Wabash National Corporation (NYSE:WNC) Q4 2022 Earnings Call Transcript

Brent Yeagy: I just want to reiterate that our management system is based on the fact that all of the existing value streams have to provide continued improvement, top line and margin growth as we go forward. We’ve done the pruning of the portfolio to-date to get us to where we have extreme focus. Results show that, and there is no area that we have more focus than parts and service right now. So that all aligns with what Mike said, but it is a very purposeful construct in the way we do business here now.

Justin Long: Got it. And I guess the last one for me, there are clearly secular demand drivers that are driving strength in your business and backlog right now. I’m just curious if that’s resulting in any change in the competitive landscape, are you hearing anything about competitors adding capacity, new entrants, et cetera or would you say that competitive landscape is essentially unchanged at this point?

Brent Yeagy: I’d say, based on what we see, we see it as unchanged, the same barriers existed six, nine, 12 months ago, it’s still access to labor and a supply chain that is able to support overall capacity gains. Remember that the capacity that we’re adding specifically on dry vans and, I don’t know, tank operation, we are redeploying existing labor for the most part or in case of Mexico in a place where labor is available. And speaking to the two 10-year agreements plus others that we are – that are little bit more traditionally but yet still profound, our supply base is responding to our call for added capacity that we’re really the only ones positioned to do this at scale right now.

Operator: The next question is from Mike Shlisky with D.A. Davidson. Your line is open.

Mike Shlisky: Yes, hi. Good morning and thanks for taking my question. I’ll start off with a question on the truck body business. They were down quarter-over-quarter in the number of units shipped, but we keep hearing that chassis supply from the OEM’s got a bit better during the last two weeks of December. So I was wondering if you could comment on how supply looks to start the year here at Wabash, and would you expect to see some good growth in the number of truck body that you get out the door to customers in the first half of 2023?

Brent Yeagy: Yes. Thanks, great question. We alluded to it on our last call when we talked about what did the supply of chassis look like and it’s early signs of chassis flow improving. And that was, yes, they are improving but the actual flow in terms right chassis right time wasn’t substantially improving. So what we saw across that truck body industry was chassis flowing in and sitting on a lot and unable to match the entire supply chain to get finished product flow. So what that means is less chassis on the yard for our customers and not a great ability to get those to flow through the business in terms of shipments. What we have seen through the fourth quarter as we come into the first quarter as we’re starting to get back on track and we’re seeing the actual improvement in the sequencing and the on-time delivery, where the right chassis are beginning to show up and that’s why we’re confident that we should see the targeted truck body growth that we expect in 2023.

Mike Shlisky: That’s great Brent. And then moving onto Parts & Service, I really liked how Parts & Service, the mix helped you in the fourth quarter here, you’ve got – so it sounds like you’ve got some pretty good expansion plans for 2023 as well. So can you maybe comment on whether margins could expand in churn in that segment, if you see that’s good constant growth there in the coming year?