $XX sequentially which increases $XXX a for XX% million year-over-year the

selling XX,XXX rebounded average recorded ASP the price flat trailer Commercial XX.X% of quarter. compared once New or Products year of operating growth prior was historically with XX.X% to and essentially margins respectively. Trailer -- and again margins strong

and its quarter, Despite margins in for X.X% year. the challenges, spec experience and quarter $XX.X are However, operating a revenue. consecutive to trailer lower $XX.X CTP general million comparisons trailers was double-digit and both amortization lower margin. of quarter delivered operating and last price as the during growth labor operating shipments, commodity our tough mix quarter performance income and margin Selling, cost as of higher higher administration and due excluding the well year-over-year CTP delivered to setting ninth quarterly record lower of during impact of the comparisons million or down the of

than to we optimization down cost the $X SG&A the spending full be more million implement continue business. For we to as expect initiatives year-over-year levels year throughout

finish X.X million the income convertible million, the accretion relates a prior is primarily XX.X%. X.X quarter to recognized the the quarter. the XXXX expense year-over-year million, in X.X down and for expected million quarter levels. As tax tax Intangible primarily decrease X.X flat expense was effective totaled quarter reported lower associated notes amount essentially of from the with million We due the charges of Interest interest million, a was for SG&A year. year-over-year X.X convertible to expense is to of of of XX.X non-cash amortization rate for notes. revenue, the of The percent outstanding,

year XX.X% expect rate to approximately to We be XX%. the full tax

per per adjustments realized acquisition after or the of income share. gain million net branch non-GAAP and net facilities or our for locations. mentioned adjusted for the were quarter million, are to the related quarter, respectively. GAAP $X.XX, related of In adjusted for on quarter expenses pre-tax XXXX third adjustments. excluded XX.X were million a the respectively. earnings and earnings the diluted adjusting for million adjusted XX.X branch quarter for gains dealers. XXXX formal XX.X basis, $X.XX On share to XX.X share $X.XX comparison, one-time third-party million the X.X XXXX $X.XX Non-GAAP GAAP adjusted transition Finally, million third of Both adjusted the earnings earnings third of of and transition also X.X was diluted and of and were per

driven $XX aggressive to capital third but revenue. acquisition. of management, and transition impacted move approximately excluding essentially year-over-year capital also improvement largely working lower the activities decrease Net million balance and by sheet was branch and working the the is by liquidity. Let’s by flat from quarter impact the Supreme The year-over-year

million. at depending on year-to-date Capital approximately of to implementation. million We consistent approximately spending our quarter $XX timing bringing year expect spending the $XX decrease capital project was million full X typical capital with working be in project We to year-end pattern. our capital the seasonal to

borrowings of October Our million to million XX $XXX sequentially liquidity free plus of down The high available the cash or to as of cash. Company cash being was a level generate due balance XXth, funded Supreme sheet from a portion continues acquisition balance and allocation maintain as components which our growth allowed priority liquidity very at for level, funding healthy liquidity and the other of in a capital capital productivity allocation well operating capital plan as EBITDA, flow for improvements. us our expenditures first to

flow, the dividend shareholders and In share the our free returning to portion addition of repurchase. to cash a

with strong Supreme as forma quarter Supreme finish debt basis We to and pro third continue added we The and times. to free X.X net the times months of sheet EBITDA operating at levels overall to and balance performance trailing months operating the On X.X acquisition. basis. growth continues the despite net the including and be to times a sheet XX we’ve XXX challenges XX the Company maintain of flow inclusive fund cash XXX a generate of respectively, healthy million to the ratios trailing strong during of leverage of and quarter. balance for excess generated in Company X.X a face the and be of income profit would In debt EBITDA, debt on million summary, gross continued

space. to outlook Dick, growing completed some excited of to commentary he’ll back call in have Supreme for mile turn where remainder are our get XXXX. acquisition we now the detail the forward to the and the look and and Lastly, final this I’ll year

Dick Giromini

Thanks, Jeff.

and near-term close outlined and necessary we of structural Falls, the factors acquisition in cost development manufacturing XXXX, we’re productivity some facing projects Little impacting our numerous a associated today, pressure out the integration. labor market, investments expenses Supreme molded detailed including tighter headline as technology continued commodity and we’ve with numbers As composite some

XXXX, platform will the Looking implementation markets. far in FTR drivers favor ELD tonnage the forward XXXX positive with increased strong tailwinds drive longer-term trailer and constrain our see from production and ACT, performance our recently however, that capacity to demand strengthening tank, and truck numbers, headwinds. to freight for and shipments and more we than rate demand Market trailer projections and

outlook yields to market line in and offset investments In come much productivity. labor the commodity help is tightness, more on our automation stable. The addition, improve CTP initiatives

mile by Little a mid and of provides us to Falls the well impact income business final delivery while growing it Supreme also year positioning advantage top positive up home of ramp will the and turn take Our markets. XXXX positive off full

plans. we’ll ways to grow out also in to as we out all pursuing in the additional So With selective continue to with balance decisions. and existing our we'll considered returns business were quarter seek shareholders value our not expectations between we that while the and for strategic business, high and we take see head significant is growth line in opportunities third assuring our continue over to extremely all close that, to as any reward for operator confident opportunities while into we’ll increase successful call the the and to XXXX We’ll turn I’ll be continue be and that risk implement I’m XXXX. our results proper questions.

Operator

you. Thank

question first session. the Stephens. Delco is from Brad will We question-and-answer Our begin Instructions] now with [Operator

Brad Delco

to I that Jeff, XXXX of don’t when or up about I adjustments guidance Brent for should Big on know net little more of or least bit the have kind little and color just picture wanted so XXXX. a a customers but to benefit bit trailers for fourth an if XXXX, with you at picking get think of that a looks you be it I issue like quarter. this

sorry You so. acquisition Supreme the -- play guess to and guidance? fourth are question. your things wise your two also accretion quarter sorry, I in do XXXX then those have quarter -- expecting in fourth into XXXX? simplify mean I from you the What quarter How Supreme and guidance and fourth

Dick Giromini

Bret. Yes,

we’ve obviously, first XXXX Let how the third the the half quarter to me adjustments. overall EPS of and talk -- was about adjustments performance about

the the we seen, have relative third some As that we to factor guidance constraints you’ve quarter significant labor in that the in prior quarter certainly were gave. performance

then lower flow have will That lower as through. mentioned my there, as of comments, that not be be impact it quarter, seen continued relative And half move we continue more we trailers guidance some commodities the quarter will as As the a issue will was, the commodity -- in first in well. XXXX. into seen are and as half higher fourth but in mix look I mix labor the that in as we there third quarter the quarter to pronounced of impact expect XXXX of of we consistent the second margins, we commodities a than in thirdly of as significant the well, the spec to prior was will impact at

factors some results XXXX. significant So, adjustments are that overall of guidance to made those in the we’ve overall impacting or are the the

the are quarter, say of write-up as do we would I to acquisition and assets for what required terms inventory that, you're of Supreme of you impact the fourth required. the is perspective, from all In a GAAP know when an that

basis lot we synergies on margin so that that to we And books. Supreme going to grow in or therefore, we as forward, out and in that of potentially fourth inventory shipments from the our a that overtime. expect capture will we acquired. quarter perspective, that lower until clear margin And we’ll have normal Obviously, return show stepped up occur fourth for quarter certainly a the that the

estimate the part quarter business We’ll we in of XXXX, individual you’ve go this terms next Supreme early the guidance bring we full for year point to more In got units, time. out the broken at in that haven’t through specific which clarity our in as as XXXX. of

Brad Delco

Okay, end quickly of I the labor anticipated what that the July, that’s weren't or guess be costs sort at to commodity or get you you things just updated guess by the raw clear costs helpful. are guidance labor the cost issue. kind for of of the But issue the when I in material terms of issue change These -- surprised?

Brent Yeagy

Brent. is This

necessarily I overall just the the order attrition. in think was August We with and of timeframe what labor to replenish saw the saw not in ranks. in an market tightness September issue really our we

as we with the provide We -- in produce we the up in able us hours affect unable And on general and recover the to overtime QX. make -- which a hurricane units. portion with time, open what to had was rising re-price was a So total the and result, trailers Southeast, the required commodities. us saw to and that affected impact. as coming there to Coupled be those work that with we of run HDPE costs to out is effects were at a QX backlog in that continue we’ll the to we prices, the

Brad Delco

related able and with versus to been that you think contracts HDPE hedge have and guys more with historically was what the headwind steel material to Ford So do guess raw I wood aluminum? you

Brent Yeagy

Absolutely.

Brad Delco

raw materials? -- So HDPE three the the factor other other was bigger two than a

Dick Giromini

we of least be as on be haven’t entirely a HDPE, general our majority at previously language to to but we don’t you steel. of percentage pass-through customers. contract discussed our aluminum into wood hedge, able a And know the would as hedged because Brad exposure effectively our to and in -- we’ve we’re put It both

Brad Delco

understood makes about that were wanted raw material with really Yes, talking sense. I inflation. just we sure what that. to I know make We

Dick Giromini

comment, original in relative quarter. my terms but to the in Back I they think prior impact to commodities of the labor was guidance issue were, bigger both than QX a contributed of

Brent Yeagy

that Those add CTP initiatives capital number improvement come projects that of faced. automation start So that earlier investment related these of that my we’ll to for are demand and in productivity to we just come business and up some online to offset significant in comments are the hour lines. the van -- Brad, that labor

So, those savings one-time automation they’re through in place. ongoing initiatives -- that’s us savings for we not XXXX important beyond because will they’re continue and as go savings, progress as those

Brad Delco

the can that in material And I me And per you or that remind thanks, cost and we next data question. Harrison? correctly, we people, also what well, of Lafayette mentioned you Brent, a improvements what wood day, from the to if cut XXX I Yes, think leaves just -- to XX And think is that of put you perspective? also, in as I terms you cost? Harrison on making bigger then that expect will but said number in see a provide heard would you’re out overall hours said savings you X%

Brent Yeagy

Sure.

of yield million and wood flooring savings. Wabash improvement That Wood $X Products, it about what for conversion wood the we is a of to in So, material WWP. resulted a relative in kind buckets which talked X% the

about issues XX Products, a within redeploy the labor business. manned with But not of there. we relief redeploy associates. on situation within we in talking equivalent going tightness can Similar hour the of only production overtime yes, get effectively we then take terms a reduce it’s to of reflective Commercial the In that those have we’re that to be we’re of a that then then basis. productivity daily savings requirements Trailer the yes, workers business. of those operations, We XXX portion case, would most associates Again,

Operator

from Capital have Markets. Tiss BMO Joel we Next,

Joel Tiss

both at for the how bunch sort of as I it if a balanced because things XXXX. with is gave for get just us positive And could just you on? worried just I’m tailwinds wonder XXXX. you looking a you’re of of wanted the couple wide you Dick, of what more look guidance of that balance I view the a to sides about out

Dick Giromini

to XXXX of XXXX, that will I today. past. near-term of certainly we’re range wide recognize XXXX want the as and and reason a an point. we initiatives The issues I taken come fair. step enter to inflection confident many improvement Truly initiatives how stated at where we’re a those earlier from on productivity that a process, of We've Yes, but the are so some is to there the this of year in up many be everyone early lot as understand is fruition and is we

of that the we like of constraint result some issues a As labor issues face. productivity the

Supreme We now. side from of our the worth year positive business of full impact part have be on also obviously in a

very, We record environment have indicators the market demand economic All tonnage at right new a now. strong. up very strong are Truck levels. is very

well very could it be demand would be. it out than are trailer suggesting turns we even stronger to that So, be XXXX in what a

fourth with orders going on know very, We we get September which clarity be overall the were period, intake as is quarter. strong. conversations some customers all an hearing there industry. October through order consolidated strong, the when We’ll somewhat this, heavy trailer turns quarter orders buy and are see So, how bias the first more have everything we demand, to some forward and get could upward less, early customers it very But into look somewhat customers, when is buy very we for very, will the more. will out

range what as that strong standpoint put lot next If at through We’ll very we obviously left very could come So the it get a quarter from bias year FTR in we similar balance, go demand year. we comes forward what a is in think. clarity a year, will this the it’s that’s more upward this stage. on And proceed this levels That’s and feeling wider and that’s on year. to at be early suggesting the good past demand projections. that like a and as it's next for

Joel Tiss

bit it little to introductions able of it’s you going on be raw know just get that there margin just supply a pricing? of is you a the the cover if us give if And a extra what Can last. you Can side pricing you of material sense, I enough bit talk enhancements lot out the and or a early, indications So can lot tight like get sounds then but to equation? of are demands a and to little products. pretty costs existing your of and new just be product about

Dick Giromini

Yes.

what tell that costs generally now, we’re it’s to generally price look a the we begin than XXXX you and saying headwinds at with as saw positive, material environment as I think exactly to I position think to be far right not to should in go in I’m I commodity positive. as other we think that offset we the XXXX. that say is and I going is

Operator

Next, we Capital. Craig-Hallum Steve Dyer have with

Ryan Sigdahl

for Hi my Sigdahl Steve. taking Ryan on questions. Thanks for guys.

something trailer industry what’s to year compared forecasters like the additional are color to there overall deviation? shipment market be So expecting has guidance on implied year-over-year. but this down causing last, XX% approximately flat the your Any

Dick Giromini

XXXX in as volume, we I it intent have at maintain what try to think with commodity we’ve we costs or environment over Yes, advantageous in we'd to positive XXXX not in to market begin look somewhat share. a regain market feel as also in to able In an an environment we possibly can to drive for margin resulted that make cases in increasing share, drop try materials. choices of as Wabash to only But some the in parts that recover but general, of can. to some

Jeff Taylor

good our our discussed we over it’s overall do less fleets strategy The strong with impact are certainly customer significant and very that the well position favor Ryan. volume are then margin obviously have maintained have numbers are we’ve and industry -- next that about so are large at and feel market and in there. Brent we commented work that orders in will one the as with little large year the who strong fleets the one the very large this past customer our lumpy, they Nevertheless, orders year customers year. we positions also there we in and But have Yes, customers pricing industry. the and as ordered for the we we the relationships if in share

Brent Yeagy

that that make to of it as to And an relative leader within pricing from certain to think we that. XXXX. as a industry the think I amount as floor we’ve overall, we benefited sure try is industry and -- And drive give a

Dick Giromini

a bit just color it. more think to I to add little

that during have We with called have cost able that we that have now. year, increases priced some some material getting been had some the help XXXX season in that of reasonable the had commodity success that next of we gain for year. this, in some with cost for orders early larger we to orders some we’re Larger success I being pricing are fleets pricing or offset orders to experience increases that through

good feel it. pretty we So, about

Ryan Sigdahl

What between ACT and are next the one So How the you that does versus Great. to year. expectation that guidance guess Then does industry because incorporate compare FTR you other? from are between in transitioning side somewhere to an I with have standpoint? two? Thanks. deviation wide -- forecast they fairly

Dick Giromini

view Yes, point, by the early in at and comments seen both season. take heat what the at our still -- the we micro earlier, of a true harder will it and that but January. take it as somewhat We’ve of order encouraged that November, look at it what is have or we’re conservative this intake is is XXXX customers industry more for we order level of try to story saying proceed December the have we will higher. as we ourselves, That tell through seen are really -- we

I’ll drive. need will the demand who caught. will equipment to who more year, industry and One will be they're loss of case, productivity any I causing a believe until operating be up end we the what more on that of others on in through can the think in hours a that be not projections as impact will be mentioned the comments but XXXX. operating. in seeing the productivity. a previously, to That stop up will some continue the immediate And see for have included to elect impact the or adopt the to the they will decide that It will and I for we greater system will the in simply ELD it make and I end what who result will be the to forecasters don’t do up those limitations decrease impact, requirements will industry. we actually in turnout today, to start capacity of second said will to their notably for an able what There the the progress the be believe half probably indicated as than something things have clarify, implementation, There for impact of decide constraints that with fleets I've these that be

believe more second a as fleets in coming ordering from demand trailers. time a customers will So my back see incrementally you maybe standpoint, third and to

back and left fleet a And pick order then months because picked make want have trailers been So XXX they order they covered. time they the from to today, to demand another and leans year up XXX another impact XXX six later come is not may for out over numbers buy third rates up that but -- those to the in we these now being a be internally, example see numbers come three to be order larger so. next That’s until and base any it’s too months would can increments. early even am really prediction able build how I the or you larger fleets, for making that in

Ryan Sigdahl

final me. one And for Okay. one

clarification. quick a Just

guidance that is that the EPS guys backed kind included the step-up? to be of one-time Supreme, adjusted step-up orders you from in that already inventory a inventory On going have in

Dick Giromini

will discussed, being an be It numbers. included I still gap probably basis. out it but the will adjusted definitely adjusted It’s on in be think

Operator

with a have Delco follow-up Stephens. Brad we Next,

Brad Delco

on or big seems a like number? dollars, acquisition quickly the so costs. in included it that million Just The What’s X number.

Jeff Taylor

acquisition. of costs just banker That’s of normal and completing time, is be some of what We capitalize things expensed the it period we a it associated the costs costs, the an all of on fees, an over some some with the acquisition. and amortize balance but of some would sheet can associated fees and those the financing with

Brad Delco

fair? a financing that So like the costs share of there seems it. Is lion in that’s it was

Jeff Taylor

is other fees has fees. million other capitalized, but financing of some and then financing of and accountants piece the bankers X.X expensed lawyers it costs some fees, is A fees, piece the

Operator

This like concludes to I’d the Giromini remarks. today’s to turn call question-and-answer session. back Dick closing for

Dick Giromini

look Thank interest next everyone. for you to all speaking forward you, National again thank certainly call. Wabash support with your you in Brent, And all Jeff of I Mike, on Thank our Corporation. and you and Allen.

Operator

and Ladies you today’s you. Thank gentlemen, Thank this conference. participating. for concludes

now You disconnect. may

Wabash National (WNC) 1 Nov 172017 Q3 Earnings call transcript