Wabash National acquiring truck body maker Supreme

[kscarbel2]

Jason Cannon, Commercial Carrier Journal (CCJ)  /  August 8, 2017

Wabash National Corporation is acquiring truck body builder Supreme Industries, Inc. 

Under the terms of the deal, Wabash National will acquire all outstanding shares of Supreme in a cash tender offer for $21 per share – a value of $364 million.

Both companies are based in Indiana but Supreme – the second largest U.S. manufacturer of truck bodies – primarily manufactures light- and medium-duty bodies at seven U.S. facilities. Wabash National Chief Executive Officer Dick Giromini says the semi trailer maker was drawn to the deal as his company seeks to further expand its final-mile business, which Wabash entered in 2015 with the debut of dry and refrigerated truck bodies.

“Wabash National has been closely monitoring the transportation landscape as the growth of e-commerce has continued to change the logistics model,” he says.

Supreme’s medium- and light-duty commercial vehicle portfolio, distribution network, and regional manufacturing locations will combine with Wabash National’s advanced composite technologies, expertise in lean manufacturing and optimization, engineering and design proficiency and supplier relationships.

.

[kscarbel2]

Wabash Reaches Agreement to Acquire Supreme Industries

Transport Topics  /  August 9, 2017

Trailer maker Wabash National Corp. has reached an agreement to acquire truck-body manufacturer Supreme Industries, a move that would catapult Wabash to the second-largest U.S. truck-body manufacturer as it expands its focus on e-commerce equipment.

Wabash announced Aug. 8 a cash tender offer for $21 per share, which represents an equity value of $364 million and an enterprise value of $342 million for Supreme.

Founded in 1974, Supreme is the second-largest U.S. manufacturer of truck bodies, with 2016 sales of $299 million, according to Lafayette, Ind.-based Wabash. Supreme, based in Goshen, Ind., primarily manufactures light- and medium-duty truck bodies at seven factories across the United States.

One analyst, responding to the news, was supportive.

“Our initial thoughts are mildly positive on the deal as it 1) further diversifies Wabash away from the 53-foot dry-van trailer industry, 2) will be accretive to earnings and 3) should not be viewed as a ‘bet-the-farm transaction,’ ” analyst Brad Delco with Stephens Inc. wrote in a note to investors.

With the acquisition completed, Wabash would trail only Morgan Corp. in the truck body manufacturing industry, Delco told Transport Topics. “Supreme has about 17% share of the market, whereas Morgan has about 40%. No other trailer manufacturer will have as much exposure to the truck body, final-mile e-commerce market as WNC, though, to say it differently.”

“Wabash National has been closely monitoring the transportation landscape as the growth of e-commerce has continued to change the logistics model,” Wabash CEO Dick Giromini said in a statement. “We formally entered the final-mile space in 2015 with the launch of our dry and refrigerated truck bodies, and we have been aggressively growing our presence and product offering over the past two years. This acquisition supports these efforts and accelerates our objective to transform our business into a more diversified industrial manufacturer.”

Once the transaction is complete, Wabash would see its revenue from dry van semi-trailer manufacturing fall to “an expected” 50% in 2018, compared with 64% in 2016,” Stifel, Nicolaus & Co. analyst Michael Baudendistel wrote in a note to investors.

Wabash expects to deliver at least $20 million in annual run-rate cost synergies by 2021, primarily driven by corporate and procurement expenditures, and operational improvement savings, according to the company. Over time, Wabash expects to achieve significant incremental revenue opportunities that neither company could obtain on a stand-alone basis, but it did not elaborate in its statement.

“This is a great opportunity for both companies to combine our strengths to provide an enhanced customer experience within the growing final-mile delivery space,” Giromini added. “With Supreme, not only can Wabash National accelerate organic growth with our innovative DuraPlate, honeycomb panel and molded structural composite truck bodies, we can also provide a broader conventional product offering to our existing customer base.”

The merger, when approved, will enhance Supreme’s ability to “innovate more quickly and create more value for customers,” Supreme Industries CEO Mark Weber said in a statement. “We found a cultural fit with Wabash National. Because of their commitment to safety, innovation and customer relationships, I’m confident joining the Wabash National family will benefit our employees, customers and distributors.”

Trailer maker Great Dane also owns Johnson Refrigerated Truck Bodies, which makes bodies for medium-duty trucks carrying temperature-sensitive products, including for home delivery, Great Dane said on its website, and the equipment is available through authorized Great Dane branches and select dealerships.

.

[kscarbel2]

Wabash to buy Supreme Industries

Fleet Owner  /  August 9, 2017

The acquisition and subsequent merger of the two manufacturers is expected to occur no later than the fourth quarter of 2017.

Trailer maker Wabash National Corp. aims to acquire fellow Indiana-based manufacturer Supreme Industries, which makes truck bodies, in a $21 per share stock offer worth between $342 million and $364 million.

Founded in 1974, Supreme is the second largest U.S. manufacturer of truck bodies, with 2016 sales of $299 million, according to Wabash -- primarily building light- and medium-duty truck bodies at seven facilities throughout the U.S.

Dick Giromini, Wabash’s CEO, said in a statement that the deal would merge the two companies and beef up Wabash’s own truck body manufacturing operations, positioning it to capitalize on the $2 billion “final mile” logistics market that’s rapidly increasing due to e-commerce activity.

“We formally entered the final mile space in 2015 with the launch of our dry and refrigerated truck bodies, and we have been aggressively growing our presence and product offering over the past two years,” he explained. “This acquisition supports these efforts and accelerates our objective to transform our business into a more diversified industrial manufacturer.”

Giromini noted that acquiring Supreme provides Wabash with “significant growth and diversification benefits” in line with the company’s long-term strategic plan, including reduced dependence on dry van trailer demand, "reduced cyclicality" and new segments for growth.

Under the terms of the agreement and merger plan, Wabash formed an acquisition subsidiary – Redhawk Acquisition Corp. – that will commence a tender offer to purchase all outstanding shares of Supreme for $21 per share.

The deal is expected to be wrapped up no later than the fourth quarter of this year.

Following the completion of the tender offer, Wabash expects to consummate a merger of Redhawk Acquisition Corp. and Supreme in which shares of Supreme that have not been purchased in the tender offer will be converted into the right to receive the same cash price per share as paid in the tender offer.

In all, Wabash expects the deal to deliver at least $20 million in annual “run-rate” cost synergies by 2021, with expected cost synergies primarily driven by corporate and procurement expenditures plus operational improvement savings.

Over time, Wabash said it expects to achieve “significant incremental revenue opportunities” via its acquisition and merger with Supreme that neither company could obtain on a standalone basis.

The Supreme acquisition is part of a larger “diversification” strategy on the part of Wabash that Giromini touched on in the company’s second quarter earnings call – a strategy aimed at “insulating” the company from the cyclical ups and downs in trailer demand.

“Certainly, there is increased focus [on acquisitions]; we've stated that in recent quarters that with the health of the company, the strength of the balance sheet really provides us an opportunity to increase the focus and effort in that arena,” he explained during the company’s earnings call in late July.

“We're taking more targeted approach; not simply waiting for opportunities to come across the transom,” Giromini added. “We're extremely excited about … the final-mile space. It's an area that we have invested in and continue to invest in organically here. And we continue to look at opportunities in that space to grow through strategic acquisition.”

And the money is apparently there to do it. On a consolidated basis, Wabash booked revenue of $436 million in the second quarter this year, which is a decrease of $36 million or 8% compared to the second quarter of 2016, with new trailer shipments reaching 14,150 units.

In terms of operating results, Wabash reported consolidated gross profit in the second quarter of $57.7 million or 15.5% of sales. Gross profit was down $23.4 million year-over-year and up $8.3 million sequentially, the company added, while it generated operating income and margin of $38.7 million and 8.9%, respectively.

.