Wabash National Corporation · NYSE:WNC
Wabash National — Investor Presentation (November 2017)
46 slides from Wabash National's investor presentation, Nov 7, 2017
Slide 1: Wabash National Corporation Investor Update November 2017
WABASH NATIONAL CORPORATION Investor Update November 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: 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 ▪ $ 323M of liquidity or 19% of TTM revenue as of 9 /30/2017 ▪ 1.8x P roforma net leverage as of 9/30/2017 when including Sup
Slide 4: Company Facts and Figures
4 Company Facts and Figures ▪ Founded in 1985 ▪ Publicly traded s ince 1991 (NYSE:WNC) ▪ 2016 Revenue: $1.8B ▪ 2016 New Trailer Shipments: 60,950 ▪ Over 7 ,000 associates worldwide (full time & contract) ▪ Headquarters in Lafayette, Indiana ▪ 19 manufacturing l ocations in 3 countries Over 32 Years
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: Acquisition of Supreme Completed September 2017
7 A CQUISITION OF S UPREME C OMPLETED S EPTEMBER 27 TH , 2017 Company Overview Corporate HQ Goshen, IN Employees 1,450 Key Statistics (2016) Revenue $299M Gross Profit $67M (22%) Operating Income $29M (10%) With Supreme, not only can Wabash National accelerate organic growth with our innovative Dura
Slide 8: Pro Forma Company Structure and Facility Locations
8 P RO F ORMA C OMPANY S TRUCTURE AND F ACILITY L OCATIONS Separate “Final Mile” Segment Increases Focus, Expands Reach Wabash National Corporation • Dry & Refrigerated Vans • Platform Trailers • Fleet Used Trailers • Aftermarket Parts & Service • Tank Trailers & Truck - Mount Tanks • Composite Pane
Slide 9: Growth Initiatives Driving Record Results
9 2005 2016 2018E Consolidated Revenue 2005 vs. 2016 vs. 2018E Dry Vans $1.0B Dry Vans $ 1.2B 77% of total Revenue G ROWTH I NITIATIVES D RIVING R ECORD R ESULTS $1.8B $ 1.2B Dry Vans 64% of total Revenue ~50% of total Revenue 2006: Transcraft Acquisition 2012/13: Walker Group and Beall Acquisition
Slide 10: Growth Initiatives Driving Record Results
10 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%
Slide 11: Our Competitive Advantage
11 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 12: Industry-Leading Product Portfolio
12 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 13: Industry-Leading Product Portfolio: CTP End Markets
13 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 14: Industry-Leading Product Portfolio: CTP Overview
14 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 15: Industry-Leading Product Portfolio: DPG End Markets
15 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 16: Industry-Leading Product Portfolio: DPG Overview
16 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 17: Innovative Technology
17 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 18: Innovative Technology: MSC Investment Spotlight
18 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 19: Operational Excellence
19 O PERATIONAL E XCELLENCE ▪ Continuous improvement philosophy emphasizing manufacturing velocity and business process optimization ▪ Lean Six Sigma manufacturing approach for 15+ years Operational Excellence Enables Continuous Improvement Continuous improvement in all aspects of our business must
Slide 20: Strong Customer Relationships
20 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 21: Our Future Outlook
WABASH NATIONAL CORPORATION Our Future Outlook
Slide 22: Key Financial Outlook
22 K EY F INANCIAL O UTLOOK 2016 FY Results 2017 FY Outlook Shipments 60,950 Units 53,500 – 55,500 Units Revenue $1.85B $1.6B – 1.7B GM% 17.6% No Guidance OM% 11.0% No Guidance SGA (ex. Amor.) $101M Down >$5M from '16 CapEx $20M Approx. $25M Tax Rate 35.6% ~35.5 – 36.0% Adjusted Diluted EPS $1.85 $1
Slide 23: Long-Term Corporate Goals
23 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 24: Our Identity Is Shifting From Primarily a Dry Van Manufacturer
24 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 25: Long-Term Growth Drivers
25 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 26: Mega Trends Drive Growth Initiatives
26 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 27: Mergers & Acquisitions
27 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 28: Delivering Growth and Diversification - Supreme
28 D ELIVERING G ROWTH AND D IVERSIFICATION - S UPREME Strategic M&A Criteria Value - added, engineered products and services manufactured at scale where we can provide customer solutions Operating Margin levels > 10 % longer term Strong management teams that are a cultural fit Aligned with core com
Slide 29: Significant Synergy Potential with Successful Integration History
29 S IGNIFICANT S YNERGY P OTENTIAL WITH S UCCESSFUL I NTEGRATION H ISTORY Expected Annual Cost Synergies Derived from Various Channels ~$20M Supply Chain Savings Increased scale provides material purchasing savings Wabash Management System Implementation Significant benefits from shop floor process
Slide 30: Market Dynamics
WABASH NATIONAL CORPORATION Market Dynamics
Slide 31: Market Drivers: Trailer Products
31 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 32: The Final Mile Space
32 T HE F INAL M ILE S PACE Final Mile Logistics and Distribution Models are Transforming Source: Forrester Research, Business Insider, Specialty Transportation.net, Inbound Logistics, Trucking Info • Evolving changes in distribution • Trend towards next day and same day delivery → the younger the c
Slide 33: Market Drivers: Trailer Products
33 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 34: Market Drivers: Diversified Products
34 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 35: Market Drivers: Diversified Products
35 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 36: Financial Overview
WABASH NATIONAL CORPORATION Financial Overview
Slide 37: Financial Performance
37 F INANCIAL P ERFORMANCE Annual Revenue Significantly improved results: ▪ TTM Q3 2017 revenue $1.69B, up $499M since 2011 ▪ TTM Q3 2017 Operating Income increases $ 116M 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 38: Financial Performance
38 $39 $119 $150 $169 $230 $253 $192 $0 $50 $100 $150 $200 $250 $300 2011 2012 2013 2014 2015 2016 Q3 2017 TTM ($ 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 39: Capital Allocation Strategy
39 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 40: Appendix
WABASH NATIONAL CORPORATION Appendix
Slide 41: Income Statement Summary 2011-YTD Q3 2017
41 2011 2012 2013 2014 2015 2016 YTD Q3 2017 Net sales 1,187,244$ 1,461,854$ 1,635,686$ 1,863,315$ 2,027,489$ 1,845,444$ 1,223,717$ Cost of sales 1,120,524 1,298,031 1,420,563 1,630,681 1,724,046 1,519,910 1,035,718 Gross profit 66,720$ 163,823$ 215,123$ 232,634$ 303,443$ 325,534$ 187,999$ % of sale
Slide 42: Balance Sheet 2011-Q3 2017
42 2011 2012 2013 2014 2015 2016 Q3 2017 ASSETS Current assets Cash and cash equivalents 19,976$ 81,449$ 113,262$ 146,113$ 178,853$ 163,467$ 153,702$ Accounts receivable 52,219 96,590 120,358 135,206 152,824 153,634 152,603 Inventories 189,533 189,487 184,173 177,144 166,982 139,953 245,674 Deferred
Slide 43: Cash Flow Statement 2011-YTD Q3 2017
43 2011 2012 2013 2014 2015 2016 YTD Q3 2017 Cash flows from operating activities Net income 15,042$ 105,631$ 46,529$ 60,930$ 104,289$ 119,433$ 62,066$ 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 12,709 Amort
Slide 44: Reconciliation of Non-GAAP Measures
44 2011 2012 2013 2014 2015 2016 Q3 2017 TTM Net income 15.0$ 105.6$ 46.5$ 60.9$ 104.3$ 119.4$ 85.1$ Income tax (benefit) expense 0.2 (57.1) 31.1 37.5 59.0 66.0 44.5 Interest expense 4.1 21.7 26.3 22.2 19.5 15.7 12.8 Depreciation and amortization 15.6 25.6 38.3 38.8 38.0 36.8 35.0 Stock-based compen
Slide 45: Adjusted Earnings Per Share Reconciliation
45 $ 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 46: Potential Dilutive Impact of Senior Convertible Notes
46 Hypothetical Quarterly Average Share Price (NYSE: WNC) (1) Premium Required (paid in WNC Shares) Potential Incremental Shares for Diluted EPS (in 000s shares) (2) 11.00$ -$ - 12.00$ 1,132,087$ 94 13.00$ 4,963,178$ 382 14.00$ 8,794,268$ 628 15.00$ 12,625,359$ 842 16.00$ 16,456,450$ 1,029 17.00$ 20
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