Wabash National Q3 2024 Earnings Call Transcript

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Provided by Quartr
October 24, 2024

Key Takeaways

  • Wabash has refocused on its core transportation and logistics markets with a customer-centric strategy, expanding its parts and services business to drive higher-margin recurring revenue.
  • The company recorded a $462 million non-cash charge in Q3 after a jury verdict on a 2019 accident, and it is pursuing appeals and legal remedies.
  • Wabash lowered its full-year 2024 guidance to roughly $1.95 billion in revenue and about $1.25 EPS due to softer dry van demand and capacity adjustments, though it expects 2025 EPS to exceed 2024.
  • Strategic partnerships, including a 10-year steel supply agreement with Steel Dynamics, JVs with HDI and Fernwey for parts distribution and digital enablement, and a trailers-as-a-service deal with Kodiak, bolster supply chain resilience and recurring revenue opportunities.
  • In Q3, Wabash delivered $464 million in revenue, shipped 7,585 trailers and 3,630 truck bodies, achieved 12.1% gross margin and reported adjusted EBITDA of $34 million (7.4% of sales) with EPS of $0.19.
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Earnings Conference Call
Wabash National Q3 2024
00:00 / 00:00

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Operator

Thank you for standing by. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wabash Third Quarter twenty twenty-four Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the conference over to Ryan Reed. You may begin.

Ryan Reed
Ryan Reed
VP of Corporate Development and Investor Relations at Wabash National Corporation

Thank you, and good morning, everyone. We appreciate you joining us on this call. With me today are Brent Yeagy, President and Chief Executive Officer, Pat Keslin, Chief Financial Officer, and Mike Pettit, Chief Growth Officer. Before we get started, please note that this call is being recorded. I'd also like to point out that our earnings release, slide presentation supplementing today's call, and any non-GAAP reconciliations are all available at ir.wabash.com. Please refer to slide two in our earnings deck for the company's safe harbor disclosure addressing forward-looking statements. I'll hand it off now to Brent.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Thanks, Ryan. Good afternoon, everyone, and thank you for joining us. Let's start out by level setting that our adjusted third quarter financial results largely align with our prior expectations. Before we get into the details on the quarter, I'd like to provide some strategic updates and address how we see the path of our growth continuing to unfold. To set the stage, I want to step back and reflect on the last few years of our journey to change the growth and performance trajectory of Wabash, highlighting how we've reached our current position and where we see the company headed. When I assumed the role of CEO, our strategy of becoming a more diversified industrial was no longer serving us well.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

While the fundamental rationale behind it to address dry van cyclicality was sound, especially after the challenges of the 2009 financial crisis, it had become clear that some of the most promising megatrends were happening within our core markets of transportation, logistics, and distribution. We needed to refocus closer to home, expanding our equipment portfolio to complement our core dry van product line, created greater value and an opportunity for deeper relationships with our customers. But we hadn't fully capitalized on that potential. The pandemic provided an opportunity to quickly restructure both our organization and the go-to-market strategy, with the latter shifting from a product-centric model to a more customer-centric one, where we could expand the definition of how value could be created. By streamlining access to multiple equipment types through a single commercial point of contact, we created significant value for our customers.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

This shift has brought us closer to our customers, enabling us to jointly plan for the future and foster innovation. It also gave us further insight into what their deeper problems and business needs were beyond the products we make and the solutions we provide at the time. We are now able to position our total portfolio of transportation solutions as a more resilient set of revenue streams. The value of a deeper customer relationship gives us reason to engage more strategically with our supply chain to enhance the manner in which business can be conducted, allowing for more resilient responsiveness and willingness to collectively serve the customer. Suppliers recognize Wabash's efforts to improve the industry status quo and are aligning with us, combining strengths to provide even greater benefits to our customers, particularly within the next industry upcycle.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Our reimagined manufacturing capacity will also be a key asset in this regard. Our increased resiliency and improved responsiveness will allow us to outperform as compared to previous cyclic upturns. One major area of strategic focus has been our parts and service initiative. For years, this opportunity was overlooked in our previous drive for diversification. We now recognize that growing this higher margin, recurring revenue business is a core element to balancing the cyclic nature of demand for transportation equipment. We're excited about the potential in parts and services, not just as a revenue driver, but as a critical support mechanism to maximize the life cycle of our equipment. We continue to drive the core aspects of this growth journey and are increasingly excited about unmet needs we are uncovering through our enhanced customer relationships. Our partnerships with HDA and Fernweh Group are instrumental in this growth.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

The Wabash Parts joint venture with HDA rapidly established extensive distribution capabilities, providing our dealer network and fleet customers with efficient access to a broad portfolio of aftermarket parts. Meanwhile, our Link JV with the Fernweh Group is enhancing our digital capabilities, providing us the capability of engaging our customers differently and engaging in solutions to problems in different ways. The ability to revolutionize how our dealers and our suppliers and customers experience the Wabash brand through the solutions we provide and the manner in which we provide it, within the vast transportation logistics landscape. We have positioned the company well for this next chapter, where the continued investment and development of capabilities will increase the scale of profitable growth for the company. To further refine our focus, we made some key organizational changes.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Mike Pettit, formerly CFO, has been both a thought leader and internal catalyst for our parts and services growth. Recognizing that we needed to free him from his day-to-day CFO responsibilities to allow him to fully focus on the mission to accelerate the scale of our achievements, Mike will now serve as Chief Growth Officer, overseeing parts and services, digital enablement, and engineering. Collectively, these areas of the business will be leveraged in a manner to bring our purpose of changing how the world reaches you to life at scale. Let me turn the call over to Mike for his first update as Chief Growth Officer. It's all yours, Mike.

Michael Pettit
Michael Pettit
SVP and Chief Growth Officer at Wabash National Corporation

Thanks, Brent. Before diving in, I'd like to mention that while I genuinely enjoyed my time as CFO, I'm excited about my new position and the focus it provides to more consistently drive growth through the organization.

Michael Pettit
Michael Pettit
SVP and Chief Growth Officer at Wabash National Corporation

On the topic of growth, one of the ways Wabash is leading within the transportation, logistics, and distribution industries is by leveraging our ecosystem to navigate shifts and seize emerging opportunities. As a market leader in transportation equipment, Wabash sits at a unique crossroads, collaborating with suppliers, dealers, carriers, shippers, and technology providers. These partnerships allow us to tackle complex challenges that no single entity could solve alone. While we're still early in this process, in October, we hosted our second gathering of our ecosystem partners at our Ignite conference, bringing together over 300 attendees. This gathering really demonstrates our commitment to transforming what was once viewed as a basic supply chain into a collaborative ecosystem, capable of solving broader challenges together. There are already a couple of proof points I'd like to highlight.

Michael Pettit
Michael Pettit
SVP and Chief Growth Officer at Wabash National Corporation

First, we recently signed a ten-year strategic supply agreement with Steel Dynamics, a leading North American steel producer. This agreement strengthens our supply chain, ensuring priority access to critical components like steel coils and crossmembers during periods of high demand. This will help us meet customer needs, even during times when other manufacturers may face constraints. This agreement with Steel Dynamics adds to similar ones with Hydro, Ryerson, and Rockland Flooring, positioning Wabash as a leader in supply, reliability, and operational excellence. Secondly, our Trailers-as-a-Service partnership with Kodiak, a leader in autonomous truck technology, is another significant step forward. Our TaaS program provides Kodiak with a flexible solution, offering access to a fleet of reliable trailers via subscription that includes maintenance, repair, and managed care support.

Michael Pettit
Michael Pettit
SVP and Chief Growth Officer at Wabash National Corporation

This allows Kodiak to focus on developing their autonomous technology, while Wabash handles the logistics of trailer utilization, uptime management, and maintenance through our managed care services. This brings together a unique technology partner and Wabash dealer service capabilities, supplemented by a growing managed care network, with Wabash acting as a connective tissue to create value for all parties. Our team is excited by these partnerships, and we are just getting started. We have been laying the foundation for growth in 2024 that we believe will prove to be transformative for Wabash in the next couple of years as we look forward to continuing to create these opportunities by leveraging our position in the transportation, logistics, and distribution ecosystem. With that, I'll hand the call back over to Brent.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Thanks, Mike. Many of you on this call know Mike and his passion for Wabash and the strategic direction we are following. We are lucky to have a leader like him to drive our strategic growth forward, and we look forward to seeing him thrive in this new role. I'm equally excited for Pat Kesling to take the duties of CFO and to work directly with Mike and I to achieve our strategic goals. After spending fifteen years at Honeywell in various finance roles, Pat joined Wabash and has progressed through several leadership positions, most recently as VP of Finance. I have worked directly with Pat since he joined Wabash in 2017, and I know that he has what we need as we move into this next chapter of the company.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Moving on to our third quarter, you'll see a significant divergence between our GAAP and non-GAAP financial results due to the impact of a September 2024 jury verdict. As we previously shared, a St. Louis jury found Wabash liable for $12 million in compensatory damages and $450 million in punitive damages in connection with a 2019 motor vehicle accident. This incident involved a passenger vehicle traveling at a high speed with an unobstructed view that struck the back of a nearly stopped 2004 Wabash trailer. While we booked a non-cash charge during the quarter related to this verdict, we believe the damages are abnormally high and the verdict is not supported by the facts or the law.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Among other things, and despite precedent to the contrary, the jury was prevented from hearing critical evidence in the case, including that the driver's blood alcohol level was over the legal limit at the time of the accident, and neither the driver nor the passenger was wearing a seatbelt, was also kept from the jury. There will be post-judgment proceedings before the court enters a final judgment for the purpose of appeal, but in the meantime, we are working closely with our external legal counsel, accounting, and insurance firms, and we'll be evaluating all available legal options. We will continue to share updates as appropriate. Wabash continues to stand firmly behind the quality and safety of our products. This will not stop us from continuing to challenge ourselves to create new and innovative products and do what we can to contribute to safer roads.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Turning to our backlog and financial outlook, total bookings at the end of the third quarter totaled just over $1 billion. This compares to about $1.3 billion at the end of Q2. As we'd expected, the dry van and large fleet season is pushing to the latter stages of normal seasonality in 2024, and we anticipate the flow of new orders to increase in Q4 and into early Q1 of 2025. With the dry van fixture for 2025 yet to be fully developed, we feel that's prudent to adjust capacity in our vans facility in order to ensure we are optimizing our current labor structure for now and for what we expect to be a medium-term improvement. In the areas such as truck bodies, we're thoughtfully increasing incrementally to prepare for a positive 2025.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Our parts and service revenue streams continue to add capability, and we will have both a broader and deeper set of offerings as we enter into the new year and continue our march to higher levels of growth in this key area of the business. For now, the rebalancing of our Q4 dry van demand and capacity necessitates that we lower our full year revenue outlook to roughly $1.95 billion and an EPS to approximately $1.25. While it's too early to quantify expectations for 2025, I do believe our 2025 EPS performance can exceed that of 2024. We look forward to providing more detail on our Q4 call. Finally, I'd like to touch on capital allocation priorities as we move forward, reiterating that the significant legal charge in the third quarter was non-cash.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

We remain well positioned to invest in the company's strategic growth initiatives, with a focus on funding parts and service growth. We believe our current dividend is competitive with our peer set, and we expect to continue evaluating between potential returns we can generate via repurchases compared to M&A. In closing, we believe by adjusting our operations to align with the current market reality, we are optimizing our future earnings power. We have made significant changes throughout the company to increase Wabash's customer value creation, and we believe the company is well positioned to grow our parts and services revenue streams, which will complement the transportation solutions side of our portfolio to further enhance our value proposition to customers and our financial performance to shareholders.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Our ecosystem approach to grow value is showing early signs of success, and the company's new organizational structure is designed to accelerate and create focus on how we build our collective future. With that, I'll hand it over to Pat for his comments.

Patrick Keslin
Patrick Keslin
SVP and CFO at Wabash National Corporation

Thanks, Brent, and good afternoon, everyone. I'm excited to be here and honored to step into the role of CFO. Mike has been an excellent mentor, and I look forward to building on his accomplishments. As we continue transforming Wabash into a visionary leader in connected solutions for the transportation, logistics, and distribution industries, I'm eager to work with all our stakeholders. Beginning with a review of our quarterly financial results, in the third quarter, our consolidated revenue was $464 million. During the quarter, we shipped approximately 7,585 new trailers and 3,630 truck bodies. Gross margin was 12.1% of sales during the quarter, while adjusted operating margin came in at 3.7%. In the third quarter, we generated adjusted EBITDA of $34 million, or 7.4% of sales.

Patrick Keslin
Patrick Keslin
SVP and CFO at Wabash National Corporation

Finally, for the quarter, adjusted net income attributable to common stockholders was $8.6 million, or $0.19 per diluted share. Adjusted EPS generation for the quarter was slightly short of our prior quarterly outlook range. However, I'd like to mention that we did incur higher than expected legal expense of $1.4 million, or $0.02 of EPS, in connection with the St. Louis legal verdict. We did not include these costs in the non-GAAP adjustments made for Q3, as they may be recurring while we move forward to find an acceptable resolution to the matter. Moving on to our reporting segments, Transportation Solutions generated revenue of $416 million and operating income of $29 million. Parts and Services generated revenue of $52 million and operating income of $8.3 million.

Patrick Keslin
Patrick Keslin
SVP and CFO at Wabash National Corporation

Year-to-date operating cash generation was $36 million, with sequential working capital trends in Q3 being incrementally helpful to operating cash. Regarding our balance sheet, our liquidity, which comprises both cash and available borrowings, was $405 million as of September thirtieth. We finished Q3 with net debt leverage ratio of 1.5 times. On capital allocation, during the third quarter, we directed $15 million to traditional CapEx, invested $1.4 million in revenue-generating assets via our Trailers-as-a-Service initiative, utilized $18.4 million to repurchase shares, and paid quarterly dividends of $3.5 million. Our capital allocation focus continues to prioritize capital expenditure above and beyond our annual maintenance CapEx spend of $20 million-$25 million in order to support our organic growth initiatives.

Patrick Keslin
Patrick Keslin
SVP and CFO at Wabash National Corporation

As Brent mentioned, we are committed to maintaining our dividend, and we will continue to evaluate opportunities for share repurchase alongside of bolt-on M&A. Moving on to our guidance for 2024, we are reducing our revenue outlook to approximately $1.95 billion and EPS to roughly $1.25. From previous midpoints, this represents a reduction of $150 million in revenue and $0.30 of EPS. The most significant changes from our prior outlook come from reduced revenue, stemming from level loading of line rates, as well as some step-up in G&A related to increased legal expenses, as our team works to address the aforementioned jury verdict. Our updated guidance implies fourth quarter revenue of $425 million-$450 million and modestly positive Q4 EPS.

Patrick Keslin
Patrick Keslin
SVP and CFO at Wabash National Corporation

Moving on to capital deployment expectations for 2024, we anticipate traditional capital investment to be between $70 million and $80 million in 2024 as a result of planned expenditures to support our strategic growth initiatives. We also expect to continue with a modest level of investment in CapEx that will be immediately revenue generating through our Trailers-as-a-Service program. While we expect to have a more complete picture of 2025 by our Q4 call, we continue to believe that we have opportunity to generate stronger adjusted financial performance in 2025 relative to 2024. As the dry van market troughs and we achieve improving performance from our truck body, tank trailer, and Parts and Services businesses, we believe 2025 adjusted EPS can eclipse that of 2024.

Patrick Keslin
Patrick Keslin
SVP and CFO at Wabash National Corporation

I'll now turn the call back to the operator, and we'll open it up for questions.

Operator

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Your first question comes from the line of Jeff Kauffman with Vertical Research. Please go ahead.

Jeffrey A. Kauffman
Managing Director at Vertical Research Partners LLC

Thank you very much, and congratulations in a tough environment. I wanna take a look bigger picture, kind of. We know the market's slowing down right now because of the pressure on industry P&L that's out there. We know that trailers are getting hurt a little harder than trucks just because fleets are nervous about 2027 EPA, and they're holding on to their truck purchasing commitments for the year. As you talk to your customers about 2025, you know, a lot of the truckload earnings calls I've heard, companies are saying, "Hey, we may spend less in 2025 than we are in 2024." You know, what have your customers told you so far about their 2025 intentions versus their 2024 intentions? And, you know, ACT Research just reduced their forecast for 2025 below 2024.

Jeffrey A. Kauffman
Managing Director at Vertical Research Partners LLC

What parts of your customer base are seeing the greatest pressure versus what parts of your customer base are actually holding in pretty well despite the environment?

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Yeah. Thanks, Jeff. Complicated question, complicated answer. In the past, we, we'd be much more enabled to give very discrete answers relative to the segments that make up our customers. The way I would explain it today is that it is varied amongst customers, regardless of segment. So while there, I'll use LTL. While there is relative, a more relative robust environment for the LTL players, we have some LTL players that are holding the level of volume, that they gave in twenty twenty-four. We have other customers that are signaling, waiting on the sidelines, at least for the time being, to figure out what the market's going to do. And we have some that are having conversations about how they would add additional units, throughout the year, if the market warrants.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

So it's just in the LTL. It's a varied landscape. I would say the truckload is very similar there. We have small and medium-sized players are still in the same position that they were really at, you know, in the first and second quarter of twenty twenty-five. That has not changed, which all goes into ACT and FTR's revised numbers. There are some larger players that are again maintaining their level of buy, where they have a more rigid, purposeful replacement cycle, and they do not want to get behind like they have in the past. And there are some that are either again waiting on the sidelines or holding off to gain more clarity to their purchasing decision, which is why we see it pushing in the cycle.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

It is a very customer-independent decision-making process right now, not a broad brush application of what the market is or it isn't.

Jeffrey A. Kauffman
Managing Director at Vertical Research Partners LLC

Thank you for that answer. If I can come at it a different way, more from the company side. I think the forecast this year, depending on who you talk to, is for about two hundred and thirty-five thousand units this year. If you look at the production forecasts for on a quarterly basis, that may dip all the way down to kind of a hundred and eighty thousand unit annualized rate over the winter months.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Yeah.

Jeffrey A. Kauffman
Managing Director at Vertical Research Partners LLC

And then maybe bounce back to kind of a two thirty or two forty in the summer months. How do you manage for that kind of volatility? And then with the pricing model having changed, where you made that switch a couple of years ago, should we be thinking about operating margins moving with volume differently than they have in the past?

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

That's a multi-part answer. Let me start on the first part, and then I'll let others chime in. Yeah, first off, I think the ACT FTR estimates for twenty twenty-five are absolutely in the ballpark for the world that we're experiencing right now. From a, and I'll go, you know, a little further with the question than maybe what you asked. The pricing, from a pricing standpoint, the pricing that we have experienced, just to round out our dry van backlog for twenty twenty-four, we feel is indicative of how we will start out twenty twenty-five. So we feel like that's a relatively clear data point, that we can bridge off of and probably the street can bridge off of.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

From a dynamic nature, Jeff, you know, as well as I, we've been doing this for twenty-plus years, so in the world of dynamics, this isn't as bad as what we've experienced in the past, so well within our capability of managing, and we manage it better today than we ever have. But with the capacity reductions that we allude to with the revised guidance that we gave are the moves that we're making right now to rightsize, to create a better, call it, net margin profile over the next six months. With an eye on how do you preserve a level of dynamic capability to obviously take advantage of whatever the market gives us. So that's what I would say from a narrative, qualitative standpoint, and I'll look to Pat-

Patrick Keslin
Patrick Keslin
SVP and CFO at Wabash National Corporation

Yeah.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

If you have any other color.

Patrick Keslin
Patrick Keslin
SVP and CFO at Wabash National Corporation

Yeah. Brent hit it with the pricing, where we expect the levels that we're at right now to flow into 2025. To answer your question specifically about operating margins now relative to what we've seen in the past, so past trough times, we would expect to see an improvement there, given what we've been able to do with pricing. So hopefully that answers your question, Jeff.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Yeah. And what I would add is that you really have to integrate in the improved position of where we sit with our truck body business. You have to add in the additional parts and service on top of what is a better starting position at this point in a trough from a dry van perspective, compared to any other time we've had in our history.

Patrick Keslin
Patrick Keslin
SVP and CFO at Wabash National Corporation

We have a more diverse set of revenue streams than we've ever had during a trough environment, which will help performance in a valley.

Jeffrey A. Kauffman
Managing Director at Vertical Research Partners LLC

All right. Well, thank you very much, and I want to congratulate you for hiring a Indiana Hoosier as your CFO. Big fan.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

It just shows you we're capable of anything.

Operator

Your next question comes from the line of Mike Shlisky with D.A. Davidson. Please go ahead.

Michael Shlisky
Michael Shlisky
Managing Director and Senior Equity Research Analyst at D.A. Davidson & Co

Yes. Hi, good afternoon, and thanks for taking my questions.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Good afternoon.

Michael Shlisky
Michael Shlisky
Managing Director and Senior Equity Research Analyst at D.A. Davidson & Co

Maybe to follow up on that. Hey, just to follow up on that last answer you gave, if you've got volumes that are flat and a little bit down next year on the trailer side, does the mix change, now that you've ramped up your new facility, does the mix change between what you produce in your new and your old? And is there a margin tailwind, just as you may have learnings, as that's been open for a year, and you've gotten your processes together? Is there any kind of positive there for 2025?

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Again, complicated question relative to the market. First off, I would say that Wabash has the ability of, I would say, being in a better position relative to the demand that we generate in 2025, even with call it flat industry levels from 2024 to 2025. And so we will look to capitalize on that, and we believe we can do that with the pricing that we've got. The mix that you tend to get, or just as your absolute level of volume by mix, has a limiting effect on how you utilize your assets most effectively in this type of environment.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

We will not expect to necessarily get the full effect of the new capital, but we will get a level of positive impact by having it up and running. It should be running at a full purchase volume throughout 2025. We'll see a full year contribution of that, which should be helpful. We are actively working, as we looked at kind of outstrip, or not outstrip, but to outperform the demand environment. We are specifically looking and trying to tailor that demand to fit where we can most effectively build it.

Michael Shlisky
Michael Shlisky
Managing Director and Senior Equity Research Analyst at D.A. Davidson & Co

Okay. Okay. Makes sense. And I hopped on a little bit late, so if my next two questions have been asked and answered, please just tell me to talk with you later on it. Want to ask about the Parts and Services business. I was a little bit surprised you didn't see substantial growth in that business, given your efforts that you've made. You rolled out the new portal, I think, over the last few months. I guess I'd like to just get a feel for whether your efforts are bearing fruits, and all we're seeing is just the effect of a sluggish market broadly. But your efforts, you feel confident that you'll see some growth there over the next few quarters?

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Yeah, and on the scripted aspect of the call, we've alluded to the fact that we are very confident that the foundational elements that we have put in place, plus what is coming online, or what has come online in the last few months and what will be coming online in the next months after that, give us a great position relative to 2024 going into 2025. The relative dip, not really a dip, but I would just say more sluggish performance, right? Still grew, when you think about where we were. It's a tough market out there at this moment, and nothing that... We're not immune to that.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

And, you know, parts and services are not immune from the cyclic demand characteristics of a market like this, but they are absolutely more resilient than most of our revenue streams, and I think that's showing in our numbers. So that's proving out, and with that, just having stability in the market will provide a tailwind in 2025 as compared to 2024. When customers are trying to figure out one quarter to the next, is it gonna get better or worse? That makes for delayed buying decisions and incomplete buying decisions and maybe not optimal. Just stability, regardless of the level, will help our parts and service business.

Michael Pettit
Michael Pettit
SVP and Chief Growth Officer at Wabash National Corporation

Yeah, I think it's important to remember, too, Mike, there's a lot of different revenue streams that roll up into parts and services, and a lot of what you alluded to, we're seeing some nice growth and progress in. But we do sell some into the OE space from component parts for Wabash. You can actually see that in our press release, where you'll see some weakness in some of those parts. So as Brent mentioned, the initiative itself is much more resilient than the base business. You can see that, where it's providing the stability that we thought it would, but it still does operate within the overall freight landscape that has seen a lot of softness this year.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Yeah. So I guess I'd even be more, just more specific. The retail side of our parts and service, pretty good, pretty happy with.

Michael Pettit
Michael Pettit
SVP and Chief Growth Officer at Wabash National Corporation

Mm-hmm.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

What we directly provide in terms of part components that are directly consumed, which are directly related to OEM demand, they're in the same place the rest of our business is in.

Michael Pettit
Michael Pettit
SVP and Chief Growth Officer at Wabash National Corporation

Yeah.

Michael Shlisky
Michael Shlisky
Managing Director and Senior Equity Research Analyst at D.A. Davidson & Co

Okay. Got it. Got it. I also, maybe my last question, I also appreciate your commentary that, you know, there's a good chance for growth in earnings next year, even if, you know, there's no tremendous growth in the dry van business. But you just allude to also, you know, there have been some reductions to the dry van forecast, and who knows, there could be more to come. It could be the other direction, but we could see an additional step downward. I'm just curious, can you maybe, like, maybe ballpark for us, kind of what is the max amount that maybe the broader trailer market can be down for Wabash to still have a flat-to-up year in earnings in twenty twenty-five?

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

I'm not sure. I think that would be going beyond our ability right now to give that type of bottom-floor guidance, and I would be hesitant to do that, as I sit here right now. There's absolutely room for that to occur, but I do not necessarily... There's a lot of factors that integrate in answering that question.

Michael Pettit
Michael Pettit
SVP and Chief Growth Officer at Wabash National Corporation

I would say we would expect to see growth in parts and services. We'd expect to see growth in truck body, and so that would offset some softness in dry vans, but not breaking down the specific unit count.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Yeah.

Michael Shlisky
Michael Shlisky
Managing Director and Senior Equity Research Analyst at D.A. Davidson & Co

Okay. That's, that's totally fair. Appreciate the answers. I'll pass it along.

Brent Yeagy
Brent Yeagy
President and CEO at Wabash National Corporation

Yep. Thanks, Mike.

Operator

That concludes our Q&A session. I will now turn the conference back over to Ryan Reed for closing remarks.

Ryan Reed
Ryan Reed
VP of Corporate Development and Investor Relations at Wabash National Corporation

Thank you very much, and thanks, everyone, for joining us today. We look forward to following up during the quarter. Have a great day.

Operator

That concludes today's call. Thank you for joining. You may now disconnect.

Executives
    • Ryan Reed
      Ryan Reed
      VP of Corporate Development and Investor Relations
    • Michael Pettit
      Michael Pettit
      SVP and Chief Growth Officer
    • Brent Yeagy
      Brent Yeagy
      President and CEO
    • Patrick Keslin
      Patrick Keslin
      SVP and CFO
Analysts
    • Jeffrey A. Kauffman
      Managing Director at Vertical Research Partners LLC
    • Michael Shlisky
      Managing Director and Senior Equity Research Analyst at D.A. Davidson & Co
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