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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.03pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-
Not scored
Net-tone change vs last year's 10-K.
MD&A
-0.03pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
No section text extracted for this filing. The 10-K may use a non-standard template that the parser doesn't recognize - the original doc is still linked in the Stats tab.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) describes the matters that we consider to be important to understanding the results of our operations for the years ending December 31, 2025 and December 31, 2024. In addition, we address our capital resources and liquidity as of December 31, 2025. Our discussion begins with our assessment of the condition of the North American trailer industry along with a summary of the actions we have taken to strengthen the Company. We then analyze the results of our operations for the last two years, including trends in the overall business and our operating segments, followed by a discussion of our cash flows and liquidity, capital market events, debt obligations, and contractual commitments. We conclude with a review of critical accounting judgments and estimates and information on recent accounting pronouncements that we adopted during the year, if any, as well as those not yet adopted that may have a material impact on our financial accounting practices, if any.
For a discussion of results of operations for the year ended December 31, 2024 compared to the results of operations for the year ended December 31, 2023, see Part II, Item 7,—”Management's Discussion and Analysis of Financial Condition and Results of Operations” of our 2024 Annual Report on Form 10-K, filed with the SEC on February 18, 2025.
Executive Summary
In 2025, the company continued to build on our strategic accomplishments of 2024 by demonstrating improved resilience during an industry down-cycle and maintaining a forward posture by continuing to invest in strategic growth in a manner that's unprecedented relative to market conditions. Operating profit in 2025 totaled $307.5 million and the operating margin was 19.9%. The Company’s operating profit includes a $418.6 million non-cash charge for punitivedamages stemming from the Product Liability Matter as further described in Note 15 in the Notes to Consolidated Financial Statements. Additional discussion related to financial results are included in the “Results of Operations” section below.
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Throughout 2025, we have continued to create more points of connection with our customers with greater focus on Parts & Services as well as innovative offerings like Trailers as a Service (TaaS)℠ that allow us to add recurring, longer-term value beyond an initial transaction. These advancements have not only deepened our customer engagement but have also enriched our collaborations with supplier and technology partners. We have solidified specific partnerships that are enabling us to grow our recurring revenue within the transportation, logistics and infrastructure ecosystem. Our Wabash Parts joint venture rapidly established significant distribution capabilities that allow our dealer network efficient access to our comprehensive portfolio of aftermarket parts. In 2025, Wabash exercised its option to acquire its joint venture partner’s 51% membership interest in Linq Venture Holdings, LLC, a transaction that makes it a wholly-owned subsidiary. Linq Venture Holdings, LLC continues to play a crucial role in advancing our digital capabilities, which aim to revolutionize the online experience for our dealers, traditional and non-traditional suppliers of both parts and services and a broad set of customers spanning across the vast transportation and logistics landscape. Additionally, our 2023 investment to add 20% more dry van manufacturing capacity at our Lafayette facility has reinforced our go-to-market strategy with a portfolio-based selling approach that leverages the breadth of our products.
In addition to our commitment to sustain profitable growth within each of our existing reporting segments, our long-term strategic initiatives include a focus on diversification efforts, both organic and strategic, to continue to transform Wabash into a lean, visionary leader of connected solutions with a higher growth and margin profile to successfully deliver a greater value to our shareholders. Our strategy is centered around our ability to scale core competencies by growing in and around core markets with known customers.
Our ability to generate solid margins and cash flows and a healthy balance sheet should position the Company with ample resources to (1) fund our internal capital needs to support both organic growth and productivity improvements, (2) optimize our debt leverage and other financial ratios, (3) return capital to shareholders, and (4) selectively pursue strategic acquisitions. We will continue our internal effort to strategically identify potential acquisition or partnership targets that we believe can create shareholder value and accelerate our growth and diversification efforts, while leveraging our strong competencies in manufacturing execution, sourcing and innovative engineering leadership to assurestrong value creation. Organically, our focus is on profitably growing and diversifying our operations through leveraging our existing assets, capabilities, and technology into higher margin products and markets and thereby providing value-added customer solutions.
Throughout 2025, we demonstrated our commitment to being responsible stewards of the business by maintaining a balanced approach to capital allocation. The resilience of our operations and our strong financial position provided us the opportunity to take specific actions as part of our ongoing commitment to prudently manage the overall financial risks of the Company, returning capital to our shareholders, and optimizing our capital structure for long-term growth. These actions included repurchasing $30.9 million (inclusive of excise tax) of common stock under the share repurchase program approved by our Board of Directors and paying dividends of $13.8 million. In addition, as further described in the “Liquidity and Capital Resources” section below, in September 2022 we amended our Revolving Credit Agreement. The amendment increased the total credit facility to $350 million, extended the maturity to September 2027, which is the nearest maturity date of our long-term debt, and as of December 31, 2025, there was $45.0 million outstanding under the Revolving Credit Agreement. Collectively, these actions demonstrate our confidence in the financial outlook of the Company and our ability to generate cash flow, both near and long term, and reinforce our overall commitment to deliver shareholder value while maintaining the flexibility to continue to execute our strategic plan for profitable growth and diversification.
In addition to overall industry risks, there are downside risks relating to issues with both the domestic and global economies, including the housing, energy, and construction-related markets in the U.S. Other potential risks as we proceed into 2026 primarily relate to the fact that we rely on a limited number of suppliers for certain key components and raw materials in the manufacturing of our products, including tires, landing gear, axles, suspensions, aluminum extrusions, chassis and specialty steel coil. While we have taken actions to mitigate certain of these risks, there may be additional or increased shortages of supplies of raw materials or components which would have an adverse impact on our ability to meet demand for our products. Despite these risks, we believe we are well positioned to capitalize on a historically normalized overall demand level while maintaining or growing margins through improvements in product pricing as well as productivity and other operational excellence initiatives.
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As we enter 2026, we will continue to adjust to changes in the current environment, preserve the strength of our balance sheet, prioritize the safety of our employees, and ensure the liquidity and financial well-being of the Company. We believe we remain well-positioned for both near-term and long-term success in the transportation, logistics, and infrastructure industries because: (1) our core customers are among the major participants in these industries; (2) our technology and innovation provides value-added solutions for our customers by reducing operating costs, improving revenue opportunities, and solving unique transportation problems; (3) our Wabash Management System (“WMS”) principles and processes and enterprise-wide lean efforts drive focus on the interconnected processes that are critical for success across our business; (4) our significant brand recognition, presence throughout North America, and the utilization of our extensive dealer network to market and sell our products; and (5) our One Wabash approach to create a consistent, superior experience for all customers who seek our connected solutions in the transportation, logistics, and infrastructure markets. By continuing to be a premier provider of diverse solutions aimed at optimizing end-to-end supply chains across the transportation, logistics, and infrastructure industries we expect to leverage our existing assets and capabilities into higher margin products and markets by delivering connected value-added customer solutions.
Operating Performance
We generally measure our operating performance in five key areas – Safety/Morale, Quality, Delivery, Cost Reduction, and Environment. We maintain a continuous improvement mindset in each of these key performance areas.
Safety/Morale. The safety of our employees is a core value. We demonstrate this core value by working on innovations to protect the people who operate our equipment and partnering with others to promote higher standards in transportation and manufacturing. We continually focus on reducing the severity and frequency of workplace injuries to create a safe environment for our employees and minimize workers compensation costs. We believe that our improved environmental, health, and safety management translates into higher labor productivity and lower costs as a result of less time away from work and improved system management. See the “Human Capital Resources and Management” section in Part I, Item 1, "Business" of this Annual Report on Form 10-K for additional detail on our commitment to safety and human capital.
Quality. Our commitment to quality and safety is backed by a robust concern reporting system and associated processes. Any Wabash employee can report a potential safety-related concern that could cause an unreasonable risk of harm. Potential or reported safety concerns are routed to a cross-functional Product Safety Team that includes members from Quality, Warranty, Engineering, Sales and Strategic Sourcing. The Product Safety Team investigates submissions and serves as an initial filter of potential safety issues. Issues that need to be escalated are sent to the Product Safety Council, which consists of executive team members who will coach and give final direction to the Product Safety Team. We monitor product quality on a continual basis through a number of means for both internal and external performance as follows:
▪ Internal performance. Key process indicators for our quality measurement include both First Time Quality (“FTQ”) and Defects Per Unit (“DPU”). FTQ is a performance metric that measures the impact of all aspects of the business on our ability to ship our products at the end of the production process and DPU is a measurement of defects found at the end of the production process. As with previous years, the expectations of the highest quality product continue to increase while maintaining FTQ performance and reducing rework. In addition, we currently maintain ISO 9001 registrations at our Lafayette, Indiana (since 2012) and Cadiz, Kentucky facilities (since 2014).
▪ External performance. We actively track our warranty claims and costs to identify and drive improvementopportunities in quality and reliability for our customers. Early lifecycle warranty claims for our van trailers are trended for performance monitoring. Using a unit-based warranty reporting process to track performance and document failure rates, early lifecycle warranty units per 100 van trailers shipped averaged approximately 2.5, 2.8, and 2.6 units in 2025, 2024 and 2023, respectively. Continued low claim rates have been driven by our successful execution of continuous improvement programs centered on process variation reduction and responding to the input from our customers. We expect that these activities will continue to allow us to manage our total warranty cost profile.
In addition to managing a robust quality management system for Wabash’s operations for internal and external performance, we expect all direct and indirect suppliers to meet certain standards of quality, engineering, delivery, and management. Our supplier audit process is a comprehensive assessment performed at the supplier’s facility focusing on their system capabilities and how they measure to Wabash’s established requirements. Based on a supplier’s overall rating, action plans are developed to identify improvementopportunities, corrective actions, and timelines to ensure proper closure.
Delivery/Productivity. We measure productivity on many fronts. Some key indicators include production line throughput, labor hours per trailer or truck body, labor cost as a percentage of revenue, scrap rates, and inventory levels. Improvements over the last several years in these areas have translated into significant improvements in our ability to better manage inventory flow, control costs, and analyze material and contribution margins.
▪ During the past several years, we have focused on productivity enhancements across all of our product lines within manufacturing assembly and sub-assembly areas through developing the capability for mixed model production.
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▪ Through deployment of the Wabash Management System (“WMS”), all of our business reporting segments have focused on increasing velocity at all our manufacturing locations. We have engaged in extensive lean training and over the last several years have deployed purposeful capital to accelerate our productivity initiatives.
▪ Our manufacturing leadership teams have developed competencies to isolate process constraints, and then address those constraints through multiple avenues that drive additional throughput and cost reductions.
Cost Reduction and our Operating System. The WMS allows us to develop and scale high standards of excellence across the organization. We believe in our One Wabash approach and standardized processes to drive and monitor performance inside our manufacturing facilities. Continuous improvement is a fundamental component of our operational excellence focus. Our focus on leveraging One Wabash and the WMS mindset across the Company, for example, has allowed us to make strides in all areas of manufacturing including safety, quality, on-time delivery, cost reduction, employee morale, and environment. We continue to maintain focus on continuous improvement. In the past several years, we made adjustments throughout our processes to align variable and fixed costs with capacity and created leaner internal processes in multiple areas. In addition, we continued to invest capital in our processes to reduce variable cost, lowered inherent safety risk in our processes, improved overall consistency in our manufacturing processes, and maintained our assets to capitalize on any economic and/or industry upswings.
Environment. We have been on a sustainability journey since the Company’s inception. Uniquely incentivized to improve product designs by utilizing new composite materials to reduce the weight and improve the durability of our products, we are a leader in creating value for customers by facilitating improved fuel efficiency and ensuring the quality and longevity of our equipment. We commit to our employees, customers, and shareholders to conduct our business responsibly, protect the environment through pollution prevention, and uphold employee health and safety as a core company value. Energy conservation efforts are another critical part of our commitment to continuous improvement and environmental stewardship, and we drive energy conservation efforts across all of our facilities. This policy includes improving operational efficiency as well as upgrading to energy-conserving equipment where possible.
We demonstrate our commitment to sustainability by maintaining ISO 14001 registration of our Environmental Management System at our Lafayette, Indiana; Cadiz, Kentucky; San José Iturbide, Mexico; and Harrison, Arkansas locations. In 2005, our Lafayette, Indiana facility was one of the first trailer manufacturing operations in the world to be ISO 14001 registered. Being ISO 14001 registered requires us to demonstrate quantifiable and third-party verified environmental improvements.
During 2024, our recycling programs and use of recycled materials saved 213,000 cubic yards of landfill space, 53,000,000 kilowatt-hours of electricity, 57,800 metric tons of greenhouse gas emissions, and 31,600 mature trees. In addition, in December 2025, we were recognized among Newsweek’s America’s Most Responsible Companies 2026.
In addition, manufacturers across multiple industries choose our proprietary DuraPlate ® composite technology for its versatility and strength. Each DuraPlate ® panel and product contains between 15% and 30% post-consumer resin (“PCR”). By using PCR in the manufacture of DuraPlate ® , Wabash has diverted the equivalent of more than 1.93 billion plastic bottles from landfills including 75.4 million bottles in 2024. Furthermore, at the end of the product lifespan, DuraPlate ® is recyclable.
Our annual Corporate Responsibility Report is available on our website (ir.onewabash.com) and references the ongoing environmental, social, and governance (“ESG”) initiatives that demonstrate our commitment to sustainability and social responsibility. The content on any website referred to in this Annual Report on Form 10-K is not incorporated by reference into this Annual Report on Form 10-K unless expressly noted.
Industry Trends
Trailer demand is a direct function of the amount of freight to be transported. To monitor the state of the industry, we evaluate a number of indicators related to trailer manufacturing and the transportation industry. Recent trends we have observed include the following:
Transportation / Trailer Cycle. The trailer industry generally follows the transportation industry cycles. The most recent estimates from industry forecasters ACT Research Co. (“ACT”) and FTR Associates (“FTR”) indicate total United States trailer production levels for 2025 of approximately 196,000 and 195,000, respectively, which represents a decrease of approximately 16.6% and 15.2%, respectively, from 2024 production levels.
Current estimates from ACT and FTR for 2026 United States trailer production are 183,000 and 180,000, respectively, representing a decrease of approximately 6.6% and a decrease of 7.7%, respectively, versus 2025. These estimates are generally in-line with our expectations as trailer manufacturers manage a continued weak of 2026 demand compared to previous years due to the continuing freight recession.
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ACT is forecasting annual new trailer production levels for 2027, 2028, 2029, and 2030 of approximately 257,000, 297,000, 307,000, and 299,000, respectively. In addition, FTR is forecasting annual new trailer production for 2027, 2028, 2029 of approximately 231,000, 291,000, and 298,000, respectively. These estimates are generally more consistent with historical trailer industry production levels, and in some years higher than historical production levels. However, overall economic uncertainty and continued soft demand in the industry for certain of our products could continue to impact these estimates. This uncertainty and softness are evident in the ACT and FTR forecasts, particularly for 2026 production. However, we believe that our strategic plan and actions taken over the last several years have positioned us to remain well-suited to adapt to changes in the industry and demand environment due to our strong balance sheet, liquidity profile, and diversification.
Transportation Regulations and Legislation . There are several different areas within both federal and state government regulations and legislation that are expected to have an impact on trailer demand, including:
▪ The Canadian Department of the Environment continues to delay the trailer portions of Canada’s greenhouse gas regulations (“GHG2”), essentially following the California Air Resource Board (“CARB”), who will provide at least a six-month notice prior to commencement of enforcing GHG2. This rule mirrored the EPA GHG2 regulations and would only apply to Wabash trailers registered in Canada.
▪ On December 3, 2019, CARB issued an official advisory notifying trailer manufacturers that CARB will be suspending enforcement of GHG2 trailer requirements and will provide at least a six-month written notice prior to commencement of enforcing GHG2. If we were to receive CARB’s six-month advance notice of enforcement, more stringent van trailer standards would potentially become effective for various model years—requiring more advanced fuel efficiency technologies, such as rear boat tails and higher percentage improvement side skirts and tires. CARB continues to suspend enforcement as a six-month written notice has not been issued. We will continue to monitor the status of the regulation.
▪ CARB Advanced Clean Fleet (“ACF”) legislation sets requirements for organizations to reduce the overall emissions of the vehicle fleets they operate. These standards applied to fleets owned and operated by Wabash at the Moreno Valley and Perris, California facilities as well as many Wabash customers who own and operate fleets in California. In early 2025, CARB withdrew a waiver request from EPA and will not enforce ACF regulations for high-priority (large commercial) and drayage fleets. State and local government fleets remain subject to the regulation.
▪ CARB’s Advanced Clean Truck (“ACT”) regulations impact the truck body chassis manufacturers that supply to Wabash by setting an annual zero emission sales requirement. Congress has since revoked previously-issued waivers for CARB’s ACT through a Congressional Review Act. This regulation is being challenged by multiple states as well as the EPA and DOJ. However, CARB is continuing efforts to advance electric vehicle deployment and adoption and has issued a report outlining potential means for doing the same. Wabash will continue to monitor the lawsuits surrounding this regulation while gathering information from customers and suppliers regarding any continued push to drive larger market penetration of electric commercial trucks over the coming years beyond an immediate compliance-only driven solution.
▪ In 2024, CARB zero-emissions Transport Refrigeration Unit (“TRU”) rules went into effect. Like ACF, these requirements impacted Wabash customers and worked to drive greater demand for electric TRUs that are installed on Wabash vehicles. CARB requested and received a partial waiver from EPA for TRUs. CARB withdrew the portion of the waiver request that covered the TRU zero emission requirements. While CARB withdrew their waiver request for some of their zero emissions related regulations, we believe that innovation will continue to drive the industry toward a lower emission solution that provides a value proposition to the customers over and above a compliance-only driven solution.
▪ EPA’s American Innovation and Manufacturing Act (“AIM”) continues to phase-down the production and consumption of hydrofluorocarbons (“HFCs”) in the United States. The AIM Act currently mandates that EPA provide Wabash with application-specific allowances to manufacture EcoNex™ Technology products. Such allowances operate to increase certainty that HFCs are made available to Wabash during the time that the application-specific provisions are active. EPA has extended the allocation program for another five years or through 2031. Wabash has not been impacted by any reduction in availability or increase in cost of HFCs and did not request allowances for 2026 based on current demand as well as existing inventory.
▪ Updates to the proposed CARB 2024 Heavy-Duty Engine and Vehicle Omnibus regulation provided greater flexibility to chassis manufacturers for 2024–2026 engine model years. While this should help OEMs as they develop near-term engine updates, OEMs will be required to comply with 2027 emission regulations in the long-term. While the number of chassis manufacturers registering EVs continued to grow (albeit largely in the traditional OEM space), hydrogen fuel cell manufacturers also started to register. While the numbers were small (primarily testing and over-the-road applications), this was a positive sign for the future of work trucks. In December 2024, the EPA issued a waiver officially giving CARB federal permission to enforce the rule.
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▪ PFAS regulations are being developed and issued by EPA and various states. We are monitoring the regulations and their applicability to our operations and products. Minnesota’s Pollution Control Agency (“MPCA”) has issued a reporting requirement for manufacturers who distribute for sale into the state any product or component that contains intentionally-added PFAS. The MPCA regulation includes a ban on non-essential uses beginning in 2032. Wabash is working closely with its suppliers to understand whether any supplied components or materials contain any such PFAS under this regulation.
Other Developments. Other developments and potential impacts on the industry include:
▪ While EPA and the National Highway Traffic Safety Administration (“NHTSA”) are unable to regulate trailers due to a previous ruling, which reduces the risk to trailer manufacturers in the near term, CARB continues to seek additional states to join their position in attempting to drive regulation at the state level.
▪ While we believe the need for trailer equipment will be positively impacted by the legislative and regulatory changes addressed above, these demand drivers could be offset by factors that contribute to the increased concentration and density of loads.
▪ Trucking company profitability, which can be influenced by factors such as fuel prices, freight tonnage volumes, and government regulations, is highly correlated with the overall economy of the U.S.; carrier profitability significantly impacts demand for, and the financial ability to, purchase new trailers.
▪ We expect that the majority of freight in our industry will continue to be moved by truck and, according to ATA, total freight transportation revenue is expected to increase from an estimated $921 billion in 2025 to $1.46 trillion in 2035.
▪ The ongoing transition from diesel tractors (and their coolant systems) to electric or fuel cell vehicles changes how heated or cooled trailers can regulate temperature. This creates a market need for alternate heating and cooling solutions.
▪ The impacts of the continued near-shoring trend should be positive for trucking. It will continue to impact current supply chain routes, with possible movement of logistics hubs.
▪ Oversupply of refrigerated trailers in 2022-2023 has led to a surplus of inventory in the market, which put downward pressure on supply since 2024. The long-term outlook of the market still remains strong, and is expected to follow the same industry trend as the total trailer market as demand softness subsides.
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Results of Operations
2025 Compared to 2024
Net Sales
Net sales in 2025 decreased $404.0 million, or 20.8%, compared to 2024. By business segment, net sales prior to intersegment eliminations and related trailer units sold were as follows (dollars in thousands):
Year Ended December 31,
Change
Amount
(prior to elimination of intersegment sales)
Sales by Segment
Transportation Solutions
Parts & Services
Eliminations
Total
New Units Shipped
(units)
Trailers (1)
Truck bodies
Total
Used Units Shipped
(units)
Trailers
(1) Trailer shipments for 2025 and 2024 do not include TaaS units transferred of 1,262 and 63 units, respectively.
TS segment sales, prior to the elimination of intersegment sales, were $1,344.4 million in 2025, a decrease of $410.8 million, or 23.4% compared to 2024. The decrease in sales was primarily due to a decline in shipments due to lower demand. New trailers shipped during 2025 totaled 27,770 compared to 32,100 trailers in prior year, a decrease of 13.5%. New truck bodies shipped during 2025 totaled 10,600 compared to 14,255 truck bodies in prior year, a decrease of 25.6%. The decrease in shipments was primarily driven by lower demand due to the softening freight market.
P&S segment sales, prior to the elimination of intersegment sales, were $237.1 million in 2025, an increase of $32.1 million, or 15.6%, compared to 2024. The overall increase in sales for this segment was due primarily to the growth of our Upfitting centers and our Trailers as a Service (TaaS)℠ offerings, which combined grew by $24.7 million compared to 2024.
Cost of Sales
Cost of sales was $1,472.8 million in 2025, a decrease of $208.8 million, or 12.4%, compared to 2024. Cost of sales is comprised of material costs, a variable expense, and other manufacturing costs, comprised of both fixed and variable expenses, including direct and indirect labor, outbound freight, overhead expenses, and depreciation.
TS segment cost of sales was $1,318.7 million in 2025, a decrease of $218.9 million, or 14.2%, compared to 2024. The decrease in cost of sales, which was primarily driven by lower shipment volumes, resulted in a decrease in materials costs of $133.7 million, or 13.5%, a decrease in labor and employee related costs of $46.7 million, or 15.8%, along with a decrease in certain other manufacturing costs.
P&S segment cost of sales, prior to the elimination of intersegment sales, was $192.9 million in 2025, an increase of $35.3 million, or 22.4%, compared to 2024. The increase in cost of sales, which was primarily driven by higher sales, resulted in an increase in materials costs of $24.8 million, or 23.6%, offset by an increase in labor and employee related costs of $3.0 million, or 10.0%, and an increase in certain other overhead costs associated with increased sales and growth initiatives within the segment.
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Gross Profit
Gross profit was $69.9 million in 2025, a decrease of $195.2 million, or 73.6% from 2024. Gross profit as a percentage of sales, or gross margin, was 4.5% in 2025 as compared to 13.6% in 2024. Gross profit by segment was as follows (in thousands):
Year Ended December 31,
Change
Gross Profit by Segment
Transportation Solutions
Parts & Services
Total
TS segment gross profit was $25.7 million in 2025 compared to $217.6 million in 2024, a decrease of $191.9 million. Gross profit, as a percentage of net sales prior to the elimination of intersegment sales, was 1.9% in 2025 as compared to 12.4% in 2024, a decrease of 10.5%. The overall decrease in gross profit from the prior year period was primarily driven by the decline in shipments across all of our product lines. Conversion costs that did not decline as much as sales further reduced gross profit as a percentage of net sales.
P&S segment gross profit was $44.2 million in 2025 compared to $47.5 million in 2024. Gross profit, as a percentage of net sales prior to the elimination of intersegment sales, was 18.6% in 2025 compared to 23.1% in 2024, a decrease of 4.5%. The overall decrease in gross profit was primarily related additional costs associated with business growth and differences in the mix of revenues within the segment.
General and Administrative Expenses
General and administrative expenses were $(286.8) million in 2025, which decreased $867.5 million, or 149.4%, compared to 2024. The year-over-year decrease was primarily driven by developments related to the Product Liability Matter, as defined and further described in Note 15 to the Consolidated Financial Statements. In 2024, Wabash recorded a $450 million loss related to this matter. In 2025, following a reduction in the judgment, the Company recognized a $418 million gain. This favorable impact was partially offset by an increase in employee-related general and administrative costs, including wages, benefits, and incentive compensation programs, of approximately $8.7 million. As a percentage of net sales, general and administrative expenses were (18.6)% in 2025 compared to 29.8% in 2024. The year-over-year change as a percentage of net sales was primarily attributable to the impact of the Product Liability Matter.
Selling Expenses
Selling expenses were $24.4 million in 2025, a decrease of $3.6 million, or 12.8%, compared to 2024. The decrease was primarily attributable to a decrease in advertising and promotional expense of approximately $3.1 million, which is due in part to expenses incurred during the 2024 period related to our Ignite Conference. As a percentage of net sales, selling expenses were 1.6% in 2025 compared to 1.4% in 2024. The overall increase in selling expenses as a percentage of net sales was primarily attributable to the decrease in sales outpacing the decrease in selling expenses.
Amortization of Intangibles
Amortization of intangibles was $11.2 million in 2025 compared to $12.0 million in 2024. Amortization of intangibles was the result of expenses recognized for intangible assets recorded from previous acquisitions. In 2025, trademark intangibles acquired in conjunction with the Trailerhawk acquisition began amortization, and are included in the $11.2 million of spend in 2025 . There were certain technology-related intangible assets that became fully amortized 2024.
Impairment and Other, Net
Impairment and other, net was a net loss of $13.6 million during 2025 and a net loss of $0.5 million during 2024. Activity during the current year period primarily related to the Company’s announcement of its plan to idle its facilities in Little Falls, Minnesota and in Goshen, Indiana. The Company reviewed the asset group for impairment and as a result, machinery and equipment assets at the Little Falls, Minnesota facility previously valued at $17.2 million were determined to have a fair value of $3.8 million, resulting in a $13.4 million impairment charge recognized in the fourth quarter of 2025. Little Falls, Minnesota production is a part of the Transportation Solutions segment. The review of the Goshen, Indiana asset group , which also is a part of the Transportation Solutions segment, did not result in an impairment.
Other Income
Interest expense in 2025 totaled $21.3 million compared to $19.8 million in 2024. Interest expense relates to interest and non-cash accretion charges on our Senior Notes and Revolving Credit Agreement. Interest expense in the current year period increased compared to the 2024 period due to borrowing activities under the Revolving Credit Facility in 2025.
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Other, net for 2025 represented income of $4.0 million as compared to income of $5.4 million for 2024. Income for both the current and prior year period primarily relates to interest income.
Income Taxes
We recognized income tax expense of $71.5 million in 2025 compared to income tax benefit of $93.5 million in 2024. The effective tax rate for 2025 was 25.3% compared to 24.8% for 2024. The effective tax rate for both 2025 and 2024 differs from the U.S. Federal statutory rate of 21.0% primarily due to the impact of state and local taxes and discrete items, including stock-based compensation. Net cash refunds for income taxes in 2025 was $1.3 million compared to net cash paid during 2024 of $29.8 million.
Liquidity and Capital Resources
Capital Structure
Our capital structure is comprised of a mix of debt and equity. As of December 31, 2025, our debt-to-equity ratio was approximately 1.2:1.0. Our long-term objective is to generate operating cash flows sufficient to support the growth within our businesses and increase shareholder value. This objective will be achieved through a balanced capital allocation strategy of sustaining strong liquidity, maintaining healthy leverage ratios, investing in the business both organically and strategically, and returning capital to our shareholders. Our Board of Directors designated a Finance Committee to assist the Board in overseeing the Company’s capital structure, financing, investment, and other financial matters of importance.
Throughout 2025, in keeping with this balanced approach, we repurchased $30.9 million (inclusive of excise tax) of common stock under the share repurchase program approved by our Board of Directors and paid dividends of $13.8 million. Additionally, as described in the “Debt Agreements and Related Amendments” section below, in September 2022 we amended our Revolving Credit Agreement. The amendment increased the total revolving commitments to $350 million and extended the maturity to September 2027, the nearest maturity date of our long-term debt. As of December 31, 2025, there was $45.0 million outstanding under the Revolving Credit Agreement. Collectively, these demonstrate our confidence in the Company’s long-term financial outlook and ability to generate cash flow both near and long term. They reinforce our commitment to delivering shareholder value while maintaining the flexibility to execute our strategic plan for profitable growth and diversification.
Our liquidity position, defined as cash on hand and available borrowing capacity under the Revolving Credit Facility, was $235.3 million as of December 31, 2025, compared to $421.9 million as of December 31, 2024, representing a decrease of 44%. The decrease in liquidity from the prior year is primarily attributable to a lower cash balance and lower available revolver capacity at December 31, 2025, resulting from a reduction in cash provided by operating activities in 2025 versus 2024. For 2026, we expect to continue our commitment to fund our working capital requirements and capital expenditures from net cash provided by operations or available borrowing capacity under the Revolving Credit Agreement, as needed. Along with these investments, we will also maintain our assets to react to any economic and/or industry changes, while also responsibly returning capital to our shareholders. We will continue to move rapidly to adjust to the current environment and preserve the strength of our balance sheet, while prioritizing the safety of our employees and ensuring the liquidity and financial well-being of the Company.
Debt Agreements and Related Amendments
Senior Notes
On October 6, 2021, we closed on an offering of $400 million in aggregate principal amount of our 4.50% unsecured Senior Notes (the “Senior Notes”). The Senior Notes were issued pursuant to an indenture dated as of October 6, 2021, by and among us, certain subsidiary guarantors named therein (the “Guarantors”) and Computershare Trust Company, N.A., as trustee (the “Indenture”). The Senior Notes bear interest at the rate of 4.50% and pay interest semi-annually in cash in arrears on April 15 and October 15 of each year. The Senior Notes will mature on October 15, 2028.
We may redeem some or all of the Senior Notes at redemption prices (expressed as percentages of principal amount) equal to 101.125% for the twelve-month period beginning October 15, 2025 and 100.000% beginning on October 15, 2026, plus accrued and unpaid interest to, but not including, the redemption date. Upon the occurrence of a Change of Control (as defined in the Indenture), unless we have exercised our optional redemption right in respect of the Senior Notes, the holders of the Senior Notes will have the right to require us to repurchase all or a portion of the Senior Notes at a price equal to 101% of the aggregate principal amount of the Senior Notes, plus any accrued and unpaid interest to, but not including, the date of repurchase.
The Senior Notes are guaranteed on a senior unsecured basis by all direct and indirect existing and future domestic restricted subsidiaries, subject to certain restrictions. The Senior Notes and related guarantees are our and the Guarantors’ general unsecured senior obligations and will be subordinated to all of our and the Guarantors’ existing and future secured debt to the extent of the assets securing that secured obligation. In addition, the Senior Notes are structurally subordinated to any existing and future debt of any of our subsidiaries that are not Guarantors, to the extent of the assets of those subsidiaries.
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Subject to a number of exceptions and qualifications, the Indenture restricts our ability and the ability of certain of our subsidiaries to: (i) incur additional indebtedness; (ii) pay dividends or make other distributions in respect of, or repurchase or redeem, our capital stock or with respect to any other interest or participation in, or measured by, our profits; (iii) make loans and certain investments; (iv) sell assets; (v) create or incur liens; (vi) enter into transactions with affiliates; and (vii) consolidate, merge or sell all or substantially all of our assets. These covenants are subject to a number of important exceptions and qualifications.
During any time when the Senior Notes are rated investment grade by at least two of Moody’s, Fitch and Standard & Poor’s Ratings Services and no Default (as defined in the Indenture) has occurred and is continuing, many of such covenants will be suspended and we and our subsidiaries will cease to be subject to such covenants during such period.
The Indenture contains customary events of default, including payment defaults, breaches of covenants, failure to pay certain judgments and certain events of bankruptcy, insolvency and reorganization. If an event of default occurs and is continuing, the principal amount of the Senior Notes, plus accrued and unpaid interest, if any, may be declared immediately due and payable. These amounts automatically become due and payable if an event of default relating to certain events of bankruptcy, insolvency or reorganization occurs. As of December 31, 2025, we were in compliance with all covenants.
From time to time we may evaluate various alternatives available with respect to addressing the October 2028 maturity of the Senior Notes, including the purchase, redemption, refinancing, amending, exchanging, extending or otherwise retiring any amount of our outstanding indebtedness at any time, in open market or privately negotiated transactions with the holders of such indebtedness or otherwise. No final decisions have been made at this time, and the timing, structure and terms of any such transactions will depend on capital market conditions and other relevant factors.
Contractual coupon interest expense and accretion of fees for the Senior Notes for the years ended December 31, 2025, 2024 and 2023 were $18.0 million and $0.7 million, $18.0 million and $0.7 million, and $18.0 million and $0.6 million, respectively. Contractual coupon interest expense and accretion of discount and fees are included in Interest expense on the Company’s Consolidated Statements of Operations.
Revolving Credit Agreement
On September 23, 2022, we entered into the Third Amendment to the Second Amended and Restated Credit Agreement among us, certain of our subsidiaries as borrowers (together with us, the “Borrowers”), certain of our subsidiaries as guarantors, the lenders party thereto, and Wells Fargo Capital Finance, LLC, as the administrative agent (the “Agent”), which amended our existing Second Amended and Restated Credit Agreement, dated as of December 21, 2018 (as amended from time to time, the “Revolving Credit Agreement”).
Under the Revolving Credit Agreement, the lenders agree to make available a $350 million revolving credit facility to the Borrowers with a scheduled maturity date of September 23, 2027. We have the option to increase the total commitments under the facility by up to an additional $175 million, subject to certain conditions, including obtaining agreements from one or more lenders, whether or not party to the Revolving Credit Agreement, to provide such additional commitments. Availability under the Revolving Credit Agreement is based upon quarterly (or more frequent under certain circumstances) borrowing base certifications of the Borrowers’ eligible inventory, eligible leasing inventory and eligible accounts receivable, and is reduced by certain reserves in effect from time to time.
Subject to availability, the Revolving Credit Agreement provides for a letter of credit subfacility in the amount of $25 million and allows for swingline loans in the amount of $35 million. Outstanding borrowings under the Revolving Credit Agreement bear interest at an annual rate, at the Borrowers’ election, equal to (i) adjusted term Secured Overnight Financing Rate plus a margin ranging from 1.25% to 1.75% or (ii) a base rate plus a margin ranging from 0.25% to 0.75%, in each case depending upon the monthly average excess availability under the Revolving Credit Agreement. The Borrowers are required to pay a monthly unused line fee equal to 0.20% times the average daily unused availability along with other customary fees and expenses of the Agent and the lenders.
The Revolving Credit Agreement is guaranteed by certain of our subsidiaries (the “Guarantors”) and is secured by substantially all personal property of the Borrowers and the Guarantors.
The Revolving Credit Agreement contains customary covenants limiting our ability and certain of our subsidiaries to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock, enter into transactions with affiliates, merge, dissolve, repay subordinated indebtedness, make investments and dispose of assets. In addition, we will be required to maintain a minimum fixed charge coverage ratio of not less than 1.0 to 1.0 as of the end of any period of 12 fiscal months when excess availability under the Revolving Credit Agreement is less than the greater of (a) 10% of the lesser of (i) the total revolving commitments and (ii) the borrowing base (such lesser amount, the “Line Cap”) and (b) $25 million. As of December 31, 2025, we were in compliance with all covenants.
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If availability under the Revolving Credit Agreement is less than the greater of (i) 10% of the Line Cap and (ii) $25 million for three consecutive business days, or if there exists an event of default, amounts in any of the Borrowers’ and the Guarantors’ deposit accounts (other than certain excluded accounts) will be transferred daily into a blocked account held by the Agent and applied to reduce the outstanding amounts under the facility.
The Revolving Credit Agreement contains customary events of default. If an event of default occurs and is continuing, the lenders may, among other things, require the immediate payment of all amounts outstanding and foreclose on collateral. In addition, in the case of an event of default arising from certain events of bankruptcy or insolvency, the lenders’ obligations under the Revolving Credit Agreement would automatically terminate, and all amounts outstanding under the Revolving Credit Agreement would automatically become due and payable.
For the year ended December 31, 2025, we had payments of principal totaling $82.4 million and borrowings of principal totaling $127.4 million under the Revolving Credit Agreement. As of December 31, 2025, there was $45.0 million outstanding.
During the year ended December 31, 2024, we had payments of principal totaling $0.9 million and borrowings of principal totaling $0.9 million under the Revolving Credit Agreement. As of December 31, 2024, there were no amounts outstanding.
Interest expense under the Revolving Credit Agreement for the years ended December 31, 2025, 2024, and 2023, was approximately $2.3 million, $0.8 million, and $0.9 million, respectively. Interest expense under the Revolving Credit Agreement is included in Interest expense on the Company’s Consolidated Statements of Operations.
Cash Flow
2025 Compared to 2024
Cash provided by operating activities for 2025 totaled $11.7 million, compared to cash provided by operating activities of $117.3 million in 2024. The cash provided by operations during the current year was the result of net income adjusted for various non-cash activities, including depreciation, amortization, deferred taxes, stock-based compensation, and working capital. Changes in key working capital accounts for 2025 and 2024 are summarized below (in thousands):
Change
Source (Use) of cash:
Accounts receivable
Inventories
Accounts payable and accrued liabilities
Net source (use) of cash
Accounts receivable decreased $24.1 million in 2025 and decreased $39.0 million in 2024. Days sales outstanding, a measure of working capital efficiency that measures the amount of time a receivable is outstanding, was approximately 34 days and 31 days for the year-ended December 31, 2025 and 2024, respectively. The decrease in accounts receivable in 2025 was primarily due to the decrease in shipments compared to 2024. Inventories decreased in 2025 by $77.7 million compared to an increase in 2024 of $8.8 million. The overall decrease in inventory for 2025 was primarily attributable to the lower inventory requirements of reduced production compared to prior year. Our inventory turns, a commonly used measure of working capital efficiency that measures how quickly inventory turns per year, were approximately 7 and 6 times in 2025 and 2024, respectively. Accounts payable and accrued liabilities decreased $6.2 million in 2025 compared to a decrease of $68.7 million for 2024. Days payable outstanding, a measure of working capital efficiency that measures the amount of time a payable is outstanding, was 40 days in 2025 and 35 days in 2024.
Investing activities used $92.7 million during 2025 compared to $94.8 million used in 2024. Investing activities for 2025 included capital expenditures for property, plant, and equipment of $24.7 million, which was a decrease compared to $72.2 million during 2024. In addition, expenditures related to revenue generating assets totaled approximately $47.5 million and expenditures related to investment in unconsolidated entities totaled approximately $18.9 million. Cash used in investing activities in 2025 was primarily related to investments in our TaaS activities. In 2024, cash used in investing activities was primarily related to capital expenditures to support growth and improvement initiatives at our facilities.
Financing activities used $2.5 million during 2025 as compared to using $86.3 million during 2024. Net cash used in 2025 primarily relates to common stock repurchases of $33.8 million and cash dividend payments to our shareholders of $13.8 million. Borrowings under our Revolving Credit Agreement totaled $127.4 million which were partially offset by payments of principal, interest, and unused fees made under our Revolving Credit Agreement of $82.4 million. We repurchased common stock of $70.9 million and paid cash dividends to our shareholders of $14.8 million in 2024.
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Our liquidity position, defined as cash on hand and available borrowing capacity under the Revolving Credit Facility, was $235.3 million as of December 31, 2025 compared to $421.9 million as of December 31, 2024, representing a decrease of 44%. The decrease in liquidity from the prior year was primarily attributable to a lower cash balance and lower available revolver capacity at December 31, 2025, resulting from a reduction in cash provided by operating activities in 2025 versus 2024. Total debt obligations amounted to $445.0 million as of December 31, 2025.
For 2026 and forward, we expect to continue our commitment to fund our working capital requirements and capital expenditures from net cash provided by operations or available borrowing capacity under the Revolving Credit Agreement (as needed). Along with these investments, we will also maintain our assets to capitalize on any economic and/or industry upswings, while also responsibly returning capital to our shareholders. We will continue to move rapidly to adjust to the current environment to preserve the strength of our balance sheet, while prioritizing the safety of our employees and ensuring the liquidity and financial well-being of the Company.
Contractual Obligations and Commercial Commitments
A summary of our contractual obligations and commercial commitments, both on and off-balance sheet, as of December 31, 2025 are as follows (in thousands):
Thereafter
Total
Debt:
Revolving Credit Agreement (due 2027)
Senior Notes (due 2028)
Interest Payments on Revolving Credit Agreement (If Any) and Senior Notes (1)
Total Debt
Other:
Operating Leases
Total Other
Other Commercial Commitments:
Letters of Credit
Raw Material Purchase Commitments
Chassis Agreements and Programs
Total Other Commercial Commitments
Total Obligations
(1) Future interest payments on variable rate long-term debt (if any) are estimated based on the rate in effect as of December 31, 2025, and only include interest payments (not unused line fees).
Borrowings under the Revolving Credit Agreement bear interest at a variable rate based on the Secured Overnight Financing Rate (“SOFR”) or a base rate determined by the lender’s prime rate plus an applicable margin, as defined in the agreement. Any outstanding borrowings under the Revolving Credit Agreement bear interest at a rate, at our election, equal to (i) adjusted term SOFR plus a margin ranging from 1.25% to 1.75% or (ii) a base rate plus a margin ranging from 0.25% to 0.75%, in each case depending upon the monthly average excess availability under the Revolving Credit Agreement. We are required to pay a monthly unused line fee equal to 0.20% times the average daily unused availability along with other customary fees and expenses of our agent and lenders. During the year ended December 31, 2025, we had payments of principal of $82.4 million and borrowings of principal of $127.4 million under the Revolving Credit Agreement, and as of December 31, 2025, there was $45.0 million outstanding.
The Senior Notes bear interest at the rate of 4.5% per annum from the date of issuance, payable semi-annually on April 15 and October 15.
Operating leases represent the total future minimum lease payments for leases that have commenced. As of December 31, 2025, obligations related to operating leases that we have executed but have not yet commenced were nominal.
We have standby letters of credit totaling $5.6 million issued in connection with workers compensation claims and surety bonds.
We have $21.5 million in purchase commitments through December 2026 for various raw material commodities, including aluminum, steel, polyethylene, and nickel, as well as other raw material components which are within normal production requirements.
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We obtain vehicle chassis for our specialized vehicle products directly from the chassis manufacturers under converter pool agreements. Chassis are obtained from the manufacturers based on orders from customers, and in some cases, for unallocated orders. The agreements generally state that the manufacturer will provide a supply of chassis to be maintained at our facilities with the condition that we will store such chassis and will not move, sell, or otherwise dispose of such chassis except under the terms of the agreement. In addition, the manufacturer typically retains the sole authority to authorize commencement of work on the chassis and to make certain other decisions with respect to the chassis including the terms and pricing of sales of the chassis to the manufacturer’s dealers. The manufacturer also does not transfer the certificate of origin to us nor permit us to sell or transfer the chassis to anyone other than the manufacturer (for ultimate resale to a dealer). Although we are party to related finance agreements with manufacturers, we have not historically settled, nor expect to in the future settle, any related obligations in cash. Instead, the obligation is settled by the manufacturer upon reassignment of the chassis to an accepted dealer, and the dealer is invoiced for the chassis by the manufacturer. Accordingly, as of December 31, 2025, our outstanding chassis converter pool with the manufacturer totaled $59.6 million and we have included this financing agreement on our Consolidated Balance Sheets within Other accrued liabilities . Typically, chassis are converted and delivered to customers within 90 days of our receipt of the chassis.
The total amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, was $1.5 million at December 31, 2025. Payment of these obligations would result from settlements with taxing authorities. Due to the difficulty in determining the timing of settlements, these obligations are not included in the table above. We do not expect to make a tax payment related to these obligations within the next year that would significantly impact liquidity.
Significant Accounting Policies and Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. Our significant accounting policies are more fully described in Note 2 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty and are based on our historical experience, terms of existing contracts, evaluation of industry trends, information provided by our customers, and information available from other outside sources, as appropriate.
We consider an accounting estimate to be critical if it requires us to make assumptions about matters that were uncertain at the time we were making the estimate or changes in the estimate or different estimates that we could have selected would have had a material impact on our financial condition or results of operations.
Legal and Other Contingencies. The outcomes of legal proceedings and claims brought against us and other loss contingencies are subject to significant uncertainty. We establish legal contingency reserves when we determine that it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In determining the appropriate accounting for loss contingencies, we consider the likelihood of loss or the occurrence of a liability, as well as our ability to reasonably estimate the amount of loss. We regularly evaluate current information available to us to determine whether an accrual should be established or adjusted. Estimating the probability that a loss will occur and estimating the amount of a loss or a range of loss involves significant judgment and such matters are unpredictable. We could incur judgments or enter into settlements for current or future claims that could materially impact our results of operations.
Impairment of Long-Lived Assets and Definite-Lived Intangible Assets. We review, on at least a quarterly basis, the financial performance of each business unit for indicators of impairment. In reviewing for impairment indicators, we also consider events or changes in circumstances such as business prospects, customer retention, market trends, potential product obsolescence, competitive activities, and other economic factors. An impairmentloss is recognized when the carrying value of an asset group exceeds the future net undiscounted cash flows expected to be generated by that asset group. The impairmentloss recognized is the amount by which the carrying value of the asset group exceeds its fair value.
Goodwill. We assess goodwill for impairment at the reporting unit level on an annual basis as of October 1 st , after the annual planning process is complete. More frequent evaluations may be required if we experience changes in our business climate or as a result of other triggering events that may take place. If the carrying value exceeds fair value, the asset is considered impaired and is reduced to its fair value.
In assessing goodwill for impairment, we may choose to initially evaluate qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, then an impairment analysis for goodwill is performed at the reporting unit level using a quantitative approach. The quantitative test is a comparison of the fair value of the reporting unit, determined using a combination of the income and market approaches, to its recorded amount. If the recorded amount exceeds the fair value, an impairment is recorded to reduce the carrying amount to fair value, but will not exceed the amount of goodwill that is recorded.
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The process of evaluating goodwill for impairment is subjective and requires significant judgment at many points during the analysis. If we elect to perform an optional qualitative analysis, we consider many factors including, but not limited to, general economic conditions, industry and market conditions, financial performance and key business drivers, long-term operating plans, and potential changes to significant assumptions used in the most recent fair value analysis for the reporting unit. When performing a quantitative goodwill impairment test, we generally determine fair value using a combination of an income-based approach and a market-based approach. The fair value determination consists primarily of using significant unobservable inputs (Level 3) under the fair value measurement standards. We believe the most critical assumptions and estimates in determining the estimated fair value of our reporting units include, but are not limited to, the amounts and timing of expected future cash flows which is largely dependent on expected EBITDA margins, the discount rate applied to those cash flows, and terminal growth rates. The assumptions used in determining our expected future cash flows consider various factors such as historical operating trends and long-term operating strategies and initiatives. The discount rate used by each reporting unit is based on our assumption of a prudent investor’s required rate of return assuming the risk of investing in a particular company. The terminal growth rate reflects the sustainable operating income a reporting unit could generate in a perpetual state as a function of revenue growth, inflation, and future margin expectations.
Annual Goodwill Impairment Test
As of December 31, 2025, goodwill allocated to our TS and P&S segments was approximately $120.5 million and $70.7 million, respectively. For the 2025 annual goodwill impairment test conducted as of October 1, 2025, the Company chose to use a quantitative assessment to determine if it was more likely than not that the fair value of the TS and P&S reporting units were less than their respective carrying amounts. In accordance with the relevant accounting guidance, in order to perform the quantitative assessment, the Company considered many factors including, but not limited to, general economic conditions, industry and market conditions, financial performance and key business drivers, future operating plans, and potential changes to significant assumptions used in the most recent quantitative fair value analysis for each reporting unit. Based on the analysis of the factors and considerations described above, the Company concluded that it was more likely than not that the fair value of each reporting unit continued to be greater than the respective carrying value. Therefore, no impairment charges were recorded.
During the fourth quarter of 2024, the Company performed its annual goodwill impairment test using a quantitative assessment, whereas a qualitative assessment was utilized in 2023. Based on the results of these assessments, the Company determined it was more likely than not that the fair value of its reporting units was greater than their respective carrying amounts and no additional impairment of goodwill was recognized during the years ended December 31, 2024 or 2023.
Other
Inflation
Inflation impacts prices paid for labor, materials and supplies. Significant increases in the costs of production or certain commodities, raw materials, and components could have an adverse impact on our results of operations. As has been our practice, we will endeavor to offset the impact of inflation through selective price increases, productivity improvements, and hedging activities. Our ability to mitigate the impact of inflation through selective price increases may be limited by our backlog in cases of orders without inflation-based price adjustment provisions.
New Accounting Pronouncements
For information related to new accounting standards, see Note 3 of the Notes to Consolidated Financial Statements in Part II, Item 8 of this Form 10-K.
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ITEM 7A–QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In addition to the risks inherent in our operations, we have exposure to financial and market risk resulting from volatility in commodity prices, interest rates, and foreign exchange rates. The following discussion provides additional detail regarding our exposure to these risks.
Commodity Price Risks
We are exposed to fluctuation in commodity prices through the purchase of various raw materials that are processed from commodities such as aluminum, steel, lumber, nickel, copper, and polyethylene. Given the historical volatility of certain commodity prices, this exposure can significantly impact product costs. We manage some of our commodity price changes by entering into fixed price contracts with our suppliers and through financial derivatives. To the extent that we are unable to offset the increased commodity costs in our product prices, our results would be materially and adversely affected. As of December 31, 2025, we had $21.5 million in raw material purchase commitments through December 2026 for materials that will be used in the production process, as compared to $15.0 million as of December 31, 2024. The increase from the prior year is primarily attributable to an increase in the use of fixed price contracts for aluminum and expectations for fluctuations in pricing. As of December 31, 2025, a hypothetical ten percent change in commodity prices based on our raw material purchase commitments through December 2026 would result in a corresponding change in cost of goods sold over a one-year period of approximately $2.2 million. This sensitivity analysis does not account for the change in the competitive environment indirectly related to the change in commodity prices and the potential managerial action taken in response to these changes.
Interest Rates
As of December 31, 2025, we had $45.0 million floating rate debt outstanding under our Revolving Facility. The only other outstanding debt on our Consolidated Balance Sheets as of December 31, 2025 were the Senior Notes, which carry a fixed interest rate of 4.50%. Based on the current borrowings under our Revolving Facility, a hypothetical 100 basis-point change in the floating interest rate would result in $0.5 million corresponding change in interest expense over a one-year period. This sensitivity analysis does not account for the change in the competitive environment indirectly related to the change in interest rates and the potential managerial action taken in response to these changes.
Foreign Exchange Rates
We are subject to fluctuations in the Mexican peso exchange rates that impact transactions with our foreign subsidiaries, as well as U.S. denominated transactions between these foreign subsidiaries and unrelated parties. A ten percent change in the Mexican peso exchange rates would have an immaterial impact on our results of operations. We do not hold or issue derivative financial instruments for speculative purposes.
