Wabash National Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Wabash First Quarter 2023 earnings call. I would now like to turn the call over to Ryan Reed, Senior Director of Investor Relations. Please go ahead.

Thank you and good morning, everyone. We appreciate you joining us on this call. With me today are Brent Yagey, President and Chief Executive Officer and Mike Pettit, Chief Financial Officer. Before we get started, please note that this call is being recorded. I'd also like to point out that our earnings release, the slide presentation supplementing today's call, and any non-GAAP reconciliations are available at ir.onewabash.com. Please refer to slide two in our earnings deck for the company's safe harbor disclosure addressing forward-looking statements. I'll hand it off now to Brent.

Thanks, Ryan. Good morning, everyone, and thanks for joining us today. We are extremely pleased with our record first quarter results. Importantly, these results highlight the last four years of hard work we've undertaken to effect structural improvement in our business in the lead up to this moment in time. Customer portfolio reshaping, a significant redesign of our organization and reporting structure, a new customer-centric go-to-market approach, including an improved pricing construct and long-term customer agreements, matched on the sourcing side with retooled and relationship-based strategic agreements with key suppliers. We have reimagined our production capacity and are also acting to increase our recurring revenue exposure by achieving our rightful share in parts and services, having already laid the groundwork through our parts and distribution joint venture. All managed through a purposely crafted lean-based management system and a strategic deployment process that mutually act on the business each and every day, to drive execution and bring our strategy to a measurable reality. My team and I believe strongly that the changes made to date have significantly brightened the future prospects of our company. Our way of managing the business does not rest, and we have more work to do and opportunities to harvest. While progress is easily indicated by our first quarter performance, what really drives long-term value is the fact that our management system works to benefit customers, suppliers, employees, and communities and shareholders together. During the first quarter, we continued our steady pace of execution against our strategy. As I've mentioned before, we see our industry-leading dealer network as a meaningful competitive advantage that is unique in our industry. Our dealer network is also a key enabler to the success of our parts and service initiative. Ultimately, we succeed by facilitating our dealer success and in order to ensure optimal alignment of our collective incentives, We launched our ambassador program for our dealer partners during the first quarter. We believe this is a foundational step to sustaining the impressive rates of growth we've shown in our recurring revenue parts and service business. Also during the first quarter, we continued to advance our trailers as a service program by launching a subscription service with Loadsmith, a digital broker founded by a team with significant shipping and transportation industry experience. This relationship builds on our initial trailers as a service relationship with Freight Bonnet, which was our initial trailers as a service customer and their relationship has provided a great learning and market exploration opportunity. We believe we can continue to help remove waste from the logistics system with trailers as a service while also building a flywheel that pulls on many areas of our parts and service offerings. Trailers as a service is an excellent example of how our dealer network helps us with national scale to provide service support within this program while we create new opportunities for our dealers to help them broaden their revenue base. Finally, following considerable heavy lifting by our employees and partners, our Lafayette-based South Plant is now ready to begin initial production of dry van trailers. Production is beginning at low levels as we run off and validate all processes and as we develop the workforce on the new and exciting equipment in the facility. Having personally walked the new line and reviewed the new processes several times over the last 30 days, I'm pleased to say that this will be our most modern plant and certainly our most efficient capacity. What is also very clear is that this new dry van capacity provides us with the opportunity to upgrade our legacy dry van manufacturing assets for both capacity and efficiency. Meaningful upgrades were not previously possible given the year-in and year-out burden our legacy facility felt, running three shifts even at mid-cycle levels. This is a key reason we decided to make this capacity investment, and we're very pleased with the outcome. Our backlog has served as another proof point of our strategic progress, making a step change during the fourth quarter of last year as long-term customer agreements entered the picture. Our backlog remained very strong at $3.1 billion during the first quarter. Strong shipment activity modestly outpaced new orders in Q1, which was not a surprise. While we have somewhat limited visibility on real-time demand conditions given the strength of our backlog field, we follow macro conditions like everyone else and certainly pay attention to the commentary of our customers. With a backdrop of an aggressive Fed and recent banking issues complicating the macro picture, I believe the consensus view has shifted somewhat from a freight market rebound during the second half of 2023 to a view where most are hoping to see some positive trajectory return by year end. Clearly, spot rates have been under pressure since the beginning of 2022. That said, the vast majority of our customers, both direct and indirect, are tied to contract rates, which tend to be more stable. Contract rates have certainly experienced some pressure due to the overarching imbalance in freight demand and capacity as the ongoing inventory correction plays out. In this environment, it's natural that customers will diligently manage their capital spending We believe trailers will remain a relative priority if carriers and shippers know the long-term pain it creates to allow their fleet age to step up. Between trends like power only, nearshoring, persistent driver shortages, and so on, we feel that our space is structurally very well situated. We also know that our carefully selected customer base is well capitalized, remains profitable, and is positioning for long-term growth. As we progress through the year, we will continue to provide candid commentary on what we see from market conditions. In particular, our line of sight to a strong 2023 remains clear. With a very strong Q1 on our books, we are raising our 2023 earnings per share to a range of $4 to $4.50. Whether you're a member of the investment community that has followed Wabash for many years, or maybe only a few quarters, I hope you recognize our underlying pace of strategic progress and improvement in overall execution all the same. We are acting on this company to strengthen its business fundamentals and those changes have become increasingly clear through the strategic milestones we've achieved as well as the strength of our financial results over the last couple of years. The acceleration of results from our strategic efforts is the key takeaway I hope you are left with when evaluating our first quarter and future prospects. I think it's fair to say that most financial models do not have law bias generating our 2023 EPS guidance of $4.25, even at peak levels. I also think it's important to point out that the implied trailer production and our financial outlook remains in the range of 20% below our maximum capacity, suggesting peak earnings levels that are significantly in excess of our current guidance. And that's before we figure in any accretion from continued execution of known as well as upcoming strategic improvements in their business. I'd like to close by thanking our team members who have not only underpinned our quarterly execution, but more importantly, their belief in our strategic direction has and continues to push the impressive rate of change seen within Wabash. With that, I'll hand it over to Mike for his comments.