Q4 2024 Wabash National Corp Earnings Call
Thank you for standing by my name is Kate and I will be your conference operator today at this time I would like to welcome everyone to the Wabash Fourthquarter 'twenty 'twenty four earnings call all lines have been placed on mute to prevent any background noise.
After the Speakers' 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 like to withdraw your question Press Star one again, thank you.
I would now like to turn the call over to Ryan Reed VP of Investor Relations. Please go ahead.
Ryan Reed: Thank you good morning, everyone. Thanks for joining us on this call with.
Brent: With me today are Brent <unk>, President and Chief Executive Officer and Kathleen.
Speaker Change: Cephalin, Chief Financial Officer, and Mike Pettit, Chief growth Officer.
Brent: Couple of items before we get started first please note that this call is being recorded.
Brent: 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, one Wabash Dot com.
Brent: Please refer to slide two in our earnings deck.
Brent: Safe Harbor disclosure addressing forward looking statements.
I'd also like to mention that you should see a Q&A tab on the lower right hand corner of your screen, we'd like to encourage investors to submit questions and we'll do our best to provide answers during Q&A session of our call.
Brent: I'll now hand, it off the breadth.
Speaker Change: Thanks, Ryan good morning, everyone and thanks for joining us today.
Speaker Change: As we reflect on 2024. It is clear that this has been a pivotal year for Wabash building on our record setting financial and strategic accomplishments in 2023, we continue to demonstrate the improved resilience of our business portfolio during an industry down cycle and more importantly, we continue to innovate and invest in a manner that's unprecedented relative.
Speaker Change: To the market conditions are.
Speaker Change: Our ability to maintain a strong balance sheet and stay focused on long term value creation, while navigating short term challenges and positions us exceptionally well for 2025 and beyond.
Speaker Change: We've seen the benefits of a more diversified portfolio of first to final mile solutions, which has been instrumental in stabilizing performance during a challenging market environment.
Speaker Change: While demand for dry vans has been impacted by freight market weakness.
Speaker Change: The ability of our truck body business has bolstered our broader portfolio.
Speaker Change: This diversity ensures that Wabash is less exposed to cyclical swings and better positioned to continue executing our strategy across the broad range of market conditions.
Speaker Change: In 2024, we made significant strides in laying out the strategic ground to grow our more recurring parts and services revenue streams are key part of this has been the ongoing development of our Wabash parts joint venture with Hei.
Speaker Change: Marketplace joint ventured with turn way group and the continued broadening of our ecosystem, which includes customers suppliers dealers and technology partners.
Speaker Change: As these initiatives mature they will allow us to better balance of cyclicality profile of our business portfolio and they will also transform how we deliver value to our customers from our trailers as a service offering to the seamless digital integration of parts and services together. These initiatives form a foundation for scalable growth as we move toward an exciting future for Wabash.
Speaker Change: The growth of collaboration across our ecosystem has been a key theme in 2024.
Speaker Change: By leveraging our ecosystem to navigate shifts and seeing the emerging opportunities. We're in the early innings of using our competencies as an integrator to develop innovative solutions to industry challenges.
Speaker Change: As we think about notable examples I would like to highlight our trailers as a service partnership with Kodiak.
Speaker Change: Which is redefining the world trailer solutions and autonomous logistics the.
Speaker Change: The specific example, it goes well beyond wall base to bring together dealer service capabilities and our managed care network to ensure uptime for this differentiated technology partner to focus on making advancements in autonomous driving.
Speaker Change: Strategic relationships with key suppliers have secured an access to critical components for high demand periods and positions <unk> as a leader in supply reliability and operational excellence.
Speaker Change: <unk> is working with Purdue University on an initiative called Smart Crossroads, which is our joint effort to bring transparency to a fragmented logistics ecosystem and re think how technology and collaboration across their ecosystem to drive systemic improvements.
By creating a form of diverse stakeholders to share insights and drive innovation Smart crossroads is working to address challenges ranging from data connectivity to operational inefficiencies as we rethink how business gets done this initiative lays the foundation for the kind of bold solutions the industry needs.
Speaker Change: Our goal across the ecosystem partnerships as we move beyond transactional relationships to enable networks of stakeholders to co create innovation is larger than any one organization can achieve a lot of it.
Speaker Change: But just as important as having the right strategy is ensuring that our employees are engaged and understand how their role supports our strategic focus we believe that a culture based on respect for people is the foundation of sustained success and we've taken meaningful steps to empower our team to drive the spirit of innovation throughout the organization.
Speaker Change: This commitment is reflected in key personnel appointments such.
Speaker Change: Such as moving like that it's a chief growth officer, and internally filling that role by promoting bank has won the CFO.
Speaker Change: Also like to take this opportunity to thank our outgoing chief commercial officer, Kevin Page first meaningful contributions to leadership and strategic vision. During this time with Wabash as he moves on to retirement.
Speaker Change: Specifically kevin's passion for building process that prioritizes greater levels of customer engagement and ease of doing business will leave a lasting impact on our organization again, we're fortunate to have built a deep bench of leadership talent over the years we have.
Speaker Change: Been able to promote Bruce works off to succeed Kevin as Chief Commercial Officer drew brings exceptional transportation industry expertise from his time in senior roles at C. H Robinson. Additionally, we have promoted Donald Winston Chief operating officer Diamond brings more than 25 years.
Speaker Change: <unk> leadership experience to the role these are both exceptional leaders, who enhance our strategic perspective, and strengthen our overall operational expertise and continuous improvement mindset.
Speaker Change: While these leadership changes will be critical to realizing our strategic path forward. This cannot be achieved without the efforts of every one of our employees doing a part of something bigger by being connected to a sense of unity and strategic purpose to merge digital and physical technologies to serve our customers through a connected ecosystem of partners.
Speaker Change: The path forward is not about small incremental product improvements, it's about rethinking house logistics ecosystems can work together to transform a fragmented inefficient system into a responsive sustainable and interconnected global network.
Mike: With that I'll turn it over to Mike for his comments.
Mike: Thanks, Brett I'm pleased to be able to share some key updates on <unk> growth initiatives and how we are positioning the company for long term success, our parts and services offerings often sit at the intersection of seamlessly serving our customers our first to final mile portfolio and our digital transformation.
Mike: One example of this is our truck body updated initiatives.
Mike: In 2024, we updated over 1100 bodies for customers, which provides them with a quick equipment turnaround combined with location proximity advantages versus a traditional OE sale.
Mike: This initiative has grown double digits over the past few years and we expect that will continue in 2025.
Mike: I'd like to thank the team is making this growth possible and I believe this will be a big part of our significant growth year in 2025 for parts and services.
One of the most significant areas of progress is the continued expansion of our preferred partner network for PPA.
Mike: During Q4, we announced the addition of 14 locations extending their reach of wildlife genuine parts and services to regions not previously covered by our van trailer dealers are PPA now includes partner such as blend brothers' great Western trailer North American trailer and U S trailer parts. These partnerships strengthen.
Mike: Our aftermarket support assuring our customers had access to expert service and maintenance wherever they operate.
Mike: While this dealer network has always been an incredible competitive advantage for us and these additions as well as more to be announced in 2025, while simply strengthen a very capable parts and service network.
Mike: 2022, we launched while best parts unify enhance our parts distribution capabilities. This initiative supports all transportation solutions product lines, including the <unk> platform trailers tank trailers and truck bodies by leveraging a single distribution channel with multiple centers across the U S and Canada, we built a.
Mike: Scalable system that ensure superior parts availability and rapid delivery.
Mike: Network of service partners' locations underpinned by our parts distribution joint venture is designed to maximize uptime for our customers, providing quick and reliable access to parts and services. Additionally.
Mike: Additionally, the network is being leveraged to perform maintenance and repair activities for a cash program, which I'm happy to say is showing strong momentum in 2025 with the onboarding of new customers.
Mike: Looking ahead, we're excited about the development of a lot of that marketplace is end to end digital platform launched in 2024.
Mike: Platform connects our customers dealers and suppliers, who led network designed to transform the experienced by streamlined access to parts services and trailers. This includes expanding our trailers are the service capability can include on demand trailer capacity at locations throughout the U S and a mobile inspection app to aid and damage and explore.
Mike: Hence attribution.
Mike: Our strategic initiatives in the marketplace and our parts distribution capabilities will enable us to scale rapidly positioning <unk> to serve customers at the intersection of physical and digital technologies.
Mike: Well the digital transformation journey prioritizes ease of doing business for our customers.
Mike: Also mindful of leveraging digital tools to enhance our employee experience. We believe this positive engagement loop is critical and employee engagement.
Speaker Change: Dziedzic advancement and customer experience.
Speaker Change: In closing, we're excited about our progress with embark and services and the development work that has taken place in 2020 for these emerging capability to digitally enabled path while best marketplace also provide wabash with the platform to offer customer access to a growing set of value added services. Additionally, our expanded preferred partner network enhancement.
Speaker Change: Our capacity for after sales support of our equipment, we have streamlined maintenance and repair with a full assortment of parts fulfilled by our Wabash parts joint venture with our parts and service initiatives building momentum into 2025, we believe will have a test but meaningful value creation by building a more significant base of recurring revenue.
Brian: I'll now hand, the call back to Brian.
Brian: Thanks, Mike looking ahead to 2025, we are entering the year with unparalleled strength and readiness.
Brian: Investments will create new opportunities for our customers and partners.
Brian: With our balanced more resilient portfolio, we are poised to capitalize on what the industry environment gives us to further expand our leadership in the transportation logistics and infrastructure markets.
Brian: In the short term the industry may need to contend with some incremental complexity in the form of tariffs.
Brian: I believe it's important to mention that the actions we took as an organization in response to the first round of trade tariffs have held over the past four years and we feel that our supply chain is very well positioned insulet Wabash from any direct impacts stemming from tariffs on components manufactured abroad.
Brian: Thinking more broadly about the potential impact of U S. Tariffs, we've already seen near shoring activity ramp up for multiple reasons in recent years due to the <unk>.
Brian: Panther Tariffs act as an accelerant to the near shoring trend, we believe that foreign imports of goods being replaced by North American manufacturing activity has an outsized positive impact on dry van trailer utilization.
Brian: Looking at our backlog generally I would describe bookings across most of our businesses and aligning well with our expectations industry reports have shown slow in 2025 dry van order season, thus far this coincides with customers, indicating freight market conditions are likely to follow normal seasonal patterns in 2025 with a model.
Brian: Degree of inflection during the second half of the year.
Brian: Based on this outlook the feedback we received from our customers is that they are interested in communicating throughout the year as our dry van needs become more clear rather than booking orders in the lump sum manner that tradition for the industry. This was significant because drive and specifically tend to be the largest driver of our backlog, particularly during the fourth quarter, we do anticipate drive and orders for <unk>.
Brian: 25 to continue to accrue throughout the year.
Brian: When it comes to our financial outlook. Our initial guidance is for EPS in the range of 85.
Brian: To $1 <unk> that said I'd like to be clear about what this outlook in beds and what it does it <unk>.
Brian: Generally we anticipate a year of either stability or growth across most of our businesses. We do perceive more entry year dry van orders than normal when analyzing industry demand forecast. This activity focuses heavily on replacement as opposed to fleet growth.
Brian: We take those industry demand forecast, they compare where our backlog sits currently and assuming conservative fill rate through the course of 2025.
Brian: Additionally, when it comes to backlog, we have line of sight deposit trends in businesses like parts and services as well as truck bodies, both businesses that typically carry very modest backlogs at any point of the cycle.
Brian: We're embedding a level of cautious optimism for these businesses in our guidance.
Brian: While it's easy to understand the greater levels of stability within parts and service demand truck bodies, specifically is benefiting from the accelerated demand for replacement of power equipment ahead of the 2027 EPA mandates as such customers are signaling very healthy flow of truck body orders throughout 2025.
Brian: To conclude 2024 has been a year of both resilience and transformation for Wabash, we've demonstrated our ability to perform through market headwinds while building the foundation for sustained long term growth.
Speaker Change: As we move into 2020, I am confident that our strategy focus and execution driven by our enhanced leadership team will enable us to continue our pursuit of new levels of long term value creation for our employees customers and stakeholders.
Pat: With that I'll turn it over to Pat for his comments.
Pat: Thanks, Brian beginning with a review of our quarterly financial results in the fourth quarter consolidated revenue was $417 million.
Speaker Change: During the quarter, we shipped approximately 6770, new trailers and 3010 truck bodies gross margin was 10, 3% of sales during the quarter, while operating margin came in at <unk>, 9%.
Speaker Change: In the fourth quarter, adjusted EBITDA was $21 1 million or five 1% of sales.
Speaker Change: Finally for the quarter net loss was $1 million or negative <unk> <unk> per diluted share moving on to our reporting segments.
Speaker Change: <unk> solutions generated revenue of $370 million and operating income of $17 9 million or four 8% of sales.
Speaker Change: Carson services generated revenue of $48 6 million and operating income of $4 5 million or nine 2% of sales.
Speaker Change: Full year operating cash generation amounted to $117 million aided by a working capital release during the year.
Speaker Change: Free cash flow for 2024 was $38 million as traditional capital expenditure reduced from peak levels in 2023, a trend we anticipate continuing in 2025.
Speaker Change: Regarding our balance sheet, our liquidity, which comprises both cash and available borrowings was $422 million ending December 31, we.
Speaker Change: We finished Q4 with a net debt leverage ratio of one seven times.
Speaker Change: Turning to capital allocation during the fourth quarter, we invested $21 million via capital expenditure and invested $6 million in revenue generating assets for our trailers as a service initiatives.
Speaker Change: Utilized $8 6 million to repurchase shares and paid our quarterly dividend of $3 5 million.
Speaker Change: Full year, we invested $72 million in traditional capital expenditures invested $7 million in revenue generating assets allocated $64 million to repurchase shares and returned $14 $8 million to shareholders via our dividend.
Speaker Change: I'd like to take a moment to drill down on share repurchases as we are proud of our consistent track record of repurchase activity we.
Speaker Change: We took out approximately two 9 million shares during 2024, which equates to a reduction of about 6% of diluted shares.
Speaker Change: Zooming out further over the last five years, we've repurchased over 12 million shares which has reduced our share count by 22%.
Our capital allocation framework will continue to prioritize capital expenditure above and beyond our annual maintenance capex spend of $20 million to $25 million in order to support our organic growth initiatives. We are also committed to maintaining our dividend and we will continue to evaluate.
Speaker Change: <unk> for share repurchase alongside of bolt on M&A.
Speaker Change: As you May recall, we recognized an aggregate liability of $462 million in Q3 2024. After the jury ruled against us from a product liability trial in St. Louis.
Speaker Change: The trial related to a 2019 motor vehicle accident in which a passenger vehicle traveling at least 45 miles per hour struck the back of a near stationary 2000 and for Wabash trailer.
Speaker Change: Plaintiffs claims that the rear impact car on the trailer was effective even though the rare impact guard was designed and developed in full compliance with applicable federal regulations.
Speaker Change: One other errors committed at trial the judge erroneous, we excluded all evidence regarding the drivers intoxication and plaintiffs failure to wear seat belts at the time of the accident for these and other reasons why bash maintained that the verdict. In this case is not supported by the facts or the.
The law the company has filed post trial motions available on the public docket and we continue to evaluate all legal options.
Speaker Change: We did incur an incremental $1 million of legal expense relative to our prior guidance within fourth quarter SG&A related to our activities around this earnings.
Speaker Change: We are baking and continued elevated legal spend in our 2025 SG&A outlook will continue to provide regular updates as they become relevant for this verdict as well as callout any deviations and anticipated legal expense.
Speaker Change: Moving on to our outlook for 2025, we expect revenue of $1 9 billion to $2 1 billion with a midpoint of $2 billion.
Speaker Change: We continue to expect truck bodies tank trailers and parts and services to serve as sources of relative strength in 2025, we expect meaningful revenue growth in our parts and services segment as freight market conditions stabilize.
Speaker Change: Additionally, it's worth calling out that our truck body business is poised to benefit over the coming two years from 2027, EPA mandates that will impact engine economics.
Speaker Change: From an operating income perspective, we expect to generate $80 million at the midpoint or approximately 4% operating margins, we expect to see about $5 million of expense for our Wabash marketplace joint venture run below operating income during 2025.
Speaker Change: Assuming a tax rate of roughly 25%. This results in an EPS outlook of 85 to $1 five.
Speaker Change: With a midpoint of 95.
Speaker Change: Moving on to capital deployment expectations for 2025, we anticipate traditional capital investments to be between 50 and $60 million in 2025 as a result of planned expenditures to support our strategic growth initiatives.
Speaker Change: We anticipate that investment in our test fleet will increase from 2024, and we will give further granularity as that figure comes into focus.
Speaker Change: As a reminder, typical for Q1 to be our lowest quarter in terms of revenue and EPS generation in.
Speaker Change: In addition to some SG&A expense that runs through the P&L in Q1, we believe that seasonality will be more pronounced this year as you've likely heard commentary from carriers related to relatively modest first quarter expectations.
Speaker Change: We believe our demand patterns in 2025 are likely to play out in a similar fashion and we expect first quarter revenue to come in between 420 million to $450 million and EPS to be in the range of negative 20 to.
Speaker Change: The negative 30.
Speaker Change: As Brent mentioned 2024 has been an important year for Wabash, both in demonstrating the improved resilience of our business portfolio as well as continuing to generate strategic progress that will allow <unk> to deliver value to customers by combining innovative equipment offerings with.
Speaker Change: A growing set of value added services by.
Speaker Change: By executing against our strategy, we believe we will be able to enhance the company's financial performance at cycle trough cycle peak and all phases in between I will now turn the call back to the operator, and we'll open it up for questions.
Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad will loss ratio as a moment to compile the Q&A roster.
Speaker Change: Your first question comes from the line of Mike <unk>.
Speaker Change: <unk> with D. A Davidson. Please go ahead.
Speaker Change: Good afternoon, and thanks for taking my questions here.
Mike: Hey, Mike.
Mike: Hey, there.
Mike: I wanted to start off just a quick thought about the guidance that you just provided.
Mike: It looks like you've got potentially at the midpoint at least a small increase in the revenue side, but then <expletive>.
Mike: A decline in the margin.
Mike: I'm curious if you can just give us a little more granular detail as to why that might be taking place.
Mike: Some of the investments that youre, making ongoing in 25 or mix changes or what might be behind that phenomenon.
Mike: Yes, Mike pad here I will say.
Mike: If you were to Peel back the expense side.
Mike: And take a look at our SG&A guide if there is going to be a delta year over year.
Mike: <unk> two variable compensation expenses.
Mike: And then as I just alluded to <unk>.
Mike: Legal expenses related to the to the verdict will also be a headwind for us in 2025 as it relates to margins.
Mike: Okay great.
Mike: And then Brent as you discussed.
Mike: The freight market.
Mike: <unk> bin.
Mike: <unk>.
Speaker Change: Challenging moment, David maybe talk about some of the Kpis that you and the team track.
Mike: On a regular basis.
Mike: I know you always give us kind of your view, but but what.
Mike: What kpis look the most promising right now and which kpis, but maybe the least.
Mike: The least promising.
Mike: And what should we be kind of watching for to see when we will start seeing a true inflection in trailer orders.
Mike: Yes, great question.
Mike: As you can imagine over the last.
Mike: Just say decade, we've had a lot of opportunity to think about watch what are our leading indicators and things that we can look at to try to be better predictors of what's the future brings.
Mike: As we sit here today, Mike I would say one of the things. We've we're really focused on is the underlying.
<unk> segment generators of freight.
Mike: Within the overall carrier landscape, so what I mean by that is there are.
Mike: Arguably 40, plus different subsectors of freight generating.
Mike: Activity in the United States.
Mike: Some are much more important than others in terms of where it creates.
Mike: We'll call it overall freight volume regional freight volume and its effect on rates in general.
Mike: And.
Mike: What youre seeing right now and what we're looking for is that there are there should be a subset.
Mike: Those sub site freight drivers that are beginning to move in a positive direction.
Speaker Change: We're saying that those were not moving to actually we're going the opposite direction.
Mike: This time last year.
Mike: And that was that's a fundamental difference from where we're at today than where we were a year ago.
Mike: So that gives us underlying.
Mike: What I want to say.
Mike: We'll call it conservative optimism in terms of the market is beginning to turn because thats really where the market starts to turn is there.
Mike: And then those carriers that are more exposed to those sub sectors will tend to do better <unk> and.
And we can somewhat feedback by the conversations we're having with our customers and we think that's a more straight line linkage to what really drives the market than some of the lagging indicators that we have ended the use that we would see like tonnage numbers, Jim the rate themselves are <unk> dog and <unk>.
Mike: Or what really gives you a first indication of the market moving.
Mike: Hope that helps.
Oh absolutely.
Speaker Change: Appreciate those comments, maybe one one last one for me I appreciate your comments about the seasonality in the first quarter.
Speaker Change: Can you just a little bit of more granularity about the rest of the year strictly.
Speaker Change: What just took place in the fourth quarter. It was one of the lowest quarters for the industry in quite some time you also had a challenging quarter on your shipments to <unk>.
Speaker Change: Do you think that we should see a positive quarter in the fourth quarter and would you anticipate potentially other quarters of the year being up.
Speaker Change: Yes.
Speaker Change: Yes, let me try that one I would say.
Speaker Change: In general.
Speaker Change: Yes, we absolutely see that.
Speaker Change: Well costs are being put in the balloon over the course of 2025 as the market begins to.
Speaker Change: Gradually pick up steam.
Speaker Change: And so I'm not going to go as far as trying to do year over year as at this point I would just say momentum should build throughout the year.
Speaker Change: The fourth quarter of 2024, So let me reiterate 2024.
Speaker Change: It was a.
Speaker Change: Most of it very specific of that relative to.
Speaker Change: A declining market.
Speaker Change: That just could not sustain itself moving into the fourth quarter.
Speaker Change: We should be in a different place going into 2025 for the reasons. We just talked about so I would not anticipate.
Speaker Change: The amount of paywall for tail off in general that we saw in 2024 that should not happen.
Speaker Change: And so just kind of to the previous statement I think it's just a it is a general glide up throughout 2025.
Speaker Change: And that is all setting itself up for.
Speaker Change: Our 2026 as people begin to move into full replacement and incremental growth.
Speaker Change: Based on what we see starting to <unk>.
Speaker Change: Joe the proverbial green shoots that we really do see right now and there is a real dichotomy going on out there between what carriers are saying and doing.
They want to be very positive many of them know it's more positive than it was this time last year, but they don't really want to say it because they got burned so hard last year.
Speaker Change: Sure.
Speaker Change: And believe me I understand that one.
Speaker Change: But there really is a level of <unk>.
Quiet optimism.
Speaker Change: We're seeing the right things turning.
Speaker Change: Got it.
Speaker Change: I appreciate all those comments, Brent and I will pass it along thank you.
Mark: Thanks Mark.
Speaker Change: Your next question comes from the line of Jeff Kauffman with vertical Research partners. Please go ahead.
Thank you very much.
Jeff Kauffman: I was wondering if we can get a deeper dive on the fourth quarter and what happened the profit margins because not just in the core trailer business, but also in the parts business. It just seemed like a much weaker fourth quarter than one would have expected given the revenue should put on the board.
Speaker Change: On parts, specifically, Jeff we had it we had a couple.
Jeff Kauffman: I'll call. It one time activity events that happened in Q4 that won't repeat.
Jeff Kauffman: About the full year I've been talking for the last year about we would expect parts and services to be high teens EBITDA margins I think we were about $18 five fully area that I.
Jeff Kauffman: I would expect that.
Jeff Kauffman: To pick back up in 2025. So it was there was there were a couple of things that happened towards the end of the year that.
Jeff Kauffman: We would not expect a rolling 25, so we.
Jeff Kauffman: We would be back on that high teens fab like that for 2025 of our services as far as yes.
Jeff Kauffman: Overall, it really does come down to the volume leverage there where fourth quarter was was our lowest in the transportation solutions segment, Bolton and trailers and truck body.
Jeff Kauffman: Certainly impacts margins.
Jeff Kauffman: Well I would think as new units being purchased as much older units are little more parts.
Jeff Kauffman: So just a little surprised by that.
Speaker Change: Mike how big is the costs right now and where do you expect that to be at the end of next year.
Speaker Change: Yes, so right now it's still.
Speaker Change: So it's in that.
Speaker Change: Between 500000, there's a different phases of full service capabilities that we've been rolling out for the last couple of years.
Speaker Change: It will grow who believe relatively significantly this year its going to trend obviously with some of the dynamics that Brian was talking about.
Speaker Change: In terms of the early early indications are that they're going to need.
Speaker Change: Our customers need capacity.
Speaker Change: Ask you on the first levers there Paul.
Speaker Change: And we've got several customers now that have a.
Speaker Change: A small number of tasks units in their fleet, but what we're excited about we have a growing customer base that has some tax units in their fleet. So they see the capabilities of those we could see that hit an inflection point mid year, we're not giving official guidance on unit count for 2025, but we would expect to update that as we've seen the market unfold.
Speaker Change: And then in Q1 and Q2 and we'll give we'll provide further guidance on the next couple of calls what we think that will be Mike maybe you can give some insight just into.
Speaker Change: I'll call it new customer acquisition.
Speaker Change: Early stage Onboarding just in the last 45 days.
Speaker Change: Yes, yes, yes, so it trends with what we've seen on.
Speaker Change: The markets.
Speaker Change: You may be seeing some early signs of life. We have we have brought on.
Speaker Change: Several new customers just in the last 45 days again, it's a small unit count, but new customers that we believe could be much larger users of task and we're also developing some capabilities.
Speaker Change: Look for some <unk>.
Speaker Change: There's a analysis of next couple of weeks of additional capabilities that we think will be key to the.
Pass up in longer term, how we can help our customers.
Speaker Change: With some of their logistics needs around security and surety.
Speaker Change: So that's all happened it happened pretty quickly and we think that it is.
Speaker Change: Is going to be a positive trend throughout 'twenty.
Speaker Change: One more question for Brent.
Speaker Change: Kind of go back to 10000 feet and look at whats going around around in the market.
Speaker Change: Well, we tariffs, but we're not tariff not 100% sure but.
Speaker Change: You have less of a footprint in Mexico than most of your competitors that bill trailers for a living.
Speaker Change: And I guess the second part of that is trailer pools were a big deal a few years ago that talk went away in the downturn, but listening to some of the trucking companies.
Speaker Change: They're talking about trailer pools still being a thing so separate from kind of what happens if we tariff Mexico and does that change your competitive position.
Speaker Change: What are customers, saying to you about tariff.
Speaker Change: Alright trailer pools right now.
Speaker Change: Great those are two good questions.
Speaker Change: Let's start with tariffs.
Speaker Change: Yes, Wabash on.
Speaker Change: Two different fronts are extremely well positioned relative to whatever happens from a tariff standpoint, so let's go.
Speaker Change: Our supply chain side first we made substantial strategic changes at our supply chain construct coming out of the 2018.
Speaker Change: Truck tariff on slot and so we have dramatically dramatically reduce our exposure.
Speaker Change: To that to make it almost de Minimis.
Speaker Change: At this stage. So we are very we have built quite a moat around the incoming supply tariff risk.
Speaker Change: We know our competitors are still substantially exposed to that tariff risk.
Speaker Change: Across many different dimensions, so we feel pretty good about that.
Speaker Change: From a.
Speaker Change: Manufacturing location standpoint, we have one facility.
Speaker Change: That has.
Speaker Change: Some level of exposure to.
Speaker Change: Potential tariffs on Mexico.
Speaker Change: Our competitors have substantially more exposure than we do.
Speaker Change: And we have available capacity in our domestic operations to shift production as needed to minimize those tariff impacts if they were to occur.
Speaker Change: So we we.
Speaker Change: Watch them very closely we don't know exactly how they will or construct or how long.
Speaker Change: But we know that we have.
Speaker Change: Put the right pieces in place to manage it one way or the other so we're not overly concerned at this point.
Speaker Change: Alright, and then trailer pools customer discussions.
Speaker Change: To hear a couple of truckers actually talking about trailer pools.
Speaker Change: Call it power by the hour I guess, but.
Speaker Change: So yes, so the treadmill of pools of growth concept yet yes.
Speaker Change: Yes, so trailer pools as a concept are absolutely still in play you are right the rhetoric and kind of the momentum of it stalled as the market began to.
Speaker Change: Constrict, but the concept is still there because it's extremely valid and re making up the called the asset management model and cost model.
Speaker Change: And the flexibility.
Speaker Change: For these fleets that is going to continue forward and what we're finding is it is changing the way that we can position the task fleet going forward as many of the inquiries that we're having are from larger shippers and carriers that are seeing now different ways in which they can.
Speaker Change: Construct layers of a trailer pool concept.
Speaker Change: So we see that still we will see that we believe we will see that.
Speaker Change: Yeah.
Speaker Change: Trend slash concept grow and become much more publicly talked about once the market kind of gets into full swing as we approach second half 'twenty five going in 'twenty six and that's a lot of inquiries again, we've had our people are wanting to experiment around the edges because they see.
Speaker Change: More efficient model for them.
Speaker Change: Possibly layering in task as part of that solution Mike.
Speaker Change: Yes, Im just going to add so task can solve a lot of our customers' needs with our carriers and shippers, but fundamentally it really plays well as a solution for a customer that wants to deploy available and that's that's a place where we think it will continue to grow at scale in some of the same things you are hearing Geoff or some of the reasons why of optimism as we add.
Speaker Change: <unk> to pad it will drive demand for that for that product to our customers that are looking at when when Mike talks about things that will drop and capabilities, we're creating just providing a physical trailer in a pool concept. What we're finding is not enough and what you have to do is think about every barrier.
Speaker Change: <unk> that it takes to seamlessly annually high flexibility and with speed being able to get that asset upon you call a declaration of need to revenue producing.
Speaker Change: So the ecosystem.
Speaker Change: And the marketplace, what we're doing is constructing this landscape.
Speaker Change: Pieces that make it easy frictionless.
Speaker Change: Hey, I can create revenue if I just had.
And then we can provide the rest of the equation to get them, making more money.
Speaker Change: Okay.
Speaker Change: Good luck and thank you.
Speaker Change: Thanks, Jeff.
Speaker Change: That concludes our Q&A session I will now turn the call back over to Ryan Reed for closing remarks.
Speaker Change: Thanks, Kate and thanks for everyone joining us today, and we'll look forward to following up during the quarter.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
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Speaker Change: Yes.
Speaker Change: Yeah.