Wabash National Corporation Announces Second Quarter Results
LAFAYETTE, Ind., July 22 -- Wabash National Corporation today announced results for the three and six month periods ended June 30, 2003. Net sales for the second quarter were $230 million compared to $210 million for the same period last year. Net loss for the second quarter was $27 million, including a $29 million non-cash charge related to planned asset divestitures, compared to a net loss of $22 million for the same period last year. Diluted loss per share was $1.05 for the quarter, including a $1.09 per share charge related to planned asset divestitures, compared to a loss of $0.96 per share for the 2002 quarter. For the six months ended June 30, 2003, net sales were $453 million and a net loss of $26 million, including the $29 million charge, compared to net sales of $372 million and a net loss of $36 million for the same period last year. Diluted loss per share for the six months ended June 30, 2003 and 2002 was $1.02, including the $1.09 per share charge, and $1.61, respectively.
Commenting on the quarter, William P. Greubel, President and Chief Executive Officer, stated, "The fundamental changes currently taking place within the Company could prove to be a watershed period as we move to structurally improve the Company, both operationally and financially. The following are just some of the significant highlights from the quarter:
* Sales increased 3% from the 2003 first quarter on the continuing
improvement in demand for new trailers while operating income, before
the $29 million charge, improved 48% over first quarter 2003 levels.
We are indeed becoming earnings focused as opposed to share focused. We
successfully started up two new production lines during the quarter, one
line for our new Wabash FreightPro sheet and post trailer and one line
for DuraPlate(R) containers. We believe trailer industry demand will
continue to improve over the next several quarters. Our demand
continues to be affected by our large customers managing their equipment
capacity very closely;
* We are in the final planning stages of reorganizing our channels of
sales and distribution which will allow us to improve our opportunities
to exploit our product and service offerings in the mid to large sized
fleet segments of the trailer industry while maintaining our strategic
relationships with the premier trucking companies in the U.S.;
* As announced, we have signed a definitive agreement to sell
substantially all of the assets of our leasing and rental business and
our aftermarket parts business. Total consideration from the sale of
these assets and the retained assets is approximately $65-$70 million of
which $55 million will be paid in cash upon closing. We expect the
transaction to close in the third quarter and is subject to lender
approval and buyer financing. As noted above, we recorded an impairment
charge of $29 million in the quarter to recognize the planned disposal
of these assets at less than book value. This non-cash charge will not
affect the Company's compliance under its existing bank covenants. Upon
closing this transaction, all proceeds from this divestiture will go
toward debt retirement which, including this amount, will total
approximately $90 million year-to-date;
* We also announced the selection of Fleet Capital to lead and fully
underwrite a new $250 million syndicated bank financing for the Company.
The new financing, which is subject to Fleet Bank credit approval and
Wabash board approval, will be a three year asset based revolver and
term loan that will be used to replace existing indebtedness and will
substantially lower our cost of debt. Closing on the transaction is
expected to occur during the third quarter of this year. Successfully
refinancing our existing debt will result in charges of approximately
$24 million, including prepayment penalties of approximately $20 million
and a non-cash charge of approximately $4 million for the write-off of
previously deferred debt costs, which will be recognized when the
financing is completed. These charges will not affect the Company's
compliance under its existing bank covenants; and
* We are in the process of evaluating what we believe will be the final
piece to our new capital structure, which will mark the culmination of
two years of work to turn the Company around and to secure its future.
We continue to meet or exceed our objectives. We have active and sound management leading our turnaround. Associate involvement has been excellent. Our capital structure will soon be very solid. We intend to focus our free cash flow in the future on continuing to pay down debt. We shall augment our profitability by focusing our products and services on the entire van market going forward. As the trailer industry improves, we have positioned ourselves to take full advantage of the recovery."
Wabash National Corporation designs, manufactures, and markets standard and customized truck trailers under the Wabash(TM) brand name. The Company is one of the world's largest manufacturers of truck trailers and a leading manufacturer of composite trailers. The Company's wholly owned subsidiary, Wabash National Trailer Centers, is one of the leading retail distributors of new and used trailers and aftermarket parts throughout the U.S. and Canada.
This press release contains certain forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are, however, subject to certain risks and uncertainties that could cause actual results to differ materially from those implied by the forward- looking statements. Without limitation, these risks and uncertainties include the Company's ability to achieve profitability, increased competition, reliance on certain customers and corporate partnerships, shortages of raw materials, availability of capital, dependence on industry trends, export sales and new markets, acceptance of new technology and products, and government regulation. Readers should review and consider the various disclosures made by the Company in this press release and in its reports filed with the Securities and Exchange Commission.
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
Unaudited
Three Months Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
NET SALES $230,231 $210,251 $452,739 $372,203
COST OF SALES 206,542 204,024 406,709 365,937
Gross profit 23,689 6,227 46,030 6,266
GENERAL AND ADMINISTRATIVE
EXPENSES 7,894 14,807 18,433 28,898
SELLING EXPENSES 6,022 6,030 11,240 11,779
LOSS ON ASSET IMPAIRMENT 28,500 --- 28,500 ---
Loss from operations (18,727) (14,610) (12,143) (34,411)
OTHER INCOME (EXPENSE):
Interest expense (10,391) (7,816) (18,259) (13,489)
Foreign exchange gains
and losses, net 2,733 2,211 5,589 1,958
Other, net (883) (1,462) (1,025) (2,271)
Loss before income taxes (27,268) (21,677) (25,838) (48,213)
INCOME TAX BENEFIT --- --- --- (11,947)
Net loss (27,268) (21,677) (25,838) (36,266)
PREFERRED STOCK DIVIDENDS 264 443 528 886
NET LOSS APPLICABLE TO
COMMON STOCKHOLDERS $(27,532) $(22,120) $(26,366) $(37,152)
BASIC AND DILUTED NET LOSS
PER SHARE $ (1.05) $ (0.96) $ (1.02) $ (1.61)
COMPREHENSIVE INCOME LOSS:
Net loss $(27,268) $(21,677) $(25,838) $(36,266)
Foreign currency
translation adjustment 243 171 444 166
NET COMPREHENSIVE LOSS $(27,025) $(21,506) $(25,394) $(36,100)
Retail &
Three months ended Manufacturing Distribution Eliminations Total
2003
Net Sales $ 167,483 $ 75,375 $ (12,627) $ 230,231
Operating Results $ 10,592 $ (29,595) $276 $ (18,727)
2002
Net Sales $ 130,848 $ 89,264 $ (9,861) $ 210,251
Operating Results $ (1,701) $ (13,038) $ 129 $ (14,610)
Six months ended
2003
Net Sales $ 334,140 $ 153,731 $ (35,132) $ 452,739
Operating Results $ 18,815 $ (31,257) $ 299 $ (12,143)
2002
Net Sales $ 213,249 $ 175,617 $ (16,663) $ 372,203
Operating Results $ (18,196) $ (16,786) $ 571 $ (34,411)
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Unaudited
June 30, December 31,
2003 2002
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $6,615 $35,659
Accounts receivable, net 85,846 34,396
Current portion of finance contracts 7,962 9,528
Inventories 139,461 134,872
Prepaid expenses and other 21,409 18,299
Total current assets 261,293 232,754
PROPERTY, PLANT AND EQUIPMENT, net 137,096 145,703
EQUIPMENT LEASED TO OTHERS, net 64,867 100,837
FINANCE CONTRACTS, net of current portion 16,890 22,488
GOODWILL, net 35,444 34,652
OTHER ASSETS 17,929 29,135
$533,519 $565,569
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $277,393 $42,961
Current maturities of capital lease
obligations 45,733 12,860
Accounts payable 65,018 60,457
Other accrued liabilities 60,324 61,424
Total current liabilities 448,468 177,702
LONG-TERM DEBT, net of current maturities 12,384 239,043
LONG-TERM CAPITAL LEASE OBLIGATIONS, net of
current maturities 1,945 51,993
OTHER NONCURRENT LIABILITIES AND CONTINGENCIES 21,654 22,847
STOCKHOLDERS' EQUITY:
Total stockholders' equity 49,068 73,984
$533,519 $565,569
WABASH NATIONAL CORPORATION AND SUBSIDIARIES
EBITDA
The company uses EBITDA and Adjusted EBITDA, income (loss) before income taxes, interest expense, depreciation and amortization; and specific identified charges in the case of adjusted EBITDA, as an internal measure of performance, and believes it is useful and commonly used measure of financial performance in addition to income (loss) before income taxes and other profitability measures of performance under GAAP. EBITDA should not be construed as an alternative to operating income and income (loss) before taxes as an indicator of the Company's operation in accordance with GAAP. Our definition of EBITDA can differ from that of other companies. The following table reconciles net income, the most comparable measure under GAAP, to EBITDA and Adjusted EBITDA for the periods indicated (dollars in millions).
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
EBITDA reconciliation:
Net loss $(27.3) $(21.7) $(25.8) $(36.3)
Income tax benefit - - - (11.9)
Interest expense 10.4 7.8 18.3 13.5
Depreciation and
amortization 6.6 7.6 13.3 15.0
EBITDA (10.3) (6.3) 5.8 (19.7)
Loss on asset impairment 28.5 - 28.5 -
Adjusted EBITDA $18.2 $(6.3) $34.3 $(19.7)
Operating Income
The following table reconciles operating income, the most comparable measure under GAAP, to operating income before the loss on asset impairment for the periods indicated (dollars in millions).
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Operating income (loss)
reconciliation:
Operating loss $(18.7) $(14.6) $(12.1) $(34.4)
Loss on asset impairment 28.5 - 28.5 -
Operating income (loss) before
loss on asset impairment $ 9.8 $(14.6) $ 16.4 $(34.4)