Wabash National’s 1Q results mirror troubles of trailer makers

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Wabash National Corp. on Wednesday, May 13, reported a net loss of $28.3 million for the first quarter of 2009 on net sales of $77.9 million. For the same quarter last year, the company reported a net loss of $6.4 million on net sales of $161.1 million. First-quarter new trailer sales totaled 2,700 units, which represents a 57 percent reduction from the prior-year period. The volume decline reflects the current economic environment and the continuing challenges facing the transportation industry.

“Results for the first quarter of 2009, while disappointing, were not surprising,” said Dick Giromini, president and chief executive officer of the Lafayette, Ind.-based company. “The challenging economic climate has resulted in weak production demand, and the carryover effect of very high raw material and component costs adversely impacted our operating results. As the year progresses, we expect an improving, albeit constrained, demand environment for trailers and increasing benefits from our cost optimization initiatives, including the recently completed Lafayette transformation project. In addition, we will realize the effects of reduced raw material and component costs, with the exception of aluminum products, where unfavorable forward commitments are expected to continue to impact results until the fourth quarter.”

Eric Starks, president of FTR Associates, recently told the Truck Trailer Manufacturers Association (TTMA) that trailer production will continue at current depressed levels through the end of 2009 before beginning a slow recovery. “At the moment, transport demand is so weak that in fact the trucking industry as a whole actually does not need any new trailers at all,” Starks said at TTMA’s annual meeting.

Nevertheless, Starks predicted that the special needs of individual trucking firms will result in a continuation of the current low level of orders. Starks also said a large oversupply of trailers will act as a continuing drag on new trailer demand, resulting in very weak 2009 production of only 70,000 units for the industry as a whole; this will improve only modestly to 89,000 units in 2010.

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Giromini said Wabash National’s primary focus continues to be the prudent management of its cash flow and liquidity needs. “To this end, we recently completed a forbearance agreement with our bank group and are working with our bank group on a longer-term resolution to our revolving credit facility and overall financial capitalization,” he said. “In this regard, we continue to assess the strategic alternatives available to the company, and have retained BB&T Capital Markets as the company’s exclusive financial adviser to assist in the consideration of various corporate strategic alternatives for maximizing shareholder value.”

Details included in Starks’ presentation are part of FTR’s North American Truck and Trailer Outlook Report, which is available to subscribers. For information about all FTR Associates transportation reports, go to the Nashville, Ind.-based company’s website at www.ftrassociates.net or call Starks at 888-988-1699, ext. 41.