Wabash National Corporation (NYSE:WNC) delivered another beat in the first quarter of 2019. Wabash saw margin expansion take hold and accordingly saw a boost in free cash flow for the quarter. The company plans to use new cash to pay down debt later in the year, which will help boost future returns by eliminating interest expense. The company continues to see improving margins and has provided guidance for between $1.50 and $1.70 for the full year 2019. The company is working to diversify its revenue streams to mitigate the impact on the cyclicity of the commercial trailer market.
Source: Wabash National Corporation
Earnings
The company reported earnings for the first quarter of fiscal 2019 on May 1, with $0.27 per share, which came in ahead of Wall Street’s expectations. This is a decline year over year from $0.35 per share in 2018, though those earnings were higher due to $7.9 million in ‘other income’. Actual gross profits for the quarter were 7% greater than the quarter a year ago, and income from operations was essentially flat, only decreasing slightly YOY. The company also saw gross and operating margins increase from last quarter, though lower than quarter one of 2018, largely due to increasing raw material costs as well as supply chain issues. The company announced measures, such as raising pricing in accordance with rising prices and improving supply chain efficacy, to address short-term pressure on the company’s margins in the fourth quarter. These efforts have begun to take hold and should continue to be reflected in improved margins throughout 2019.
Looking Forward
Free Cash Flow, Debt, and Dividend
The company’s free cash flow conversion for the quarter was 182% for FCF of $27 million. The company said in its earnings call that it plans to use its cash build up
