WNC - Earnings call transcript Q2 2018 | Wabash National Corporation

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Operator

Welcome to the Q2 2018 Wabash National Earnings Conference Call. My name is John, 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. turn over now Jeff will I the to call Taylor. And

Jeffery Taylor

Jeff everyone. John, are the quarter the outlook as is is Officer; on and today. Executive you, operating for making with will the the well we in current I and our listening Welcome Yeagy, progress initiatives, the earnings Chief conclusion President XXXX. the environment Brent good strategic of This remarks, of and the second review the call Thank performance the Officer XXXX audience. from financial for discuss for morning, open to At the our remainder quarter, Chief Company the Financial Corporation Wabash the then prepared call. me as call will Taylor, Brent will National questions we results. overall

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

note please First, this recorded. that being is call

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

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

Brent Yeagy

Jeff. Thanks,

discussions external analysts additional I with a directly I've week on CEO with lead became common today. meeting to was company. had one that the I color may salaried know, I the call meet and company. CEO question As as From December. have manufacturing first I to transition the also CEO those Wabash which to X, emerged make on and numerous how hourly locations shareholders meetings question pleasure was traveling and our a announced of many transition. National associates part on June great spent last want the my to and of since to provide planned

that foundation company Let build stronger today established it XX-year by this the history. will predecessor. in The diverse and by that more been me saying has on is start ever we’ve we that my

what proud the will accelerating of we the we and I are continue people, in of in do team purpose, accomplished, strengthening specific performance. are growth Company that and have nevertheless business and order on to focused We my areas

plan XX City our was is We and will share performance. plays of over November about Company months Day more into second strategic plan year. next for Investor With this how York quarter New the during few the that that our the that discussed

which of million, a quarter quarter quarterly strong the our We other directly achieved business two from a strong in considering record segment record is and addition Supreme to attributable We the in profitably as Mile environment previous Products segments. deliver to grow approximately the continue Final to the consolidated demand fourth and are is and XX% new This we especially of diversify. execute to the record higher revenue at our our than XXXX. challenging performance face, plan strategic pleased the for $XXX we new

of the As Final Mile a growth revenue and both of the stronger the delivery That we retail, and like expect market top we occurring home see XXXX within a the in as with markets. align history that company. established business trends bottom models for for of of fact clearly demand unquestionable of the logistic our the strategic half second strong three products entire on We $XXX All in record Mile line source to Supreme. and e-commerce, matter quarterly and record the experience segments changes are continue business of billion. of compasses business our many XX-year

solid results a XXXX. that was topline quarter it optimism reinforce While our for for

continue material tight by areas supplier I as by market same This inflation that work discussed we transportation constraints trade unemployment demand means driven last an through national materials labor other includes quarter. and supply industrial the Washington. it out cost the tractors of components low continued of We to and headwinds many result leading key and tariff a XX-year for and for in disruptions products. activity strong and driven

settle of in continue broader we supply trailer we to As the see balance improvement move through stability XXXX. industry rates as should across the

summer As period historically we labor pressure mid subside. will exit the

the quarter, our second to in Truck further the However, units quarter. second in are our from tariff with range. products, internal improve QX XXXX our and In actions the shipments to begin efforts. were XXXX. customers which hiring regard the inflation, strong labor productivity Overall, we are shipments to line largest take pricing to was we to will aggressively quickly related and trade were moving in due the body expected demand situation into XX,XXX through impact impact trailer and into seasonal in quarter guidance

at e-commerce delivery supported in belief secular remains and increased backlog the Supreme by in with is and Nevertheless, Middle improvement orders for We and the see trailer months and strong our current demand subside the quarter year. at On seasonally backlog the XXXX body quarter for demand first growing XX% year-over-year of of momentum impact well XXXX. in for with up and the the goods will past Final Mile half continuing for Mile the or Final the QX strong excluding and expected. Backlog billion. the activity. outlook Products as second an remained reinforcing XXXX. of as Supreme from Trailer a addition $X.X Truck XX% year-over-year the finished year-over-year have in demand of basis, absolute supporting back home remains end increasing and several strong that robust our the backlog Mile movement

I to of are DuraPlate MSC. you molded initiatives, Next, or the progress Cell update and Core, Honeycomb strategic want composite DuraPlate which organic on Core, structural

of Van manufacturing of efforts Products Final overall by Commercial pounds product Mile to body for weight Concurrently stages Dry our the DuraPlate commercialization of of continue first the to by performance to up early up pounds with We to segments is DuraPlate as development markets. trailer expected. of and trailer reduce Cell to upgrading Core, proceeding and compared Cell moving panel in characteristics. This our is Cell conventional the maintaining for Van production. Honeycomb Core Dry of the Core further press phase the technologies standard interest in to lightweight technology, panel can truck This XXXX. to specific operation while development development of have and technology successfully we XXX to lower other end the continue technology has our across DuraPlate compared Trailer DuraPlate, which forward potential XXX a Core completed panel. as a enables material many the use as weight the One

ongoing and are product These two We the in us of commitment in material product are from Freight of material our this set to process just competition. Dry validation apart testing pilot further technologies innovative for XXXX. our producing quantities examples of that

also to or MSC on commercialization of structural bodies. forward and We refrigerated move our in vans molded continue truck both refrigerated composite technology

the active refrigerated in to testing trailers and dedicated XXX manufacturing improve scale capability increase to have increased refined Little were XXXX. process quarter, velocity capability. to during as assembly Minnesota. manufacturing location remain MSC MSC van refrigerated manufacturing in our our in on our increase van continue We Falls, MSC was processes within track We

of launched today which commercialization additional truck progressed with hasten has In and units expected field to development we in lines. body addition, than initiative over allocating the XXXX gaining momentum. originally MSC was resources both Therefore, in XXX faster the and are product

the substantial All of over this benefits refrigerated of testing model Wabash the bring breakthrough to useful product additional both the weight customer of improvements refrigerated asset point the of positively elimination National. the and for innovation capability to life product, product increasing and reduction fleets conventional which existing our development impact that our value and this technology thermal with corrosive will This efficiency, metals. up has confirms the drive by

of within Products and growth the last the Final initiative integration I is our will Finally, Supreme strategic activity Mile combined business. discuss

Wabash a million our By $XX to system, annual of rate using accountability the on synergies within taking track legacy years. focused previous the five a of deliberate remain are and focused We acquisitions. achieve than we more and deployment integration Wabash run Supreme tracking the approach leaders and target of management to in process,

are investing into the planned, significant we capital As business.

improve In fact, we capability. million to of manufacturing have already projects capital committed $X

saying will completed. and/or see debottleneck, quarter realized increased the we and investment output as that process improved many profitability by productivity already record in benefit as streamline, are and XXXX second areas We enhance benefits the have as throughout the be will beyond projects more We're the and to further business. to the further grow witnessed capability ability

update. regulatory Now shift I’ll a into short

if weekly regarding know, you and Washington the As to changing more trade seem from tariffs be frequently. updates not

plays the materials are this these business of The out. effects domestically. and Wabash’s sourced majority monitoring on our We actively possible components and events are as

impact is direct tariffs to the Wabash So not to significant.

However, tariffs of caused have which steel we the specifically in domestic cost for XX% and to materials edge. inflation, impacting not aluminum, are is able the components

future. proactively the hedging to hedging this of near expand are possible as manage productivity to program continue the and much as We our risk in with breath working our of

technologies to these discussed, require and unveiled operate for standards Board and with California. that II equip outlined or the It its of Phase the is timeframe. the proposal medium Resources in for in the adoption CARB likely trucks Air XXXX in rules previously fuel-saving greenhouse gas new that California trailers greenhouse starting will As trailers heavy-duty own fleets CARB's EPA gas regulations

will making Last forced a gas be such. to This amendment is under house regulated January comply which the to efficiency to back Senate amendment appropriations rule, the be argument should filings the from as therefore not this We standards greenhouse used that trailers a bill, monitor will trailer being EPAs passes, fuel EPA continue regulate in the not CARB in the Clean EPAs heavy forward. annual Act. of not effect in to remain gas moves week, Air duty vehicle trailers and Should the included it budget. the XXXX. self-propelled with that bill took to The and an goes that prohibits the as rule

to spot our load a rates levels, their near the the consumer bullish climb all-time Jeff, continue or utilization expectations at FTR and remains carrier turn indicators. charts record set of level, let me starts highlight strong, are a balance to At extremely share and over for in both records. a at ACT availability truck macro order carriers path the contract elevated is GDP and At forecasters, a to and and off high The quote industry are is units about housing strong, micro overall is on views production, activity forecast truck the to year. and tonnage more XXX,XXX XXX,XXX confidence of are level, continues I at the and the levels, for the forecast for be increasing its Before profitability time this call of few just market of to recently with produced the units FTR ACT demand record views all trailer equipment, while of year.

Additionally response that units the respectively. order the and ACT next outlook cycle trailer XXXX trailer book remain to and at year is demand which historically the units of XXX,XXX we customer continues levels. be strong forecasting seasonally XXX,XXX recently production XXXX, trailer strong early open for another with FTR indicator In demand, for to positive

forecasts there While to foreseeable XXXX, ACT FTR replacement future. clarity the forecast lot levels – above for strong a demand beyond still is continue of and

conditions, headwinds levels. the industry producing at could impact market strong the Given and constrain current XXXX few the outlook from that are forecasted there

cost QX, in continued and market. experienced challenges supply remainder distressed the material of inflation, and XXXX. the expect labor They a base, we throughout tightening Specifically,

plans are developing issues. of each to We contingency these address

However, on in year. could the of half escalation performance the impact material further have a second

the such indicators order year For and for high freight strong strong utilization the half rate, as industry full truck tonnage. tractor of the book, and continued back

XXXX our full-year XX,XXX tightening guidance shipment XX,XXX to are We units. to trailer

to of third be total range and trailer units. XX,XXX for we anticipate the XX,XXX Specifically shipments trailer the quarter, in

for Mile with a guides. of truck headwinds into previously shipment performance, environment backlog and Taking outlook the well expect products, products in now the Final end full-year demand year-to-date business, continued For our focused body the challenging XX,XXX, our strong account, the as with as prior our full-year high discussed. strong shipment we execution exceed to as

financial are we for the We second that, share even earnings call our to range Jeff on per year a updating the company focused With strong to I and adjusted near-term $X.XX the of guidance delivering this XXXX over In Jeff? half the an stronger turn to remain position XXXX. will full-year for $X. update.

Jeffery Taylor

Group and increased Diversified On net compared the quarter. a to our for basis, XX,XXX XX% Commercial million were quarter revenue Products both to was Brent. in revenue favorable sales all shipments the consolidated year-over-year Consolidated a new point during guidance. units the for the quarterly Products Trailer an segment Final prior strong quarter impact of Trailer $XXX new million, the Thanks of adding the second or with Net contributed and establishing increase high quarter revenue. $XXX shipment consistent Mile

increase levels Second quarter of non-trailer-related totaled in for million revenue slightly all-time truck in of quarter XX,XXX year in service the units. million as at our revenues $XX $XX to addition and branch the to transition to to from other both stores in million our branch second approximately primarily the our was XXXX, non-trailer represent continue other of the Components, is quarter, $XXX dealers. or This build products. in segment. the result to totaled XX% company-owned parts and lower quarter, sales total growth and revenue, prior Supreme a down $XXX primarily due Overall, Final body of organic sales our $XXX of revenue. records Equipment quarter as initiatives the for inclusion locations non-trailer revenue compared independent was products million due up the current quarter, continue to the which Mile million new we

to attributed quarter to results, Mile and million of consolidated described, continuing to impact or of Nevertheless, Mile XXX generated of B.G. labor Final operating period $XX or Consolidated performance declined XX.X% Final million gross up in operating year-over-year by the million, The level is the points million, increase partially due higher quarterly margin of strong very the profit million constraint. which to of year-over-year cost of including quarter in of gross gross was prior XXXX. challenging CTP terms year supplier basis a a ramp the achieved of for $X.X $XX.X historically income Operating and Brent of and addition Company inflation, decreases compared profit of gross up with the decrease environment labor previously margin $XX.X for addition the material the products. cost cost to addition margin. and the XXX year-over-year the In component XX% company operating to $XX points attributed offset highest and since XX% X.X% by products basis second consistent the

EBITDA second $XX.X addition, revenue. operating or million was X.X% In for the of quarter

Trailer year-over-year a business $XXX million on or shipments units. for of I’ll CTP. Now look at increase sales a XX% financial start with each Commercial new or Net results in million were units. of the trailer represents $XX Products which XX,XXX

due in material New price pricing trailer increased average selling or better ASP was and market to rising and costs. year-over-year to response up labor demand

recorded margins housing cost, of And Transcraft XX% is Additionally, had margins increases quarter operating and due development production structural or in strong and both which are increases are as year-over-year energy and on it labor market Operating to manufactured million Benzene products our manufacturing trailer industrial quarter. worth material were down composites and in million ramp and and higher were stronger operating XX.X% Gross of $XX.X the up markets. strong our a trailer revenue of once platform run by investment result frozen that Cadiz, lower income increased total performance expense includes high in $XX.X noting sequentially. products demand. Kentucky commercial brands very margins to during XX.X% respectively. with the demand again flatbed strong operating double-digit a of that In the costs

seasonal the pick quarter. normal On second the up in

thank and our process which and our equipment aviation or Next systems includes Products Group Diversified DPG truck composite, businesses. trailer

respectively. and the resulting inefficiencies influx margin increase the our XX.X% to gross margins over labor levels were previous million in results component market primarily XX% material for revenue million. higher-than-normal Operationally and by and cost Overall, within was income and impacted segment reflect year-over-year business. operating $X X.X% increased demand levels. DPG this from rising short-term topline labor improving and quarter time gross of tank operating was of an X% meet of an inflation, conditions, segment trailer of consistent in demand delivering quarter Second with

trailer the the expect is the This whose in million. and in which and sales margins body is bottom the truck year totaled for half delivered in XX.X% the and the with production margins was of amortization production throughput Operating X.X% line Final improves million labor as efficiencies truck Last quarter segment tank of environment income Mile X.X% market excluding quarter and Mile improved shipments quarter is from body second revenue. second million Products in SG&A in We DPG increase and within $X.X continued facilities. Final of top the of with and improvement the Supreme’s improved of million seasonal we for gross result its largest and customers. demand QX. history, Products, operating $XXX net uptick quarter the strongest Mile in many improvement second sequentially or a respectively. revenue the a Final as the our strong $XX.X $XX.X the

For we of on be SG&A the of high million, the $X.X due to the Supreme approximately a quarter was to and increase expense gains offset totaled with of at lower as approximately million interest expected cost second structure properties. $XX quarter on in $X.X to the flat XXXX the partially for notes. realized by Interest for the the the acquisition full-year. and Intangible of flat capital year-over-year amortization company approximately quarter expect to the on notes yield the Other $X sale for secured quarter for revenue the million year-over-year income the added third convertible former interest to related percent be first as quarter million $X.X million X%. totaled is as the the full-year,

expense May premium for the settled principal approximately million call, value previous was $XX cash, matured convertible tax and second tax in inclusive rate to in effective $XX million. income our XX.X% $XX XX%. the effective our quarter X rate remaining on settled line our of tax outstanding of of guidance for in million in of the recognized quarter. XX% the with on communicated was We As The that full-year bond

the or primarily basis or adjusted sale non-GAAP were adjusted locations, was per adjusted diluted after $X.XX Finally XX%. the a $XX.X our net million $XX.X gains, of to for former a $X.XX branch of on year-over-year for per income million share. related gains On million share, increase quarter, earnings non-recurring diluted adjusting EPS $X.X

the liquidity. quarter Net balance remain year. We with in of estimate second the balance move capital flat we and $XX and second period. levels prior are to year in full-year be million on sheet projects. capital previous Capital several anticipate the was finished implementation working the and Let's $X to million working capital approximately spending depending on the approximately quarter both of consistent the the for large spending generally at timings to revising quarter our

trailing Our X.X as $XXX times liquidity regards cash of million capital revenue. X.X XX-months or times respectively. and leverage plus gross net at available and XX, June approximately finished In or of the second quarter was for to XX% structure, with we debt borrowings ratios

view expected additional our some While full-year, performance financial color as to XXXX well. on our wanted remainder Brent provide the shared on I for of the

Final the million consolidated in current shipment Given previously demand expect respects. in outlined second and revenue to many headwinds the the seasonal we expect quarter. in segments drop quarter three we be be strong the Mile to normal continued the similar quarter to between market all $XXX third considering million With in Products, to the $XXX and third trailer guidance vibrant, quarter

largely quarter. favorable has by we trailer continuation has as in offset pricing will headwinds the similar, margins slightly the impact first of second better quarter operating as the the improved While been be experienced current expected, sequentially pricing in

well record outlook industry with generated more performance in summary, realize With quarter the full improvement revenue. income ahead. headwinds, In backlog, gross strong positioned increases and price the Despite and with quarterly was profit particularly strong of full we the performance Company's and and backlog impact we in a significant overall operating of positive year, the the year the material in quarter. for cost strong, in a operating levels additional to fourth for sheet balance are labor the second the expect strong

John, We focus deliver With the performance, for on and the I'll shareholder question-and-answer are are increase of value call three turn the to now committed and core into areas back to people, the the purpose, future. who will session. prepared to to and the Company, begin expectation that

Operator

Thank you.

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

Scott Schoenhaus

Scott is you? for are This guys. Hey, actually How Schoenhaus Brad.

Brent Yeagy

you how Good, are Scott?

Jeffery Taylor

Yes, good morning, Scott.

Scott Schoenhaus

your be And domestic Good. I you I'll see? the where to know weren't Is margins, you raw then the you baseline margins I you guys you just can't that about through pricing could each sort of where quarter. raw kind the guess I gross start should just commented said material be costs gross that of Wondering in of longer better guess of costs? flow off, if hedge. that able for I talk make head material know segment you could near-term Jeff what in through our term be and walk Can us should maybe third segment? XX%

Brent Yeagy

specific me let don't We give by at level. margin piece guidance with first. the start maybe second segment So

is So think see we for advance I our that do improvement. and to continued commentary expect you directional

to the labor pricing to and additional we we're take in seeing to and volatility and greatest supplier headwinds constraints. materials increased work raw As aggressively mitigate obviously from then continue the to possible, continues extent the offset hold that

improvement marginal I quantify see level expect don't be. to what think then quarter as we third a practice, some would end. would the we that But into quarter move segments fourth and the into all as margin amount three we of year by

Jeffery Taylor

previous the into quarter And primarily bit but color just first for quarter, third the would in itself the more call, and kind fourth repricing fact in with In talked begin backdrop backlog quarter specifically the the early an going of that the about of we that show QX a get that margin, earnings CTPs had Scott, just to to the right. little conducted effect second a QX. in quarter, on

cost also or to business. specifically us pricing within efforts been level gives that our it of successfully take both QX. actions our platforms those trailer subsequently As should that recovery We've again active in material see reason that's business believe recovery that tank and we to start place and – the in impact

that been things past are rounding our some well leading to material inflation six weeks. cost models doing, backlog that aggressively of we've pricing quote the the are those as occurred into eight as new the So in over that out

Scott Schoenhaus

Right.

Brent Yeagy

you to been are history. move was back Scott to question, that hedge the this part point in have time, effetely around your first the and So in of not our which and not effectively we historically XX% at hedging

able use to are We effectively directly. hedge the key we metals that

general, those So aluminum as steel and them. in we materials purchase those we hedge products,

are small in hedge, of metal we may effectively components We all we to that specific be content not a situations, In able able to them through the purchase. portion that get comes that of as time, density polyethylene, wall. core material for large this remains a side unhedged portion does that is is which the high that but DuraPlate extent composite hedge, to at the

you future and that actively We about talk in exposure that's the hedge to it are material if develops. working can effectively additional something and component and we will as evaluating

Scott Schoenhaus

my I talk your XXXX Can obviously smaller freight your and cycle. most telling guys. helpful with question talk would this the strength your be feeling could you're markets and what about the like follow customers. of customers you? very end are telling the into just you backlog looking of would sort are larger really what seeing is peak into about up demand That's from Can Great. at customers you investors guess and is be

Brent Yeagy

the segments indicates early terms up macro agree as and the across everything backlog We is talk to It the time advance. levels we XXXX. same Trailer Board higher that quote as size the last refrigerated the we're we which I’ll to see and saying high both that drive in first and manage measures an platforms freight micro specifically move period in tends tanks at for quote picked significantly with year saw and to both about into of the economy.

in right second of at we said Customer it So our capacity they also plan sentiment to the of feel how terms good board leave XXXX as context those of kind the talk echo year they really to across customer we about and in here bullish look same we half sentiment. now. how the set And really the gauge is bullish will suppliers that also for and just where of as they business. their we sentiments for

Scott Schoenhaus

Great. That’s very helpful.

Brent Yeagy

Yes, similar in specifically the specifically good conversation this well XXXX. about truck where secular at customers line demand up a very feel tend truck around largest as body e-commerce. body it's with to see today who setting We our we're as for for and

Jeffery Taylor

of key I we continue business the in over years with of to showing where it's tank improves think indicators Yes, couple is economic activity. or past in slowly positive that trailer been from see increased many those markets strong growth

Scott Schoenhaus

helpful hop I’ll back Great. Thanks very guys. queue. in

Jeffery Taylor

Thank you, Scott.

Operator

from from is Global. question next Our Seaport Mike Shlisky

Michael Shlisky

morning, Good guys.

Brent Yeagy

Good morning.

Jeffery Taylor

morning, Good Michael.

Michael Shlisky

morning. Good

of QX off kind the kick costs. I just in get was accretive excluding So any of as could here, it one-time you us a number to whether Supreme

Jeffery Taylor

believe think I the do quarterly in income haven't to strong strong increase it performance performance that be actual actually would revenue yes. with I the leads business for me the QX accretive just it on in accretive record believe very was the calculation is the a that strong done operating I If But very basis. on that

Michael Shlisky

Okay. another Supreme, and troubling us just issues it up because on the have there selling And there other chances been appropriate outfitters with outfitting. some delivered amount for getting of

As that any experience recently? part Supreme of

Brent Yeagy

Not would chassis, I that relative I struggles, created supply but the but disruption we’re I struggles our our Supreme to say without is complete disruption. without material material business. impact that regard availability without would say in would a say for of relative not not to

Michael Shlisky

Okay. U.S. et of parts of some cetera. the the of from Because get different so Great. And to want Coast year. West country different yours I many and this your are sense a actually then market far share so are in central

categories share of think you challenges held in especially some in in facing the think your there so respect you've with far important to and you everyone's you more If labor same XXXX? on that

Brent Yeagy

Yes, down markets. are number of major holding exact an either share share without time we're growing all nailing or at or our that this indications say

there's advantaged think ability manufacturer on navigating well void on think any we and some somewhat based feedback point is and I been our competition. our at So feedback the we've of this to we that the in disruption supply have that don't and capitalize I may in we're That's cases market. this that given. that's given that been feedback to but qualitative be position relative we've

of across areas think is we or some as tighter that better there X.X national X the I is plus worse pockets it's The are you terms labor absolutely markets In that having in know and market different. we are Indiana average our at that tight said labor the minus is setting any Lafayette, competition areas unemployment today. have are country some

Michael Shlisky

one just curious Thanks. customer of comment I Brent sense makes matters GHG last forward? going trailers reduce development to much a EPA and forward. that because I when products I product of kind your on them to pipeline the anyway of is developed to of there fuel that the mean, guess the consumption exempting you going I'm some cost. made kind is going was from for you squeeze Great. save fuel that's here that standards potentially in kind one

to you R&D So change might if for can kind pass? highlight do plan they have – this of the were and you where us how

Brent Yeagy

Sure.

deadline. meet pipeline market, already XXXX are demands So already first required the off, that ready maybe products the put the initial we've the for that into for

So the that next satisfy period off requirements any introduced ago would the of years would that for not a XXXX Ventix affect of the material tranche the in begin for requirements. to We that couple cut way. here

for for as cases next tranche bring to in work as the could have with already AeroFin some XL that So that allows well we also additional XXXX. into ability additive many begun

may pipeline to value material push to to value customers, not the requirements. regulatory that to and still there. sell going gas customers whether being driver, add while of we we or our there in value wouldn’t we're playing added have added or But meet a point, accordingly those not rule terms market to demand. features add those been will that market or There be greenhouse your is those products a we've not, look features those So effect to a

Michael Shlisky

much. very Thanks Okay.

Jeffery Taylor

Mike. you, Thank

Operator

Steve is question next Dyer Craig-Hallum. Our from from

Steven Dyer

Thanks. Good morning, guys.

Brent Yeagy

Steve. morning, Good

Steven Dyer

the of for year. margin a guidance and Just to as I your question remainder earnings try parse the

implication a margins and typically square based like on – in QX for holidays fairly happen sharp things trying you the year volumes with QX given So for doesn't the said was just that. increase which to and what

seeing give ramp? little just of what So appreciate kind can you're to confidence that you of a help sort or us expect us

Jeffery Taylor

Sure Yes. Steve.

you've last I as into us back it so think pricing half increased favorable the and in pricing the that and the did build for pushed honestly say backlog the as into full-year. calls prior built heard the quarter most as of the that the full-year, backlog

quarter an that impact our get that's the and stability that's And will fourth there. the stability the to improvement quarter, on and mix regards quarter to you as we customers that our Also we for than direct – that favorable workforce pricing quarter. in regard we in expect as productivity indirect topline the so. look know so to QX, you overall and generally channel lead do a mix the then those see as in more at our believe customers lower the we are customers. third as look improvement some market about basis some strong we third at driving building labor of have will priced that and And And and think product – pretty the we're from

quarter, to improve quarter. possible, increase until the the to material make that wait It's channel that QX will there stabilize. the even have. current will could profile some in We and We’ll call also an raw favorability margin as call in mix that be a forecasts the maybe indirect in we for There's the also possibility next see well. in fourth are which help

Steven Dyer

book mean I to you the XXXX. it you’ve relates for Thanks. order Okay. opened capacity mentioned, as

book just that how the margin you're given and of the for volatility to you're past firm current open me. for pricing a the type? if capacity, to given all commodities going in try year pricing, another you're if wondering few And on take an Thanks. have question That’s you're the lots handling Wondering it guys cetera. in for in slots follow-up you for upside to Just et then second higher that's orders. half opportunity

Jeffery Taylor

first how I'll risk of one pricing we are pricing XXXX material volatility looking a the management standpoint. from terms take for at in and

discussions between the conversations now. risk pressures XX-period to inflationary frameworks so our throughout customers, challenging and beginning suit also competitors life more in absolutely as go of bill. adding believe the of quote and Those are talking terms ongoing right environment. inflationary follow they as additional will are – at with well We are having our the with customers in hedging to direct both to look negotiate looking the as We material protection various inflation, recover as mechanisms – and well

but So to we time occur. to will look setting the is think up that market to allow – that we tell,

process won’t we looking give volume absolute that not the us, In starting the pricing to But safe perceived terms maybe also do numbers we're think we're at all looked talk market and the margin and as that position, covering I that be hard where again you to able allows We XXXX, through that this pricing as working right were we're well, think to say in of it's but part pricing, now. is to recover we’ll of about accordingly of that. inflation point. only material I at turn

go of terms by the into disruption relative labor to our supply efficiency. mirrored the and as QX, be with added we stability in hand capacity are goes constraint level really is hand capacity QX. of is In going we This in what to

table. on chain. the maneuvering improvement improvements on have out see that are QX As that based ability in plans the some believe to QX, We stabilize, which the on that more it be Labor to to those will of call should we'll game feedback But the begins we conversion may supply we metered have. environment floor. of those occurs, the the start the to ongoing on truly based occur stability supply will do we prepared we in If relative

Steven Dyer

guys. thanks okay, it, Got

Brent Yeagy

Thank Steve. you,

Operator

Our next question is from Joel Tiss Capital from BMO Markets.

Joel Tiss

guys. Hey, doing? you’re How

Brent Yeagy

morning. Hello, good Joel,

Joel Tiss

Good morning.

if as a the do cycle similar that You’ve can a answered of minutes sense Final the Thank you. look on talk the and you drive year to and we cycle even being could second little there, more well? business, just and XXXX into is few any margins for what as seeing about a the are we maybe spend see half the you operating the lot. and Mile I you wondered

Brent Yeagy

our terms for those think business. van body truck duty medium relative really businesses way cycles any the being predominately heavy and see same of between to duty we and cycles necessarily in micro our that macro We both the material the up Yes, isn't don't fundamental we that and effectively truck propel serve. with duty proportionately numbers are the And markets demand that growth this body see a level think Mile we of Final business being that secular in picked medium again specifically piece the we that separate. drivers

investing order to XXXX, it. a Jeff feel we good for and question. take about that's let That's line look Final excited we're why to So what pretty have in on I’ll begin we're Mile sufficient capacity even like then XXXX business. advantage it the and XXXX, cover market to of why

Jeffery Taylor

operating have is the of terms to period in our continue mean Having seasonal expand generally we Yes, has is those second that a it, in said profile that a Joel quarter. to I to goal margins, strongest margins. do the business

history profile you pretty good like. get as if seasonal go and at know back a a that you look As looks traded of and view what you’ll publicly company, Supreme’s

we're do We impact drop But lower won't necessarily there Obviously from making in an in I work will longer-term continue operating the that to in gross topline. development, margins over on of we comment So overall that long-term. expect just investments capability over our new time volumes. to the leverage normal perspective all quarter-to-quarter. facilities manufacturing products that and in grow margins technologies operating expect and

Joel Tiss

very you Thank great. That's much.

Brent Yeagy

Joel. And Yeagy you, End now to of turn I'll over Brent Thank the back Q&A for closing remarks. call

Brent Yeagy

Corporation. speaking you interest and Wabash on of next I your support for Jeff our you. all again look and forward you Thank National in to with call. Thank

Operator

concludes gentlemen for today's participating. and Ladies you Thank call. you. that Thank

now You may disconnect.

Wabash National (WNC) 1 Aug 182018 Q2 Earnings call transcript