A healthy freight market will continue driving demand for trailers, Wabash National’s (NYSE: WNC) CEO told analysts after the company reported record revenue in its first quarter.
“Freight activity has remained strong into the first quarter, with the expected demand for core trailer products continuing,” Brent Yeagy said on May 1.
Wabash generated $533 million in revenue during the first three months of 2019, versus $491 million a year earlier, a 9 percent increase. Net income was down at $14.8 million, or $0.27 per share, compared to $21.3 million, or $0.37 per share in the first quarter of 2018.
The results, reported before the market opened on May 1, beat analysts expectations of $0.25 per share on $523.2 million in revenue. Wabash also reported a 4.7 percent operating margin for the quarter, a 100-basis point improvement compared to the fourth quarter of 2018.
“We are off to a good start in 2019, with the first quarter coming in slightly ahead of our initial expectations,” Yeagy said in the company’s earnings release. “Although the manufacturing environment remains challenging, the operating decisions and commercial strategies that we launched last year to offset these pressures pulled through as expected in the form of a sequential increase in margins.”
Yeagy told analysts that the company had continued to see improvements on the supply side, particularly with its last-mile products. “Chassis availability has substantially improved over the fourth quarter of 2018,” Yeagy said.
Net sales of commercial trailers increased by 4.2 percent to $341 million. Sales for final mile products surged by 33.6 percent to $101 million. Diversified product sales increased by 4.7 percent to $100 million.
Wabash shipped 12,400 new commercial trailers during the quarter, slightly lower than the 12,650 during in the same period of 2018. It shipped 700 new trailers from its diversified segment, compared to 550 a year earlier.
Order backlog increased by 29 percent to $1.6 million, reflecting strong trailer demand.
Wabash maintained a positive outlook for the rest of 2019 and stated it would continue to expect to earn $1.50 to $1.70 per share for the full year. Yeagy noted that this would reflect an 11 percent increase in earnings year-over-year.
“Industry volumes are proving to be strong in 2019, as reflected by the strength of our backlog,” Yeagy said. “We continue to work diligently to mitigate the operational and supply chain headwinds that accompany such high levels of demand.”
The Trump Administration’s tariffs on imported steel and aluminum have been a drag on the company since they took effect in 2018.