Wabash National Corporation (NYSE:WNC) Q2 2023 Earnings Call Transcript

Operator: Thank you. Your next question comes from the line of Morgan Weisberg of Vertical Research Partners. Please go ahead.

Morgan Weisberg: Hey guys, thank you for taking my call. If you could just touch a little bit up on the ramp up of the refrigerated product and basically how that is advancing and where you guys see the production run rate today, and where do you expect it to be in the next, let’s say, six months and 12 months?

Brent Yeagy: Yes. So we’re going to put this in the context of full cold chain revenue, because when we think about our structural composite investments and increasing of capacity, it spans from – in that all first to final mile suite of products. And when we think about cold chain revenue, I’ll go a little further than 12 months, so we’ll say 12 months to 24 months. You could say, we’re in a place where we can foresee potentially doubling our cold chain revenue from where it sets today and, call it late 2025, mid-2026 based off of the investments that we we’ve made to date. So we feel very good about how we will capitalize going forward in a market that is ridiculously dynamic and growing in ways that we are well suited to fed.

Morgan Weisberg: Great to hear. Thank you.

Operator: Thank you. Your next question comes from line of Felix Boeschen of Raymond James. Please go ahead.

Felix Boeschen: Hey, good morning, everybody.

Brent Yeagy: Hey, Felix.

Mike Pettit: Hey, good morning.

Felix Boeschen: Hey, I was curious if we could talk about the parts and services business, obviously very good quarter, and I think Mike, last time we had talked about growing 20% plus for the year. I guess two questions. Number one, can you talk about the driving factor of the growth in that business? And then two, if you can update that view on 20% plus, or maybe I missed it, that, that that would be helpful.

Mike Pettit: Yes. So we’re seeing a lot of strength and contribution to that performance across all the different drivers within parts and services. But I think the newest piece that we’ve talked about is our e-commerce platform is just coming online literally as we speak that will help provide a really good experience to our dealers through our Wabash Parts business that we’ve been growing Wabash Parts over the last year, but we have continued to invest in it over the last 12 months. And we are starting to get some real tangible digital tools to support the front end, which we believe will continue to propel that growth through the rest of this year. In terms of the 20%, I would say we’re going to do that plus in 2023, and there’s no reason to believe that we can’t maintain that growth into 2024 as well.

Felix Boeschen: Okay. Awesome. That’s helpful. And then I appreciate the new disclosure around trailer as a service from a CapEx perspective. Could you maybe directionally talk about how big or how big of a spending bucket you think it might become into 2024 and some of the returns we should be thinking about?

Mike Pettit: Yes. We’ll continue to update. It’s not – as you can see from the disclosure, it’s not huge today. We would expect to do a little bit more on the second half than we’ve done so far. But it’ll still be relatively modest. As we go into 2024, we would like to start to think about annually doing 2,000 plus trailers into that pool and you can kind of get a swag on what that would be from a capital expenditure perspective. But as we continue to develop our platform that we’re working on to really connect that trailers as a service physical asset with the aftermarket sales and support and we can – and we’re able to find the right level of customer connection, we might continue to increase that. So whether that’s 2024 or 2025, but there’s more than just the capital allocation component of the trailers as a service, there’s also the digital [ph] component that we’re bringing to life simultaneously.