Welcome to the First Quarter Earnings Conference Call. My name is Richard and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Mike Pettit, Vice President of Finance and Investor Relations, you may begin.

Thank you, Richard, and good morning. Welcome everyone to the Wabash National Corporation 2016 first quarter earnings call. This is Mike Pettit, Vice President of Finance and Investor Relations. Following this introduction, you’ll hear from Dick Giromini, President and Chief Executive Officer of Wabash National on the highlights of the first quarter, current operating environment and our outlook for the rest of 2016. After Dick, Jeff Taylor, our Chief Financial Officer will provide a detailed description of our financial results. At the conclusion of the prepared remarks, we’ll open the call for questions from the listening audience. Before we begin, I’d like to cover two brief items. First, please note that this call is being recorded. Second, as with all of these types of presentations, this morning’s call contains certain forward-looking information including statements about the Company’s prospects, adjusted earnings guidance, industry outlook, backlog information, financial conditions and other matters. As you know, actual results could differ materially than those projected in the forward-looking statements. These statements should be viewed via the cautionary statements and risk factors set forth from time-to-time in the Company’s filings with the Securities and Exchange Commission. With that, it’s my pleasure to turn the call over to Dick Giromini, President and CEO.

Thanks, Mike. Overall it was another record quarter for the company and a great start to the year. Actually, I should say it was the best first quarter in the company’s history and as such, we are on pace for 2016 to be another record year. We remained focused on executing our corporate strategy, profitably grow and diversify the company for organic and strategic growth, as well as through prudent management of our capital structure. Having said that, we are now a more diverse business than we’ve ever been. Today, we are far more than just a van trailer company and as a result, we have businesses realizing strong demand while others face demand headwinds. One thing consistent across all businesses is strong execution and effective management of the opportunities or challenges that each have been dealt. Within CTP, effective management of a strong demand environment combined with exceptional operational execution, led to outstanding overall results. At the same time, the DPG team saddled with a much weaker demand environment was able to deliver strong gross margins through effective cost management decision-making. Our first quarter results continue to validate our long-term strategic plan, first develop back in 2007 and demonstrates the progress we continue to make in executing that plan to profitably grow and diversify the business. We’ve changed the fundamental composition of our business and continue to strive to make additional improvements to grow margins, ensure more stable earning stream and take advantage of macro growth trends. With this focus, we’ve put ourselves into a position to take advantage of a very strong balance sheet, diverse businesses and world-class operations as we continue to execute these strategic moves. With that, let’s get down to specifics. On a quarterly basis, consolidated net sales were $448 million on shipments of 14,500…

Thanks, Dick, and good morning, everyone. Let me start by saying that we are obviously pleased with the first quarter results. Our results truly reflect the high level of execution we have demonstrated over the past several years, but particularly during the last six quarters, as well as the progress we have made to grow and diversify the company. Before discussing the results for the quarter, I’d like to comment on our recent capital allocation activities. As you know, we are executing a balanced capital allocation strategy where we are able to pay down debt and reduce our leverage, fund our corporate growth initiatives and return capital to shareholders. In the first quarter, we allocated approximately $6.3 million to repurchase just under 500,000 shares of stock as part of our existing $100 million, two-year share repurchase program. This activity highlights our commitment to increase shareholder value through return on capital and demonstrates our continued confidence that Wabash has a sustainable earnings stream and future cash flows. We also purchased $35 million in principal value of convertible notes, reducing the outstanding balance to $96 million at the end of the quarter. The convertible notes which mature in May of 2018 represented only significant debt maturity for the next switch years and further highlights the strength of our balance sheet driven by the performance and stability of the business. We continue to believe that our balanced capital allocation strategy will reward our shareholders by driving long-term value creation and de-risk the company all while providing flexibility to proactively grow our business into new and existing markets, both organically and strategically. With that, let’s turn to the financial results. On a consolidated basis, revenue for the quarter was $448 million, an increase of $10 million or 2%, compared to the first quarter of…

Thank you. [Operator Instructions] Our first question online comes from Mike Shlisky. Shlisky, please go ahead.

Good morning. This is John in for Mike. Can you give us a sense of how Wabash did from market share perspective in Q1? Were there any categories you felt you did better and or any worsen? Thanks.

No, I think I’d say that was pretty consistent with where we have modeled and where we have done overall historically. So we generally will have overall market share, pretty consistently around the 20% level overall ranging 20%, 21% in any given year. It’s pretty consistent.

Okay, thank you.

2015 and 2016 and we expect that to continue.

All right, well, thank you.

Thank you, John.

Thank you. Our next question online comes from Alex Potter. Please go ahead.

Hi guys. First question on gross margins in CTP, I mean, obviously just a monster quarter in Q1. So congrats there. With the construction projects and everything impacting shipments and presumably gross margin over the remainder of the year, you mentioned that Q1 is probably a peak for gross margin there. Just trying to wrap my head around what the cadence of gross margin could be for the remainder of the year because of some of those external impacts?

Yes, the impact will really be more notable in the second half of the year. That’s when the project gets into its heavier space. So, from a modeling standpoint, we would expect, for your sake, we would expect second quarter to have some level of consistency with what was able to be delivered in the first quarter, because the construction project won’t change dramatically until we get into – early into the third quarter and that’s when the third quarter will have likely the most impact and that will carry through the balance of the year and we would…

Okay.

We would estimate – we would estimate at this time that we could see in the second half relative to CTP and relative to the business here in the Lafayette area, maybe a 1% to 1.5% impact in gross margin in the second half for the CTP business related to the van trailer segment.

Okay, excellent. Thank you, that’s very helpful. I was wondering if you could also comment a bit on some of the non-trailer products in DPG, so non-tank trailer, you mentioned there that it looks like quoting activity for the tank trailer themselves has picked up and that seems like it has positive implications. So what could be happening in the remainder of the year and over the next several quarters which is great. Just wondering if you can give some additional color on when you expect some of these other new products that are in the hopper just starts inflecting, do you have any visibility on that? Thanks.

Yes, the tank trailer business, we always have lead time from the time you receive your quote and then you receive the order and then you have to engineer the product and you got the lead time to procure the materials, the component tree, suspension systems and alike. So there generally is a couple months delay from the time of order received to the time you can actually start building. So we do have some of that, but we will start to see some benefit in the second quarter on the tank trailer side with some of those orders that were starting to flow in. In the composites business, that was a strong quarter. They’ve seen some good order intake. So we would expect the next couple quarters in that business to be very solid. It’s always a fourth quarter problem for the composites business and filling backlog that tends to be their seasonally weakest quarter in that segment. In the process systems part of the business, my comments were really directed at, now that we’ve seen some significant quote activity pick up, we’ve got to get many of those converted to orders and then start to process of getting them into the backlog. That one is a little more difficult to predict. We expect improvement in it as it continues, but it’s difficult to time phase that for you as that business tends to be larger, longer lead time type component tree, its pharmaceutical downflow booths and isolator booths, high hour content, mobile clean rooms, those type of products, even the stationery silos. Little more difficult to – they don’t have a line process flow that you have good predictability like you do with trailer products. So that gives you pretty much a high level insight into. They are very diverse, and that’s the – it’s truly a diversified products business and that’s why we have this ebb and flow in those businesses that we are still working to not only better understand and make more predictable, but how to get better balance between those, we like the fact that they are diversified because it gives us some being up, some being down, it gives you that confidence that you are going to continue generating nice cash flow through the business. But there is still periods of softness that we are having to deal with and most notably in the tank trailer side of it which looks like it maybe recovering now.

Okay, excellent. Thanks very much for the color. Great quarter, obviously guys.

Thank you.

Thank you. Our next question online comes from Steve Dyer. Please go ahead.

Thanks good morning, Dick. Good morning Jeff.

Hi Steve. Good morning.

Couple of questions. You had talked about considering maybe opening some build slots for next year. It was unclear to me if you actually have done that, I know there is some other capacity coming online this year. So is there any thoughts to doing that and trying to lock in some price and things like that earlier than you normally would?

Yes, my comments on that Steve were, in some cases, we have some multi-year agreements where we have accepted some – taken some build slots that would be 2017 build slots until those baked on some multi-year agreements with some customers and in other cases we had customers who wanted slots in 2016, we were not able to provide them the number of slots that they would have liked, they need the equipment, so we have some rollover, I guess, you can call slots that we filled in 2017 to help accommodate those customers. So, I don’t want to say that we have officially opened the 2017 build slots, but we have effectively, in some cases, to deal with some specifics instances. There is no question that the demand environment remains very strong despite what we are seeing in the more recent order rates that are reported by the forecasting firms. We are seeing a lot of interest in products and in some cases orders just can’t be accepted by many folks. And so we’ve been very selective in what we have accepted to quote in. My belief is that, we will have a similar expectation from customers this year that we had last year for officially opening the 2017 calendar year product build slots early in the cycle than we had last year. It is a little unique that we put some orders in. This really an exceptional year. It’s just the excessively heavy demand throughout 2015 and into 2016 that have caused these special circumstances and the reason I sound like I am hedging a little bit is, we try not to get too far out in front because of the problem you have with projecting what the input cost will be further down the road that you…

That’s very helpful. Obviously, that kind of touched on my next question which is March looked a little bit softer on the dry van side and then just wondering if that’s a function of pull-forward maybe into Q4 last year or it’s just a function of you can’t accept the orders as you booked and would that lead to sort of another couple months that on their face looks softer because you can’t take the business?

Yes, Steve, I think you hit on both points, because of the significant early pull ahead last year, where the summer time orders, the June, July, August timeframe last year was significantly stronger than historical trends would indicate. And customers were getting in as early as they could because the prior year have been so strong and they’ve gotten locked out and we are seeing that phenomenon again and I think we came into the year effectively fully booked on the dry van side and not far off on the refrigerated side and now we are essentially full on both. It’s an interesting anomaly that we are all dealing within the industry. I am confident we heard that some competitors have actually been taking orders for 2017, but I don’t think that’s excessive at this point. But I do believe we will see normal – as we get to the middle of the year, you are going to see a – should see a significant pick up in order rates and maybe get a little bit more normalized in the second half of the year. So, we are expecting, based on everything we are talking with customers and what their intentions are, it would seem that 2017 would be another strong year and that’s why we say we are consistent with where ACT Research really is on this year and next year from a demand standpoint.

Thank you. Our next question online comes from Jeff Kauffman. Please go ahead.

Thank you. Hey guys, congratulations.

Hey, Joe.

Pardon me. It looks like the line has dropped from the queue. Our next question comes from Mike Baudendistel. Please go ahead.

Thank you. Last quarter, you said that there was something like 35,000 to 50,000 units of capacity that your competitors added. Now that we are a couple months after that. It shat still true or any more fewer units?

Yes, our position was that we could only get to around 30,000. When you really read into any press releases or commentary that you hear through the proverbial grapevine and all would be more in that possibly 30,000 impact would be more of a 2017 rather than 2016 as these facilities or expansions are completed. There is some misnomers and that’s where the 50,000 number comes in, the misnomers by some folks on what was being reported in the case of one of the competitors who is taking a facility and repurposing it to build dry vans, the likelihood is that that capacity will be transitioned over from a nearby older plant. So it’s not an effective minor increase rather than what was being reported in another case, an expansion is really being done for – and based on the pres release that’s put out for chassis and containers, which will not impact van trailer production, there is only a small portion where a line has been added internally on an expanded facility but a new facility is strictly intended for chassis and containers. So, all in, the best we can come up is something nearing the 30,000 unit increase in effective capacity and I will add what I shared last quarters prior to the recession downturn, there were about 50,000 more units of van capacity in the industry leading into the downturn. So coming out of the downturn, 50,000 down, now, we are talking about potential of 30,000 up. So, from a comparison basis, we’ll still be 20,000 units as effective installed capacity less than what we had prior to the last downturn and the industry operated pretty effectively even at those levels. I will share there has been some other offsets in the tank trailer side of the industry. So what we’ve been talking about right now is more in the van side, van trailer side. On the tank trailer side of the industry, there have been some folks who have left the industry, some smaller players. It’s not appreciable in volume, but there actually has been more reductions than there had been additions. Polar announced the closure of two of three facilities that they have. So that’s going to take some capacity out of the industry. Hauler has left the industry building tank trailers. We understand that Mak has repurposed their Billings Montana plants away from tank trailers to building dumps and other products. So, there is going to be a net reduction there that should help drive opportunities on the tank trailer side of the business. So there is some balancing going on in the industry.

Thank you. Our next question online comes from Joel Tiss. Please go ahead.

Hey guys, it’s Richard Carlson in for Joel.

Good morning, Richard.

Good morning, just hoping for little clarity around the guide, I look back over the past couple of years, it looks like, the first half is about 40% of the full year, so that has about 60%. It seems like we are implying that’s going to be opposite this year and obviously the highway project Kevin want to do with that, but just trying to figure out, I know you said that’s going to be next quarter where you give us a full update, but how much are you baking in for that currently and what are some of the other key pieces that we need to think about when we model this out?

We are trying to be very prudent in our projections at this point. We are off to a heck of a start for the year. There is some unknowns as we get into the second half on what the impact will truly turn out to be from the highway project. So, we are doing everything we can to mitigate any impact working with the city, weekly meetings, working with the construction company who is doing the work to make sure we understand everything they are doing. They’ve been very accommodating and support of and so far, some of the changes we made in access to the property, uniqueness from the property are working out real well, very smoothly. So we will have a much better insight into it. So we have great confidence for the year, it could very well be if the impact is not a significant, we could have the opportunity to even ship more trailers than what we are projecting but we are – as my comments stated, at this point in time, we are sticking with the 60,000 to 62,000 total trailer units as we don’t want to over commit and under deliver because of unknowns about this highway project. That’s one thing we don’t have 100% control over. So, if the city and construction company working with us, it can help us mitigate some of the impact that we’ve modeled in. It could be a net plus to us and so we will have a much better idea as we get into the second quarter call, because we’ll be into that period of time where we are realizing what the impact truly is.

Yes, and then, Richard, I think if you look back at past years, you’d see a much more pronounced seasonal profile. Obviously, Q1 has been the weakest of the quarters historically and in this quarter in particular we had an exceptional very strong first quarter. If you go back one to two years, you will hear us we were talking about. We wanted to get more balanced across the four quarters. I think the strong demand environment and some of the actions we’ve taken had allowed us to do that and so, partly what you are seeing is really more of a flatter profile in the current year.

Thank you. Our next question online comes from Kristine Kubacki please go ahead.

Hey, good morning guys.

Hi, Kristine.

Just a question on raw material impacts, you’ve heard from some of the other suppliers talking about and I still will off of kind of high levels we seen but definitely made a move in the quarter, especially aluminum, steel. Just talk a little bit about the trends you are seeing. Can you remind us if we do see some more significant moves there, how quickly can you pass that through to customers and is there any lag effects?

Yes, great question Kristine. We are seeing commodities start to move up. So I think the bottom has been reached. We are seeing aluminum, step up by a few pennies for a pound at this point, but certainly a move that we monitor it daily and we are seeing several cents per pound move up to in that $0.82, $0.83 per pound have their running $0.76, $0.77 per pound for quite some time. On the steel side, we are seeing the move up. It’s gotten up into the mid-400s and it had been down probably $50, $60 lower than that at points over the past year. We do go out on both those accounts and we do take forward positions when we quote a customer and receive a firm – the firm signed order from the customer, we will go out and take a forward position to protect a pricing that’s been built into the cost that is built into that trailer order. So we mitigate the risk on that part of it. And then we update on a quarterly basis, we will update our cost model going out four quarters at least and using projections and updating to current trends for the more than subsequent quarter to build that into any new quotes that are being provided to customers. So, we are pretty well protected and as I commented a little earlier about 70% of all the input cost from raw materials convert to components ends up being protected and then in the case of some large quotes which tends to be upwards 60% of the business we do in most quarters is protected because we have agreements with large suppliers to hold price so that we don’t have any forward risk on the margin that we would realize with some of those large longer-term quotes. So we are trying to invest we can, but we are seeing some increases in some raw materials. It seems to be a real trend, I think things have bottomed out and not sure where they will settle in. They are not going up at a rapid pace, but we are seeing some upside for sure.

I appreciate that color. And then just real quick on the used units and that’s a pretty small but it did follow where in terms of a little bit quarter-over-quarter and we’ve heard some of the fleets talk about that the used market has softened up even on the trailer side a little bit. Can you comment there?

Yes, Kristine, I think on the dry van side, it’s still a tight market. It may have softened some, I hadn’t heard that commentary, but what I can tell you, we are just starting a lot of units out there that are available because of the low number of units that were built and shipped during the last downturn and so, that’s contributing to the tightness in the market there. On the refrigerated side, there are more units out there that are available obviously. So, that one is a little softer. And as you know, it’s like most pieces of our business that can be lumpy at times and it depends on what used units we have, what units we have taken on dry packages and those kinds of things and because of the strong market there haven’t been a lot of dry packages that we’ve taken in the quarter.

Yes, if I can just add to that, in the years prior and I should say, several years prior, in prior to the last downturn, many of our customers would look to us to take their used equipment as part of trade package when they were – they are looking to replace the equipment to buy new. During this cycle what we have seen is more and more customers doing the – selling their late model equipment on their own and have not made those available as part of the trade packages or have not expected us to take those as trade to do the new trailer deals. So, it’s a different environment, obviously it can all turn as things slow down and they want to come to us for that, but that explains a lot why our used trailer volumes have gone down so much from what they were several years ago.

Thank you. Our final question comes from Jeff Kauffman. Please go ahead.

Hi, back again. Don’t know what happened there. Hey guys. Most of my questions have been answered, but Jeff, let me come back to cash flow. Given the guidance you gave us for CapEx and share repurchase and what we’ve seen so far in terms of working capital debt reduction it still looks like based on your earnings guidance is about $60 million to $70 million of free cash unspoken for at this point. And then I assume the view is keep it dry in case there if something opportunistic to do on the acquisition side, but can you talk about maybe where you might like to take debt levels if no acquisitions materialize, would you look to buyback more to convert at these levels or do you think you would just keep the powder dry?

Yes, thanks, Jeff. I appreciate the question. In terms of our overall capital allocation strategy, it remains consistent with what we talked about in the past and obviously, making sure that we protect the business long-term by having a healthy liquidity as without a doubt our first priority, funding capital expenditures is part of that as well. Beyond that, then it comes down to how do we create the most value and divert that capital to drive the value, obviously in the current environment, we’ve been able to take advantage of opportunities that come to us to repurchase the convertible notes. That’s something that we would like to continue to do when we have the opportunities to do that. Obviously, you don’t have to be an attractive value for what something we would pursue further this year. That matures in May of 2018 and our goal would be to take that off the table. As soon as we can when it’s cost-effective to do so. So, I don’t have specific numbers to guide you through there. And then, obviously after that, we do want to continue to look at and evaluate opportunities to grow this business strategically, we have increased the investment we are making on our organic growth initiatives as we’ve seen the step-up in capital expenditures. That remains something that is still a high priority for us. But it’s also something that – as you’ve seen over the last couple of years, we are going to maintain our discipline and we are going to make sure that we are selective as we evaluate those opportunities. So that it’s something that we want to continue to do but we are not going to go out and overpay for any opportunity that it gets presented to us. And then obviously, w also want to, as appropriate take advantage of return of capital to shareholders and as you know, we currently have a share repurchase program that’s authorized by the Board for $100 million on a two years that was authorized at the beginning of this year.

Thank you. At this time, I see we have no further questions. I’d like to turn the call back over to Dick Giromini for closing remarks.

Thank you, Richard. So, while much has been done, opportunities bound. We will continue to be strategic but selective in pursuing opportunities to grow our business, in addition to the organic growth initiatives already underway. We’ll continue to seek out ways to increase returns and value for all shareholders while assuring that the proper balance between risk and reward is considered in all decisions. In closing, we are clearly on pace to deliver another record year in 2016 with a strong start, a solid backlog, a supported demand environment and a continued focus on execution in 2016. Thank you for your interest and support of Wabash National Corporation. Mike, Jeff and I, all look forward to speaking with all of you again on our next call. Thank you.

Thank you, ladies and gentlemen this concludes today’s conference. Thank you for participating. You may now disconnect.