UPDATE: Wabash National (WNC) Misses Q4 EPS by 6c, Revenues Beat; Offers FY19 EPS Mid-Point Guidance Above Consensus

Wabash National (NYSE: WNC) reported Q4 EPS of $0.38, $0.06 worse than the analyst estimate of $0.44. Revenue for the quarter came in at $610.2 million versus the consensus estimate of $592.88 million.

• Strong demand drives 12 percent year-over-year increase in Q4 2018 revenue
• Full year revenue of $2.3 billion is highest in company history
• Q4 2018 backlog increased 47 percent year-over-year to $1.8 billion
• Q4 2018 gross margin declined 210 basis points year-over-year as a result of operational headwinds
• GAAP earnings per share of $0.21 in Q4 2018, $0.38 adjusted Non-GAAP earnings per share
• 2019 EPS outlook revised to $1.50 to $1.70 per diluted share

“In a quarter impacted by challenges in the operating environment, we continued to strengthen long-term relationships with our customers by shipping near-record volumes. We generated quarterly net sales of $610 million in the fourth quarter, a 12 percent increase versus the prior year quarter, and full year sales of $2.3 billion, the highest in the Company’s 33-year history," explained Brent Yeagy, president and chief executive officer. "Due in part to the strength in demand conditions, all three of our reporting segments faced continued operating pressures which negatively impacted our margins. We are highly focused on reducing the cost pressures that included a shortage of chassis and other components, as well as increased labor and material costs. We have taken action to improve pricing across all three business segments in order to recover higher materials and manufacturing costs. We launched additional productivity initiatives and bolstered supply chain effectiveness through both resourcing and planning improvements. We are confident that these actions will address the short-term operating pressures to clear the way for improved margin performance in 2019.”

Net income for the fourth quarter 2018 was $11.6 million, or 21 cents per diluted share. Adjusted non-GAAP net income for the fourth quarter was $21.5 million or 38 cents per share, compared to 36 cents in the fourth quarter of 2017.

Operating EBITDA, a non-GAAP measure that excludes the effects of certain items, for the fourth quarter 2018 was $47.6 million, or 7.8 percent of net sales, and full year operating EBITDA of $186.9 million, or 8.2 percent of net sales.

Mr. Yeagy continued, “While we expect strong industry volumes in 2019, we also anticipate some level of short-term supplier and cost challenges continuing into the new year. I am confident in our team's ability to successfully navigate these issues as we focus on mitigating supplier disruptions and driving increased productivity. With strong market conditions, a solid balance sheet and six consecutive years of converting free cash flow in excess of net income, I expect 2019 to be a strong year for Wabash National. We expect 2019 full-year revenue to be between $2.25 billion to $2.35 billion based on our current backlog and we feel it is prudent to revise our full-year earnings outlook to $1.50 to $1.70 per diluted share based on the carryover of supply disruption and cost pressures moving into 2019.”

GUIDANCE:

Wabash National sees FY2019 EPS of $1.50-$1.70, versus the consensus of $1.51.

For earnings history and earnings-related data on Wabash National (WNC) click here.

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