Add
WNC to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| WNC > SEC Filings for WNC > Form 10-Q on 2-Aug-2012 | All Recent SEC Filings |
2-Aug-2012
Quarterly Report
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report of Wabash National Corporation (the "Company", "Wabash" or "we") contains "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements may include the words "may," "will," "estimate," "intend," "continue," "believe," "expect," "plan" or "anticipate" and other similar words. Our "forward-looking statements" include, but are not limited to, statements regarding:
our business plan;
the acquisition of Walker, the amount of transaction costs associated with the acquisition, our ability to manage the cost of the financing of the acquisition and related indebtedness and our ability to effectively integrate Walker and realize expected synergies and benefits from the Walker Acquisition;
our expected revenues, income or loss and capital expenditures;
plans for future operations;
financing needs, plans and liquidity, including for working capital and capital expenditures;
our ability to achieve sustained profitability;
reliance on certain customers and corporate relationships;
our ability to diversify the product offerings of non-trailer businesses;
availability and pricing of raw materials;
availability of capital and financing;
dependence on industry trends;
the outcome of any pending litigation;
export sales and new markets;
engineering and manufacturing capabilities and capacity;
acceptance of new technology and products; and
government regulation.
Although we believe that the expectations expressed in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and are subject to inherent risks and uncertainties, such as those disclosed in this Quarterly Report. Important risks and factors that could cause our actual results to be materially different from our expectations include the factors that are disclosed in "Item 1A. Risk Factors" in our Form 10-K for the year ending December 31, 2011 and elsewhere herein, including, but not limited to, Item 1A of Part II hereof.Each forward-looking statement contained in this Quarterly Report reflects our management's view only as of the date on which that forward-looking statement was made. We are not obligated to update forward-looking statements or publicly release the result of any revisions to them to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events.
RESULTS OF OPERATIONS
The following table sets forth certain operating data as a percentage of net
sales for the periods indicated:
Three Months Ended Six Months Ended
June 30, June 30,
2012 2011 2012 2011
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 89.1 94.3 90.7 93.6
Gross profit 10.9 5.7 9.3 6.4
General and administrative expenses 3.7 2.8 3.5 3.4
Selling expenses 1.5 1.1 1.4 1.2
Acquisition expenses 3.4 - 2.2 -
Income from operations 2.3 1.8 2.2 1.8
Interest expense (1.5 ) (0.4 ) (1.0 ) (0.4 )
Loss on debt extinguishment - (0.2 ) - (0.1 )
Income before income taxes 0.8 1.2 1.2 1.3
Income tax expense 0.3 - 0.1 -
Net income 0.5 % 1.2 % 1.1 % 1.3 %
|
For the three and six month periods ended June 30, 2012, we recorded net sales of $362.4 million and $640.1 million, respectively, compared to $287.1 million and $509.1 million in the prior year periods. Net sales for the three and six month periods ending June 30, 2012 increased largely due to the acquisition of Walker which generated net sales of approximately $44.3 million from the date of acquisition through the end of the second quarter. In addition, new trailer volumes for the three and six month periods ended June 30, 2012 increased by approximately 600 and 2,000 trailers, or 5.3% and 9.9%, respectively, compared to the prior year periods. Sales of our Diversified Products segment increased for the three and six month periods by approximately $52.0 million and $61.3 million, or 380% and 262%, respectively, primarily due to the inclusion of Walker operations. Gross profit margin was 10.9% in the second quarter of 2012 compared to 5.7% in the prior year period. The increase in gross profit margin is primarily due to improved pricing on new trailers, the continued organic growth within our Diversified Products segment, along with diversification into higher margin opportunities through the acquisition of Walker. We continue to be encouraged by the overall trailer market throughout the first six months of 2012 and our expectation is that overall shipment and production levels will continue to improve as we progress further into 2012. In addition, we expect to continue to deliver improvements in our financial and operational results as we further optimize our production facilities, implement Walker synergies, and continue to expand our Diversified Products customer base and product offerings.
Selling, general and administrative expenses increased in the second quarter of 2012 as compared to the same period in 2011 due primarily to the acquisition of Walker, higher amortization of intangibles recognized in connection with Walker and higher salaries and other employee related costs due to the full reinstatement of compensation levels that were reduced in previous years to adjust our cost structure to match market demand. As a percentage of net sales, selling, general and administrative expenses increased to 5.2% as compared to 3.9% in the prior year period.
Our management team continues to be focused on sizing our operations to match the current demand environment, maintaining our cost savings initiatives, strengthening our capital structure, developing innovative products, positioning the Company to optimize profits as the industry continues to improve, selecting product introductions that meet the needs of our customers and diversifying our product offering through growth in non-trailer products. As a recognized industry leader, we continue to focus on product innovation, lean manufacturing, strategic sourcing and workforce optimization in order to strengthen our industry position and improve operating results.
Three Months Ended June 30, 2012
Net Sales
Net sales in the second quarter of 2012 increased $75.3 million, or 26.2%,
compared to the second quarter of 2011. By business segment, net external sales
and related units sold were as follows (dollars in millions):
Three Months Ended June 30,
2012 2011 % Change
Sales by Segment
Commercial Trailer Products $ 263.4 $ 237.0 11.1
Diversified Products 65.7 13.7 379.6
Retail 33.3 36.4 (8.5 )
Total $ 362.4 $ 287.1 26.2
New Trailers (units)
Commercial Trailer Products 11,000 10,500 4.8
Diversified Products 400 - -
Retail 600 900 (33.3 )
Total 12,000 11,400 5.3
Used Trailers (units)
Commercial Trailer Products 700 400 75.0
Retail 400 400 -
Total 1,100 800 37.5
|
Commercial Trailer Products segment sales were $263.4 million for the second quarter of 2012, up $26.4 million, or 11.1%, compared to the second quarter of 2011. The increase in sales is due primarily to a 4.8% increase in new trailer shipments as approximately 11,000 trailers shipped in the second quarter of 2012 compared to 10,500 trailers shipped in the prior year period as a result of the continued strengthening in market demand. Additionally, average selling prices increased by 5.8% in the second quarter of 2012, compared to the prior year period, due to increased pricing necessary to offset higher raw material costs as well as favorable customer and product mix. Used trailer sales increased $1.8 million, or 57.6%, compared to the previous year period as a result of a 75.0% increase in shipments.
Diversified Products segment sales, net of intersegment sales, were $65.7 million for the second quarter of 2012, up $52.0 million, or 379.6%, compared to the same period in 2011. The increase in sales is primarily due to the acquisition of Walker which contributed approximately $44.3 million in the current year period. Excluding Walker, Diversified Products segment sales increased $7.7 million, or 56.2%, as compared to the previous year period as a result of increased demand across all our Wabash Composites and Energy and Environmental Solutions product offerings and new business opportunities identified during the past year as we continue to gain positive momentum in our efforts to diversify our business and increase our market penetration and overall acceptance of our product offerings.
Retail segment sales were $33.3 million in the second quarter of 2012, down $3.1 million, or 8.5%, compared to the prior year period. The decrease in sales is primarily due to a $4.0 million, or 19.7%, reduction in new trailer sales as trailers shipped during the current quarter decreased approximately 300 units as compared to the prior year period. Used trailer sales increased $1.2 million, or 40.1%, primarily due increased average selling prices compared to the prior year period.
Cost of Sales
Cost of sales for the second quarter of 2012 was $322.7 million, an increase of $51.9 million, or 19.2%, compared to the second quarter of 2011. As a percentage of net sales, cost of sales was 89.1% in the second quarter of 2012 compared to 94.3% in the second quarter of 2011.
Commercial Trailer Products segment cost of sales, as detailed in the following table, was $244.4 million for the second quarter of 2012, an increase of $15.7 million, or 6.9%, compared to the second quarter of 2011. As a percentage of net sales, cost of sales was 92.8% for the current quarter compared to 96.5% in the prior year period.
Three Months Ended June 30,
Commercial Trailer Products Segment 2012 2011
(dollars in millions)
% of Net % of Net
Sales Sales
Material Costs $ 196.4 74.6 % $ 183.3 77.3 %
Other Manufacturing Costs 48.0 18.2 % 45.4 19.2 %
$ 244.4 92.8 % $ 228.7 96.5 %
|
Cost of sales is comprised of material costs, a variable expense, and other manufacturing costs, comprised of both fixed and variable expenses, including direct and indirect labor, outbound freight, and overhead expenses. Material costs were 74.6% of net sales in the second quarter of 2012 compared to 77.3% for the same period in 2011. The 2.7% decrease resulted from increases in the overall average selling prices for new trailers necessary to offset increased raw material, commodity and component costs. Other manufacturing costs increased $2.6 million in the current year period, as compared to the prior year period, resulting from additional costs related to increases in new trailer production volumes as compared to the prior year. As a percentage of sales, other manufacturing costs decreased from 19.2% in the second quarter of 2011 to 18.2% in the 2012 period.
Diversified Products segment cost of sales was $48.0 million in the second quarter of 2012, an increase of $39.7 million, or 477.9%, compared to the same 2011 period due primarily to the acquisition of Walker in the current year period. As a percentage of net sales prior to the elimination of intersegment sales, cost of sales was 76.9% in the second quarter of 2012 compared to 80.0% in the second quarter of 2011. The 3.1% decrease as a percentage of net sales was primarily the result of an increased percentage of net sales from higher-margined product lines as compared to the previous year period.
Retail segment cost of sales was $30.4 million in the second quarter of 2012, a decrease of $3.5 million, or 10.4%, compared to the same 2011 period. As a percentage of net sales, cost of sales was 91.1% in the second quarter of 2012, compared to 93.1% in the second quarter of 2011. This improvement as a percentage of net sales was primarily the result of product mix as an increased percentage of net sales from the higher margin parts and service product line for the 2012 period as compared to the prior year period.
Gross Profit
Gross profit was $39.7 million in the second quarter of 2012, an improvement of $23.5 million from the prior year period. Gross profit as a percent of sales was 10.9% for the current quarter, compared to 5.7% for the same period in 2011. Gross profit by segment was as follows (in millions):
Three Months Ended June 30,
2012 2011
Gross Profit by Segment:
Commercial Trailer Products $ 18.9 $ 8.2
Diversified Products 17.7 5.4
Retail 3.0 2.5
Corporate and Eliminations 0.1 0.1
Total $ 39.7 $ 16.2
|
Commercial Trailer Products segment gross profit was $18.9 million for the second quarter of 2012 compared to $8.2 million for the second quarter of 2011. Gross profit as a percentage of sales was 7.2% in the second quarter of 2012 as compared to 3.5% in the 2011 period. The increase in gross profit as a percentage of net sales was primarily driven by improved pricing necessary to offset increases in material costs, primarily related to steel and tires.
Diversified Products segment gross profit was $17.7 million for the second quarter of 2012 compared to $5.4 million in the second quarter of 2011 primarily due to the acquisition of Walker. Gross profit, prior to the elimination of intersegment sales, as a percentage of sales was 23.1% in the second quarter of 2012 compared to 20.0% in the second quarter of 2011. The 3.1% increase as a percentage of net sales was largely the result of the inclusion of Walker during the current year period as well as increased demand across all of our other Diversified Product segment product offerings, including DuraPlate AeroSkirtsฎ and portable storage containers as well as improved margins from our wood floor operations due to productivity improvements as well as the increased demand requirements for our dry van trailers during the current year period as compared to the previous year period.
Retail segment gross profit was $3.0 million for the second quarter of 2012, an increase of $0.5 million compared to the same period in 2011. Gross profit as a percentage of sales for the second quarter of 2012 was 8.9% compared to 6.9% for the prior year period. The increase in gross profit margin is primarily due to favorable product mix as a result of a higher percentage of sales from the higher margin parts and service product line for the 2012 period as compared to the prior year period.
General and Administrative Expenses
General and administrative expenses of $13.4 million for the second quarter of 2012 increased $5.5 million, or 68.5%, from the prior year period. The increase was largely due to the inclusion of Walker which added approximately $4.7 million during the current year period and includes $2.7 million of amortization expense for intangible assets acquired. In addition, salaries and other employee related costs, excluding Walker, increased $0.6 million in the current year period due to the full reinstatement of compensation levels that were reduced in previous years to adjust our cost structure to match market demand. As a percentage of sales, general and administrative expenses increased to 3.7% for the current quarter as compared to 2.8% for the second quarter of 2011. Excluding amortization of intangible assets, general and administrative expenses as a percentage of sales would be 2.7% for the current year quarter as compared to 2.5% for the second quarter of 2011.
Selling Expenses
Selling expenses were $5.5 million in the second quarter of 2012, an increase of $2.3 million, or 73.2%, compared to the prior year period primarily due to the inclusion of Walker which added approximately $2.1 million during the current year period. As a percentage of net sales, selling expenses were 1.5% for the second quarter of 2012 compared to 1.1% for the prior year period.
Acquisition Expenses
Acquisition expenses totaling $12.2 million in the second quarter of 2012 represents costs incurred in connection with the Walker Acquisition.
Other Income (Expense)
Interest expense for the second quarter of 2012 totaled $5.4 million, an increase of approximately $4.3 million primarily due to interest and non-cash accretion charges related to our Convertible Senior Notes and Term Loan Credit Agreement entered into in connection with the Walker Acquisition during the quarter.
Income Taxes
We have experienced cumulative operating losses over the most recent three year period. After considering these operating losses and other available evidence, both positive and negative, we have recorded a full valuation allowance against our net deferred tax assets as of June 30, 2012. Please refer to our "Critical Accounting Policies and Estimates" section below for an update on our position as the expected timing to release all or a portion of our full valuation allowances.
The acquisition of Walker on May 8, 2012, created goodwill in the amount of $151.5 million which will have an indefinite life for book purposes. However, for tax purposes the value of this goodwill will be fully deductible over 15 years. This book to tax difference will create a deferred tax liability which, according to ASC 740, cannot be netted against other deferred tax assets and liabilities with specific identifiable lives and offset by the valuation allowance. As a result, a deferred tax liability and deferred tax expense of $0.7 million was recognized for the three month period ending June 30, 2012.
Six Months Ended June 30, 2012
Net Sales
Net sales for the first six months of 2012 were $640.1 million, an increase of
$131.0 million, or 25.7%, compared to the 2011 period. By business segment, net
external sales and related units sold were as follows (dollars in millions):
Six Months Ended June 30,
2012 2011 % Change
Sales by Segment
Commercial Trailer Products $ 496.9 $ 422.6 17.6
Diversified Products 84.7 23.4 262.0
Retail 58.5 63.1 (7.3 )
Total $ 640.1 $ 509.1 25.7
New Trailers (units)
Commercial Trailer Products 20,900 18,900 10.6
Diversified Products 400 - -
Retail 1,000 1,400 (28.6 )
Total 22,300 20,300 9.9
Used Trailers (units)
Commercial Trailer Products 1,300 800 62.5
Retail 800 600 33.3
Total 2,100 1,400 50.0
|
Commercial Trailer Products segment sales were $496.9 million for the first six months of 2012, up $74.3 million, or 17.6%, compared to the first six months of 2011. The increase in sales is due primarily to a 10.6% increase in new trailer shipments as approximately 20,900 trailers shipped in the first half of 2012 compared to 18,900 trailers shipped in the prior year period as a result of the continued strengthening in market demand. Additionally, average selling prices increased by 4.8% in the first six months of 2012 compared to the prior year period due to increased pricing necessary to offset higher raw material costs as well as favorable customer and product mix. Used trailer sales increased $3.6 million, or 66.9%, compared to the previous year period primarily the result of a 62.5% increase in shipments due to increased market demand.
Diversified Products segment sales, net of intersegment sales, were $84.7 million for the first six months of 2012, up $61.3 million, or 262.0%, compared to the same period in 2011. The increase in sales is primarily due to the inclusion of Walker, which added net sales of approximately $44.3 million since the date of acquisition, as well as increased demand across all our Wabash Composites and Energy and Environmental Solutions product offerings and new business opportunities identified as we continue to gain positive momentum in our efforts to diversify our business and increase our market penetration and overall acceptance of our product offerings.
Retail segment sales were $58.5 million in the first six months of 2012, down $4.6 million, or 7.3%, compared to the prior year period. New trailer sales decreased $7.7 million, or 22.6%, due to an approximate 400 unit decrease in shipments as compared to the prior year period primarily due to timing. Used trailer sales increased $2.0 million, or 35.3%, primarily due to a 33.3% increase in shipments compared to the prior year period due to increased market demand. Parts and service sales were up $1.1 million, or 4.6%, due to increased market demand.
Cost of Sales
Cost of sales for the first six months of 2012 was $580.7 million, an increase of $104.3 million, or 21.9%, compared to the 2011 period. As a percentage of net sales, cost of sales was 90.7% for the first six months of 2012 compared to 93.6% for the 2011 period.
Commercial Trailer Products segment cost of sales, as detailed in the following table, was $466.3 million for the first six months of 2012, an increase of $62.7 million, or 15.5%, compared to the first six months of 2011. As a percentage of net sales, cost of sales was 93.8% for the first six months compared to 95.5% in the prior year period.
Six Months Ended June 30,
Commercial Trailer Products Segment 2012 2011
(dollars in millions)
% of Net % of Net
Sales Sales
Material Costs $ 372.6 75.0 % $ 321.8 76.1 %
Other Manufacturing Costs 93.7 18.8 % 81.8 19.4 %
$ 466.3 93.8 % $ 403.6 95.5 %
|
Cost of sales is composed of material costs, a variable expense, and other manufacturing costs, comprised of both fixed and variable expenses, including direct and indirect labor, outbound freight, and overhead expenses. Material costs were 75.0% of net sales in the first six months of 2012 compared to 76.1% for the prior year period. The 1.1% decrease was the result of increases in average selling prices for new trailers necessary to offset increased raw material, commodity and component costs as well as favorable customer and product mix. Other manufacturing costs increased $11.9 million in the current year period as compared to the prior year period primarily due to additional costs related to increases in new trailer production volumes. As a percentage of sales, other manufacturing costs decreased slightly from 19.4% in the prior year period to 18.8% in the 2012 period.
Diversified Products segment cost of sales was $60.6 million in the first six months of 2012, an increase of $46.1 million, or 320.3%, compared to the same 2011 period primarily resulting from the acquisition of Walker during the current year period. As a percentage of net sales prior to the elimination of intersegment sales, cost of sales was 77.7% in the first six months of 2012 compared to 81.1% in the first six months of 2011. The 3.4% decrease as a percentage of net sales was primarily the result of an increased percentage of net sales from our higher-margined product lines as compared to the previous year period.
Retail segment cost of sales was $53.0 million in the first six months of 2012, a decrease of $5.3 million, or 9.2%, compared to the same 2011 period. As a percentage of net sales, cost of sales was 90.7% in the first six months of 2012 compared to 92.5% in the first six months of 2011. This improvement as a percentage of net sales was primarily the result of product mix as an increased percentage of net sales from the higher margin parts and service product line for the 2012 period as compared to the prior year period.
Gross Profit
Gross profit was $59.4 million in the first six months of 2012, an improvement of $26.7 million from the prior year period. Gross profit as a percent of sales was 9.3% for the first six months compared to 6.4% for the same period in 2011. Gross profit by segment was as follows (in millions):
Six Months Ended June 30,
2012 2011
Gross Profit by Segment:
Commercial Trailer Products $ 30.6 $ 19.0
Diversified Products 24.2 8.9
Retail 5.4 4.8
Corporate and Eliminations (0.8 ) -
Total $ 59.4 $ 32.7
|
Commercial Trailer Products segment gross profit was $30.6 million for the first six months of 2012 compared to $19.0 million in the prior year period. Gross profit as a percentage of sales was 6.2% in the first six months of 2012 as compared to 4.5% for the prior year period. The increase in gross profit as a percentage of net sales was primarily driven by improved pricing necessary to offset increased material costs, primarily related to steel and tires.
. . .
|
|