Wabash National Q4 2023 Earnings Call Transcript

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Provided by Quartr
February 1, 2024

There are 7 speakers on the call.

Operator

Thank you for standing by, and welcome to the Wabash 4th Quarter 2023 Earnings Call. I would now like to welcome Ryan Reed, VP of Investor Relations to begin the call. Ryan, over to you.

Speaker 1

Thank you. Good morning, everyone, and thanks for joining us on this call. With me today are Brent Yeagy, President and Chief Executive Officer and Mike Pettit, Chief Financial Officer. A couple of items before we get started. First, please note this call is being recorded.

Speaker 1

I'd also like to point out that our earnings release, the slide presentation supplementing today's call and any non GAAP reconciliations are available at ir.onewabash.com. Please refer to slide 2 on our earnings deck for the company's Safe Harbor disclosure addressing forward looking statements. I'll hand it off now to Brent.

Speaker 2

Thanks, Ryan. Good morning, everyone, and thanks for joining us today. 2023 has been a year in which we've substantially exceeded the financial performance in any year of the company's history. I'd like to congratulate the Wabash team on the significant achievement. Beyond their financial accomplishments, I'm even more excited about the strategic progress we have made during 2023 and how it positions us to generate even stronger performance going forward for our employees, our customers and our other stakeholders.

Speaker 2

In thinking about our strategic accomplishments in 2023, I'd like to emphasize the theme of connections, relationships and networks. Our journey began with enhancing the core

Speaker 1

of our business through greater connection with our

Speaker 2

customers. The transformation to be a more customer centric organization has been a pivotal change. We created more points of connection with our customers with enhanced driving capacity, Greater focus on parts and services as well as innovative offerings like trailers as a service that allow Wabash to add recurring, longer term value beyond our initial transaction. These advancements have not only deepened our customer engagement, but have also enriched our collaborations with supplier and technology partners. By gaining a more profound understanding of our customer problems and their opportunities, we are more able to share valuable insights with our suppliers, our technology partners and other parties that can contribute to customer success.

Speaker 2

The power of bringing our ecosystem together For our customers, it enhances our collective ability to elevate performance through the cycle. We have solidified specific partnerships with HDI and the Firmway Group, which is enabling Wabash to grow our recurring revenue within the transportation, logistics and distribution ecosystem. Our Wabash Parts joint venture with HTI rapidly established significant distribution capabilities that allow our dealer network efficient access to our comprehensive portfolio of aftermarket parts. Fernway Group is now playing a crucial role in advancing our digital capabilities, which aim to revolutionize the online experience for our dealers, traditional and non traditional suppliers of both parts and services and a broad set of customers spanning across vast transportation and logistics landscape. We've also made a commitment to deepening our relationship with our employees.

Speaker 2

We appreciate A strong employee engagement enables superior financial performance. Our focus is on cultivating a work environment and a culture that keeps respect for our employees front and center by empowering them to confidently bring their best selves to work and an atmosphere that drives an openness for change and innovative spirit. This commitment to a high performance culture is not just about achieving corporate goals. It's about fostering a sense of unity and purpose where every individual feels respected, valued and part of something bigger. With every day that goes by, Wabash is enlarging its role as a visionary leader With the capability to address the opportunities within an increasingly complex transportation, logistics and distribution ecosystem, Our strategy very much intends to harness our expanding ecosystem to create enhanced value for all engaged parties.

Speaker 2

As we've contemplated the strategic positioning we've attained in most recent years, our emerging set of capabilities will continue to scale over time. To ensure we accelerate effectively, we have made the decision to shift our organization to enhance our focus on bringing our longer term strategy plans to life. In December, Dustin Smith transitioned from Chief Strategy Officer to Chief Operating Officer and Kristin Glazener, the Chief Administrative Officer. Dustin has been instrumental in our strategy refresh and will now lead our operations through this vital phase. His role will focus on the deployment of operational and manufacturing capabilities required to foster growth in our business.

Speaker 2

Kristin has led our legal and people support functions over the past few years. As Chief Administrative Officer, Shulensure we possess the required capabilities and business processes to act on our business in a manner that drives respect for people to the highest achievable levels, a culture that embraces change and the capacity to scale our business to new levels of performance. Our team is excited about these changes and I'd like to extend my congratulations to Dustin and Kristen on their new roles. Moving on to our financial performance during the Q4 of 2023, we achieved earnings per share of 1.07 This brings our full year earnings to $4.81 per share, surpassing our 2025 EPS goal set in 2022 by 39%. While favorable market conditions supported this achievement, we firmly believe in the sustainability of our execution as well as the repeatability of this level of financial performance.

Speaker 2

We are showing higher levels of financial performance through all phases of the cycle And we are confident that when the market conditions strengthen for our customers, we will achieve financial performance that exceeds 2023. Turning our attention to market conditions and backlog, new order activity during the Q4 allowed our 12 month backlog to increase sequentially to 1,600,000,000 During more normalized mid cycle environments, it's difficult to see new order activity stretch into the Q1 of the year as we expect to see in 2024. With freight rates having contracted for now 24 months, We're watching capacity exit the transportation space. Moreover, as macro destocking activity abates, this has historically alleviated pressure that we've seen on sector. In addition to these corrective factors, the combination of a relatively strong labor market, sustained consumer spending And cooling inflation supports the likelihood of an economic soft landing, particularly considering potential interest rate cuts on the horizon.

Speaker 2

It seems clear that the transportation space has already experienced a lengthy recession and although industry participants will likely be shy about making bold predictions about timing of the rebound, the freight down cycle seems unlikely to last through the entirety of 2024. Wabash is well prepared to accelerate as the winds of the market shift to our back and drive us forward. Moving on to our financial outlook, we're initiating 20 24 guidance with revenue in the range of $2,200,000,000 $2,400,000,000 with EPS of $2 to $2.50 While this outlook is in moderation from our 2023 performance, It's important to note that the midpoint of our 2024 EPS guidance is in line with our results from 2022 and we'll be tied for the 2nd best annual financial performance in the company's history, which would easily be the best results achieved during a period of declining revenue. At no time in Wabash's history have we had the balance sheet strength, the strategic vision and the collective will to decisively continue our programmatic march through the headwinds of a difficult market. In closing, 2023 has been a year of both record financial achievement and strategic advancements for Wabash.

Speaker 2

This progress has readied us to deploy enhanced operational manufacturing capabilities to support organic growth generated by the multitude of connections Wabash can make through our ecosystem. Most immediately, leveraging digital transformation to connect the footprint of 78 dealer locations to create greater ease of customer access across the network to equipment, Parts and services. In the more immediate term, we expect to leverage our steady backlog to demonstrate our ability to post record downturn financial performance. As the freight market downturn transitions into an upswing, we are well prepared to capitalize on the potential market improvements anticipated in 2025 and beyond. With that, I'll hand it over to Mike for his comments.

Speaker 3

Thanks, Brian. Beginning with a review of our quarterly financial results. In the Q4, consolidated revenue was $596,000,000 During the quarter, we shipped approximately 10,075 new trailers and 4,075 truck bodies. Gross margin was 18.2% of sales during the quarter, while operating margin came in at 10.3%. This represents year over year improvement of 380 basis points and 150 basis points respectively.

Speaker 3

Operating EBITDA for the Q4 was $76,800,000 or 12.9 percent of sales, which was a 230 basis point improvement versus the Q4 of the prior year. Finally, for the quarter, net income was $50,400,000 or $1.07 per diluted share. From a segment perspective, Transportation Solutions generated revenue of $547,000,000 and operating income of $74,600,000 or 13.6 percent of sales. Parts and services generated revenue of $55,200,000 and operating income of $10,100,000 or 18.4 percent of sales. Year to date operating cash flow was $319,000,000 reflecting our strong financial performance.

Speaker 3

For the Q4, dollars 115,000,000 of operating cash flow compared to $13,000,000 of CapEx and $2,000,000 of expenditures for revenue generating assets, resulting in free cash flow generation of $100,000,000 during the quarter. I'd also like to call out that full year free cash flow generation amounted to $216,000,000 even in the year when we invested of over $100,000,000 of capital in our business. Net leverage on trailing 12 month operating EBITDA was 0.6 times. And during the Q4, our credit rating was upgraded by Moody's, which followed another upgrade by S and P earlier in the year. Turning to capital allocation during the Q4.

Speaker 3

We utilized $20,000,000 to repurchase shares, invested $13,000,000 in capital expenditures and $2,000,000 of expenditures for revenue generating assets and paid our quarterly dividend of $4,000,000 For the full year, we invested $98,000,000 in capital expenditures, dollars 6,000,000 in expenditures for revenue generating assets and allocated $67,000,000 to repurchase shares while returning $16,000,000 to shareholders via our dividend. Stepping back on share repurchases specifically, I'd like to call out that we've reduced our share count by approximately 25,000,000 shares from the high watermark On share count in 2014, this equates to reduction of about 35% of our share count since 2014. Looking over the last 5 year period, we've repurchased 8,500,000 shares or about 15% of shares over that time period. Our capital allocation focus continues to prioritize capital expenditures above our annual maintenance CapEx spend of $20,000,000 to $25,000,000 order to support our organic growth initiatives. We are committed to maintaining our dividend and then we anticipate continuing to evaluate opportunities for share repurchases as we have demonstrated the past 5 years and M and A.

Speaker 3

Moving on to our outlook for 2024, we expect revenue of $2,200,000,000 to $2,400,000,000 with a midpoint of $2,300,000,000 This outlook is supported by a meaningful 12 month backlog as continued to see new order activity in January. We continue to expect truck body, tank trailers and parts and services to serve as stabilizing forces in 2024 as market conditions remain stronger in those businesses relative to dry vans. Additionally, these businesses have and will continue to benefit From organizational focus and execution, Hank Trailers and Truck Bodies have both experienced improved volumes as we act on the business through our Wabash Management System. Additionally, parts and services is receiving considerable organizational strategic focus as we seek to grow the segment's revenue by 20% in 2024 to continue building a broader base of recurring revenue and of course pull through the accretive margins that come with it. From an operating income perspective, we expect to generate $163,000,000 at the midpoint or approximately 7%.

Speaker 3

This resulted in EPS outlook of $2 to $2.50 per share with a midpoint of $2.25 per share. I'd like to mention that in 2024, we expect to see about $6,500,000 of expenses for our Wabash Marketplace joint venture run below operating income. Since we announced this JV with Fernway Group on our Q3 call, we have named Sid Sarangi as Managing Director of the Wabash marketplace. Sid comes with a diverse leadership background scaling tech within large businesses and we're thrilled to have him lead an entity charged with rapid growth and digitally enabled recurring revenue. Moving on to capital deployment expectations for 2024, We anticipate traditional capital investment to be between $70,000,000 $80,000,000 in 20.24 as a result of client expenditures to for our strategic growth initiatives.

Speaker 3

We also expect to invest in CapEx that will be immediately revenue generating through our trailers as a service program. As a reminder, we do break out investment in TAS separately and we'll continue to give visibility to our capital allocation to that program as it grows. At this point, we expect our investment in that program to grow year over year and we'll give more specific guidance as anticipated full year figure comes into focus. As a reminder, it's typical for Q1 to be our lowest quarter in terms of revenue and EPS generation. Our expectation is for Q1 revenue to come in between $500,000,000 $550,000,000 and for EPS to be between 0.45 $0.50 a share.

Speaker 3

In summary, I'm extremely proud of our Wabash team for generating 2023 results that our 2025 financial plan 2 years ahead of schedule. This achievement is a testament to our team's dedication and strategic execution. Looking ahead, we expect to maintain this momentum with improved financial performance at all phases of the cycle as we focus on our strategic growth initiatives to provide more sticky revenue in verticals that reinforce and complement our core equipment business. As we enter 2024, which we expect to be a year of transition, we're poised to demonstrate our resilience through less robust market conditions and continue pushing forward with strategic growth to position the company to surpass 2023's financial performance as the freight market in Everly recovers. I'll now turn the call back to the operator and we'll open it up for questions.

Operator

Our first question comes from the line of Michael Slitsky with D. A. Davidson. Please go ahead.

Speaker 4

Good morning, guys, and thanks for taking my questions. So you talked a little bit about some of the outlook for trailers for 2024 being meaningfully down, I think that's not a surprise. And then you also you had mentioned there could be a recovery in the works. If we look at some of the industry forecasters, they're saying that the 2025 trailers could be almost a full snap back to where it was back in 2023, just 1 year away here. I'm curious if you can tell us if you agree with that statement, could it be a complete snapback in 2025?

Speaker 4

And can you comment on as long as rates or other metrics kind of get better by this summer, whether you can constantly say that's going to happen? Or do you would you see other things happen like interest rates, etcetera, kind of prior to becoming fully confident that we'll have a big increase here next year?

Speaker 2

Yes, Michael. Great question. Obviously, no one has a complete crystal ball into what 2025 will be, but I'll attempt to unpack it from our point of view. I think absolutely there are initial signs within the market that it is beginning to heal and correct And those should become much more measurable and I would say verge on materiality in the results of our customers probably by mid summer. Now clearly that hinges on continuation The prevailing thought that we'll see interest rates actually reduce in, we'll say, after March Based on the most recent feedback from the Fed, I think we want obviously that means that the current status quo from a Geopolitical standpoint doesn't materially change in that time period.

Speaker 2

But I think the things that the U. S. Economy is acting on sets us up for a much better 2025. Now I think the definition of a snapback is still needs to be unpacked. And can we see and should we see a significant demand difference In 2025, I believe that to be the case.

Speaker 2

Is it a step function change moving into necessarily those first few months of 2025, I would probably pull back a little bit on that. But I think what you will see is a I think we're sitting in a position, we'll have a different perspective on the market going into 'twenty five. I think you'll see that robustness build throughout 2020 And I think it can be material. And we are planning our business based off of that being the most probable outcome at this moment.

Speaker 4

Thanks so much, Brent, for that color. Maybe I can follow-up with a question for Mike then. I mean, on the free cash outlook for 2024, you've obviously given us a lot of the pieces here already. But I'd be curious about working capital. If you're fairly confident at the company that You'll see some increases in 2025 versus 2024.

Speaker 4

Do you feel Like you're still going to keep a pretty high level of working capital to end the to kind of end the year here?

Speaker 3

Yes. Obviously, it depends on the seasonality you would see in the demand profile, what happens with working capital at year end. But We would expect, obviously, with a little bit of a revenue step back from 'twenty three to 'twenty four, we'd expect to see Either the same or slightly less working capital in 2024. So it should be an enabler to free cash flow. We tend to see that.

Speaker 3

So we would expect another strong year of free cash flow in 2024 Depending on what we need to do to ramp up into 25, but would not expect to see an increase in working capital unless 25 snaps back really early in the year.

Speaker 2

Yes. I think it's a mix of factors. There is the reduction in working capital going into 2024. There will be some relative increase to prepare for 2025, but at the same time, you have to integrate in that supply chains are getting better. We're moving away more and more from the increased safety stock in raws.

Speaker 2

So there's a lot to integrate there. So I echo Mike, there's a lot of factors that go in that says it really shouldn't be a big deal moving into 25.

Speaker 4

Great. And maybe one last one for me about reefers in 2024 and 2020 I didn't hear much about that in your prepared comments. I know you've got the new launch in Minnesota going and other new products launching. Can you maybe update us that's why you think Refus will be a material driver to help stabilize business in 2024 and a real growth driver for 2025. Just Steve, kind of provide a timeline on how that stuff might have rolled out?

Speaker 2

I think every aspect of our strategic product portfolio will be a driver in 2025 As we do that, I don't think it's just on the reefer side. It will continue to be a growing part of our overall portfolio As well as we'll see it from dry vans, we'll see platforms pick up significantly from where it will be in 2024. Truck bodies are going to be coming off of a very stable environment with a growing demand profile in 2025 with parts and services, just complementing it all. So I feel pretty good about all those different product lines and service capabilities in 2025.

Speaker 3

I agree. I just want to add that there's 2 pieces that are important and Brent hit on them, but just to reiterate. There's the growth we'll see in 2025, but there's also the stabilizing effect we're seeing in 2024, reefers definitely check that box with what we've done in Minnesota, so the truck bodies, parts and tanks. It really has helped provide stabilization in the earnings profile.

Speaker 4

Great. I appreciate the color. I'll pass it along. Thank you.

Speaker 3

Thanks, Mike.

Operator

Our next question comes from the line of Justin Long with Stephens. Please go ahead.

Speaker 5

Thanks and good morning. Maybe to start with a question on the guidance. You provided the outlook for the Q1, Mike. Obviously, a pretty big step down from an earnings perspective versus what we just saw in the Q4. And I know there's some seasonality, but I was just curious if you could speak to kind of any other drivers sequentially that are causing that pressure And as you think about the quarterly cadence of EPS over the remainder of the year, is 2Q to 4Q, do you think that cadence looks Those quarters look pretty similar or is this a ramp over the course of the year?

Speaker 5

Is there any more color you can give us on that front?

Speaker 3

Sure. I'll start with that one first. The Q1 is typically the lowest quarter of the year in a normal seasonality year And so we're going to see that. So you obviously see a step up in the other 3. And right now, with the caveat, we want to see 125 really start to pull, but for now we believe the calendarization of earnings in Q2 to Q4 will be relatively flat, might be a little higher in Q2, but for the most part, I think it's going to be relatively flat in the last three quarters of the year.

Speaker 3

And then the step down from Q4 to Q1, again, not uncommon. We see that a lot. It can be a low time for seasonal time for demand. There's going to be a little bit of year over year pricing in there, Q4 to Q1, but volume seasonality is the biggest driver.

Speaker 5

Okay. That's helpful. And, I guess, kind of building on that question, one thing that you've talked about Strategically, and I think Brent, you mentioned this on the last call is that your plan is to maintain headcount in this environment Despite trailer production moderating and in doing so that puts you in a better position to respond to the next upturn. So is there a way to think about the financial implications of that and what the kind of cost or earnings headwind is this year and the near term pain you might be taking for the longer term gain?

Speaker 2

Yes. So We've turned it this way. When we think about headcount across the business, it is not one answer across the Board. We had some aspects of the business such as with truck bodies that we're adding headcount and versus trailers where we'll be looking at holding headcount. And we're not holding headcount in a manner which it is not is underutilized or nonutilized labor.

Speaker 2

We've been able to Secure sales and a backlog and our filling in order to utilize that labor in a standard efficiency way. So right now, there would be little to no, what I would call detrimental impact from a labor cost standpoint within our margins. Most of the rightsizing of dry van capacity has been through shifting volume to the added capacity that we brought online And then taking out our 3rd shift, leveling the plant on a 2 shift operation And then what workforce we have shed has been on the temporary side, again, leaving our full time workforce impact.

Speaker 3

The only thing I would add to that is if you think about it, since we believe this is more of a short term thing, there's some downtime in the plan as opposed to mass layoffs in the plan. So that's we're taking we're normalizing that cost, as Brent mentioned, by taking some temporary downtime because we believe

Speaker 1

it's going to come back

Speaker 3

and we're trying That's how we handle that without having a significant cost change.

Speaker 2

Yes. And then there's the added upside of how we manage the workforce today and then throughout 2024 as we bring our more efficient, higher throughput Manufacturing capability for dry vans at scale with added demand as we prepare for 2025. Really, What I want to say allows us to utilize this headcount that we have in a really efficient way and not have to take on as much of the headcount inefficiency as we move into and throughout 2025, right? So it's really not about Accepting added cost right now. It's about building capability to defer and prevent inefficiency in outer, we'll call it, periods and years.

Speaker 5

Okay. That's really helpful. And I guess lastly for me, I think the Act forecasts So maybe been tweaked a little bit for 2024 on trailer production. But just based on the order season that you've seen thus far. I'm curious if you still feel those Act forecasts are a good best guess At this point, and then just real quickly on the guidance, Mike, curious if that includes any impact from buybacks?

Speaker 3

No, the guidance does not include impact from buybacks. But as far as that forecast, I think we feel like that's generally in the ballpark. Yes.

Speaker 2

The customer behavior, customer sentiment, Forward looking views that they provide us are really right in line with where they were even at the Q3 call and are reflective of the general market. I think ACT is as right as they can be based on the market.

Speaker 5

Okay, great. Thank you so much for the time.

Speaker 2

Thanks, Justin.

Operator

Our next question comes from the line of Jeff Kauffman with Vertical Research Partners. Please go ahead.

Speaker 6

Hey, good morning everybody and congratulations on a lights out 2023. I guess I want to follow-up on the last question a little bit first and then maybe talk about some of these other new businesses or new focuses. So in terms of looking at the guide, and I know we got to set the bar somewhere. So the ACT Research forecast has trailers coming down about 20% for the year. Now you had 44,000 trailers give or take this year.

Speaker 6

But I would argue your Production probably shouldn't come down in line with the industry because you were out about 10,000 trailers worth of capacity in dry and you were also out, I don't know 2,500 trailers in capacity in reefer as you were switching that to the other facility. So in theory, as that capacity starts to come back, your production should not be down as much as the industry. So when I look at the implicit $2,200,000,000 to $2,400,000,000 in revenue that you are putting out there. I can do my own math, but it implies to me that you got trailers coming down about 10% on the transportation solutions business. Is that a fair way to think about it?

Speaker 6

Or am I thinking about something wrong? And then how do you Look at 24 and think about, okay, well, I got 10,000 trailer capacity units, newly made that I'm going to bring back and I've got reefers I'm going to bring back and how do you think about bringing that capacity back to the market?

Speaker 2

Yes. So, yes, Jeff, I would say your I'd say the thesis you're presenting is,

Speaker 4

We'll call

Speaker 2

it in the ballpark of correctness. We absolutely are growing market share as we sit here today in 2024, as we keep our relative trailer production in line with our existing headcount. And we're able to do that, maintaining a price leading position in the market, which is a very nice place to be. At the same time, bringing on, we'll call it 10,000 units of, we'll call it, capacity gain in the dry van business. And so we are doing the work today to build A backlog and a set of customer relationships that you can think about across the entire dry van manufacturing system, The ability of taking that demand and we think the demand itself will allow will be there without A real strain on the pricing environment in 2025, which is a big deal, right?

Speaker 2

So we're leading price.

Speaker 3

We

Speaker 2

think there's going to be a market that allows that price to sustain, maybe even grow a little bit and able to do it in an efficient way in 2025. And so we see that capacity being able to be utilized very efficiently. And as we want, our manufacturing strategy here is not to run the business At 105%, 115% of straight time capacity, we want to run it in a much more efficient place going forward, while maintaining a pricing environment that is most advantageous and meeting the strategic needs of those core customers that call Wabash Home. There's a lot of things going together there, but it sets up for 2020 sets up well for 2025 and beyond.

Speaker 6

Okay. And when do you think we start to see the push on the refrigerated trailer side with the new product?

Speaker 2

Great question. I think it's still materializing over the next 24 to 36 months. We are again adding additional capacity and that capacity seems to be being utilized well Based off of the backlog we see in 2024, which is going to pressure us to add additional capacity, But that capacity is we're going to acquire some new manufacturing technology that's in the process of being developed. So those two things have to coincide, but we are absolutely establishing more and more every day the value proposition for the pricing that we believe that product deserves. And as long as that continues to go down that path, again, we'll be pressured to add capacity in outgoing years.

Speaker 3

Just a reminder, it's not just trailers, we're seeing it in truck bodies and we're seeing some growth in the truck body space and we think there's other segments of truck body that EcoNets will play well in that we to bring to market soon.

Speaker 2

Yes. And I'm glad Mike said that because I'm remissed because I even with internally, we want to frame it as It's really about cold chain technology scaling. It's not really about reefer vans per se. And to Mike's point, we're seeing opportunities that compete for capacity now in terms of total return to the business that makes for interesting capacity allocation discussions right now.

Speaker 6

Okay. And then one last one, if I can. So separate from the manufacturing business, you have the parts and service business, you've brought on some partners to help push growth in that area. Is that a business that you think should grow In an industry environment that may be taking a respite in 2024 before it moves forward in 2025, 2020 6? Or is this more of a investment year in parts and service capability before we go back to higher industry volumes?

Speaker 3

We believe we can continue to grow this year, Jeff, in services. And we remain very confident in our Investor Day target of $300,000,000 revenue by 2025 in that business. So we just finished at 2 20, 2 21, 2023, so that glide path to 300 would require us to grow in 2024 and then grow again in 2025. We believe we've got Quite a bit of runway just to capture some market that really is Wabash's rightful place to play in the trailer aftermarket space And we're bringing that to bear in 2020 for which we believe we can one of the reasons we can grow in an otherwise softer demand environment.

Speaker 2

Yes, I think it's just, I guess, paramount to understand that, Jeff, as we continue to grow in parts and services, We're not doing it in the same old blocking and tackling way, right, competing, I would say, we'll call it with Equal capability, the way that we're attacking the market is really going after it, the unserved areas in an underserved way, which allows us some blue ocean capabilities to grow and that's all on purpose. There's no need to jump into the pool with everyone else. We define a new pool.

Speaker 4

All right. Well, thank

Speaker 6

you for your insights and congratulations on a fantastic year.

Speaker 1

Thanks, Jeff. Thanks, Jeff.

Operator

There are no further questions at this time.

Speaker 3

Thanks

Speaker 1

everybody for joining us today. Look forward to following up with you during the quarter.

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Key Takeaways

  • In 2023 Wabash delivered record financial results with fourth-quarter EPS of $1.07, full-year EPS of $4.81 surpassing its 2025 target by 39%, and generated $216 million of free cash flow with net leverage at 0.6x.
  • Wabash issued 2024 guidance of $2.2–2.4 billion in revenue and $2.00–2.50 in EPS, which at the midpoint equates to a tie for the second-best EPS in company history despite lower revenues, backed by a $1.6 billion backlog.
  • The company continues its strategic pivot toward customer-centric connectivity by expanding driving capacity, launching Trailers-as-a-Service, and growing aftermarket parts & services to build recurring revenue streams.
  • Key ecosystem partnerships include the Wabash Parts joint venture with HTI for expanded aftermarket distribution and a digital joint venture with Fernway Group to create the Wabash Marketplace, enhancing dealer and customer online engagement.
  • Management created new roles to accelerate execution of its long-term strategy, promoting Dustin Smith to COO to oversee operations and manufacturing deployment and Kristin Glazener to CAO to scale people, culture, and processes.
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Earnings Conference Call
Wabash National Q4 2023
00:00 / 00:00