Wabash National downgraded to ’B’ by S&P as trailer demand weakens
Investing.com -- S&P Global Ratings has downgraded Wabash National Corp. to ’B’ from a previous rating, with a negative outlook, citing weaker customer demand as clients continue to delay capital spending.
Following disappointing third-quarter earnings, S&P now expects Wabash to generate negative EBITDA in 2025, a substantial deviation from previous forecasts. The rating agency had earlier projected adjusted debt to EBITDA of 8.9x for 2025.
Leverage is now elevated beyond historical levels, which had remained below 4x in five of the last six years when adjusted for the Missouri Litigation Settlement in 2024. S&P anticipates leverage will remain high at 6x-7x in 2026, compared to its previous expectation of 3.8x.
The rating agency noted that while demand should eventually return, tariff uncertainty has worsened industry cyclicality and extended the recovery timeline.
In a positive development, Wabash successfully appealed the Eileen Williams, Elizabeth Perkins, et al. v. Wabash National Corp. lawsuit, reducing its obligation. On October 9, 2025, the company announced a $30 million settlement, significantly lower than the previously recorded litigation-related liability of $108 million after the second quarter.
S&P now forecasts a 20% to 25% revenue decline for the full year, worse than its previous projection of 10%-15%. The agency expects trailer deliveries of nearly 27,900 in 2025 and 29,000 in 2026, with truck body deliveries of approximately 11,200 in both years.
Despite cost-cutting efforts to adjust headcount, EBITDA was negative in the third quarter and is expected to remain negative in the fourth quarter, aligning with company guidance. S&P projects adjusted EBITDA margin will be negative 0.25%-0.75% in 2025, with potential improvement to 4%-6% in 2026.
Wabash’s liquidity position remains a bright spot, with cash of about $92 million and availability of approximately $264 million under its asset-based lending facility at the end of the third quarter. The ABL facility matures in September 2027, while senior unsecured notes are due October 2028.
Free operating cash flow expectations for 2025 have improved slightly to breakeven to positive $10 million, benefiting from timing of working capital payments. However, S&P expects negative free operating cash flow of $10 million to $20 million in 2026 as demand remains weak but the company builds inventory in anticipation of a rebound.
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