A long-term trailer supply agreement with J.B. Hunt Transport and another, unannounced multiyear deal helped cement record fourth-quarter revenue and income for Wabash.
Wabash set higher bars across the board in Q4:
For the full year of 2022, revenue totaled $2.5 billion with operating income of $166.6 million, or 6.7% of sales. Both were records.
The West Lafayette, Indiana-based equipment maker projected 2023 revenue of $2.9 billion and diluted per-share earnings of $2.85. It already has booked $600 million in orders for beyond 2023 because of the focus on long-term agreements with select customers. Two more large deals are expected to be announced before the end of March.
New orders outpaced Q4 shipments in part because of the J.B. Hunt multiyear agreement. Wabash delivered 13,310 trailers in 2022 compared to 11,655 a year earlier.
“Although 2022 will go down as the most successful year of financial performance the company has achieved so far, the groundwork to enable this execution has been in place since 2019,” Wabash CEO and President Brent Yeagy said in a news release. “With the partnership of strategic customers like J.B. Hunt, we are jointly exercising a new level of control over our destiny.”
Seeking recurring revenue through longer-term agreements allowed Wabash to make pricing more transparent to customers, something unworkable with fixed prices.
“The longer term agreements prioritize capacity for our customers who have the forward conviction around their equipment needs to engage in collaborative, multi-year demand planning,” Yeagy said.
Trailer demand remains strong despite falling freight rates, he said on a conference call with analysts.
“With underbuys in prior years and supply chain constraints remaining into 2023, implied demand for this year is still likely to outstrip supply,” he said.
And that doesn’t count demand from national trailer pools that support drop-and-hook activity brokerages that handle only power units. If autonomous trucking catches on in the next few years, Wabash could benefit from more organic business.
“We believe substantial scarcity remains in the marketplace,” Yeagy said.
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