Wabash National Corporation Q4 FY2025 earnings call

Brent's Reflections - 2025 was challenging for the transportation industry, but Wabash preserved a strong balance sheet and took cost actions. Employees were commended for their professionalism. - In the fourth quarter, transportation industry conditions remained tough, with early signs of freight market stabilization but not enough to drive demand for products. - Idled manufacturing facilities in Little Falls and Goshen, resulting in $16 million in noncash charges in Q4, with additional $4-5 million expected in 2026 ( $1-2 million cash). Expected $10 million in annualized cost savings. - 2026 trailer quoting was competitive, and the domestic trailer industry has antidumping/countervailing duty petitions underway.### Mike's Comments - Parts and services segment continued to grow in Q4, with 33% Y/Y and 6% Q/Q growth. Despite margin softness, the trajectory remains intact. - Upfit business shipped ~550 units in Q4, with 2,050 units for the full year 2025, more than double 2023 volume. Opened three new upfit centers in 2025. - Expanding trailers as a service (TAS) and digital product enablement, showcasing innovations like cargo assurance and Trailer Hawk technology.### Pat's Comments - Quarterly financial results: consolidated revenue $321 million, adjusted gross margin negative 1.1% of sales, adjusted operating margin negative 13%, adjusted EBITDA negative $26.2 million. - Balance sheet: liquidity was $235 million as of Dec 31. Capital allocation in Q4 included $5M CapEx, $7M for TAS, $700k share repurchase, and $3.2M dividend. Full-year 2025 capital expenditures included $25M traditional, $48M revenue-generating assets, $34M share repurchase, and $13.8M dividend.

Transportation Solutions generated revenue of $263 million with non-GAAP operating income of negative $31.7 million, which is negative 12.1% of sales. Parts and services generated revenue of $64.5 million and operating income of $5.1 million, representing 7.9% of sales. The parts and services segment grew 33% year over year and approximately 6% sequentially in the fourth quarter, despite the broader OEM market being down over 40% from its 2023 peak.

• Provided guidance for Q1 2026: revenue in range of $310 million to $330 million, adjusted earnings per share in range of negative $0.95 to negative $1.05. - Expect Q1 2026 to be the weakest quarter of the year in terms of revenue and operating margins. - Believes full-year 2026 revenue and operating margin are likely to be higher than 2025, but no full-year 2026 guidance issued yet. Will provide additional guidance as visibility improves.

• Antidumping and countervailing duty investigations by US Department of Commerce and International Trade Commission on imported trailer products. Preliminary determination from ITC expected on or about February 6, with final determinations from Commerce Department later in 2026. - Continued soft demand in the trailer and truck body industries, limited visibility into freight market recovery timing, pace, and sustainability. - Industry working through an extended freight downturn with replacement cycles lengthening and order patterns uneven.

Q: Can you elaborate on the idling of the Little Falls and Goshen facilities, including product lines affected and exit from businesses?

A: Brent Yeagy stated they are repositioning for the improving market in 2027, not exiting the refrigerated market. Refrigerated truck body capacity is retained with existing facilities. The shutdowns are for overhead optimization and better cost structure for the upswing.

Q: What is the outlook for parts and services in 2026, including margin expectations?

A: Mike Pettit said parts and services should see nice growth in 2026 vs 2025. Q1 will be weakest for margins due to market conditions and startup costs, but margins should bounce back in the second half. Growth from upfit locations coming online in 2026 will be additive to revenue.

Q: How do the antidumping/countervailing duty investigations affect Wabash?

A: Brent Yeagy explained the process is focused on international competitors, with no material costs to Wabash. If affirmative, penalties would be on named competitors. The investigation period is roughly 2022-2024. Initial determination on Feb 6, final in October 2026.

Q: What is the CapEx outlook for 2026 and how does it relate to maintenance?

A: Pat Keslin said maintenance CapEx in 2026 is expected to be similar to 2025 ($26M), with focus on preserving liquidity and maintaining financial flexibility. No near-term investments in revenue-generating assets like TAS for now.

Q: How do tariffs impact cost of goods sold and margins?

A: Pat Keslin noted direct impact from tariffs on material cost is minimal. The main driver of margin squeeze is pricing competition to win units in a competitive market rather than material cost from tariffs.