Wabash National Corporation · NYSE:WNC
Wabash National — Investor Presentation (February 2017)
45 slides from Wabash National's investor presentation, Feb 13, 2017
Slide 1: Wabash National Corporation Investor Update February 2017
WABASH NATIONAL CORPORATION Investor Update February 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 ▪ TTM ROIC 22.3% as of 12/31/2016 ▪ $ 333M of liquidity or 18% of revenue as of 12/31/2016 ▪ 0.3x net leverage as of 12/31/2
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 ▪ 12 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 General Freight - Truckload , 71% Refrigerated Freight , 10% Less Than Truckload Freight , 8% Platform Freight , 8% Other , 3% 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:
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 29% Chemical 28% General Freight 12% Aviation 7% Pharmaceutical 6% Refined Fuel 6% O&G 5% Aerodynamic Devices 4% Other 3% I NDUSTRY - L EADING P RODUCT P ORTFOLIO : DPG E ND M ARKETS Innovative Product Growth ▪ 2015: Expanded production capacity for dairy silos and tank trai
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 System Next
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 13+ 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 51 – 55,000 Units Revenue $1.85B $1.6B – 1.7B GM% 17.6% No Guidance OM% 11.0% No Guidance SGA (ex. Amor.) $101M In Line with 2016 CapEx $20M $30 – 40M Tax Rate 35.6% ~36% Adjusted Diluted EPS $1.85 $1.40 – 1.55 WNC Po
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% 22.3% > $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: Truck Body Spotlight
25 O RGANIC G ROWTH I NITIATIVES : T RUCK B ODY 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 grow Truck Body business to > $100M revenue by 2020 ▪ Utilizes industry - leading DuraPlate® pan
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: Trailer Demand Drivers
28 T RAILER D EMAND D RIVERS ▪ 2008 - 2010: Significant under buy of new trailers ▪ More than 40% of dry van trailers > 10 years old ▪ Active dry van trailers < 15 years old still below 2007 levels ▪ Fleet profitability remains historically high ▪ Hours of Service (HOS), ELDs, speed limiters, and ot
Slide 29: Market Drivers: Trailer Products
29 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 30: Market Drivers: Trailer Products
30 M ARKET D RIVERS : T RAILER P RODUCTS ▪ Active truck utilization expected to rise due to regulatory impact ▪ Truck Tonnage remains strong ▪ Fleet profitability at or near record levels Carrier Operating Environment Demand Environment Still Positive for Carriers
Slide 31: Market Drivers: Diversified Products
31 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 2.0% (CAGR) to $160B in 2020 Strong Dairy & Pharma Environment DPG Markets Forecasting Growth
Slide 32: Market Drivers: Diversified Products
32 M ARKET D RIVERS : D IVERSIFIED P RODUCTS ▪ Lower cost access to natural gas driving increased domestic chemical industry output; $158B of committed chemical production investment ▪ As the chemical and oil industries have continued to expand, so has production of tank trailers Growing Chemical &
Slide 33: Financial Overview
WABASH NATIONAL CORPORATION Financial Overview
Slide 34: Financial Performance
34 F INANCIAL P ERFORMANCE Annual Revenue Significantly improved results: ▪ 2016 revenue >$1.8B , up $658M since 2011 ▪ 2016 Operating Income increases $ 183M 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 $2,027 $1,845
Slide 35: Financial Performance
35 $39 $119 $150 $169 $230 $253 $0 $50 $100 $150 $200 $250 $300 2011 2012 2013 2014 2015 2016 ($ 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 generation leadin
Slide 36: Historical Financial Performance: Comparing Cyclical Upturns
36 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 – ’16 Upturn $1,214 $1,312 $1,863 $2,027 $1,845 $0 $500 $1,000 $1,500 $2,000 $2,500 2005 2006 2014 2015
Slide 37: Historical Financial Performance: Comparing Cyclical Upturns
37 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 2005 2006 2014 2015 2016 256k 281k 269k 307k 287k $617 $583 $571 12.
Slide 38: Capital Allocation Strategy
38 C APITAL A LLOCATION S TRATEGY • Maintain liquidity to support the core business and fund growth opportunities across business cycle Liquidity • Manage net debt to maintain credit rating (BB) throughout economic cycle and position for next credit rating upgrade • Target net debt to <3x EBITDA at
Slide 39: Appendix
WABASH NATIONAL CORPORATION Appendix
Slide 40: Consolidated Income Statement
40 C ONSOLIDATED I NCOME S TATEMENT ($ in thousands, except per share amounts) 2011 2012 2013 2014 2015 2016 Net sales 1,187,244$ 1,461,854$ 1,635,686$ 1,863,315$ 2,027,489$ 1,845,444$ Cost of sales 1,120,524 1,298,031 1,420,563 1,630,681 1,724,046 1,519,910 Gross profit 66,720$ 163,823$ 215,123$ 23
Slide 41: Consolidated Balance Sheet
41 C ONSOLIDATED B ALANCE S HEET ($ in thousands) 2011 2012 2013 2014 2015 2016 ASSETS Current assets Cash and cash equivalents 19,976$ 81,449$ 113,262$ 146,113$ 178,853$ 163,467$ Accounts receivable 52,219 96,590 120,358 135,206 152,824 153,634 Inventories 189,533 189,487 184,173 177,144 166,982 13
Slide 42: Consolidated Cash Flows
42 C ONSOLIDATED C ASH F LOWS ($ in thousands) 2011 2012 2013 2014 2015 2016 Cash flows from operating activities Net income 15,042$ 105,631$ 46,529$ 60,930$ 104,289$ 119,433$ Adjustments to reconcile net income to net cash (used in) provided by operating activities Depreciation 12,636 14,975 16,550
Slide 43: Reconciliation of Non-GAAP Measures
43 R ECONCILIATION OF N ON - GAAP M EASURES ($ in millions) Note: This table reconciles annual net income for the periods presented to the non - GAAP measure of Operating EBITDA. Differenc es may exist in the calculation of Operating EBITDA due to rounding. 2005 2006 2011 2012 2013 2014 2015 2016 Ne
Slide 44: Reconciliation of Non-GAAP Measures
44 R ECONCILIATION OF N ON - GAAP M EASURES a/ Branch transactions in 2016 relate to gains (losses) incurred for sale and closing of our branch locations in Phoenix, Den ver and Miami. Branch transactions for 2014 and 2015 are comprised of the sale of assets for three West Coast branches and the rea
Slide 45: Potential Dilutive Impact of Senior Convertible Notes
45 P OTENTIAL D ILUTIVE I MPACT OF S ENIOR C ONVERTIBLE N OTES (UNAUDITED) Table below illustrates the potential dilutive shares that would be included in the calculation of the Company’s reported ear nin gs per share in a future period assuming various hypothetical quarterly average market prices f
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