Wabash National Corporation

Thank you for standing by. I am Augusto and I will be your conference operator today. At this time, I would like to welcome everyone to the Wabash Second Quarter 2024 Earnings Ball. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would withdraw your question, press star one again. I would now like to turn the call over to Mr. Ryan Reed, Vice President, Corporate Development Investor Relations. Please go ahead.

Thank you, and good morning, everyone. We appreciate you joining us on this call. With me today are Brent Yeagey, 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 Slide presentations 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. Beginning with the second quarter of 2024, while our quarterly revenue was at the lower end of our previous guidance range, Our earnings per share surpass our outlook on stronger margin performance. Our team has continued to execute well during this transitional year for the industry, and I'd like to commend our employees for their efforts. As we acknowledge that 2024 will be a down year for the industry, this underscores the importance of the strategic changes we have made at Wabash over the past several years. By streamlining our organization, optimizing our overall customer portfolio, solidifying our balance sheet and narrowing our strategic focus to the transportation, logistics, and distribution markets. We have positioned the company to pursue higher margin and more resilient revenue opportunities. Nothing speaks to this more than our strategic focus on parts and services and the developmental work taking place in 2024. So we are excited about our emerging capability to digitally enable trailers as a service through our Wabash marketplace. which provides us the platform to provide additional value-added services to our customers. In addition, we can now connect all of our customers to our Wabash Preferred Partner Network for Maintenance with a full assortment of parts fulfilled by our Wabash Parts Joint Venture. With digitally linked and Wabash structured services coming together to begin scaling in 2025, Wabash is positioned to continue raising both the floor and the ceiling on financial performance. Parts and services is more stable than transportation equipment, And as these emerging revenues scale, they will provide a critical stabilizing force within our financial performance. But our strategic focus on parts and services ultimately ties back to the equipment side of our portfolio. Given the ongoing conditions in freight, it is worth analyzing our portfolio of first to final mile equipment to recognize that drivers and market activity do vary across verticals. On this call, we are all well aware in how demand for dry vans is certainly influenced by changes in general freight market conditions. However, very meaningful parts of our equipment portfolio, such as truck bodies and tank trailer businesses, are influenced by different market drivers. For example, our tank trailers are utilized by end customers for specialized calls such as chemical or dairy, which are part of supply chains that demonstrate significantly more stability over time compared to general freight conditions. Within our truck body business, these pieces of equipment are used for a wide range of transportation, logistics, and distribution applications, from middle-mile warehouse redistribution to home delivery. This diversity means the truck body is not driven by the over-the-road freight rates, but a much broader set of demand drivers. Extensive strategic planning has gone into shaping our current equipment portfolio, and we are now reaping the benefits of this diversity and the varied factors that influence demand and profitability across our transportation solutions portfolio. Wabash is not pursuing a single market, and we should not be measured in that manner. Instead, we are developing a more resilient and diverse array of products and services to serve a dynamic range of customers from first to final mile. It's not about doing more of the same. It's about boldly taking the necessary steps to build a foundation of business resilience and growth. This approach will enable us to continue our trajectory of higher highs and higher lows in financial performance. Turning to market conditions, we see pockets of both strength and weakness. But on balance, I believe there's optimism about what lies ahead. Our drive-in customers have had little relief from the ongoing freight recession, although the truckload market seems to be experiencing return to normal seasonality, a positive waypoint on the path to recovery. That said, customers have still revised their capital expenditure plans downward for the balance of this year. The unfolding reality of 2024 is certainly at odds with how most thought the back half of 2024 would bring moderate improvements in both demand within the freight market as well as freight rates. While important macro indicators like industrial production have turned positive and inventory levels have moved from a state of excess to balance, it will take some time for these supporting factors to manifest in the freight markets. Also on the macro outlook a bit further out, I'd like to address the narrative of heavy-duty truck pre-buy potentially impacting carrier spending on trailers. While we agree that the economics underpinning the EPA's 2027 emissions mandates could temporarily boost demand for trucks above trend, We don't anticipate a significant diversion of capital from trailers to trucks. Additionally, these EPA mandates impact certain chassis classes that receive wall-based truck bodies, and we do expect this segment to remain strong over the next few years. I'll continue to emphasize that over the long term, we remain bullish on higher trailer to tractor ratios being driven by persistent secular trends like power-only operations, driver shortages, and nearshoring. The increase in freight inefficiency is only set to grow. Many shippers are specifying higher trailer-to-tractor ratios in their RFPs, which will only amplify this impact into the future. Shifting focus to our backlog, at the close of the second quarter, we had a total of $1.3 billion in orders, with $1 billion of that figure expected to be shipped in the next 12 months and a significant portion of that earmark for 2024. While our backlog indicates softer customer capital expenditure intentions for 2024, It is also typical to see a seasonal pullback in orders during the summer months as carriers prepare for large deal season, which traditionally occurs in the fall timeframe as they begin to shift focus to 2025. Moving on to our financial outlook, with greater information on customers' CapEx plans, we are reducing our full-year 2024 guidance to a midpoint of $2.1 billion in revenue and a midpoint of $1.55 in EPS. As we have continued to refine our financial outlook for the year, it is important to remember that our overarching theme remains unchanged. Wabash is on track to achieve the best financial performance on record during correction in our industry. Finally, I'd like to touch on capital allocation priorities for both the second quarter and full year. Given the significantly positive free cash flow we anticipate generating this year, we are well-positioned to constantly invest in the company's strategic growth initiatives. which we will continue to elevate Wabash's financial performance. Additionally, we've increased the pace of our share repurchases during the second quarter, taking advantage of what we have viewed as a compressed valuation. We expect to continue making opportunistic repurchases as the company's long-term and even medium-term earnings potential and free cash flow generation does not seem to be fully reflected in our most recent valuation. In closing, We continue to remain agile, adjusting our operations to align with the current market reality. That said, Wabash is benefiting from enhanced portfolio diversity within our set of first to final mile equipment, driven by influences far beyond general freight conditions. With a significantly less cyclical parts and service business, Wabash is well positioned and focused on building for the future. To reiterate, our EPS outlook midpoint of $1.55 falls squarely in the middle of the financial performance of peak years like 2018 and 2019, reflecting the resilience we have built within our portfolio and the structural improvements we have made to our base business. Wabash has never been better positioned to capitalize on the next period of freight expansion. We are focused on continuing our progress toward achieving outside strategic growth that is both more resilient and more profitable. With that, I'll hand it over to Mike for his comments.