Wabash (WNC) Q1 2026 Earnings Call Transcript

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Date

Friday, May 1, 2026 at 12 p.m. ET

Call participants

• President and Chief Executive Officer — Brent L. Yeagy
• Chief Financial Officer — Patrick Keslin
• Vice President, Investor Relations — John Cummings

Takeaways

• Backlog -- Backlog increased 19% sequentially to $837 million, showing heightened order activity compared to the prior quarter.
• New Trailer Shipments -- 5,378 new trailers were shipped during the period, reflecting core manufacturing volume.
• Truck Body Shipments -- Shipped 1,527 truck bodies, with the segment experiencing only modest sequential top-line growth from Q4 2025.
• Adjusted Non-GAAP Gross Margin -- Negative 2.6% of sales, directly affected by reduced production levels and segment inefficiency.
• Adjusted Non-GAAP Operating Margin -- Reported at negative 18.3%, signifying severe operational pressure from low volumes.
• Adjusted Non-GAAP EBITDA -- Negative $38 million, or negative 12.5% of sales, underscoring challenged profitability.
• Adjusted Non-GAAP Net Income -- Negative $47.5 million, or negative $1.17 per diluted share, below the company's prior expectations.
• Transportation Solutions Segment Revenue -- Generated $250 million in revenue, with an operating loss of $34.5 million on a non-GAAP basis.
• Parts & Services Segment Revenue -- $54 million revenue, negative $2 million operating income, as results were hampered by startup costs from new upfit sites not yet generating revenue.
• Cash Flow -- Operating cash flow was negative $33.7 million, resulting in negative free cash flow of $37.3 million.
• Liquidity -- Total liquidity, including cash and borrowing capacity, was $165 million as of March 31.
• Plant Idling Costs -- $3 million in costs related to the idling of the Little Falls and Goshen facilities were recognized and aligned with previous projections.
• Second Quarter Guidance -- Revenue expected between $380 million and $400 million; adjusted EPS is projected in the negative $0.40 to negative $0.60 range.
• Capital Expenditures -- $4 million was invested in capital expenditures during the quarter, with future spending to remain tightly managed.
• Dividend -- $3.5 million returned to shareholders through the quarterly dividend.
• Operational Benchmarks -- Key internal metrics such as on-time-to-promise, first-time quality, and total recordable incident rates achieved new bests.
• Safety Performance -- Overall injury rate improved 7% sequentially and 19% year over year; total injuries decreased 9% sequentially and 42% year over year.
• Upfit Business Expansion -- New upfit sites opened in Chicago, Atlanta, and Phoenix, with each expected to generate $10 million to $20 million in incremental revenue at peak and gross margins approaching 20%.
• Digital Initiatives -- SPECT SYNC digital enablement is reducing friction in quoting and configuration, receiving a stronger-than-expected customer reception at the NPEA event.

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Risks

• Adjusted non-GAAP gross and operating margins were deeply negative, explicitly cited as resulting from lower-than-planned volumes and inefficiencies.
• The Parts & Services segment incurred operating losses due to the startup costs of new upfit sites that have not started contributing revenue.
• CFO Keslin said, "These results were below expectations, driven primarily by lower-than-planned volumes."
• Management cited persistent market softness, specifically stating that truck body demand is expected to remain soft through 2026 and will recover six to nine months behind dry vans.

Summary

Wabash National Corporation (NYSE:WNC) reported sequential growth in backlog and detailed ongoing strategic investments in digital and upfit initiatives, despite severe top- and bottom-line weakness. Management confirmed the first quarter marked the anticipated low for the year, with clear confidence in sequential improvement beginning in the second quarter and strengthened visibility for 2027. Recent advancements in their SPECT SYNC digital platform and network expansion into key metropolitan upfit markets position the business for service-line growth as market conditions recover. Management intends to maintain quarterly guidance only during this period of limited market clarity, emphasizing agility and capital discipline as fundamental operational themes.

• Management specifically flagged improved capital deployment effectiveness and a more flexible cost structure as differentiators from previous down cycles.
• Company leadership views near-term actions—such as deliberate plant idling, sustained investment in customer support, and operational agility—as foundational to capturing margin leverage and cash generation when demand returns.
• A 25%+ dry van share is targeted in the initial phase of recovery based on digital capabilities and expanded production capacity completed in late 2023.
• Pending regulatory relief from Section 232 tariffs and anticipated antidumping duty outcomes are expected to provide a more favorable competitive environment entering 2027.
• Improved engagement from customers and order activity reinforce a company outlook that sees Q1 2026 as the trough, with positive adjusted EBITDA projected for the remainder of the year.

Industry glossary

• SPECT SYNC: Wabash National Corporation’s proprietary digital platform designed to streamline customer quoting and product configuration.
• Upfit: Customization and installation of specialized equipment or bodies on vehicle chassis to serve vocational applications.
• Section 232 Tariffs: U.S. import duties on specific steel and aluminum products intended to protect domestic manufacturing from foreign competition.
• Dry Van: An enclosed box trailer used for general freight shipping, representing a key product for Wabash National Corporation.
• Adjusted Non-GAAP EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted for unusual or non-cash items, excluding items noted by company management.

Full Conference Call Transcript

Brent L. Yeagy: Thanks, John. Before we begin, I want to recognize Mike Bennett, who as of April 8 is transitioning out of Wabash National Corporation. Mike has been a meaningful contributor to Wabash National Corporation for 14 years and played an important role in shaping our culture and our strategy. His impact on the organization is lasting, and we are grateful for his leadership and commitment to Wabash National Corporation. We wish him all the best as he enters this new chapter of his life. As we entered the first quarter, we did so with a clear-eyed view of the environment in front of us. Freight markets were uncertain, and customers continued to act cautiously.

Order patterns were uneven, asset utilization inconsistent, and capital decisions across the industry were being evaluated carefully. At the same time, we were encouraged by early signs of stabilization and improving fundamentals that typically precede a broader recovery. Now as we move into 2026, both our customers and our visibility continue to improve, and it shows an environment that is building to set up for a constructive 2027 as spot rates, contract rates, capacity, and demand all are coming together to drive back to replacement demand for equipment, and possibly beyond as fleets begin to plan more confidently. Against that backdrop, our priorities have not changed.

We are focused on controlling what we control, protecting margins through the cycle, and executing against our long-term strategy. That means aligning cost to demand, maintaining pricing discipline, and continuing to invest in areas that differentiate Wabash National Corporation. Particularly parts and services, digital enablement, and our manufacturing operations. The actions we have taken position us favorably for the market's return versus prior down cycles. We are deploying capital more effectively, more efficiently, and at levels above what has been historically possible, managing liquidity with discipline, and building a business that will emerge from this cycle stronger, more resilient, and better positioned to perform as market growth accelerates. Execution remained a focus in Q1.

Key operating metrics, including on-time-to-promise, first-time quality, and total recordable incident rates, continue to improve and set new benchmarks. That performance reflects the experience, commitment, and capability of our team. I want to recognize our employees for their continued focus and discipline. Market conditions in the first quarter were largely consistent with what we saw exiting last year. We are encouraged by the progress beginning to take shape across several underlying indicators. Improvements in spot rates and manufacturing activity, for example, are increasing visibility into recovery, as evidenced by the 19% increase in backlog versus the prior quarter, to $837 million.

While geopolitical uncertainty continues to influence customer behavior at present, with fleets remaining conservative, extending asset lives, and prioritizing flexibility over expansion, the tone is shifting quickly, and customers are increasingly engaging to discuss their future needs. As expected, the early stages of this recovery continue to be supply-driven. Capacity continues to contract as enhanced driver eligibility enforcement designed to improve safety across the industry improves freight rates and begins to restore carrier profitability.

At the same time, key freight indicators are exhibiting some of the strongest year-over-year performance, including the ATA for-hire truck tonnage index having its largest year-over-year increase since October 2022, and the Logistics Managers Index increasing 4.2 points sequentially, the fastest level of expansion since May 2022. As this recovery builds, capital spending will follow. Wabash National Corporation is well positioned to respond with the capabilities, capacity, and customer relationships to support increased demand and increased market share. Looking ahead, our near-term demand outlook remains balanced as customers convert improving profitability into capital spending decisions. Beyond that, the outlook is increasingly constructive as we move into 2027.

Multiple leading indicators continue to trend positively, customer conversations are becoming more optimistic, and the very positive impact of the recent change in Section 232 tariffs, and the forthcoming positive progression of the antidumping and countervailing duty process, further support our confidence as we approach the Q3 and Q4 bid season for 2027. While we prepare to exit this stage of the market cycle, operational discipline and cost management remain foundational to how we run the business for both near-term assuredness and long-term improved profitability. That means staying disciplined on costs, protecting liquidity, and remaining ready for multiple scenarios.

The plant idling actions announced in our January 2026 call are progressing as planned, with $3 million of the costs referenced in our prior call recognized in Q1 2026 and in line with projections. Beyond those actions, we continue to evaluate opportunities to rationalize our portfolio and rightsize fixed costs while remaining committed to our strategy of delivering industry-leading supply chain solutions from first to final mile. Our objective is straightforward: remove costs in a sustainable way that protects margins and liquidity today and creates leverage for improved profitability and cash generation as volumes recover. We remain agile and prepared to adjust spending, including capital expenditures, as conditions evolve.

At this time, we have been deliberate about what we do not cut. Investments in safety, quality, and customer support remain nonnegotiable. We continue to fund initiatives that expand recurring revenue and strengthen customer relationships, particularly within parts and services. The result is a cost structure that is more flexible, more resilient, and better aligned with current market realities while preserving our ability to scale efficiently as demand improves. Recent developments related to Section 232 tariffs and the pending antidumping and countervailing duty rulings are expected to provide meaningful relief for the domestic industry.

Wabash National Corporation is proud of its U.S. manufacturing footprint and workforce, and as these measures take effect and the playing field begins to level in late 2026 and into 2027, we are confident in our ability to compete, grow share, and benefit from greater pricing stability. We are also well positioned operationally. The additional dry van capacity from our Lafayette South plant completed in late 2023 provides scalable and efficient capability to produce approximately 10 thousand incremental trailers versus prior upcycles. Flexibility allows us to support customers effectively as conditions normalize.

As the market recovery continues to solidly take hold over the next few quarters, uncertainty across the industry will continue to subside, but until then, we will continue to provide quarterly guidance only as we navigate this transitionary period. This approach allows us to deliver more accurate and relevant outlooks while acknowledging limited visibility on timing. Customer engagement is increasing, and our sales team remains active. As mentioned earlier, backlog improved 19% sequentially, which is a historic high rate of growth for the first quarter. For the second quarter, we expect revenue in the range of $380 million to $400 million and adjusted EPS in the range of negative $0.40 per share to negative $0.60 per share.

This outlook is consistent with our expectation that Q1 2026 represented the low point for the year, with sequential improvement expected in each subsequent quarter. We remain focused on execution, liquidity, and readiness to capture profitable growth as market conditions continue to improve. I would now like to highlight some of our strategic initiatives. Digital enablement continues to be a key differentiator for Wabash National Corporation. At the recent NPEA event, which showcased SPECT SYNC, we significantly reduced friction from the quoting and product configuration process for our customers.

The response exceeded expectations, and we are focused on scaling these capabilities across the network as we create breakthrough advances in both speed and quality of the customer experience—key enablers to capture additional market share in a forthcoming expanding market. Across the organization, we are using digital tools to improve selling, tracking, and supporting our products, enhancing fleet visibility, enabling smarter maintenance decisions, improving inventory efficiency, and elevating the customer experience through data-driven AI insights. These capabilities are particularly critical within parts and services, where they support more predictable revenue streams and reinforce our shift from products to solutions.

What is coming into focus for Wabash National Corporation are clear opportunities, with the recent advancements in AI technology, to leap forward in operations, supply chain, working capital efficiency, and the customer experience. I am very excited to share in the future what we will look to accomplish over the next 36 months and beyond in terms of growth, profitability, and customer satisfaction. The synergies from these initiatives lead us to target dry van share of more than 25% in the first half of the cycle. I also want to touch on our upfit business, which remains an important component of our strategy and a clear example of how we are expanding beyond traditional equipment manufacturing.

Demand for vocational body-based solutions remains attractive, particularly across utilities, telecom, landscaping, highway construction, and solid waste, where fleet complexity and uptime requirements create a strong need for local, fast-turn customization. New site openings are progressing in three of the largest using metroplexes, designed to serve the Chicago, Atlanta, and Phoenix areas. These markets sit within state concentration that drives many units, and the new locations are intended to improve proximity, reduce lead times, and increase win rates by bringing install and customization capability closer to where customers operate.

We are already supporting major national accounts out of our Atlanta location, and we are confident the growth we have seen in our existing upfit locations will translate to the same new sites as volumes ramp and capacity utilization improves. At peak, we expect the additional upfit sites to generate incremental revenue in the range of $10 million to $20 million per site and gross margins approaching 20%. There is more we can do with these assets over time and into the future. I will describe how we will grow the addressable markets of each of these and future locations on additional calls.

Over time, our work to deploy digital tools, AI insight, and upfit capabilities strengthens our parts and services platform, deepens customer relationships across our products, and creates a natural pull-through for additional offerings. They also strengthen our transportation products business. In addition to recurring revenue, together they help reduce cyclicality and improve our margins. I am going to end my comments discussing workplace safety. I want to recognize the organization's continued drive for safety excellence. In Q1 2026, our overall injury rate improved 7% versus 2025, and 19% versus 2025. Total injuries declined 9% sequentially and 42% year over year. An injury rate of less than one is attainable, and Wabash National Corporation is on a mission to achieve it.

It reflects the level of operational discipline we are driving today on our shop floor and the readiness we have to perform as the market moves upward. I am very proud of our people on the manufacturing floor, and I am eager to have them show what they are truly capable of when they rise to meet the challenges and the opportunities contained within the acceleration of demand at the start of a new industry period of expansion. With that, I will turn it over to Pat for his comments.

Patrick Keslin: Thanks, Brent. I will begin with a review of our first quarter results. For the first quarter of 2026, consolidated revenue was [inaudible]. During the quarter, we shipped 5,378 new trailers and 1,527 truck bodies. As expected, challenging market conditions persisted throughout the quarter. While we did see sequential top-line growth in truck bodies from Q4 2025, that improvement was more modest than anticipated. The truck body business entered the down cycle later than traditional trailers. Based on current visibility, we now expect this segment to remain soft through 2026, with a recovery profile that trails dry vans by approximately six to nine months. Lower production volumes continued to pressure operating efficiency.

As a result, adjusted non-GAAP gross margin was negative 2.6% of sales, and adjusted non-GAAP operating margin was negative 18.3%. As a reminder, these adjusted results exclude costs associated with the idling of our Little Falls and Goshen facilities, as well as favorable purchase accounting impact from the acquisition of our marketplace joint venture. Adjusted non-GAAP EBITDA for the quarter was negative $38 million, or negative 12.5% of sales. Adjusted non-GAAP net income attributable to common shareholders was negative $47.5 million, or negative $1.17 per diluted share. These results were below expectations, driven primarily by lower-than-planned volumes.

While results were below our prior guidance, our view that Q1 represents the low point of the year remains unchanged, and we continue to expect sequential improvement as we move forward. Turning to our segments, Transportation Solutions generated $250 million in revenue and reported an operating loss of $34.5 million on a non-GAAP basis. Results reflect lower demand across core markets and the inefficiencies associated with reduced production levels. Parts and services delivered $54 million in revenue and negative $2 million of operating income on a non-GAAP basis.

Segment profitability was adversely affected during the quarter as we incurred startup costs for newly established upfit sites that have not yet begun generating revenue, resulting in a heavier cost burden as volumes are still ramping. While upfit operations were breakeven in the quarter, we have clear line of sight to growth in the coming quarters and expect strong profitability as capacity utilization improves and we meet customers where they operate. Turning to cash flow, operating cash flow for the quarter was negative $33.7 million, resulting in negative free cash flow of $37.3 million. As of March 31, total liquidity, including cash and available borrowings, was $165 million.

Throughout the ongoing market softness, we have remained focused on preserving liquidity and maintaining financial flexibility. This disciplined approach positions us to manage near-term headwinds while continuing to support our strategic priorities and longer-term initiatives. During the first quarter, we invested approximately $4 million in traditional capital expenditures, and returned $3.5 million to shareholders through our quarterly dividend. As we navigate uncertain market conditions, we are maintaining a prudent and conservative approach to cash management in 2026. Preserving liquidity and strengthening balance sheet resiliency remain central priorities. Working capital management continues to be an area of strong execution, and we are preparing the organization for an efficient working capital ramp as markets recover.

In support of this effort, we are engaged in discussions with our banking partners, and we intend to address our existing ABL facility ahead of September 2026 when the ABL would turn current. Looking ahead to the second quarter, we expect revenue in the range of $380 million to $400 million, an operating margin of approximately negative 5%, and adjusted earnings per share in the range of negative $0.40 to negative $0.60. Capital expenditures remain under close review. While we are prepared to adjust timing based on market conditions, we currently expect modest sequential growth in Q2 spending following disciplined deferral actions in the first quarter.

As we communicated on our prior call, Q1 was expected to be the weakest quarter of the year, and that expectation is reflected in our Q2 guidance. We anticipate continued improvement as we progress through 2026, with positive adjusted EBITDA expected in 2026. In summary, the first quarter reflects continued challenges and uneven demand conditions across transportation. At the same time, it reinforced the resilience of our organization and our ability to actively manage liquidity and costs in real time. We remain focused on disciplined execution, maintaining financial flexibility, and positioning the business to respond quickly and decisively as underlying market indicators continue to improve.

Our priorities remain unchanged, and we are committed to building long-term value while navigating near-term uncertainty with clarity and control. I will now turn the call back to the operator and we will open it up for questions.

Operator: We will now open the call for questions. We ask that you pick up your handset when asking a question to allow for optimum sound quality. You are muted locally; please remember to unmute your device. Our first question comes from the line of Michael Shlisky with DA Davidson. Michael, your line is open. Please go ahead.

Michael Shlisky: First, on the guidance you put out there for next quarter, are your backlogs now that we are already well past order season and well past even March fully booked for the quarter, or are you still waiting on a few orders here?

Brent L. Yeagy: Yes, good question. We have complete visibility on the backlog that went into our guidance.

Michael Shlisky: Okay, great. Thank you for that. I also want to ask about the truck body business. I assume that some of the very largest truck buyers that you make are some of the weaker areas—if I am wrong, correct me there—and what are you looking for, macro-wise, in truck bodies to really feel good that things will, in fact, get better after the next quarter or two here?

Brent L. Yeagy: Yes, so I would say that truck bodies are really being impacted across, I would say, Class 2–3 all the way up to predominantly Class 6. As we sit here today, that is the majority of truck bodies that we are going to produce. I would not say there is a tremendous difference in the classes at this point, and it kind of goes to the second part of your question. We really need to see some of the discretionary-spending-related areas pick up, which is really going to reflect in the overall sentiment of the consumer as we go forward.

I think the other parts of it are that the generation and consumption of some of the more consumable discretionary products—we are starting to see some movement in manufacturing—need to continue and hold as we move into 2027. Housing is a substantial part of the equation, especially when you think about some of the largest consumers of truck bodies to support their rental businesses, which is really predicated on the movement of people into those new homes. So the housing market is a market that we are really paying attention to right now.

Michael Shlisky: Got it. Maybe can you also update us on your current status and plan for reefers? Do you think you have to hire or get a ramp-up period to get that started again and get that rolling? And if you see improvement in demand generally—dry vans too—do you have the people that you need to ramp that up once that arrives?

Brent L. Yeagy: We will start with the dry van piece. As we approach 2027, we are in a good place in terms of installed capacity sitting here approaching midyear of 2026. With the shifts that we have running and our ability to flex those to meet initial demand, coupled with the efficiencies that we have gained with our South plant, the relative hiring needs that we will have on the early stages of the ramp are somewhat muted for us based on all those actions. Now, as the ramp continues into the later half of 2027, there will be additional hiring that will have to be done to add additional shifts, which would be expected as we meet that demand.

Specifically with refrigerated, we are still going down the process of development of a repositioned refrigerated van product. We have done low-level capital purchases in order to address long lead-time areas. We remain committed to working through a deployment schedule for that to be a material addition to Wabash National Corporation as the cycle progresses.

Michael Shlisky: Okay. Appreciate that color. I will pass it along. Thank you.

Brent L. Yeagy: Thanks, Michael.

Operator: There are no further questions at this time. I will now turn the call back to John Cummings for closing remarks.

John Cummings: Thank you, everyone, for joining us today. We look forward to connecting with you throughout the quarter. Have a wonderful day.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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