Wabash National Corporation — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. The filing was signed February 24, 2022. Wabash designs and manufactures transportation equipment and related products and services. In September 2021, it reorganized reporting into Transportation Solutions (TS) and Parts & Services (P&S); prior-period segment information was recast.
Financial performance and position
| Metric | FY2021 | FY2020 |
|---|---|---|
| Net sales | $1,803.3 million | $1,481.9 million |
| Gross profit / margin | $196.5 million / 10.9% | $159.8 million / 10.8% |
| Operating income (loss) / margin | $33.5 million / 1.9% | $(85.6) million / (5.8)% |
| Net income (loss) | $1.2 million; $0.02 diluted EPS | $(97.4) million; $(1.84) diluted EPS |
| Cash from (used in) operations | $(7.5) million | $124.1 million |
| Capital expenditures | $49.1 million | $20.1 million |
| Cash and cash equivalents | $71.8 million | $217.7 million |
| Debt, net of discount and fees | $428.3 million | $448.0 million |
Net sales increased 21.7% year over year, principally from higher equipment shipments and demand. TS sales rose 24.2% to $1,633.3 million; P&S sales declined 1.3% to $177.2 million, partly reflecting service-location closures and the sale of Extract Technology. TS gross profit improved, while P&S gross profit fell 12.5% to $36.9 million. The consolidated gross margin edged up 0.1 percentage point.
Operating results improved from 2020, which included $106.7 million of goodwill impairment. FY2021 included $27.6 million of impairment and other expense, principally a $28.3 million non-cash charge related to discontinued legacy brand names. Net income remained modest, reflecting interest expense and $9.5 million of debt-extinguishment charges. Fourth-quarter net loss was $25.3 million, including the rebranding impairment and financing-related costs.
Operating cash flow swung to an outflow, largely as working capital increased by $94.5 million, including higher receivables and inventory ahead of expected 2022 production. Liquidity, defined by the company as cash plus available revolver capacity, was $258.0 million at year-end, down from $384.0 million. Debt principal was approximately $433.0 million, including $400 million of 4.50% senior notes due 2028 and $33.0 million drawn on the revolving facility. The company reported a debt-to-equity ratio of approximately 1.3:1.0 and compliance with debt covenants.
Material changes and significant events
- Backlog rose 70% to approximately $2.526 billion at December 31, 2021, compared with $1.482 billion a year earlier. The filing cautions that orders can be changed or canceled and backlog may not convert to revenue as expected.
- Wabash issued $400 million of 4.50% senior notes due 2028 and used the proceeds, with revolver borrowings, to redeem its 2025 notes and repay its term loan. It also increased revolving commitments from $175 million to $225 million.
- The company repurchased $66.7 million of stock and paid $16.4 million in dividends during 2021. The quarterly dividend was $0.08 per share; $136.1 million remained available under the repurchase authorization at year-end.
- The company sold Extract Technology in the second quarter for net proceeds of approximately $20.8 million and recognized a $1.9 million gain. The 2021 results also reflect completion of 17 service-location closures.
- Wabash’s January 2022 rebranding to a unified Wabash brand reduced the useful lives of legacy trade names and trademarks, prompting the fourth-quarter impairment charge.
Outlook, commentary, and risks
Management described the trailer-market outlook as strong and said backlog provided a solid base entering 2022. Industry forecasters cited in the filing estimated U.S. trailer production of 298,000–315,000 units for 2022, versus approximately 265,000–266,000 in 2021. These are industry forecasts, not company revenue or earnings guidance. Wabash planned to add 20% dry-van manufacturing capacity beginning in 2023 by converting space from traditional refrigerated-trailer production. It also highlighted growth initiatives in cold chain, e-commerce and logistics, EcoNex technology, and parts and services.
Management emphasized that forecasts and execution are exposed to supply-chain disruption, labor shortages, inflation in raw materials and freight, and the ability to pass higher costs to customers. Other principal risks include the cyclical nature of trailer demand, customer concentration (the five largest customers represented about 30% of 2021 sales), competition, COVID-19 effects, chassis availability for truck bodies, and the company’s substantial debt and covenant restrictions. The filing also identifies legal and environmental contingencies; management did not expect the described proceedings to materially affect financial condition or liquidity, while noting outcomes are uncertain.
Important facts for investors to verify
- Whether backlog converts to shipments and revenue on schedule, given reported supply, component, and labor constraints.
- Whether pricing and productivity can offset material, freight, and labor inflation without weakening margins.
- Whether working-capital needs, including inventory and receivables, normalize and operating cash flow recovers.
- Debt-service capacity, revolving-facility availability, covenant headroom, and the sustainability of dividends and repurchases.
- Execution and returns from the planned capacity conversion, rebranding, and growth investments in EcoNex and Parts & Services.
- Potential additional impairments, customer concentration exposure, and developments in the disclosed legal and environmental matters.