Moody’s cuts Wabash rating third time in a year, execs eye ‘27 rebound

The B3 rating at Moody’s is six notches below the cutoff line between investment grade and non-investment grade debt.

‘Very weak’ credit metrics

“The rating downgrade reflects our expectation that Wabash’s credit metrics will remain at very weak, unsustainable levels over the next 12 months,” Moody’s said in its report. “Wabash’s earnings have evaporated and cash burn has persisted during a prolonged down cycle in new truck trailer production as the company’s customers defer investments in their transportation fleets.”

Moody’s said trailer production at Wabash (NYSE: WNC) should increase sequentially during the year, though the latest quarterly data continues a long slide.

Wabash data on trailers shipped has been declining steadily for many months. It was 5,378 in the first quarter, down from 5,901 in the fourth quarter of 2025. Its recent high-water mark was 13,670 in the third quarter of 2022. 

Financial measures have also been grim at Wabash. It reported cash and cash equivalents on hand at $31.9 million at the end of 2025. A year earlier, it was $144.5 million. At the end of 2022, cash and cash equivalents were $58.2 million.

Net sales in its Transportation Solutions segment, which includes its truck manufacturing operations, were $250.1 million in the first quarter of 2026. Sequentially, that is less than the $262.9 million in the fourth quarter of 2025.

In the third quarter of 2022, Transportation Solutions reported net sales in Transportation Solutions of $611.8 million. 

Wabash’s net income last year was impacted positively by the settlement of the nuclear verdict it faced in Missouri. But more reflective of its operations, the company posted a gross profit of $69.9 million in 2025 for all operations, down from $265 million a year before. In 2022, gross profit was $322.7 million. 

Company seeing ‘early stabilization’

In Wabash’s first quarter earnings call, when the company posted an operating loss of $37.3 million in its Transportation Solutions segment, which contains its trailer manufacturing activities, CEO Brent Yeagy acknowledged the poor performance but sought to forecast better days.

“Order patterns were uneven, asset utilization inconsistent and capital decisions across the industry were being evaluated carefully,” he said. “At the same time, we were encouraged by early signs of stabilization and improving fundamentals that typically precede a broader recovery. Now as we move into the second quarter of 2026, both our customers and our visibility continues to improve. And it shows an environment that is building the set up for a constructive 2027 as spot rates, contract rates, capacity and demand, all are coming together and drive back to replacement demand for equipment and possibly beyond as fleets begin to plan more confidently.”

Wabash is not followed closely by equity analysts; only one was on the earnings call.

Rising backlog

Yeagy said the company’s backlog in the quarter was $837 million, which was up 19% from the fourth quarter of 2026. He added it was the highest quarter-to-quarter gain in backlog growth for the first quarter in the company’s history .  

Even with an improvement in market conditions, Moody’s said it still expects Wabash’s debt/EBITDA ratio to be 6X at the end of 2027 “though trending in a positive direction.” The agency said it expects free cash flow to remain negative, “as the company’s working capital needs to support growth outweigh the recovery in earnings.”

Moody’s also said at the end of 2023, that ratio was 1X.

The debt issue also was raised in terms of Wabash’s short term needs. Moody’s said Wabash has “adequate liquidity to bridge the company to what we expect will be a meaningfully improved production environment in 2027.”

But it’s going to need to rely more on a $350 million asset-based revolving credit facility, Moody’s said. That ABL expires in September 2027, “which introduces refinancing risk in the near-term.”

Moody’s added that it expects Wabash’s revenue would be “slightly down in 2026, with negative earnings and free cash flow.”

Wabash’s stock is only down 9.37% in the last 52 weeks. But the more recent trends have been brutal: down 17.58% in the last month and 31.55% in the last year. According to Yahoo Finance, its five-year rate of return exceeds negative 58%.

Wabash declined comment on the Moody’s rating change.

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