Wabash National Corporation (NYSE: NYSE:WNC), a leading manufacturer of semi-trailers and liquid transportation systems, reported its third-quarter financial results for 2024, meeting expectations despite a significant legal charge. The company's leadership, including CEO Brent Yeagy and Chief Growth Officer Mike Pettit, discussed the strategic initiatives and financial outcomes during the earnings call.
Adjusted net income was reported at $8.6 million, with an adjusted earnings per share (EPS) of $0.19. Wabash's consolidated revenue reached $464 million, and the company adjusted its full-year revenue outlook to approximately $1.95 billion and EPS to around $1.25. The company is preparing for potential growth in 2025, with a focus on customer-centricity and strategic partnerships.
Key Takeaways
- Wabash's adjusted financial results were in line with expectations, with consolidated revenue of $464 million.
- The company faced a $450 million punitive damages judgment, impacting financial reporting.
- Adjusted full-year revenue outlook was revised to $1.95 billion, with EPS expected to be around $1.25.
- Strategic partnerships and a focus on parts and service offerings are key drivers for future growth.
- Management remains optimistic about 2025, with potential improvements in the dry van market and operational capabilities from new facilities.
Company Outlook
- Wabash anticipates traditional capital investments of $70 million to $80 million in 2024.
- The company is preparing for strategic growth initiatives and maintaining a competitive dividend.
- Management believes 2025 could yield stronger adjusted EPS than 2024, with a stabilized dry van market.
Bearish Highlights
- The company lowered its full-year revenue outlook due to a seasonal decline in dry van orders.
- Higher legal expenses impacted EPS by $0.02.
Bullish Highlights
- Wabash is shifting towards a customer-centric model with enhanced parts and service offerings.
- Key partnerships and a Trailers as a Service program are expected to drive growth.
- The parts and service business showed resilience despite market sluggishness.
Misses
- The adjusted full-year revenue outlook reflects a $150 million reduction and a $0.30 decrease in EPS from previous estimates.
Q&A Highlights
- CEO Brent Yeagy and CFO Patrick Keslin discussed market challenges and the company's diverse revenue mix.
- There is caution in providing specific earnings guidance for 2025 due to uncertainties in the trailer market.
- Executives anticipate growth in parts and services and truck body segments to offset potential declines in dry van unit counts.
Wabash National Corporation's third-quarter earnings call highlighted the company's resilience in the face of legal challenges and market uncertainties. With strategic investments and a focus on parts and services, Wabash is positioning itself for growth in the coming year. The company's leadership remains committed to transparency and will provide updates on the company's progress in the subsequent quarters.
InvestingPro Insights
Wabash National Corporation's recent financial results and strategic outlook can be further contextualized with real-time data from InvestingPro. Despite the challenges highlighted in the earnings call, InvestingPro data reveals that Wabash's P/E ratio stands at 5.03, suggesting the stock may be undervalued relative to its earnings. This could be of interest to value investors, especially considering the company's current market capitalization of $743.59 million.
InvestingPro Tips indicate that Wabash's management has been aggressively buying back shares, which aligns with the company's commitment to shareholder value mentioned in the earnings call. This strategy could potentially support the stock price and signal management's confidence in the company's future prospects.
Additionally, InvestingPro highlights that Wabash's liquid assets exceed short-term obligations, which is a positive sign for the company's financial health, particularly in light of the legal challenges and market uncertainties discussed in the earnings report.
It's worth noting that the stock is trading near its 52-week low, with a significant price decline over the last three and six months. This information, combined with the company's revised outlook and strategic initiatives, may be relevant for investors considering the stock's potential for recovery.
For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Wabash National Corporation, providing deeper insights into the company's financial position and market performance.
Full transcript - Wabash National (WNC) Q3 2024:
Operator: Thank you for standing by. My name is Jeanie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wabash Third Quarter 2024 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. [Operator Instructions]. I would now like to turn the conference over to Ryan Reed. You may begin.
Ryan Reed: 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. 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 and any non-GAAP reconciliations are all available at ir.onewabash.com. Please refer to Slide 2 in our earnings deck for the company's safe harbor disclosure addressing forward-looking statements. I'll hand it off now to Brent.
Brent Yeagy: Thanks, Ryan. Good afternoon, everyone, and thank you for joining us. Let's start out by level setting that our adjusted third quarter financial results largely in line with our prior expectations. Before we get into the details on the quarter, I'd like to provide some strategic updates and address how we see the path of our growth continuing to unfold. To set the stage, I want to step back and reflect on the last few years of our journey to change the growth and performance trajectory of Wabash highlighting how we've reached our current position and where we see the company headed. When I assumed the role of CEO, our strategy of becoming a more diversified industrial was no longer serving us well. While the fundamental rationale behind it to address dry van cyclicality was found, especially after the challenges of the 2009 financial crisis it is become clear that some of the most promising mega trends were happening within our core markets of transportation, logistics, and distribution. We need to refocus closer to home. Expanding our equipment portfolio to complement our core dry van product line created greater value and an opportunity for deeper relationships with our customers, but we haven't fully capitalized on that potential. The pandemic provided an opportunity to quickly restructure both our organization and the go-to-market strategy with a latter shifting from a product-centric model to a more customer-centric one, where we can expand the definition of how value could be created. By streamlining access to multiple equipment types through a single commercial point contract, we created significant value for our customers. This shift has brought us closer to our customers, enabling us to jointly plan for the future and foster innovation. It also gave us further insight into what their deeper problems and business needs were beyond the products we make and the solutions we provide at the time. We are now able to position our total portfolio of transportation solutions as a more resilient set of revenue streams. The value of a deeper customer relationship gives us reason to engage more strategically with our supply chain to enhance the manner, which business can be conducted, allowing for more resilient responsiveness and willingness to collectively serve the customer. Suppliers recognize Wabash's efforts to improve the industry status quo and are aligning with us, combining strengths to provide even greater benefits to our customers, particularly within the next industry up cycle. Our reimagined manufacturing capacity will also be a key asset in this regard. Our increased resiliency and improved responsiveness will allow us to outperform as compared to previous cyclic upturns. One major area of strategic focus has been our parts and service initiative. For years, this opportunity was overlooked in our previous drive for diversification. We now recognize that growing this higher margin, recurring revenue business is a core element to balancing the simple nature of demand for transportation equipment. We're excited about the potential in parts and services, not just as a revenue driver, but it's a critical support mechanism to maximize the life cycle of our equipment. We continue to drive the core aspects of this growth journey and are increasingly excited about unmet needs we are uncovering through our enhanced customer relationships. Our partnerships with HTI and Fernweh Group are instrumental in this growth. The Wabash Parts joint venture with HTI rapidly established extensive distribution capabilities, providing our dealer network and fleet customers with efficient access to a broad portfolio of aftermarket parts. Meanwhile, our link JV with the Fernweh Group is enhancing our digital capabilities, providing us the capability of engaging our customers differently and engaging the solutions to problems in different ways. The ability to revolutionize how our dealers and our suppliers and customers experience the Wabash brand through the solutions we provide and the manner, which we provided within the vast transportation and logistics landscape. We have positioned the company well for this next chapter where the continued investment and development of capabilities will increase the scale of profitable growth for the company. To further refine our focus, we made some key organizational changes. Mike Pettit, formerly CFO has been both a thought leader and internal catalyst for our parts and service growth, recognizing that we needed to free him from his day-to-day CFO responsibilities to align to fully focus on the mission to accelerate the scale of our achievements Mike will now serve as Chief Growth Officer, overseeing parts and services, digital enablement, and engineering. Collectively, these areas of the business will be leveraged in a manner to bring our purpose of changing how the world reaches you to live at scale. Let me turn the call over to Mike for his first update as Chief Growth Officer. It's all yours, Mike?
Mike Pettit: Thanks, Brent. Before diving in, I'd like to mention that while I genuinely enjoyed my time as CFO, I'm excited about my new position and the focus it provides to more consistently to drive growth through the organization. On the topic of growth, one of the ways, Wabash is leading within the transportation, logistics, and distribution industries is by leveraging our ecosystem to navigate shifts and seize emerging opportunities. As a market leader in transportation equipment, Wabash sits at unique crossroads cloud brand with suppliers, dealers, carriers, shippers and technology providers. These partnerships allow us to tackle complex challenges and no single entity could solve alone. While we're still early in this process, in October, we hosted our second gathering of key ecosystem partners at our Ignite Conference, bringing together over 300 attendees. This gathering really demonstrates our commitment to transforming what was once viewed as a basic supply chain into a collaborative ecosystem capable of solving broader challenges together. There are already a couple of proof points I'd like to highlight. First, we recently signed a 10-year strategic supply agreement with Steel Dynamics (NASDAQ:STLD), a leading North American steel producer. This agreement strengthens our supply chain, ensuring priority access to critical components like steel coils and cross members during periods of high demand. This will help us meet customer needs, even during times when other manufacturers may face constraints. This agreement with Steel Dynamics adds to similar lines with Hydro, Ryerson, and Rockland Flooring position Wabash as a leader in supply reliability and operational excellence. Secondly, our Trailers as a Service partnership with Kodiak, a leader in autonomous truck technology is another significant step forward. Our TaaS program provides Kodiak with a flexible solution, offering access to a fleet of reliable trailers via subscription that includes maintenance, repair, and managed care support. This a lot of Kodiak is focused on developing an autonomous technology, while Wabash handles logistics and trailer utilization, uptime management and maintenance through our managed care services. This brings together a unique technology partner and Wabash dealer service capabilities supplemented by a growing managed care network with Wabash acting as a connective tissue to create value for all parties. Our team is excited by these partnerships, and we are just getting started. We have been laying the foundation for growth in 2024, that we believe will prove to be transformative for Wabash for the next couple of years as we look forward to continuing to create these opportunities by leveraging our position in the transportation, logistics, and distribution ecosystem. With that, I'll hand the call back over to Brent.
Brent Yeagy: Thanks, Mike. Many of you on this call know Mike and his passion for Wabash and the strategic direction we are following. We are lucky to have a leader like him to drive our strategic growth forward, and we look forward to seeing him drive in this new role. I'm equally excited for Pat Keslin to take the duties as CFO and work directly with Mike and I to achieve our strategic goals. After spending 15 years at Honeywell (NASDAQ:HON) in various finance roles, Pat joined Wabash and has progressed through several leadership positions most recently as VP of Finance. I have worked directly with Pat, since he joined Wabash in 2017, and I know that he has what we need as we move into this next chapter of the company. Moving on to our third quarter, you'll see a significant divergence between our GAAP and non-GAAP financial results due to the impact of a September 2024 jury verdict. As we've previously shared, a St. Louis jury found Wabash liable for $12 million in compensatory damages and $450 million in punitive damages in connection with a 2019 motor vehicle accident. This incident involved a passenger vehicle traveling at a high speed with an unobstructed view that struck the back of a nearly stopped 2004 Wabash trailer. While we booked a non-cash charge during the quarter related to this product, we believe the damages are abnormally high and the verdict is not supported by the facts or the law. Among other things, and despite precedent to the contrary, the jury was prevented from hearing critical evidence in the case, including the drivers blood at the hole level was over the legal women at the time of the accident and neither the driver, nor the passenger was wearing a seatbelt was also kept from the jury. There will be post judgment proceedings before the court enters a final judgment for the purpose of appeal but in the meantime, we are working closely with our external legal counsel, accounting and insurance firms, and we'll be evaluating all available legal options. We will continue to share updates as appropriate. Wabash continues to stand firmly behind the quality and safety of our products, this will not stop us from continuing to challenge ourselves to create new and innovative products and do what we can to contribute to safe arose. Turning to our backlog and financial outlook. Total bookings at the end of the third quarter totaled just over $1 billion. This compares to about $1.3 billion at the end of Q2. As we have expected, the dry van large deal season is pushing to the latter stages of normal seasonality in 2024, and we anticipate the flow of new orders to increase in Q4 and into early Q1 of 2025. With the dry van picture for 2025 yet to be fully developed, we feel that's prudent to adjust capacity in our vans facility in order to ensure we are optimizing our current labor structure for now and for what we expect to be a medium-term improvement. In the areas such as truck bodies, we are thoughtfully increasing incrementally to prepare for a positive 2025. Our parts and service revenue streams continue to add capability and we will have both a broader and deeper set of offerings as we enter into the new year and continue our march to higher levels of growth in this key area of the business. For now, the rebalancing of our Q4 dry van demand and capacity necessitates that we lower our full-year revenue outlook to roughly $1.95 billion and an EPS to approximately $1.25. While it's too early to quantify expectations for 2025, I do believe our 2025 EPS performance can exceed that of 2024. We look forward to providing more detail on our Q4 call. Finally, I'd like to touch on capital allocation priorities as we move forward. reiterating that the significant legal charge in the third quarter was non-cash, we remain well positioned to invest in the company's strategic growth initiatives with a focus on funding parts and service growth. We believe our current dividend is competitive with our peer set, and we expect to continue evaluating between potential returns we can generate via repurchases compared to M&A. In closing, we believe by adjusting our operations to align with the current market reality, we're optimizing our future earnings power. We have made significant changes throughout the company to increase Wabash's customer value creation, and we believe the company is well positioned to grow our parts and services revenue streams, which will complement the transportation solutions side of our portfolio to further enhance our value proposition to customers and our financial performance to shareholders. Our ecosystem approach to grow value is showing early signs of success and the company's new organizational structure is designed to accelerate and create focus on how we build our collective future. With that, I'll hand it over to Pat for his comments.
Patrick Keslin: Thanks, Brent, and good afternoon, everyone. I'm excited to be here and honored to step into the role of CFO. Mike has been an excellent mentor and I look forward to building on his accomplishments. As we continue transforming Wabash into a visionary leader in connected solutions for the transportation, logistics and distribution industries. I'm eager to work with all our stakeholders. Beginning with a review of our quarterly financial results. In the third quarter, our consolidated revenue was $464 million. During the quarter, we shipped approximately 7,585 new trailers and 3,630 truck bodies. Gross margin was 12.1% of sales during the quarter, while adjusted operating margin came in at 3.7%. In the third quarter, we generated adjusted EBITDA of $34 million or 7.4% of sales. Finally, for the quarter, adjusted net income attributable to common stockholders was $8.6 million or $0.19 per diluted share. Adjusted EPS generation for the quarter was slightly short of our prior quarterly outlook range However, I'd like to mention that we did incur higher-than-expected legal expense of $1.4 million or $0.02 of EPS in connection with the St Louis legal verdict. We did not include these costs on the non-GAAP adjustments made for Q3 as they may be recurring, while we move forward to find an acceptable resolution to the matter. Moving on to our reporting segments. Transportation Solutions generated revenue of $416 million and operating income of $29 million. Parts and services generated revenue of $52 million and operating income of $8.3 million. Year-to-date operating cash generation was $36 million with sequential working capital trends in Q3 being incrementally helpful to operating cash. Regarding our balance sheet, our liquidity, which comprises both cash and available borrowings, was $405 million as of September 30th. We finished Q3 with net debt leverage ratio of 1.5x. On capital allocation, during the third quarter, we directed $15 million to traditional CapEx, invested $1.4 million in revenue-generating assets via our Trailers as a Service initiatives, utilized $18.4 million to repurchase shares and paid quarterly dividends of $3.5 million. Our capital allocation focus continues 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. As Brent mentioned, we are committed to maintaining our dividend and we will continue to evaluate opportunities for share repurchase alongside of bolt-on M&A. Moving on to our guidance for 2024. We are reducing our revenue outlook to approximately $1.95 billion and EPS to roughly $1.25. From previous midpoint, this represents a reduction of $150 million in revenue and $0.30 of EPS. The most significant changes from our prior outlook come from reduced revenue stemming from level loading of line rates as well as some step-up in G&A related to increase legal expenses as our team works to address the aforementioned Jury verdict. Our updated guidance implies fourth quarter revenue of $425 million to $450 million and modestly positive Q4 EPS. Moving on to capital deployment expectations for 2024, we anticipate traditional capital investments to be between $70 million and $80 million in 2024 as a result of planned expenditures to support our strategic growth initiatives. We also expect to continue with a modest level of investment in CapEx that will be immediately revenue generating through our Trailers as a Service program. While we expect to have a more complete picture of 2025 by our Q4 call, we continue to believe that we have opportunity to generate stronger adjusted financial performance in 2025 relative to 2024. As the dry van market trough and we achieved improving performance from our truck body, tank trailer and parts and services businesses, we believe 2025 adjusted EPS can eclipse that of 2024. I'll now turn the call back to the operator, and we'll open it up for questions.
Operator: Thank you. The floor is now open for questions. [Operator Instructions] And your first question comes from the line of Jeff Kauffman with Vertical Research. Please go ahead.
Jeffrey Kauffman: Thank you very much. And congratulations in a tough environment. I want to take a bigger picture, kind of. We know the market's slowing down right now because of the pressure on industry P&L that's out there. We know that trailers are getting her a little harder in trucks just because fleets are nervous about [indiscernible] and they're holding on to the truck purchasing commitments for the year. As you talk to your customers about 2025, a lot of the truckload earnings calls I've heard companies are saying, hey, we may spend less in '25 than we are in '24. What have your customers told you so far about their '25 intentions versus the '24 intentions? And research just reduce their forecast for '25 below '24? What parts of your customer base are seeing the greatest pressure versus what parts of your customer base are actually holding in pretty well despite the environment?
Brent Yeagy: Yes. Thanks, Jeff. Complicated question, complicated answer. In the past, it would be much more enabled to give very discrete answers relative to the segments that make up our customers. The way I would explain it today is that it has varied amongst customers regardless of segment. So while there -- I use LTL. While there is relative robust environment for the LTL players, we have some LTL players that are holding the level of volume that they gave in 2024. We have other customers that are signaling, waiting on the sidelines at least at the time being to figure out what the market is going to do. And we have some that are having conversations about how they would add additional units throughout the year if the market warrants. So it's just in the LTL, it's a varied landscape. And I would say the truck load is very similar there. We have small and medium-sized players are still in the same position that they were really in the first and second quarter of 2025. That has not changed, which all goes into ACT and FTR's revised numbers. There are some larger players that are, again, maintaining their level by where they have a more rigid/purposeful replacement cycle, and they do not want to get behind what they have in the past. And there are some that are either, again, waiting on sidelines or holding off to assign more clarity to their purchasing decision, which is why we see it pushing in the cycle. It is a very customer independent decision-making process right now, not a broad brush application of what the market is or it isn't.
Jeffrey Kauffman: Thank you for that answer. If I can come out in a different way, more from the company side, I think the forecast this year, depending on who you talk to, is for about 235,000 units this year. If you look at the production forecast for -- on a quarterly basis, that may dip all the way down to kind of 180,000 unit annualized rate over the winter months and then maybe bounce back to kind of a 230 or 240 in the summer months. How do you manage for that kind of volatility? And then with the pricing model having changed where you made that switch a couple of years ago, should we be thinking about operating margins moving with volume differently than they have in the past?
Brent Yeagy: That's a multipart answer. Let me start on the first part, and then I'll let others chime in. Yes. First off, I think the ACT FTR estimates for 2025 are absolutely in the ballpark for the world that we're experiencing right now from a -- I'll go a little further with the question than maybe what you asked, is the pricing from a pricing standpoint, the pricing that we are -- that we have experienced just to round out our dry van backlog for 2024, we feel is indicative of how we will start out 2025. So we feel like that's a relatively clear data point that we can bridge off of and probably the Street can bridge off of. From a dynamic nature, Jeff, we've been doing this for 20-plus years. So in the world of dynamics, this isn't as bad as what we've experienced in the past. So well within our capability, managing and we manage it better today than we ever have. But with the capacity reductions that we alluded to with revised guidance that we gave are the moves that we're making right now to right size to create a better, call it, net margin profile over the next six months with an eye on how do you preserve a level of dynamic capability to obviously take advantage of whatever the market gives us. So that's what I would say from a narrative qualitative standpoint. And I'll look to Pat, if there is any other color?
Patrick Keslin: Yes. Brent hit it with the pricing where we expect the levels that we're at right now to flow into 2025. To answer your question specifically about operating margins now relative to what we've seen in the past. So it's a past trough time, we would expect to see an improvement there given what we've been able to do with pricing. So hopefully, that answers your question, Jeff.
Brent Yeagy: Yes. And what I would add is that you really have to integrate in the improved position of where we sit with our truck body business. You have to add in the additional parts and service on top of what is a better starting position at this point in the trough from a dry van perspective compared to any of the time we've had in our history.
Patrick Keslin: We have a more diverse set of revenue streams than we ever had during a trough [indiscernible] performance.
Jeffrey Kauffman: All right. Well, thank you very much. And I want to congratulate you for hiring an Indiana Hoosier as your CFO.
Patrick Keslin: It just shows you, we're capable of anything.
Operator: Your next question comes from the line of Mike Shlisky with D.A. Davidson. Please go ahead.
Michael Shlisky: Yes, hi. Good afternoon and thanks for taking my question. Maybe the thought on that -- just a follow-up on that last answer you gave. If you've got volumes that are flat and a little bit down next year on the trailer side, does the mix change? Now that you've ramped up your new facility, does the mix change between what you're producing your new and your old? And is there a margin tailwind just as you may have learnings as that's been open for a year and you've gotten your processes together? Is there any kind of positive there for 2025?
Brent Yeagy: Again, complicated question relative to the market. First of all, I would say that Wabash has the ability of I would say, being in a better position relative to the demand that we generate in 2025, even with, call it, flat industry levels from '24 to '25. And so we look -- we will look to capitalize on that, and we believe we can do that with the pricing that we got. The mix that we will -- that you tend to get or just as your absolute level of volume by mix has a limiting effect on how you utilize your assets most effectively in this type of environment. So we would not expect to necessarily get the full effect of the new capital, but we will get a level of positive impact by having it up and running. And it should be running at a full per ship volume throughout 2025. And so we'll see a full-year contribution of that. It should be helpful. And then we are actively working as we looked at kind of outstrip or not outstrip, but to outperform the demand environment, we are specifically looking and trying to tailor that demand to fit where we can most effectively build it.
Michael Shlisky: Okay. Okay. Makes sense. And I hopped on a little bit late, if the next two questions are having asked and answered, please just talk to, hop with you later on it. One asks about the parts and service business. I was a little bit surprised, you didn't see substantial growth in that business, given the efforts that you've made. You rolled out the new portal, I think, over the last few months. I guess I would like to just kind of feel for whether your efforts are bearing fruits and all we're seeing is just the effect of just a sluggish market broadly, but your efforts, you feel confident that you'll see some growth there over the next few quarters?
Brent Yeagy: Yes. On the scripted aspect of the call, we've alluded to the fact that we are very confident that the foundational elements that we have put in place, plus what is coming online what has come online in the last few months and will be coming online in the next month after that, get us a great position relative to '24 going into '25. The relative debt, not really debt, but I would just say more sluggish performance, right, still grew when we think about where we were. It's a tough market out there at this moment and nothing that -- we're not immune to that. And parts and services are not immune from cyclic demand characteristics of a market like this. But they are absolutely more resilient than most of our revenue streams. And I think that's showing in our numbers. So that's proving out. And with that, just having stability in the market, will provide a tailwind in 2025 as compared to 2024. When customers are trying to figure out one quarter to the next, is it going to get better or worse. That makes for delayed buying decisions and complete buying decisions and maybe not optimal. Just stability regardless of the level will help our parts and service business.
Patrick Keslin: Yes, I think it's important to remember, too, Mike, there's a lot of different revenue streams that roll up in our parts and services and a lot of what you alluded to, we're seeing some nice growth and progress in, but we do sell some into the OE space from component parts for Wabash, you can actually see that in our press release, where you see some weakness in some of those parts. As Brent mentioned, the initiative itself is much more resilient than the base business. You can see that we're providing the stability that we thought it would. But it still does operate within the overall freight landscape a lot of this year.
Brent Yeagy: Yes. So I guess, I'd even be more specific to the retail side of our parts and service, pretty happy with. What we directly provide in terms of part components that are directly consumed, which are directly related to OEM demand. They're in the same place the rest of our business is in.
Michael Shlisky: Okay. Got it. Got it. Also, maybe my last question. I also appreciate your commentary that there's a good chance for growth in earnings next year, even if there's no tremendous growth in the dry van business. But you use auto also, there have been some reductions to the dry van forecast and who knows it. There'll be more to come. It could be the other direction, but we could see an additional step downward. I'm just curious, can you hear me like maybe ballpark for us kind of what is the max amount that maybe the broader trailer market can be down or Wabash to still have a flat to up year in earnings for 2025?
Brent Yeagy: I'm not sure, I think that would be going beyond our ability right now to give that type of bottom for guidance. I would be hesitant to do that, as I sit here right now. There's absolutely room for that to occur, but I do not necessarily -- there's a lot of factors to integrate in answering that question.
Patrick Keslin: I would say that we would expect to see growth in parts and services, we expect to see growth in truck body. And so that would offset some softness in dry van specific unit count.
Michael Shlisky: Okay. That's totally fair. Appreciate the answers. I'll pass it on.
Patrick Keslin: Thanks, Michael.
Operator: That concludes our Q&A session. I will now turn the conference back over to Ryan Reed for closing remarks.
Ryan Reed: Thank you very much, and thanks everyone for joining us today. We look forward to following up third quarter. Have a great day.
Operator: That concludes today's call. Thank you for joining. You may now disconnect.
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