Q2 2025 Wabash National Corp Earnings Call
Unknown Executive: Thank you for standing by.
Jeanne: My name is Jeanne and I will be your conference operator today. At this time, I would like to welcome everyone to the Wabash Second Quarter 2025 Earnings All lines have been placed on mute to prevent any background.
Thank you for standing by. My name is Jeanne and I will be your conference operator today.
At this time, I would like to welcome everyone to the wall Bosch second quarter, 2025 earnings call.
Jeanne: After the speaker's 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 1 again. Thank you.
All lines have been placed on mute to prevent any background noise.
After the speakers are marked, 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 1 on your telephone keypad,
If you would like to withdraw your question, press star 1 again.
Jake Page: I would now like to turn the call over to Jake Page. Please go ahead. Thank you and good morning, everyone. We appreciate you joining us on this call. With me today are Brent Yeagy, President and Chief Executive Officer, Pat Keslin, Chief Financial Officer, and Mike Pettit, Chief Growth Officer.
To Jake Paige. Please go ahead.
Jake Page: Before we get started, please note that this call is being 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.1wabash.com.
Jake Page: Please refer to slide two in our earnings deck for the company's safe harbor disclosure addressing forward-looking.
Thank you and good morning, everyone. We appreciate you joining us on this. Call with me today. Are Brent yagi, president and chief executive officer? Pat castellon Chief Financial Officer and Mike Pettit Chief growth officer. Before we get started, please note that this call is being recorded. I'd also like to point out that our earnings release, the slide presentation supplementing today's call in any non-gaap, reconciliations are available at ir1 wash.com,
Brent Yeagy: I'll now hand it off. Thanks, Jake. Before we dive into the quarter, I want to take a moment to thank our incredible These continue to be challenging times across the industry, and I'm continually inspired by the dedication, resilience, and heart our employees bring to their work, whether it's supporting our customers, helping each other, or finding new ways to move the business forward.
Speaker Change: Please refer to slide 2 in our earnings deck for the company's Safe, Harbor disclosure addressing forward-looking statements. I'll now hand it off to Brett.
Brent Yagi: Thanks Jake. Before we dive into the quarter. I want to take a moment to thank our incredible team.
Please continue to be challenging times across the industry. And I'm continually inspired by the dedication and resilience and heart, our employees bring to their work.
Brent Yeagy: Their efforts are what keep Wabash strong, and we're truly grateful. As we reflect on the second quarter, the broader market dynamics we observed earlier in the year have largely persisted. Economic conditions remain softer than anticipated at the start of 2025, with customers continuing to report increased hesitation in capital. The slowdown is creating a ripple effect across the industry, contributing to more cautious behavior and tempered activity. Industry analysts have continued to lower their forecast for the remainder of the year, and for this quarter, we saw additional confirmation as several carriers revised their CapEx plans downward. These trends reflect a transportation market environment that remains under pressure rather than any product-specific or segment-driven software.
Brent Yagi: Whether it's supporting our customers, helping each other or finding new ways to move the business forward, their efforts are what keep Wallace strong and we're truly grateful.
Brent Yagi: as we reflect on the second quarter of the broader market dynamics, we observed earlier in the year have largely persisted economic conditions, remain softer than anticipated at the start of 2025 with customers continuing to report increase, hesitation in capital and making
The Slowdown is creating a ripple effect across the industry contributing to more cautious behavior in temperate activity levels.
Brent Yagi: Industry analysts have continued to lower their forecast for the remainder of the year. And for this quarter, we saw additional confirmation as several carriers revised their capex plans downwards
Brent Yeagy: While the current climate brings headwinds, it also highlights the strategic foresight behind the way we have reshaped Wabash over the past several years. Our organizational structure was intentionally designed to support agility and resiliency through the economic cycle. In our transportation solutions business, we're proactively managing costs to align with reduced demand. At the same time, we're maintaining momentum in parts and services, which once again delivered year-over-year revenue growth this quarter. This continued outperformance in parts and services reinforces our confidence in its role as a key driver of long-term stability and growth. By integrating these offerings more deeply with our equipment solutions, we believe we're laying the foundation for a more balanced business that can perform through varying market conditions.
Brent Yagi: These Trends reflect a transportation Market environment that remains Under Pressure rather than any product specific or segment driven softness.
While the current climate brings headwinds, that also highlights the Strategic Force site that behind the wave. We had reshaped wall bashed over the past several years.
Brent Yagi: Our organizational structure was intentionally designed to support agility and resiliency through the economic Cycles.
Brent Yagi: In our transportation Solutions business. We're proactively managing costs to align with reduced demand. At the same time. We're maintaining momentum in Parts and Services which once again, delivered year-over-year Revenue growth. This quarter.
Brent Yagi: This continued outperformance in parts and services reinforces our confidence in its role. As a key driver of long-term, stability and growth.
Brent Yeagy: Even in a software environment for equipment demand, our parts and services business continue to deliver growth in Q2.
Brent Yagi: By integrating these offerings more deeply with our equipment Solutions. We believe we're laying the foundation for a more balanced business that can perform through varying market conditions.
Brent Yeagy: I want to highlight a couple of wins from the quarter that speak to the momentum we're building. First, congratulations to our F-15 for another record quarter. Their efforts continue to drive significant growth as we are on pace to almost double units year over year. We also made meaningful progress with our Trailers as a Service and Preferred Parts Network initiative. both of which continue to gain traction as we expand our office.
Brent Yagi: Even in a software environment, for equipment demand, our parts and services business continue to deliver growth in Q2, I want to highlight a couple of wins from the quarter that speak to the momentum, we're building.
Brent Yagi: First, congratulations to our update team for another record quarter their efforts. Continue to drive significant growth as we are on Pace almost double units year-over-year.
Brent Yeagy: Mike will share more details shortly, but these developments are strong indicators of how parts and services is helping bring greater balance and resilience to the broader Wabash portfolio as we scale. We continue to monitor inflationary pressures across our supply chain, while our 95% domestic sourcing and U.S. based manufacturing footprint have helped insulate us from some of the volatility others are experiencing. We're not entirely immune to cost. to take your late key inputs and service. Today, we've been successful in holding off on price. And we remain focused on operational efficiency and cost discipline to offset as much pressure as possible.
We also made meaningful progress with our trailers as a service, and preferred Parts Network initiatives, both of which continue to gain traction as we expand our offerings.
Mike will share more details shortly. But these developments are strong indicators of how Parts and Services is helping bring greater balance and resilience to the broader wall Bosch portfolio as we scale.
Speaker Change: We continue to monitor inflationary pressures across our supply chain while our 95% domestic sourcing and us-based. Manufacturing footprint have helped insulate us from some of the volatility others are experiencing, we're not entirely immune to cost increases particularly in key inputs and services.
Brent Yeagy: However, based on the current trajectory, we expect that pricing for 2026 orders will need to be adjusted to reflect the rising cost environment. As always, we're committed to communicating transparently with customers and providing as much lead time as possible. We're continuing to deliver the value and reliability they've come to expect from Wabash.
Speaker Change: Today we've been successful in holding off on price adjustments and we remain focused on operational, efficiency and cost discipline to offset as much pressure as possible.
However, based on the current trajectory, we expect the pricing for 2026 orders will need to be adjusted to reflect the rising cost environment.
As always, we're committed to communicating transparently with customers and providing as much lead time as possible. We're continuing to deliver the value and reliability. They've come to expect from wall Bash.
Brent Yeagy: Now to briefly touch on the ongoing legal matter stemming from a 2019 Motor Vehicle Act. In April, we filed a Notice of Appeal and posted the necessary appeal bond as we continue to pursue all available legal options to achieve a more reasonable outcome. We want to reiterate that we stand firmly behind the safety and integrity of our products and remain confident in our ultimate legal position.
Speaker Change: now, to briefly touch on the ongoing legal matter, stemming, from a 2019 motor vehicle accident,
Speaker Change: In April, we filed a notice of appeal and posted the necessary, appeal Bond, as we continue to pursue all available legal options to achieve, a more reasonable outcome. We want to reiterate that we stand firmly behind the safety and integrity of our products and remain confident in our ultimate legal position.
Brent Yeagy: Turning to the broader market environment, demand remains muted across the trailer. Industry forecasters have continued to revise their outlook downward, and recent updates now suggest that 2025 shipment volumes will fall well below basic replacement demand. This prolonged softness is reflected in our own backlog, which declined to approximately $1 billion at the end of While that's not unexpected given the current landscape, it's clear that customers continue to take a wait-and-see approach to capital. For now, we've undertaken a reassessment of 2025 and now expect midpoints of 1.6 billion in revenue and negative dollar and 15 cents of adjusted EPS.
Speaker Change: Referring to the broader Market environment, the man remains muted, across the trailer industry, entry forecasters, have continued to revise, their Outlook downwards and recent updates. Now, suggests that 2025 shipment volumes will fall well below, basic replacement, demands,
Speaker Change: This prolonged softness is reflected in our own backlog which declined to approximately 1 billion dollars at the end of Q2.
Speaker Change: While that's not unexpected, given the current landscape. It's clear that customers continue to take a wait and see approach to Capital spending
Brent Yeagy: Even with the revised guidance, we still expect to be near free cash flow breakeven for 2025, excluding our capital investments and trailers of the service.
For now, we've undertaken a reassessment of 2025 and now expect midpoints of 1.6 billion in revenue and negative $1.15 of adjusted eps.
Brent Yeagy: While our order book for 2026 is not yet open, we're actively engaged in conversations with customers and preparing quotes for next year's demand. Based on those early discussions and current industry forecasts, we're cautiously optimistic that 2026 will reflect a return to growth. Of course, that outlook assumes relative stability in the broader environment. If we avoid further deterioration in business and consumer sentiment, we believe 2026 has potential to align with current growth expectations. As always, we'll continue to monitor market signals closely and stay in close alignment with our customers as planning progresses.
Speaker Change: Even with the revised guidance, we still expect to be near free cash flow break, even for 2025, excluding our Capital Investments and trailers of the service.
While our order book for 2026 is not yet open. We're actively engaged in conversations with customers and preparing quotes. For next year's demands based on those early discussions and current industry forecasts. We're cautiously optimistic to 2026, we reflect and return the growth.
Speaker Change: Of course, our Outlook assumes relative stability in the broader environment. If we avoid further deterioration business and consumer sentiments, We Believe 2026 has potential to align with current growth expectations.
Mike Pettit: I'll turn the call over to Mike for his comment. Thanks, Brent. Over the past couple years, we've talked about turning parts and services into a steadier, higher margin engine within Wabash. The first half of 2025 proves we are continuing to deliver on that strategy. Parts and Services sits squarely between our first to final mile equipment portfolio and the connected support that keeps those assets running day in and day out. Think of this expanding Parts and Services segment as the connective tissue that combines our equipment portfolio with best-in-class partners across distribution, digital, maintenance, and repair. Together, we're not only moving faster, we're layering entirely new forms of customer value, creating durable improvements in Wabash's financial performance.
Speaker Change: As always, we'll continue to monitor Market, signals closely and stay in close alignment with our customers as planning progresses.
Mike: I'll turn the call over to Mike first comments.
Mike: Thanks, Brent. Over the past couple of years, we've talked about turning Parts and Services into a steadier higher margin engine within Wabash.
Mike: The first half of 2025 proves We are continuing to deliver on that strategy, harsin Services, sit squarely between our first and final mile equipment portfolio. And they've connected support that keeps those assets running day in and day out think of this expanding Parts and Services segment as the connective tissue that combines our equipment portfolio with best-in-class Partners across distribution digital maintenance and repair
Mike Pettit: The second quarter alone, the segment grew 15% sequentially and 8.8% year-over-year, while seeing EBITDA margins return to the high teens, right where we believe this business can perform on a sustainable basis. Keep in mind, this has all been done right into the teeth of a very difficult market backdrop. Showing this growth is indeed structural and will provide stability for the enterprise for years to come.
Mike Pettit: One of the clearest proof points behind the parts and services momentum is our upfit. Our upfit offerings let us deliver fully tailored equipment in just a couple of weeks, combining the scale of truck body production with the deep customer intimacy that defines parts and services. To put hard numbers around that, last year we completed approximately 1,100 upfit units. This year, we doubled first quarter throughput to 406 units and added another 556 in the second quarter, bringing the year-to-date unit count to 962 units. On top of that, we are opening two new upfit centers, one in northwest Indiana and another in Atlanta, giving us capability in two strategic markets and putting us on pace to exceed 2000 units in 2025, while setting the stage for significantly more growth in 2026.
Mike: Together we're not only moving faster. We're layering entirely new forms of customer value creating durable improvements in wages. Financial performance. In the second quarter alone, the segment grew 15% sequentially and 8.8% year-over-year while seeing Evita margins returned to the High Teens right. Where we believe this business can perform on a sustainable basis. Keep in mind, this has all been done right into the teeth of a very difficult Market backdrop showing this growth is indeed structural and will provide stability for the Enterprise for years to come
Mike: 1 of the clearest proof points behind the parts and services. Momentum is our upfit business. Our upfit offerings, let us deliver fully tailored equipment in just a couple of weeks, combining the scale of Truck Body production with the Deep customer intimacy, that defines parts and services to put hard numbers around that. Last year we completed approximately 1,100, upfit units.
Mike: This year, we doubled, first quarter of throughput to 46 units and added another 556. In the second quarter, bringing the year to date unit count to 962 units. On top of that, we are opening 2, new upfit centers 1 in Northwest, Indiana. And another in Atlanta, giving us capability in 2, strategic markets and putting us on Pace to exceed 2,000 units in 2025 while setting the stage for significantly more growth in 2026.
Mike Pettit: Trailers as a Service, or TAS, is another example of Wabash extending our manufacturing and distribution leadership through business model and We continue to send shippers, carriers, and brokers across North America. many of whom bundled the trailer itself with preventative maintenance, telematics, nationwide uptime support, and repair. The result, customers focused on moving freight, while Wabash handles the trailer, which maximizes customer value and efficiency.
Mike Pettit: As mentioned in the first quarter, our acquisition of TrailerHawk accelerated the technology roadmap inside of TAS. In June, we rolled out version 1.2 of the TrailerHawk app, enabling shippers to reserve capacity directly on the platform while tracking assets in real time. Coming in the back half of the year, our predictive analytics alerts and automated tracking and billing, capabilities that turn raw data into actionable, measurable savings.
Mike: Trailers is a service or Cass is another example of wave. A extending our manufacturing and distribution leadership through business model Innovation, we continue to sign shippers carriers and Brokers across North America, many of whom bundle. The trailer itself with preventive. Maintenance telematics Nationwide uptime support and repair management. The result customers focused on moving Freight. While wash handles the trailer which maximizes customer value and efficiency
Mike Pettit: We have been continuing to prepare our physical and digital capabilities for the eventual market upturn, and we will be ready to ramp TAS when our customers require it.
as mentioned in the first quarter, our acquisition of trailer Hawk accelerated, the technology road map inside a task in June. We rolled out version 1.2 of the trailer Hawk app enabling shippers to reserve capacity directly on the platform. While tracking assets in real time, coming in the back half of the Year, our Predictive Analytics alerts and automated tracking and billing capabilities that turn raw data into actionable. Measurable savings. We have been continuing to prepare our physical and digital capabilities for the eventual market. Upturn. And we will be ready to ramp tasks when our customers require it.
Mike Pettit: Over the past year, we've also pushed hard on expanding our preferred partner network or PPN.
Mike Pettit: We brought Dan Millar on board to lead this effort in September of 2024, a parts industry veteran with over 25 years of experience. And in less than a year, we're already seeing significant results with our world class dealer group at the backbone. The network is extending our reach so that we can grow parts distribution, accelerate repair turnaround and provide the services infrastructure that underpins tasks. Our North Star target is 300 points of service and parts distribution and today we're well on our way. The addition of 29 locations in the first half of 2025 has grown our network to over 110 locations with more coming online every month.
Mike: Over the past year. We've also pushed hard on expanding our preferred partner Network, or PPN, we brought Dan Mohler on board to lead. This effort in September of 2024, a parse industry veteran with over 25 years of experience and in less than a year we're already seeing significant results with our world class dealer group at the backbone. The network is extending our reach so that we can grow Parts distribution, accelerate repair, turnaround, and provide the services and infrastructure that under
Tasks. Our Northstar Target is 300 points of service and parts distribution. And today, we're well on our way.
Mike Pettit: This new location strengthens our network and provides after-sales support for our customers.
Mike: The addition of 29 locations in the first half of 2025 has grown our Network to over 110 locations with more coming online every month. Each new location strengthens our Network and provides after-sale support for our customers.
Mike Pettit: Financially, the rationale behind scaling parts and services couldn't be clearer. While the freight market has continued to put pressure on equipment orders and transportation solutions, parts and services continues to deliver secular growth, stabilizing earnings through the cycle. As this segment expands, its higher margins will play an ever larger role in Wabash's bottom line and cash flow generation.
Mike Pettit: But more importantly, we're winning because we've found new ways to serve our country. Innovative solutions that extend value far beyond the original equipment sale and well into the life of the asset.
Mike: Growth stabilizing earnings through the cycle as this segment expands its higher margins. Will play an Ever larger role in wb's bottom line and cash flow generation
Patrick Keslin: With that, I'll hand the call back to Pat for his comments. Thanks, Mike. Beginning with a review of our quarterly financial results. In the second quarter, our consolidated revenue was $459 million. During the quarter, we shipped approximately 8,640 new trailers and 3,190 truck boxes. Slightly better than expectations, resulting in a revenue on the top end of our $420 million to $460 million guidance.
Speaker Change: But more importantly, we're winning because we found new ways to serve our customers innovative solutions that extend value far beyond the original equipment sales and well, into the life of the asset with that, I'll hand the call back to back for his comments.
Speaker Change: Thanks Mike beginning with a review of our quarterly Financial results and the second quarter, our Consolidated Revenue was 459 million.
Patrick Keslin: gross margins of 9%.
Patrick Keslin: and Breakeven Adjusted Operating As a reminder, the adjusted non-GAAP numbers reflect the removal of items related to the Missouri Legal In the second quarter, adjusted EBITDA was $16 million, or 3.6% of sales. Finally, adjusted net income attributable to common stockholders was negative $6.1 million or negative $0.15 per diluted share, beating expectations due to slightly higher revenue and cost containment actions throughout the quarter.
Speaker Change: During the quarter, we shipped approximately 8,640, new trailers, and 3,190 Truck Bodies, slightly better than expectations, resulting in a revenue. On the top end of our 420 million to 460 million guidance range, gross margins of 9% and break even adjusted operating margins.
As a reminder, the adjusted non-gaap numbers, reflect the removal of items related to the Missouri legal verdict.
Speaker Change: In the second quarter adjusted, I bet that was 16 million or 3.6% of sales.
Patrick Keslin: Moving on to our reporting segment. Transportation Solutions generated revenue of $400 million and operating income of $13 Parts and Services generated revenue of $60 million and operating income of $9.1 million. We view the sequential and year-over-year revenue growth in the parts and services segment as particularly positive. Despite challenging market conditions, we have been able to execute on our strategy of building out more resilient and recurring revenue streams to our parts and services segment.
Finally adjusted net income attributable. To Common stockholders was -6.1 million or -5 cents per diluted. Share beating expectations due to slightly higher revenue, and Cost, Containment actions throughout the quarter.
moving on to our reporting segments, Transportation Solutions, generated revenue of 400 million and operating income of 13 million,
Speaker Change: Parts and Services generated revenue of 60 million and operating income of 9.1 million.
Speaker Change: We view the sequential and year-over-year revenue growth in the parts and services segment as particularly positive.
Despite challenging market conditions. We have been able to execute on our strategy of building out more resilient and recurring revenue streams to our parts and services segments.
Patrick Keslin: Year-to-date operating cash flow was negative $16.1 million as timing of revenue within the quarter created a drag on working capital in Q2. Regarding our balance sheet, our liquidity, which comprises both cash and available borrower. was $312 million as of June 30. We finished Q2 with a net depth leverage ratio of 6.2.
Speaker Change: Year to date. Operating cash flow was negative. -6.1 million as timing of Revenue. Within the quarter, created a drag on working capital in Q2.
Patrick Keslin: On capital allocation, during the second quarter, we directed $6 million to traditional CapEx, invested $0.7 million in revenue-generating assets to support our Trailers as a Service initiative, utilized $10.4 million to repurchase shares, and returned $3.4 million to shareholders via our quarterly dividend. Our capital allocation priorities remain disciplined and growth-oriented. We continue to invest above our 20 to 25 million annual maintenance CapEx to support organic growth. At the same time, we remain committed to our dividend and will evaluate share repurchases and strategic bolt-on M&A opportunities in a balanced return-driven I'll provide additional color on our 2025 capital deployment plan shortly.
Regarding our balance sheet, our liquidity, which comprises both cash and available borrowings was 312 million as of June 30th, we finished Q2 with a net, debt, leverage ratio of 6.2 times.
Speaker Change: On Capital allocation during the second quarter, we directed 6 million to traditional capex.
Invested 0.7 million in Revenue, generating assets to support our trailers as a service initiative.
Speaker Change: Utilize 10.4 million to repurchase shares and return, 3.4 million to shareholders via our quarterly dividend.
Speaker Change: Our Capital allocation priorities, remain disciplined, and growth oriented. We continue to invest above our 20 to 25 million, annual maintenance capex to support, organic growth initiatives,
At the same time, we remain committed to our dividend and will evaluate share of purchases and strategic bolt on m&a opportunities in a balanced, return driven framework.
I'll provide additional color on our 2025 Capital deployment plan shortly.
Patrick Keslin: Moving on to our guidance for 2025, we are reducing our revenue outlook to approximately $1.6 billion and EPS to a range of minus $1 to minus $1.30. From previous midpoints, this represents a reduction of roughly $200 million in revenue and $0.55 of EPS. ongoing economic uncertainty continue to weigh on our customers capital expenditure plans and contribute to a softer overall market environment. In Q2, third-party trailer forecasts dropped by roughly 13% for 2025, and our updated guidance reflects this sentiment. The most significant changes from our prior outlook come from a reduction in volumes within transportation solutions.
Moving on to our guidance. For 2025, we are reducing our Revenue Outlook to approximately 1.6 billion, and EPS to arrange of minus a dollar to minus a $130.
Speaker Change: From previous midpoints, this represents a reduction of roughly 200 million in revenue and 555 cents of VPS.
Speaker Change: Ongoing economic uncertainty continue to weigh on our customers capital expenditure plans and contribute to a softer overall Market environment.
In Q2 third-party trailer forecast, dropped by roughly 13% for 2025 and our updated guidance. Reflects this sentiment
Patrick Keslin: flowing through to a decrease in gross profit equivalent to about $0.80 in EPS versus our prior guidance. This is partially offset by continued cost containment actions taken that recoup approximately $0.25 in EPS. In a continued environment of soft demand, our ability to stay agile and disciplined in cost management remains critical.
Speaker Change: The most significant changes from our prior Outlook, um, from a reduction in volumes within Transportation Solutions, flowing through to a decrease in gross profit equivalent, to about 80 cents in EPS versus our prior guidance. This is partially offset by continued Cost, Containment actions taken that recoup, approximately, 25 cents of eps.
Patrick Keslin: I'm proud of how our team is executing Q2. They responded quickly and effectively, delivering strong progress on our cost containment initiative. We expect the same level of focus and execution to carry on in the second half.
In a continued environment of soft demand, our ability to stay agile and disciplined and cost management remains critical.
Progress on our Cost Containment initiatives.
Patrick Keslin: As for the third quarter, our updated guidance implies third quarter revenue of $390 million to $430 million and EPS of minus $0.20 to minus $0.30.
We expect the same level of focus and execution to carry on in the second half of the year.
Speaker Change: As for the third quarter, our updated guidance implies third quarter revenue of 390 million to 430 million, and EPS of minus 20 cents to minus 30 cents.
Patrick Keslin: Moving on to capital deployment expectations for 2025, given the updated outlook, we have reduced our anticipated traditional capital investment to be between $30 and $40 million. As mentioned on previous calls, our capital expenditure plans are flexible and capital outlays will continue to adjust as the market dictates. The same goes for the rest of our capital allocation priorities. I would say that generally we have flexibility with regard to how we allocate capital in 2025, depending on how market conditions evolve.
Speaker Change: Moving on to Capital deployment, expectations for 2025, given the updated Outlook. We have reduced our anticipated traditional capital investment to be between 30 and 40 million.
Speaker Change: as mentioned on previous calls, our capital expenditure plans are flexible and capital outlays will continue to adjust as the market dictates
Patrick Keslin: While our first half free cash flow, excluding investment and trailers as a service was negative 31 million. We expect to be near break even by the end of the year as we right size working capital to the current needs of the business. While 2025 has brought its share of challenges, we remain focused on disciplined execution and advancing our long-term strategy. Our teams have shown strong resilience and sound judgment, particularly in managing costs and maintaining a healthy liquidity position to navigate the current and As we work through this cyclical trough, history reminds us that the rebound often comes stronger than expected.
Speaker Change: the same goes for the rest of our Capital, allocation priorities. I would say that generally, we have flexibility with regard to how we allocate capital in 2025, depending on how market conditions evolve while our first half free cash flow, excluding investment, and trailers, as a service was -31 Million. We expect to be near break, even by the end of the year, as we right-size working, capital to the current needs of the business.
Speaker Change: Oh, 2025 has brought its Sheriff challenges. We remain focused on disciplined execution and advancing. Our long-term strategy
Speaker Change: Our teams have shown strong resilience and sound judgment particularly in managing costs, and maintaining a healthy liquidity, position to navigate the current environment.
Patrick Keslin: We're positioning the business to be ready when that inflection point arrives, when market conditions stabilize, and businesses regain the confidence to reinvest.
Speaker Change: As we work through the cyclical, trough history reminds us that the rebound often comes stronger than expected.
Unknown Executive: I'll now turn the call back to the operator and we'll open it up for questions. Thank you.
Speaker Change: We're positioning the business to be ready. When that inflection point arrives, when market conditions, stabilize and businesses regain the confidence to reinvest
Speaker Change: I'll now turn the call back to the operator and we'll open it up for questions.
Mike Shlisky: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone. And your first question comes from the line of Mike Shlisky with D.A. Davidson. Please go ahead. Yes, hi. Thanks for taking my question. Um, Brent, uh, just looking at 2026 or the overall, uh, trailer cycle. Just update us on what you're watching today. What has to happen for orders, for order rates to kind of pick up? Are you hoping that or thinking that folks might be exiting the trailer fleet market and making the market a little smaller for those who are left, just better rates and volumes?
Speaker Change: Thank you at this time. I would like to remind everyone in order to ask a question. Press star, then the number 1 on your telephone keypad,
Speaker Change: And your first question comes from the line of Mike schlitzie with da Davidson. Please go ahead.
Mike Schlitzie: Uh yes. Hi thanks for taking my questions.
Speaker Change: Um, spread, uh, just looking at a 2026 with the overall, uh, trailer cycle.
Mike Shlisky: Just maybe the, you know, two or three key things that you're watching for.
Speaker Change: Just update us on. What's your what you're watching today? What has to happen, What orders for order ways? To kind of pick up. Are you hoping that or thinking that folks might be exiting the trailer Fleet market and making the market a little smaller for those who are who are are? Um, are left. Just better rates and volumes so maybe the you know, 2 or 3 key things that you're watching for currently.
Brent Yeagy: Yeah, so Great question. So when we think about 2026, I think it really comes down to capacity coming out of the market being the really the only factor right at this moment that we would be looking at in the context of the, I would say the forecast that the third parties are putting out there at this moment in time. Now that's echoed by our customers as well, who, if you, when you really talk around the corn with them, they believe that enough is starting to exit as long as nothing else changes in the environment to see where they can look at, we'll call it, you know, we'll call it directional capital deployment in line with those expectations.
Yeah. So
Great question.
Brent Yeagy: which is really nothing more than getting back to a at-replacement level of capital deployment, and then eating into slightly the deficit that they've created by the underbody over the last couple of years. So I think that is the main thing that we're looking at right now.
Speaker Change: Um, so, when we think about 2026, I think it really comes down to, um, capacity coming out of the market being the, the really, the only Factor right? At this moment that we would be looking at in the context of the, I would say the forecast that the third parties are putting out there at this moment in time, you know, that's echoed by our customers as well. Um, who if you, when you, when you really talk around the horn with them, they believe that enough is starting to exit. Uh, as long as nothing else changes in the environment to see where they can look at, um, we'll call it, uh, you know, we'll call directional Capital deployment in line with those expectations, which is really nothing more than getting back to a at replacement level of um, Capital deployment and then eating into the de
Brent Yeagy: And then the secondary thing that we'd be looking at is the fundamental freight-producing subsectors of the market, which is really what would be truly the more positive, precipitating event that we're all looking for to really change the game going forward.
Lightly the deficit that they've created by the under buy over the last couple years. Um so I think that is the the main thing that we're looking at right now. And then the secondary thing that we'd be looking at is the, you know, the fundamental Freight producing sub sectors of the market, uh, which is really what would be the, um, truly, the more positive, um, you know, precipitating event that we're all looking for that really changed the game going forward.
Brent Yeagy: I want to start with that question, Brent, just asking a little more broadly, do you get the sense that the industry is quietly being able to do a bit more with fewer assets these days? Has the industry gotten more efficient over the last couple of years with the use of AI or more efficient, you know, load boards, anything to tell us there, is the national fleet... just shrinking because of technology and not due to volume. I don't have any. There's nothing that I see at this moment that would say there's anything happening at scale around substantial efficiency that's moving into the market through technology deployment right at this moment.
Speaker Change: I want to stop with that question. Brent just asking, uh, a little more broadly. Do you get the sense that that the industry is is quietly being able to do a bit more with fewer assets? These days as the industry got more efficient over the last couple of years, conducive more efficient or um, no, you know load boards. Anything to tell us there is the is the is the national Fleet
Brent Yeagy: I would say the net inefficiency is still greater than efficiency being created. Now, that doesn't mean that there's not inroads happening at the fleets, and it doesn't mean that they're not building platforms that ultimately show promise. But when you integrate, right, all of it happening right now, plus the disruption that's happening in logistics, I think it is much more of a market-related situation as we sit here today. So I would not expect to see, as the market unfolds over the next three, four, five years, a depressing element relative to efficiency gains. Not my calculus right now.
Speaker Change: There's nothing that I see at this moment, that would say there's anything happening at scale around substantial efficiency that's moving into the market through technology deployment. Right? At this moment I would say the the net inefficiency is still greater than efficiency being created. Now, that doesn't mean that there's not inroads happening at The Fleets and it doesn't mean that they're not building platforms that ultimately, uh, show promise. But when you integrate, right? All of it happening right now, plus the disruption that's happening in logistics. I think it it it um, is much more of a um, a market related situation as we sit here today. So I do not, I would not expect to see as the market unfolds over the next 3 4. 5 years a um depressing element relative to efficiency gains not, it's not in my calculus right now.
Mike Shlisky: Got it. Thanks.
Mike Shlisky: And maybe just lastly, can you give us just a little bit more detail on the parts and service growth? That was pretty impressive. I am curious, do you think, you know, the trajectory that that business is on, that you've still got a growth tail when it gets to 2026, and what might be behind that, whether it's offerings or expanding the network, Yeah, I think we hit on that a little bit, but it's up, it's a big piece of it. Obviously, our parts initiative that we've been doing now for about three years is starting to get some traction with our with our PPN expansion.
Got it. Uh thanks. Let me just lastly.
Speaker Change: Can you just a little bit more detail on the person's Service Group? If that was pretty pretty? Uh, uh, impressive? I am curious. Do you think, you know, the trajectory that that business is on that you've still got growth tail? When did the 2026? Um, and what might be behind that whether its offerings or expanding the network Etc.
Brent Yeagy: We believe second half can be 20% better than the first half. And that we can we can see on the top line revenue, we think we can grow into 26 as well. So we don't, we expect there's a long runway ahead of us, we're just getting started. So we're coming off of a lower base, but we're now hitting some levels that I think are meaningful from the top and bottom line that are starting to move the enterprise and that's just going to keep going as we go forward. And we re-segmented in 21. We're at this point now where I think we're finally, we're finally starting to see that sustainable growth and at levels that really will start to move the Super.
Yeah, I I think we we hit all that a little bit, but it's up up. It's a big piece of it. Obviously our, our parts initiative that we've been doing now for about 3 years is starting to get subtraction, uh, with our with our PPN expansion. We, we believe second half can be 20% better than the first half and then we, we can we can see on the top line revenue. We think we can grow into 26 as well. So we don't, we expect, there's a, there's a long Runway ahead of us. We're just getting started. So uh, we're coming off of a of a lower base, but we're now hitting some levels, I think are meaningful from the top and bottom line that are starting to move the the Enterprise, and that's just going to keep going as a as we go forward and that we we res segmented in in 21. We're at this point now, where I think we're finally, we're finally starting to see that sustainable growth and at levels that really will start to move the needle.
Mike Shlisky: Mike, thanks so much.
Mike Shlisky: I'll pass it along.
Mike Shlisky: Bye.
Super Mike. Thanks so much. I'll pass it along.
Speaker Change: Bye.
Jeff Kauffman: Your next question comes from the line of Jeff Kauffman with Vertical Research Partners. Please go ahead. Thank you. Good morning, everybody. A couple questions. Thank you. That $30 to $40 million in CapEx, does that include the investment in trailers as a service? It does not, so that would be just our traditional cafe. Okay, and so where is the TAS fleet right now and how much incremental investment went in in 2025 to TAS? So in terms of dollars that we've spent through the first half of the year, it's roughly $21 million. I'll let Mike expand on where we're at in terms of total trailers and deployment, but the spend right now is about $21 million through the first half of the year.
Speaker Change: Your next question comes from the line of Jeff. Kaufmann with vertical research Partners. Please go ahead.
Jeff Kaufmann: Thank you. Good morning everybody.
Jeff Kaufmann: Um, a couple questions thank you that 30 to 40 million in capex. Does that include the investment in in trailers as a service?
All right, does not. So that that would be just our traditional capex.
Okay. And, um, so where is the toss Fleet right now? And, and how much incremental investment went in, in 2025 to toss?
The. So, in terms of dollars that we've spent through the first half of the year, uh, it's roughly 2021 million. Um, I'll I'll let Mike expand on the, uh, where where we're at, in terms of total trailers and and deployment. Um, but that's the, the spend right now is about 21 million through through the first half of the year.
Yeah, the total Fleet still directly in line with what we said it was at in q1. Uh, it's over a thousand we've had, we've added a few uh in total and I would say that we would we would expect it to grow second half, obviously that's Market driven, and but we would, we would expect to see a, a move up in the second half of where we've been the last 2 quarters in terms of our total Fleet and test.
Patrick Keslin: Okay, thank you. So, Brent, in your comments, you talked about the need for price increase in 2026 to handle inflation. At least on my numbers, I'm calculating average sales price in the transportation business dropped by about 9% sequentially from 1Q to 2Q and is down about 13% year-on-year. What is driving that? Is that a mixed change? Is that because of the way the contracts are structured? How should I think about that? And then how should I think about that moving forward to 3Q, 4Q? Yeah, I'll let Pat start and then I'll follow up. Yeah, the sequential ASP is almost entirely mixed driven, Jeff.
Speaker Change: Okay, thank you. Um so uh, Brent and your comments, you talked about the need for price increase in 2026 to handle uh inflation.
Speaker Change: A at least on my numbers I'm calculating average sales price in the transportation business dropped by about 9% sequentially, from 1 2 to 2 and is down about 13% year-on-year. What is driving that? Is that a mixed change? Is that because of the way, the contracts are structured, how how should I think about that? And then how should I think about that moving forward to 3242?
Patrick Keslin: So if you were to do the percentage of the total trailers that are drive-ins, first quarter, second quarter, with the increase in that percentage, it's a drag on our ASP across the transportation solutions group. If you were to look at it on a like-for-like basis and exclude that mix, ASP would be relatively flat to what it was in the first quarter. Okay, so less tanks, more dries, it's kind of more was driving it. Okay, and then The delivery number for 2Q8640, congratulations, it was a lot higher than I thought it would be. You mentioned in your comments a timing issue.
Speaker Change: Yeah, I'll let Pat start and then I'll, I'll follow up here. Yeah, the, the sequential ASP is uh, is almost entirely mixture of and Jeff. Um, so if you, if you were to do the percentage of the total trailers, uh, that are driving ins first quarter or second quarter with the increase in that percentage, it's a drag on our, uh, ASP across the the transportation solutions group. Um, if you were to look at it on a like, for like basis and, and exclude that mix uh, ASP would be relatively flat to what it was in the first quarter.
Speaker Change: Thanks more dries, it's kind of more. What's driving it?
Patrick Keslin: Is that what happened here? Did we have more trailers that went in 2Q that maybe won't go in 3Q, 4Q? Yeah, so the timing issue specifically that we mentioned was just around cash collections. So we did it, we had a very big June shipments. So as you know, that you could straddle between June, July and Q2 and Q3. But that was, that comment was specifically related to where our networking capital is at the end of the second quarter, because we did, we did have higher shipments in the quarter in that third month. Yeah, I'll give a little qualitative feedback on that, Jeff.
Speaker Change: Okay. And then um, the delivery number uh, for 2 q86, 40. Congratulations, there was a lot higher than I thought it would be. You mentioned in your, uh, comments, that timing issue. Is that what happened here? Did we have more trailers that went into q that maybe won't go in 3Q 4q?
Brent Yeagy: I was overall pretty happy. All things being considered was second quarter revenue, specifically in the context of all of the, we'll call it tariff noise that jumped into the mix, you know, at the end of the first quarter, right? So think about that affecting everything from incoming orders, pushouts and cancellation risk. When I step back and look at what the industry did through what was called feedback on the supply chain, Wabash weathered that extremely well, extremely well, let me say that again, extremely well, in terms of continuity of production, and not having maybe the disruption that others had seen.
Speaker Change: Yeah, we the so the timing issue, uh, specifically that we mentioned was just around cash collections. So we did, we had a very big June shipments. Um, so as you know, they can you could straddle between, uh, June July and Q2 and Q3. But that was, that comment was specifically related to where our Network had capitalized at the end of the second quarter. Uh, because we did, we did have higher shipments in the quarter in that third month. Yeah, I I'll give a little qualitative feedback on that, Jeff, I was overall pretty happy. All things being considered was second quarter revenue and specifically in the context of all, of the we'll call it tariff noise that jumped into the mix, you know, at the end of the first quarter, right? So the thing about that, affecting everything from incoming orders, push outs and cancellation risk.
Brent Yeagy: And I think that's going to show in market share numbers when the year's all said and done, helped us dramatically being able to leverage also cost reduction efforts, because we've managed a much, again, relatively more stable platform than maybe some of the rest. And we hope maybe that we can take advantage of that when we go into 2026 as well.
Brent Yeagy: So just, you know, hey, the big numbers, you know, are not what we'd like, but pretty happy with the way we're running the show right now when it comes to running the shop floor and making choices on how best to navigate this thing.
Um, when I step back and look at what the industry did through, what was called feedback on the street and through our supply chain wall Bosch weathered that extremely well, extremely well, let me say that again. Extremely well in terms of continuity of production. Uh, and not having maybe the disruption that others have seen. Uh, and I think that's going to show in market share numbers in the Years, all said, and done helped us dramatically in being able to leverage also cost reduction efforts, because we've managed a much again, relatively more stable platform um than maybe some of the rest. We hope maybe that we can take advantage of that when we go in the 2026 as well. So just, you know, hey, The Big Numbers, you know, are are are not what we'd like but uh, pretty happy with the way we're running the show right now. When it comes to running the shop floor and making choices on how best to navigate this thing.
Jeff Kauffman: All right, can I follow that point? Because you did have a great quarter. And, you know, the deliveries above what I expected, you know, profits better than expected. As I look to the 25 guide of a loss of $1.15 at the midpoint on $1.6 billion of revenues. How much of that is the operations of the business that's, you know, coming through and how much of that is a drag on the P&L because of some of these new projects and new businesses that you're funding? Yeah, so I would say it's market driven, for sure. We do have some SG&A expenses related to our investments that we're still going to continue to invest in future growth of the business.
Speaker Change: All right, can I follow that point because you did have a great quarter, uh, and you know, the deliveries are above what I expected, um, you know, profits better than expected. As I look to the 25 guide of, uh, a loss of a15 at the midpoint on 1.6 billion in revenues. Um, how much of that is the operations of the business that that's, you know, coming through and how much of that is a drag on the p&l because of some of these new projects and new businesses that you're funding.
Jeff Kauffman: But for the most part, I mean, you could you could do the math on the top line drop from guy to guy that's entirely market driven. And we've taken we've taken actions on on the cost side, that we feel are prudent, given the market reality of what our top line is going to look like. And that's what that's what's implied in the guide that we gave. All right. So, one final question and I'll pass it on. So, year-to-day, we're looking at an operating earnings number of about a $0.73 loss. The guidance is for, you know, let's say $1.15 for the full year, so we're implying about a $0.40 loss for the second half of the year.
Speaker Change: Yeah. So I I would say it's it's Market driven uh, for sure. Um, that we do have some sgna expenses related to our investments that we're, um, still going to continue to, uh, invest in future growth of the business. But, but for the most part, I mean, you could, you could do the math on the top line drop, uh, from guy to guy that's entirely Market driven. Um, and we've taken we've taken actions on, on the cost side. Um, that we feel are prudent given, uh, the market reality of what, our top lines going to look like. Um, and that's what that's what's implied in in the guide that we gave you.
Jeff Kauffman: As I turn to the discussions for the new year, as I turn to the benefits from the big beautiful bill and what that might mean for the industry, is your sense that we're in the darkest part of the trailer cycle right now and that we, you had mentioned in your comments, you were hoping for a better 26th. Until the orders come in, we don't know, but can you talk about this new activity and what gives you enthusiasm that maybe we're seeing the darkest days right now? Yeah, the Jeff, I would like to say we're in the darkest days.
Speaker Change: All right. So 1 final question and I'll pass it on so, um, year to date. Uh, we're looking at an operating earnings number of about a 73 Cent loss. The guidance is for, you know, let's say a $1.15 for the full year. So we're implying about a 40 Cent loss for the second half of the year. Um, as I turn to the discussions for the new year, as I turn to the the benefits from the big beautiful Bill. And what that might mean for the industry is is your sense that we're in the darkest part of the trailer cycle right now. And that we you, you had mentioned in your comments. You were hoping for a better 26 until the orders come in, we don't know, but can you talk about this new activity and what gives you enthusiasm? That, that maybe we're seeing the dark?
Market stays right now.
Speaker Change: Yeah. The um
Brent Yeagy: Yeah, there's nothing that says that we're nothing that says that we're not. The only thing that changes that statement is what happens in the future that we don't know something has to act probably on the market for that to to change the outlook. and your guess is as good as mine of what that may or may not be. When I talk to customers right now, I just had a discussion yesterday with one of the big ones, and the being below replacement is a big deal now. And the more prominent, well-managed carriers are doing the best they can so that they can leverage margins going forward when this thing goes.
Well Jeff I would like to say we're in the darkest days. Um yeah there's nothing that says that we're nothing that says that we're not.
Um, the only thing that changes that statement is what happens in the future that we don't know. Something has to act probably on the market for that to to change the Outlook of that.
Speaker Change: Uh, and your guess is as good as mine of what that may or may not be.
I, when I talked to customers right now, um, I just had a discussion yesterday with a
Brent Yeagy: They're not getting behind the curve too much right now, but they don't have much further they can go before they are going to have to spend not only to get to replacement, which will be a bump from 2015, I'm sorry, 2025, but they've also got to start catching up some. You know, I'm kind of repeating myself, but that that's a very broad This is a discussion that's happening out there right now, and the general consensus that I've gotten is, hey, if it can just hold, what's going on right now. And we get a look at it and it just gets, you know, A couple of tenths of a percent of spot rate right now is not a bad thing.
Speaker Change: Prominent well-managed, um, carriers uh, are doing the best they can so that they can maintain so they can leverage margins going forward, right? When this thing goes, right, they're not getting behind the curve too much right now, but they don't have much further, they can go before. They are going to have to spend, not only to get 2 replacement, which will be a bump from 2015. I'm sorry 2025, but they've also got to start catching up some, which, you know, kind of repeating myself. But that that's a a very broad discussion. That's happening out there right now. And the general consensus that I've gotten is hey if it can just hold
what's going on right now and we get a look and and and it just gets, you know,
Jeff Kauffman: You gotta go, that's not very much. In the world we're living in, if they can just knock off a few of those, that's enough from what I'm getting for them to have to and want to spend a little more in 2020. And I think that's how I think about it. And from where we're at, hey, that's a good story from being, like you said, in the darkest days, because all you gotta then have happen is the next shoe to drop, and this thing will take off again. Well, thank you for that perspective and best of luck.
Speaker Change: A couple tenths of a percent of spot rate right now is not a bad thing like you kind of go that's not very much.
In the world we're living in if they can just knock off a few of those that's enough from what I'm getting for them to have to and want to spend a little more in 2026. And I think that's that's how I think about it. And from where we're at hey that's a good story from being like you said in the darkest days because all you got to then have happen, is another the next shooter drop and this thing will take off again.
Unknown Executive: Thank you. Thanks.
Speaker Change: Uh-huh. Well, thank you for that perspective and best of luck. Thank you. Thanks. Thanks.
Unknown Executive: There are no further questions at this time.
Jake Page: I will now turn the call back over to Jake Page for closing remarks. Thank you, everyone, for joining us today. We'll look forward to following up during the quarter.
There are no further questions at this time. I will now turn the call back over to Jake page for closing remarks.
Jake Page: Have a great day. Thanks.
Thank you everyone for joining us today, we'll look forward to following up during the quarter. Have a great day. Thanks.
Unknown Executive: Ladies and gentlemen, that concludes today's call. Thank you for joining.
Speaker Change: ladies and gentlemen, that
Unknown Executive: You may now disconnect. Thanks for watching!
Speaker Change: Today's call, thank you for joining. You may now disconnect