Wabash National Corporation · NYSE:WNC
Wabash National — Investor Presentation (August 2017)
44 slides from Wabash National's investor presentation, Aug 31, 2017
Slide 1: Wabash National Corporation Investor Update August 2017
WABASH NATIONAL CORPORATION Investor Update August 2017
Slide 2: Safe Harbor Statement
2 This presentation contains certain forward - looking statements, as defined by the Private Securities Litigation Reform Act of 1995. All statements other than historical facts are forward - looking statements, including without limit, those regarding shipment outlook, Operating EBITDA, backlog, de
Slide 3: Financial Highlights: Strong, Disciplined Financial Performance
3 ▪ Earnings up 700% since 2011 (Adjusted EPS $0.23/ sh in 2011 to $1.85/ sh in 2016) ▪ Strong free cash flow with >100% cash conversion; $179M in Operating Cash Flow in 2016 ▪ TTM ROIC 19.3% as of 6/30/2017 ▪ $ 348M of liquidity or 20% of TTM revenue as of 6/30/2017 ▪ 0.3x net leverage as of 6/30/2
Slide 4: Company Facts and Figures
4 2006 | 2013 | 2015 | 2016 Company Facts and Figures ▪ Founded in 1985 ▪ Publicly traded s ince 1991 (NYSE:WNC) ▪ 2016 Revenue: $1.8B ▪ 2016 New Trailer Shipments: 60,950 ▪ Nearly 6,000 associates worldwide (full time & contract) ▪ Headquarters in Lafayette, Indiana ▪ 13 manufacturing l ocations in
Slide 5: Our Vision, Mission and Values Drive Everything We Do
5 Mission To provide ever - increasing value to all of our stakeholders, including customers, shareholders, associates, suppliers, and our community. Based on core values of integrity, trust and mutual respect, we will drive continuous improvement , thus assuring leadership positions in: ▪ S afety p
Slide 6: Leading Brands in Diverse End Markets and Industries
6 W ABASH N ATIONAL C ORPORATION Wabash National offers a wide selection of products … …that span a diverse set of markets and industries. …to a nationwide customer base of blue - chip companies … Commercial Transportation Food, Dairy & Beverage Pharmaceutical & Biotech 2016 Sales: $ 1.5B ▪ Dry and
Slide 7: Growth Initiatives Driving Record Results
7 G ROWTH I NITIATIVES D RIVING R ECORD R ESULTS 2005 2016 Consolidated Revenue 2005 vs. 2016 Dry Vans All Other Products $1.8B $ 1.2B Dry Vans $1.0B (77% of Total Revenue) Dry Vans $1.2B (64% of Total Revenue) 50% Revenue Improvement with Less Dependency on Dry Vans 2013: Beall Acquisition 2006: Tr
Slide 8: Diversification Yields Higher Margins, Less Cyclicality
8 G ROWTH I NITIATIVES D RIVING R ECORD R ESULTS 2005 2016 Revenue Manufacturing Retail & Distribution 19% Commercial Trailer Products (CTP) Diversified Products Group (DPG) Operating Income Manufacturing Gross Profit/ Margin 16.8% 21.5% 17.6% 0% 5% 10% 15% 20% 25% CTP Consol. DPG 11.7% 8.1% 11.1% 0
Slide 9: Our Competitive Advantage
9 O UR C OMPETITIVE A DVANTAGE Wabash Leads with Technology and Innovation Industry - Leading Product Portfolio Strong Customer Relationships Innovative Technology Operational Excellence Creates Profitable & Sustainable Growth
Slide 10: Industry-Leading Product Portfolio
10 I NDUSTRY - L EADING P RODUCT P ORTFOLIO ▪ Leverage our strengths in engineering and manufacturing to offer a wide selection of transportation and industrial products » 100+ years of experience • Trailer design and engineering • Stainless steel manufacturing » Lean Six Sigma commitment from plant
Slide 11: Industry-Leading Product Portfolio: CTP End Markets
11 I NDUSTRY - L EADING P RODUCT P ORTFOLIO : CTP E ND M ARKETS Innovative Product Growth ▪ 2015: Introduced Final Mile and Cold Chain Series Truck Bodies ▪ 2017 and Beyond: Developing and producing molded structural composite trailers and truck bodies at our newly acquired Little Falls facility Nor
Slide 12: Industry-Leading Product Portfolio: CTP Overview
12 I NDUSTRY - L EADING P RODUCT P ORTFOLIO : CTP O VERVIEW Van & Platform Trailers Transportation Products & Services DuraPlate® Dry Van DuraPlate HD® Dry V an ArcticLite® Refrigerated V an DuraPlate Pup Trailer Benson® Aluminum T railers Transcraft® Steel and Combo Trailers Transcraft® Coil H aul
Slide 13: Industry-Leading Product Portfolio: DPG End Markets
13 Food, Dairy, Beverage 31% Chemical 16% General Freight 15% Aviation 9% Pharmaceutical 7% Refined Fuel/O&G 4% Defense 4% Aerodynamic Devices 4% Parts & Other 10% I NDUSTRY - L EADING P RODUCT P ORTFOLIO : DPG E ND M ARKETS Innovative Product Growth ▪ 2015: Expanded production capacity for dairy si
Slide 14: Industry-Leading Product Portfolio: DPG Overview
14 Sanitary Trailer Refined Fuel Truck Processor Downflow Booth Isolator Aircraft Refueler Dry Bulk Trailer Vertical Silos Above Ground Storage Tanks Mobile Clean Room Hydrant Cart FRP Trailer Vacuum Truck Refined Fuel Truck & Pull Chemical Trailer Truck Body Panels Aerodynamic Fairings Ground Freig
Slide 15: Innovative Technology
15 I NNOVATIVE T ECHNOLOGY ▪ Over 200 patents and patent applications in the U.S. and globally ▪ Customer - focused engineered solutions in all of our industries & markets Our Technology Sets Us Apart from Other OEMs 3 Recent Innovations Conventional vs Bonded DuraPlate Sidewall Bonding Technology ▪
Slide 16: Innovative Technology: MSC Investment Spotlight
16 I NNOVATIVE T ECHNOLOGY : MSC I NVESTMENT S POTLIGHT ▪ New operation in Little Falls, MN: 53 acres, 600,000 sq. ft. ▪ Located on the Mississippi River, approx. 100 miles from Minneapolis ▪ State - of - the - art compression molding equipment for MSC technology, bulk resin system , bulk foam s yst
Slide 17: Operational Excellence
17 O PERATIONAL E XCELLENCE ▪ Continuous improvement philosophy emphasizing manufacturing velocity and business process optimization ▪ Lean Six Sigma manufacturing approach for 14+ years Operational Excellence Enables Continuous Improvement Continuous improvement in all aspects of our business must
Slide 18: Strong Customer Relationships
18 S TRONG C USTOMER R ELATIONSHIPS ▪ Strong customer relationships built on industry - leading, innovative products that provide superior long - term value ▪ Diverse customer base and end markets ▪ Established relationships with many of the largest carrier and industry leaders Providing Superior Va
Slide 19: Our Future Outlook
WABASH NATIONAL CORPORATION Our Future Outlook
Slide 20: Key Financial Outlook
20 K EY F INANCIAL O UTLOOK 2016 FY Results 2017 FY Outlook Shipments 60,950 Units 53 – 56,000 Units Revenue $1.85B $1.6B – 1.7B GM% 17.6% No Guidance OM% 11.0% No Guidance SGA (ex. Amor.) $101M Down slightly from '16 CapEx $20M $30 – 35M Tax Rate 35.6% ~35 – 35.5% Adjusted Diluted EPS $1.85 $1.44 –
Slide 21: Long-Term Corporate Goals
21 L ONG - T ERM C ORPORATE G OALS 2015 2016 Consolidated Revenue $2.0B $1.8B Consolidated Operating Margin 8.9% 11.0% Adjusted Non - GAAP EPS $1.49 $1.85 ROIC 1 19.5% 22.7% > $3.0B > 10% > 20% > $2.50 NOTE: 1. ROIC = NOPAT/ Invested Capital NOPAT = Operating Income * (1 - tax rate) Invested Capital
Slide 22: Our Identity Is Shifting From Primarily a Dry Van Manufacturer
22 O UR I DENTITY I S S HIFTING F ROM P RIMARILY A D RY V AN M ANUFACTURER We are now a diversified industrial manufacturer that is becoming less dependent on dry vans 2005 $1.2B Reefers 77% 15% 8% Parts & Service Dry Vans Dry Van Trailers Other Trailer Products Non - Trailer Products 2020 $3.0B Dry
Slide 23: Long-Term Growth Drivers
23 L ONG - T ERM G ROWTH D RIVERS Margin Expansion • Pricing discipline • Operational efficiency / lean manufacturing • Supply chain optimization Organic Growth • New end markets and geographies • Product innovations / portfolio expansion • Aftermarket parts and service capabilities Mergers & Acquis
Slide 24: Mega Trends Drive Growth Initiatives
24 M EGA T RENDS D RIVE G ROWTH I NITIATIVES ▪ Advanced lightweight materials ▪ Full suite of aero products ▪ Aftermarket parts growth ▪ Mobile and on - site customer service ▪ Low cost energy supports chemical production ▪ $158B* of committed chemical production investment ▪ Market share growth in
Slide 25: Organic Growth Initiatives: Final Mile Spotlight
25 O RGANIC G ROWTH I NITIATIVES : F INAL M ILE S POTLIGHT ▪ Target Market for Dry Truck Body > 50,000 units annually ▪ Target Market for Refrigerated Truck Body > 10,000 units annually ▪ Objective is to organically grow Final Mile business to > $100M revenue by 2020 ▪ Utilizes industry - leading Du
Slide 26: Mergers & Acquisitions
26 M ERGERS & A CQUISITIONS ▪ Tank Trailers ▪ Process Systems ▪ Aviation & Truck Equipment Transformative Acquisition (2012) Platform Expanding Acquisition (2013) ▪ Aluminum 406/Refined Fuel Tank ▪ Dry Bulk Tanks ▪ Geographic Expansion Past Acquisitions Strategic M&A Criteria Growth Through Acquisit
Slide 27: Market Dynamics
WABASH NATIONAL CORPORATION Market Dynamics
Slide 28: Market Drivers: Trailer Products
28 M ARKET D RIVERS : T RAILER P RODUCTS ▪ Strong demand above replacement levels forecast for next 5 years ▪ Fleet equipment dynamics and regulations key drivers of trailer demand Trailer Demand Forecasts Strong Demand Above Replacement Levels
Slide 29: Market Drivers: Trailer Products
29 M ARKET D RIVERS : T RAILER P RODUCTS ▪ Active truck utilization expected to rise due to regulatory impact ▪ Truck Tonnage remains strong ▪ Fleet profitability near record levels Carrier Operating Environment Demand Environment Still Positive for Carriers
Slide 30: Market Drivers: Diversified Products
30 M ARKET D RIVERS : D IVERSIFIED P RODUCTS ▪ Growing milk production supports demand for dairy silos, mixers and food - grade tank trailers ▪ Worldwide pharmaceutical R&D spend to grow 2.4% (CAGR) to $ 181B in 2022 Strong Dairy & Pharma Environment DPG Markets Forecasting Growth
Slide 31: Market Drivers: Diversified Products
31 M ARKET D RIVERS : D IVERSIFIED P RODUCTS ▪ Lower cost access to natural gas driving increased domestic chemical industry output; $ 181B of chemical production investment announced since 2010 ▪ Oil prices expected to rise, so is production of tank trailers Growing Chemical & Oil Markets Positive
Slide 32: Financial Overview
WABASH NATIONAL CORPORATION Financial Overview
Slide 33: Financial Performance
33 F INANCIAL P ERFORMANCE Annual Revenue Significantly improved results: ▪ TTM Q2 2017 revenue $1.73B, up $538M since 2011 ▪ TTM Q2 2017 Operating Income increases $ 144M since 2011 ▪ WNC Gross Margin reaches record 17.6% in 2016 Annual Operating Income and Gross Margin $1,187 $1,462 $1,636 $1,863
Slide 34: Financial Performance: EBITDA, Liquidity and Net Leverage
34 $39 $119 $150 $169 $230 $253 $212 $0 $50 $100 $150 $200 $250 $300 2011 2012 2013 2014 2015 2016 Q2 2017 TTM ($ mils) F INANCIAL P ERFORMANCE Net Debt Leverage Ratio Improved top - line and margins lead to: ▪ Record FY Operating EBITDA in 2016 ▪ Maintained strong liquidity position in 2016 ▪ Cash
Slide 35: Historical Financial Performance: Comparing Cyclical Upturns
35 H ISTORICAL F INANCIAL P ERFORMANCE : C OMPARING C YCLICAL U PTURNS ’05 – ’06 Upturn $97 $63 8.0% 4.8% $0 $50 $100 $150 $200 $250 $300 2005 2006 Operating EBITDA ($ mils) Industry Volumes * ’14 – ’17 Upturn $1,214 $1,312 $1,863 $2,027 $1,845 $1,725 $0 $500 $1,000 $1,500 $2,000 $2,500 2005 2006 20
Slide 36: Historical Financial Performance: ROIC Since Last Upturn
36 H ISTORICAL F INANCIAL P ERFORMANCE : C OMPARING C YCLICAL U PTURNS ’05 – ’06 Upturn *Source: ACT $312 $386 16.2% 3.7% $0 $100 $200 $300 $400 $500 $600 $700 2005 2006 Invested Capital ($ mils) Industry Volumes * ’14 – ’16 Upturn $617 $583 $571 $541 12.5% 19.5% 22.7% 19.3% 0% 5% 10% 15% 20% 25% 20
Slide 37: Capital Allocation Strategy
37 C APITAL A LLOCATION S TRATEGY • Maintain liquidity to support the core business and fund growth opportunities across business cycle Liquidity • Manage net debt to maintain credit rating (BB) throughout economic cycle and position for next credit rating upgrade • Target net debt to < 3x EBITDA at
Slide 38: Appendix
WABASH NATIONAL CORPORATION Appendix
Slide 39: Income Statement Summary 2011-2017
39 2011 2012 2013 2014 2015 2016 YTD Q2 2017 Net sales 1,187,244$ 1,461,854$ 1,635,686$ 1,863,315$ 2,027,489$ 1,845,444$ 798,619$ Cost of sales 1,120,524 1,298,031 1,420,563 1,630,681 1,724,046 1,519,910 671,584 Gross profit 66,720$ 163,823$ 215,123$ 232,634$ 303,443$ 325,534$ 127,035$ % of sales 5.
Slide 40: Balance Sheet Summary 2011-2017
40 2011 2012 2013 2014 2015 2016 Q2 2017 ASSETS Current assets Cash and cash equivalents 19,976$ 81,449$ 113,262$ 146,113$ 178,853$ 163,467$ 178,633$ Accounts receivable 52,219 96,590 120,358 135,206 152,824 153,634 122,978 Inventories 189,533 189,487 184,173 177,144 166,982 139,953 199,276 Deferred
Slide 41: Cash Flow Summary 2011-2017
41 2011 2012 2013 2014 2015 2016 YTD Q2 2017 Cash flows from operating activities Net income 15,042$ 105,631$ 46,529$ 60,930$ 104,289$ 119,433$ 43,118$ Adjustments to reconcile net income to net cash provided by operating activities Depreciation 12,636 14,975 16,550 16,951 16,739 16,830 8,412 Amorti
Slide 42: Reconciliation of Non-GAAP Measures
42 2005 2006 2011 2012 2013 2014 2015 2016 Q2 2017 TTM Net income 111.1$ 9.4$ 15.0$ 105.6$ 46.5$ 60.9$ 104.3$ 119.4$ 99.5$ Income tax (benefit) expense (37.0) 6.9 0.2 (57.1) 31.1 37.5 59.0 66.0 52.2 Interest expense 6.4 6.9 4.1 21.7 26.3 22.2 19.5 15.7 13.5 Depreciation and amortization 15.5 20.6 15
Slide 43: Adjusted Earnings Per Share Reconciliation
43 $ Per Share $ Per Share $ Per Share $ Per Share $ Per Share $ Per Share Net Income 15,042$ 0.22$ 105,631$ 1.54$ 46,529$ 0.67$ 60,930$ 0.86$ 104,289$ 1.50$ 119,433$ 1.82$ Adjustments: Income tax benefit, net - - (58,991) (0.86) - - - - - - - - Impact of acquired profit in inventories and short ter
Slide 44: Potential Dilutive Impact of Senior Convertible Notes
44 Hypothetical Quarterly Average Share Price (NYSE: WNC) (1) Potential Incremental Shares for Diluted EPS (in 000s shares) (2) 11.00$ - 12.00$ 95 13.00$ 383 14.00$ 630 15.00$ 844 16.00$ 1,031 17.00$ 1,196 18.00$ 1,343 19.00$ 1,474 20.00$ 1,592 21.00$ 1,699 22.00$ 1,797 23.00$ 1,886 24.00$ 1,967 25.
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