WABASH NATIONAL CORPORATION (NYSE:WNC)

Investment Managers

Sashikanth (Sash) Yenika

Siwei (Lerissa) Li

Vanditha M Ravindranath

Presented on Dec, 8 2015

Agenda

Screening Criteria

Company Introduction

Segment Profiles

Industry Overview

Key Macroeconomic Drivers

Comparable Valuation

Financial Analysis

Financial Projections

DCF Valuation

Technical Analysis

Recommendation

Screening Criteria

Industry – NOT(Energy, Financials, IT, Healthcare)

Market Cap < $1B

Piotroski Score > 5

3 Year Avg. Revenue Growth > 10% P/E < 15x

P/BV < 2x

Current Share Price < 1.2*52wk low

Company Introduction

Founded in 1985; 2014 Revenue: $1.86B

Designs, manufactures and markets standard and customized truck and tank trailers, and related transportation equipment

Source: Annual report 2014

WABASH NATIONAL CORPORATION

Commercial Trailer Products Diversified Products Retail

CompositesAviation & Truck Equip.

Tank Trailer

Process Systems

Source: Investor Presentation August 2015, November 2015 and Annual reports

Dramatic margin improvement since 2010

Segment Profile: Commercial Trailer

80%

9%

8% 3%

Dry Vans

Refrigerated Vans

Platforms

Other74%

9%

8%

6%2%

1%General Freight - Truckload

Refrigerated Freight

Platform Freight

< Truckload Freight

Used Trailer Sales

Other

2014 Sales: $1.3B

2014 new trailer shipments: 53,550

Portfolio: Dry vans, refrigerated vans, platform trailers

Industry leader in van and platform trailer manufacturing

2010 2011 2012 2013 2014-

200

400

600

800

1,000

1,200

1,400

-

1%

2%

3%

4%

5%

6%

7%

8%

9%

PRODUCT MIX END MARKETS

SALES & GROSS PROFIT MARGINSIn USD m

Source: Investor Presentation August 2015, November 2015 and Annual reports

Diverse Products and End Markets

Segment Profile: Diversified Products

2014 Sales: $0.5B

Higher growth (81% - CAGR 2010-2014 and higher margin businesses

Portfolio: Sanitary, chemical trailers, aircraft refueler, vertical silos, portable storage containers

Possess industry leading stainless steel trailer brands: Walker, Brenner, Bulk

PRODUCT MIX END MARKETS

SALES & GROSS PROFIT MARGINSIn USD m

53%

20%

15%

12%Tank Trailers

Process Systems

Composites

Aviation & Truck Equipment

24%

22%

12%

10%

8%

7%

6%5%

6%Food, Dairy & Beverage

Chemical

Energy

General Freight

Aviation

Pharma

Parts & Service

Aerodynamic Services

Other

2010 2011 2012 2013 2014-

100

200

300

400

500

-

5%

10%

15%

20%

25%

30%

Source: Investor Presentation August 2015, November 2015 and Annual reports

Segment Profile: Retail

2014 Sales: $0.2B

Dealership model, selling new and used trailers, aftermarket parts, and maintenance and repair services

Expansion into new markets with mobile service and third party maintenance

PRODUCT MIX COMPANY-OWNED RETAIL LOCATIONS

SALES & GROSS PROFIT MARGINSIn USD m

2010 2011 2012 2013 2014-

50

100

150

200

-

3%

6%

9%

12%

47%

44%

9%

New TrailersParts & ServiceUsed Trailers

Flatbed trailer

Refrigerated trailers

Freight trailers

14%

20%

21%

45%

Wabash National Corporation

Utility Trailers

Great Dane Limited Partnership

Other

MAJOR PLAYERSKEY PRODUCTS

Overview - Truck Trailer Manufacturing

OUTLOOKLIFECYCLE

Mature stage of the industry’s life cycle

Slight product saturation has been reached

Trailer with fuel saving technologies for heavy duty trucks will spur new sales during the next five years

Industry will face cost pressures from product development

Source: IBISWorld

Porter’s Five Analysis

• High: high price competition, lack of products differentiation Rivalry

• Moderate: volatile price of steel and aluminum Bargain Power of

Supplier

• Moderate: high price competition Bargain Power of Buyer

• Moderate: high initial capital cost, limited access to competitive raw material price Threats of New Entrants

• Low: no substitute for trailerThreats of Substitution

Source: IBISWorld

Key Economics Drivers• Price of crude oil• Total trade value • Price of Steel

Supply Industries • Aluminum

manufacturing • Iron & Steel

manufacturing

Demand Industries • Local freight trucking • Long-distance freight

trucking • Tank & refrigeration

trucking

Truck Trailer Manufacturing

Industry Drivers

Source: IBISWorld

• Increase in the total trade value will lead to increased demand for truck trailer manufacturing

• Increasing price of steel and crude oil may pose potential threat for the industry

2014 2015 2016 2017 2018 2019 2020 2021(50%)

(40%)

(30%)

(20%)

(10%)

-

10%

20%

30%Economic Drivers Growth

World Price of Crude Oil Total Trade Value Price of Steel

YoY

% C

hange

Economic Drivers

Source: IBISWorld

Demand Industry

• Growing demand industries revenue will lead to increased demand for truck trailer manufacturing industry

2016 2017 2018 2019 2020 2021-

1%

2%

3%

4%

5%

6%

Demand Industries Revenue Growth

Local freight trucking Long distance freight trucking

Tank and refrigeration trucking

YoY %

Cham

ge

Source: IBISWorld

Comparable Companies

Provide mechanical, mechatronic and electronic technologies for braking, stability and transmission automation systems for commercial truck, bus and trailer manufacturers

• Revenue: $2.6B• Market Cap: $5.74B

Provide axle, brake and suspension solutions to commercial truck, trailer, bus and coach and off-highway machinery manufacturers

• Revenue: $3.8B• Market Cap: $0.8B

EV

Company Name Ticker LTM Earnings LTM Sales LTM EBIT/Share WABCO Holdings Inc. WBC 23.8x 2.2x 15.7xMeritor, Inc. MTOR 13.2x 0.2x 4.9xAverage 18.5x 1.2x 10.3xWabash National Corporation WNC $1.35 $28.02 $1.84 Implied Price per Share $24.92 $33.62 $13.94 Weight 33.30% 33.30% 33.30%

Estimated Price per Share $24.14

Post 20% discounting – Share Price $19.31

Price/

Comparable Valuation

Source: Bloomberg, Capital IQ, Annual Reports

2010 2011 2012 2013 2014(40%)

(20%)

-

20%

-

400

800

1,200

1,600

2,000

Revenue Gross Profit MarginNet Profit Margin

Activity Ratios & Profitability Ratios

PROFITABILITY RATIOS

2011 2012 2013 2014-

5x

10x

15x

20x

25x

30x

Fixed Asset Turnover A/R TurnoverA/P Turnover

ACTIVITY RATIOS

Source: Annual reports 2014, 2013, 2012

The Value of Profit Margin is high due to the income tax benefit that they received in 2012

2011 2012 2013 2014-

15%

30%

45%

60%

ROA ROE (Book Value) Adjusted Net Margin

Profitability & Leverage Ratios

2011 2012 2013 2014-

1

2

3

(6x)

(5x)

(4x)

(3x)

(2x)

(1x)

-

Debt/Assets Debt/Equity Interest Coverage

PROFITABILITY RATIOS LEVERAGE RATIOS

Source: Annual reports 2014, 2013, 2012

The Value of ROE is very high due to the income tax benefit received in 2012

Adjusted Net Margin is the value of Net Profit Margin had the tax benefit not been availed

DuPont Analysis & Greenblatt Ratios

2011 2012 2013 2014-

8%

16%

24%

32%

40%

EBIT/Tangible Asset EBIT/EV

GREENBLATT RATIOS

DUPONT ANALYSIS

  2010 2011 2012 2013 2014

Tax Burden 118% 99% 217% 60% 62%

Interest Burden NM 77% 57% 75% 80%

Operating Profit Margin (2%) 2% 6% 6% 7%

Asset Turnover 3x 2x 2x 2x

Leverage   3x 3x 3x 3x

ROE   11% 51% 16% 17%

Source: Annual reports 2014, 2013, 2012, Ycharts

This was considered as NM as the value was an outlier

I/S PROJECTION

Source: Annual Reports and Investor update Nov-2015

KEY INPUTS

KEY INPUTS WEIGHTED AVERAGE COST OF CAPITAL

Source: Yahoo! Finance

DISCOUNTED CASH FLOW

Present Value of Equity SENSITIVITY ANALYSIS

Source: Annual report, industry report

Technical Analysis

Source: Yahoo! Finance – Dec 7, 2015

RECOMMENDATION

Current Stock Price:$11.55

DCF Valuation: $13.63

Relative Valuation: $19.31

Recommendation: BUY 500 shares at

Market PriceTarget Price: $14.77

Expanding Margins

Increased Share Repurchase

Strategic Acquisitions

Entry to diversified growth markets

and less cyclical industriesStock Price

Stock Price

DIVERSIFICATION OF EXISTING PORTFOLIO

Global Economic Weakness

Rise in raw materials &

competition

Stringent Regulations

Source: Yahoo! Finance