Wabash has a lot of trailers and bodies to build based on a 70% year-over-year growth in its backlog — so many that it will take practically no more orders this year.
COVID-related absences, the ongoing supply chain crisis and higher commodity prices it could not recover from customers hit the company hard in Q4. About 5% to 10% of the $2.5 billion in unbuilt orders — an increase of $600 million from the end of Q3 — slipped into 2022.
That is going to make a typically tough first quarter for revenue even tougher, the company said Wednesday on its Q4 earnings call.
“We will collaborate with customers on longer-term deals to include 2023,” CEO Brent Yeagy said. “Far from broadly opening up the order book, [Wabash] is well positioned to work in partnership to work with select customers who purchase from across our first-to-final-mile portfolio.”
One of those deals is its first five-year agreement with Meritor Inc. (NYSE: MTOR) to purchase trailers through 2026 with Meritor loose axles as standard equipment and optional Meritor Tire Inflation Systems. Other Meritor components also will be options.
As fleets clamor for more vans, especially dry and refrigerated, to address growing demand for faster delivery of consumer products, Wabash is converting a traditional refrigerated van line with 5,000 units of annual capacity to dry vans, which can be built at a rate of 10,000 a year.
“Given historic capacity constraints and associated production inefficiencies, emerging sets of new customers with digital brokers and private fleets, trailer pools and a dealer network capable of further increases in sales, we see this as a critical opportunity to grow our production capacity,” Yeagy said.
By the numbers
Q4 revenue of $479.3 million favorably compared to $404.1 million in the October-December period of 2020. But the Lafayette, Indiana-based manufacturer reported consolidated gross profit for the quarter of $42.6 million or 8.9% of sales. Including a noncash impairment of $28 million related to a brand reorganization, operating profit was $9.7 million or 2% of sales.
The net loss was $25.3 million or negative 51 cents per diluted share compared to a profit of $5.5 million or 10 cents a year ago.
Wabash shipped 11,655 new trailers and 3,230 truck bodies during Q4. COVID-related absenteeism spiked in late November and December to the highest levels of the year. Wabash hired 275 new production workers during Q4, but most of them worked to make up for production shortfalls rather than building extra trailers and truck bodies as intended.
“Omicron really did create a pretty forceful event in the December time frame,” Yeagy said.
The One Wabash rebranding effort included a new reporting structure for first-to-last-mile transportation products and parts in place of multiple segments in Q3. Concluding four years of reorganization in January, Wabash is retiring trade and brand names acquired over the past 16 years, including Benson, Brenner, Bulk Tank, Supreme, Transcraft and Walker.
Wabash will no longer use Wabash National as a marketing name, but its ticker on the New York Stock Exchange will remain WNC for Wabash National Corp. Wabash will add one new brand name, EcoNex Technology, for its molded structural composite (MSC) used in refrigerated transportation.
“We did a significant amount of third-party research to make sure that we had real data on what was the truth on the ground across that stakeholder group,” Yeagy said, referring to consolidating all brands as Wabash.
“We feel extremely comfortable based on feedback from our largest customers. So, where we anticipated possible pushback, we got the opposite, which was embracing the idea.”
The company also created a website called onewabash.com.