Wabash National Corporation (WNC) Bundle
Understanding Wabash National Corporation (WNC) Revenue Streams
Understanding Wabash National Corporation’s Revenue Streams
The revenue structure of Wabash National Corporation is primarily segmented into two key areas: Transportation Solutions and Parts & Services. Here’s a detailed breakdown of these revenue sources:
Breakdown of Primary Revenue Sources
| Segment | 2024 Net Sales ($ thousands) | 2023 Net Sales ($ thousands) | Change ($ thousands) | Percentage Change (%) |
|---|---|---|---|---|
| Transportation Solutions | 1,384,639 | 1,791,623 | (406,984) | (22.7) |
| Parts & Services | 156,459 | 165,647 | (9,188) | (5.5) |
| Total Revenue | 1,529,926 | 1,940,400 | (410,474) | (21.2) |
Year-over-Year Revenue Growth Rate
In the first nine months of 2024, the company reported a total revenue decrease of 21.2% compared to the same period in 2023. The Transportation Solutions segment experienced a decline of 22.7%, while the Parts & Services segment saw a smaller decrease of 5.5%.
Contribution of Different Business Segments to Overall Revenue
During the first nine months of 2024, the Transportation Solutions segment contributed approximately 90.5% of the total revenue, while Parts & Services accounted for about 9.5%.
Analysis of Significant Changes in Revenue Streams
The decline in revenue was primarily driven by a significant reduction in new trailer shipments, which totaled 25,330 units in 2024, down from 34,375 units in 2023, representing a decrease of 26.3%. Additionally, new truck body shipments also decreased by 6.3%, from 11,995 units to 11,245 units.
The Parts & Services segment reported sales of $156.5 million for the first nine months of 2024, a decrease from $165.6 million in 2023. This segment's decline was attributed to lower sales in Process Systems and Components businesses, which decreased by $10.5 million and $12.1 million, respectively. However, this was partially offset by increases in Upfitting Solutions and Services, which saw a rise of $8.7 million.
Summary of Revenue Performance
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change |
|---|---|---|---|
| Total Revenue | $1,529,926 | $1,940,400 | ($410,474) |
| Gross Profit | $222,113 | $389,964 | ($167,851) |
| Gross Profit Margin (%) | 14.5% | 20.1% | (5.6%) |
The gross profit margin decreased significantly, reflecting the challenges faced in the market, particularly in the Transportation Solutions segment where gross profit was $182.7 million in 2024 compared to $345.1 million in 2023, a drop of 47.0%.
Overall, the revenue analysis indicates a challenging environment for Wabash National Corporation as it navigates lower shipment volumes and a competitive market landscape, impacting both sales and profitability metrics significantly.
A Deep Dive into Wabash National Corporation (WNC) Profitability
A Deep Dive into Wabash National Corporation's Profitability
Gross Profit Margin: For the first nine months of 2024, gross profit was $222.1 million, representing a decrease of $167.9 million from the prior year. This translates to a gross profit margin of 14.5%, down from 20.1% in 2023.
Operating Profit Margin: The loss from operations for the first nine months of 2024 was $359.7 million, compared to an income of $250.8 million in the same period in 2023. As a result, the operating profit margin dropped significantly.
Net Profit Margin: The net loss attributable to common stockholders for the first nine months of 2024 was $283.0 million, leading to a net profit margin of -18.5% compared to a net profit margin of 9.3% for the same period in 2023.
Trends in Profitability Over Time
The following table outlines the trends in profitability metrics over the past two years:
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change |
|---|---|---|---|
| Gross Profit | $222.1 million | $389.9 million | (-$167.8 million) |
| Gross Profit Margin | 14.5% | 20.1% | (-5.6%) |
| Operating Income | -$359.7 million | $250.8 million | (-$610.5 million) |
| Net Income | -$283.0 million | $181.4 million | (-$464.4 million) |
| Net Profit Margin | -18.5% | 9.3% | (-27.8%) |
Comparison of Profitability Ratios with Industry Averages
The industry averages for gross, operating, and net profit margins are as follows:
| Metric | Wabash (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 14.5% | 22.0% |
| Operating Profit Margin | -23.5% | 8.0% |
| Net Profit Margin | -18.5% | 6.0% |
Analysis of Operational Efficiency
Operational efficiency can be assessed through the following metrics:
- Cost of Sales: For the first nine months of 2024, cost of sales was $1,307.8 million, down 15.6% from $1,550.4 million in 2023.
- General and Administrative Expenses: Increased to $549.7 million in 2024 from $109.2 million in 2023, representing a significant rise of 403.4%.
- Sales Decrease: Total net sales decreased by 21.2% to $1,529.9 million in 2024, compared to $1,940.4 million in 2023.
The gross profit by segment for the first nine months of 2024 was:
| Segment | Gross Profit (2024) | Gross Profit (2023) | Change |
|---|---|---|---|
| Transportation Solutions | $182.7 million | $345.1 million | (-$162.4 million) |
| Parts & Services | $39.4 million | $44.9 million | (-$5.5 million) |
Overall, the decline in gross profit margin can be attributed to a decrease in new trailer shipments, resulting in lost sales margins and lower absorption of fixed costs.
Debt vs. Equity: How Wabash National Corporation (WNC) Finances Its Growth
Debt vs. Equity: How Wabash National Corporation Finances Its Growth
As of September 30, 2024, Wabash National Corporation's total debt obligations amounted to $400.0 million. The company's long-term debt primarily consists of Senior Notes due in 2028, which carry an interest rate of 4.5% and total $400 million in aggregate principal.
In terms of the company's capital structure, the debt-to-equity ratio stands at approximately 2.0:1.0, indicating a significant reliance on debt financing relative to equity. This ratio is notably higher than the industry average, which typically ranges from 1.0 to 1.5, suggesting that the company is leveraging debt more aggressively than its peers.
During the first nine months of 2024, Wabash National Corporation reported interest expenses totaling $14.9 million, consistent with the previous year, reflecting stable debt servicing costs amid fluctuating revenues. The company also has a Revolving Credit Agreement with total commitments of $350.0 million, which matures in September 2027.
| Debt Type | Principal Amount | Interest Rate | Maturity Date |
|---|---|---|---|
| Senior Notes | $400 million | 4.5% | October 15, 2028 |
| Revolving Credit Agreement | $350 million (total commitments) | Variable (based on SOFR) | September 2027 |
Wabash National Corporation strategically balances its debt and equity funding by maintaining strong liquidity, which amounted to $404.9 million as of September 30, 2024. This liquidity position reflects cash on hand and available borrowing capacity under the Revolving Credit Agreement.
In addition to maintaining liquidity, the company has been active in managing its capital structure through share repurchases, totaling $55.7 million during the first nine months of 2024, alongside dividend payments of approximately $11.3 million. This approach showcases a commitment to returning value to shareholders while navigating the challenges of a fluctuating market environment.
Assessing Wabash National Corporation (WNC) Liquidity
Assessing Wabash National Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was approximately 1.5, indicating a solid liquidity position to cover short-term liabilities.
Quick Ratio: The quick ratio stood at 1.2, suggesting that the company can meet its immediate obligations without relying on inventory sales.
Working Capital Trends
Working capital as of September 30, 2024, was $204.8 million, reflecting a decrease from $287.3 million in the previous year. This decline is primarily due to increased accounts payable and a significant rise in accounts receivable.
| Period | Current Assets ($ million) | Current Liabilities ($ million) | Working Capital ($ million) |
|---|---|---|---|
| Q3 2024 | 612.0 | 407.2 | 204.8 |
| Q3 2023 | 685.0 | 397.7 | 287.3 |
Cash Flow Statements Overview
In the first nine months of 2024, cash provided by operating activities totaled $36.4 million, a significant drop compared to $204.6 million in the same period of 2023. This decline is attributed to a net loss of $282.4 million adjusted for non-cash activities.
| Cash Flow Type | 2024 ($ million) | 2023 ($ million) |
|---|---|---|
| Operating Activities | 36.4 | 204.6 |
| Investing Activities | (59.6) | (89.0) |
| Financing Activities | (74.2) | (68.5) |
Liquidity Concerns or Strengths
The liquidity position, defined as cash on hand and available borrowing capacity, was $404.9 million as of September 30, 2024, down from $447.0 million a year earlier and $516.1 million at year-end 2023. This decline is linked to lower cash balances and reduced borrowing capacity under the revolving credit agreement.
Debt obligations totaled $400.0 million as of September 30, 2024, with a debt-to-equity ratio of 2.0:1.0, indicating a leveraged capital structure.
Overall, while the current liquidity metrics indicate a stable position, there are potential concerns regarding cash flow sustainability given the significant net loss and reduced operating cash flow.
Is Wabash National Corporation (WNC) Overvalued or Undervalued?
Valuation Analysis
To assess whether Wabash National Corporation is overvalued or undervalued, we can analyze several key financial ratios, stock price trends, dividends, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio for Wabash National Corporation is N/A due to the negative earnings reported in recent periods. The company recorded a net loss attributable to common stockholders of $330,166,000 for the third quarter of 2024, resulting in a basic net loss per share of $7.53 .
Price-to-Book (P/B) Ratio
The P/B ratio is also impacted by the company's financial performance. As of September 30, 2024, the total stockholders' equity was approximately $200,520,000, with total shares outstanding at 43,336,755. This results in a book value per share of approximately $4.63. Given the current stock price of around $19.07, the P/B ratio is approximately 4.12 .
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) for Wabash National Corporation is approximately $1,055,520,000, calculated as market capitalization plus total debt minus cash and cash equivalents. The EBITDA for the last twelve months is $78,000,000, which gives an EV/EBITDA ratio of approximately 13.52 .
Stock Price Trends
Over the last 12 months, Wabash National Corporation's stock price has shown significant volatility. Starting the year at approximately $19.00, the price fluctuated significantly, reaching a low of approximately $10.00 in May 2024. As of the latest data, the stock is trading at around $19.07, reflecting a 0.37% increase year-to-date .
Dividend Yield and Payout Ratios
Wabash National Corporation declared dividends of $0.08 per share in the third quarter, maintaining a total dividend payout of $11.3 million for the first nine months of 2024. The dividend yield based on the current stock price of $19.07 is approximately 0.42% .
Analyst Consensus on Stock Valuation
Analysts have mixed opinions regarding the valuation of Wabash National Corporation. Currently, the consensus rating is a Hold, with a price target range from $15.00 to $22.00, reflecting uncertainty about the company's recovery trajectory following recent losses .
| Valuation Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 4.12 |
| EV/EBITDA Ratio | 13.52 |
| Current Stock Price | $19.07 |
| Dividend Yield | 0.42% |
| Analyst Consensus | Hold |
Key Risks Facing Wabash National Corporation (WNC)
Key Risks Facing Wabash National Corporation
Understanding the risk factors affecting a company is crucial for investors. For Wabash National Corporation, several internal and external risks can significantly impact its financial health.
Industry Competition
The company operates in a highly competitive market. In the transportation solutions segment, it faces competition from established players who can leverage economies of scale. This competitive pressure can lead to pricing wars, affecting profit margins. As of September 30, 2024, the company reported a 26.7% decrease in net sales compared to the prior year, reflecting the impact of declining market demand and competitive pricing.
Regulatory Changes
Changes in regulations related to transportation and manufacturing can impose additional costs. Compliance with environmental regulations is particularly pertinent, as it may require investments in new technologies or processes. Non-compliance can lead to fines and reputational damage, further stressing financial resources.
Market Conditions
The economic environment plays a significant role in the company's performance. Economic downturns can reduce demand for transportation and logistics solutions, impacting sales volumes. The company reported a 21.2% decrease in total sales for the first nine months of 2024 compared to the same period in 2023.
Operational Risks
Operational challenges, such as supply chain disruptions, can hinder production capabilities. The company saw a 26.3% decrease in new trailer shipments in the first nine months of 2024, primarily driven by lower demand for dry vans. Such disruptions can lead to increased costs and delays in fulfilling customer orders.
Financial Risks
The company has a significant amount of debt, with a debt-to-equity ratio of approximately 2.0:1.0 as of September 30, 2024. High leverage can limit financial flexibility and increase vulnerability to interest rate fluctuations. The interest expense for the first nine months of 2024 was reported at $14.9 million, consistent with the previous year.
Strategic Risks
Strategic missteps, such as failed product launches or poor market positioning, can adversely affect the company's long-term growth. The company reported a net loss attributable to common stockholders of $(330.2 million) for the third quarter of 2024. This loss underscores the importance of strategic planning and execution in maintaining investor confidence.
Mitigation Strategies
To address these risks, the company is focusing on optimizing manufacturing operations to align with current demand. It is also implementing cost-saving initiatives and enhancing its product offerings to improve margins. The liquidity position is crucial, with cash and available borrowing capacity amounting to $404.9 million as of September 30, 2024.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | Pressure from established competitors | Pricing wars affecting margins | Enhance product differentiation |
| Regulatory Changes | Compliance costs and potential fines | Increased operational costs | Invest in compliance technologies |
| Market Conditions | Economic downturns reducing demand | Lower sales volumes | Diversification of product lines |
| Operational Risks | Supply chain disruptions | Increased production costs | Strengthen supplier relationships |
| Financial Risks | High debt levels | Reduced financial flexibility | Focus on cash flow management |
| Strategic Risks | Potential for misaligned product strategies | Long-term growth challenges | Regular strategic reviews |
Future Growth Prospects for Wabash National Corporation (WNC)
Future Growth Prospects for Wabash National Corporation
Wabash National Corporation is positioned to leverage several key growth drivers in the coming years. These include product innovations, market expansions, and strategic acquisitions.
Key Growth Drivers
- Product Innovations: The company is focusing on developing advanced trailer technologies, including EcoNex™ products designed for intelligent thermal management. This innovation is expected to enhance operational efficiency for customers and drive sales.
- Market Expansions: Wabash is exploring opportunities in both domestic and international markets, particularly in the growing demand for sustainable transport solutions.
- Acquisitions: The company continues to identify potential acquisition targets that can enhance its product offerings and market reach.
Future Revenue Growth Projections and Earnings Estimates
For the first nine months of 2024, total net sales were reported at $1,529.9 million, a decrease of 21.2% from $1,940.4 million in the same period in 2023. This decline was primarily driven by a reduction in new trailer shipments, which totaled 25,330 units, down 26.3% year-over-year.
Strategic Initiatives or Partnerships
The company is committed to its Trailers as a Service (TAAS) initiative, which is aimed at providing customers with flexible leasing options. This strategic direction is expected to create a recurring revenue stream and enhance customer relationships.
Competitive Advantages
Wabash's competitive advantages include its strong brand reputation, extensive distribution network, and diversified product portfolio. Furthermore, the company has maintained a liquidity position of $404.9 million as of September 30, 2024, which provides it with the financial flexibility to invest in growth initiatives.
Financial Overview
| Metric | 2024 Q3 | 2023 Q3 | Change (%) |
|---|---|---|---|
| Net Sales | $464.0 million | $632.8 million | -26.7% |
| Gross Profit | $56.0 million | $122.9 million | -54.4% |
| Net (Loss) Income | $(329.9) million | $55.5 million | -694.0% |
| Cash Flow from Operations | $36.4 million | $204.6 million | -82.1% |
Overall, Wabash National Corporation is navigating through challenges while strategically positioning itself for future growth through innovation, market expansion, and partnerships.
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Article updated on 8 Nov 2024
Resources:
- Wabash National Corporation (WNC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Wabash National Corporation (WNC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Wabash National Corporation (WNC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.