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Trailer and truck body manufacturer Wabash National Corp. reported lower net income and revenue in the third quarter, and saw gains in its consolidated gross margin.
Net income for the period ended Sept. 30 sank to $3.8 million, or 7 cents per diluted share, compared with $25.4 million, or 46 cents, a year earlier.
Revenue dropped to $351 million compared with $580 million in the 2019 period.
Lafayette, Ind.-based Wabash manufactures semi-trailers, liquid transportation systems and truck bodies.
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It said its consolidated gross margin of 12.3% was the strongest rate since the fourth quarter of 2019 as it continued to achieve greater efficiency operating within the constraints of COVID-19 protocols.
Wabash reported total backlog at the end of the quarter was about $1 billion, and noted new order activity accelerated during the last month of the quarter to increase 29% compared with September 2019 — and the backlog rose 37% compared with June, the last month of the second quarter.
“Our increased backlog reflects strong underpinnings within the freight markets as rebounding freight activity has contributed to significant gains in spot and contract rates,” Wabash CEO Brent Yeagy said in a release.
“While we’re looking forward to a demand environment that looks poised to improve into 2021, we also remain focused on executing in the final quarter of 2020, completing a year that we expect will demonstrate the benefits of our company’s diversification efforts over the last decade as well as actions over the past two years to significantly strengthen the management system of the company,” Yeagy said.
He said the company’s supply chain understands the growth ahead and has begun steps to ramp up production — but labor shortages in the economy in general as well as in the trailer industry remain an issue.
But Wabash expects to add shifts in 2021, and sees demand continuing into 2022.
During the earnings call Yeagy said, “We do see across the industry concern about the timely availability of product throughout the first three quarters of 2021. I think our customers have been through this type of ramp up multiple times, whether it was 2017-2018 or 2014-2015 or 2004-2005. We know what this looks like.”
Meanwhile, falling market demand in the quarter compared with a year earlier sent revenue and operating income lower in its three business units.
At its largest business segment, commercial trailer products, revenue was $226.5 million, a decrease of 40.4% compared with a year earlier. Operating income was $19.7 million or 8.7% of sales during the quarter.
The commercial trailer products unit shipped 7,975 new trailers in the quarter compared with 13,700 a year earlier.
At its diversified products unit, revenue hit $72 million, down 22.7% compared with the 2019 period. Operating income was $4.2 million or 5.8% of sales during the quarter.
The diversified products segment shipped 475 trailers compared with 750 in the 2019 period.
In its final-mile products segment, revenue dropped to $55.3 million, down 51.2% compared with a year earlier. It posted an operating loss of $4.4 million during the quarter as a result of “weaker volume leverage over fixed costs,” it noted.
The final-mile products segment relies heavily on business from companies that use trucks to service their main business but are not professional freight carriers. These have been hit harder by the pandemic than freight haulers, Yeagy said. “Many of these customers may not have been classified as essential businesses during the mandated lockdowns.”
Wabash reported liquidity as of the end of the quarter was $383 million. Following the successful refinancing of its term loan, the company’s nearest material debt maturity is now October 2025.
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