Welcome to the Second Quarter Earnings Call. My name is Cynthia 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 now. I’ll turn the call over to Mike Pettit. Mr. Pettit you may begin.

Thank you, Cynthia, and good morning. Welcome everyone to the Wabash National Corporation 2016 second quarter earnings call. This is Mike Pettit, Vice President of Finance & Investor Relations. Following this introduction, you’ll hear from Rick Giromini, President & Chief Executive Officer of Wabash National on the highlights of the second quarter, the current operating environment, our outlook for the remainder of 2016, and an early look at 2017. After Dick, Jeff Taylor, our Chief Financial Officer, will provide an overview 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, the industry outlook, backlog information, financial condition 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 Rick Giromini, President & CEO.

Thanks Mike. I am pleased to share that our second quarter marked another record for the Company and rounded on a great first half of the year. Our financial results continue to validate our long-term strategic plan and demonstrate 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 it is clear that we’ve made significant progress towards transforming ourselves into a higher margin diversified manufacturer and we remain committed to this effort. In June we announced our decision to realign our retail segment under the commercial trailer products and the diversified products businesses. We believe this change in segment structure provides enhanced alignment between our two business segments and their channel partners, while supporting our strategic objective to grow the areas of our business that offer the most attractive margins and returns on invested capital. This new alignment will enable future growth that more fully leverages the scale and resources of CTP and DPG and is another example of our unwavering commitment to optimizing business results in all areas of our business. With this disciplined approach, we’ve put ourselves into a position to further leverage our world-class operations, profitable businesses and strong balance sheet as we continue to grow and diversify this company. I’d now like to discuss a few specific financial results and highlights from the second quarter. Jeff will provide more detail of the financial results in his remarks. On a quarterly basis, consolidated net sales were 471 million on shipments of 15,900 units consistent with our prior guidance. The business also delivered a strong second quarter for units built totaling approximately 16,650 units. We continue our long streak of operational excellence leveraging our expertise in Lean-Six Sigma as gross margin…

Thanks Dick and good morning everyone. Let me start by saying that we are very pleased with the second quarter consolidated results. The high level of execution in our operations and across the Company are reflective in the results this quarter and frankly have been reflective in the results over the past 2 years. Additionally, we are benefitting from the actions we have taken to grow and diversify the company, both from expanding organically into new products and markets such as aerodynamic products, mobile storage and truck bodies, as well as expanding acquisitively with the Walker acquisition which provided critical mass in the diversified higher margin products and services. Before discussing the results for the quarter, I'd like to comment on our recent share purchase activities, as you know we are executing a balanced capital allocation strategy where we allocate capital to manage liquidity, reduce our debt which intern decreases our leverage, fund our corporate growth initiatives both organic and acquisitive and return capital to shareholders. In the second quarter, we repurchased just under 750,000 shares of stock with a total spend of approximately $9.6 million. This activity highlights our commitment to increase shareholder value through return of capital and demonstrates our continued confidence that Wabash has a sustainable earning stream and future cash flows. 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. With that, let's turn to the financial results for the quarter. On a consolidated basis, revenue was $471 million, a decrease of 43 million or 8%, compared to the second quarter of last year. Consolidated new trailer shipments were 15,900 units during the second quarter in line with…

Thank you. [Operator Instructions] And our first question comes from Mike Shlisky with Seaport Global. You may begin.

So I wanted to ask quickly about the cancellation rates that you're seeing in some of the industry data that has been out there recently, you had picked up a bit when looked at as a percent of the prior month backlog, I was curious if Wabash has seen any big increases in their cancellations recently or if that's a issue for other folks in the industry?

I think we have seen some cancellations, I don't think that they are anything exceptional at this point. In one particular instance there was a, one of the customers were actually acquired by another company, so they put a hold on capital, so we did have some cancellations through our indirect channel. But nothing out of the ordinary that causes us any pause, we feel very comfortable and that's why we're able to be very confident in our projections for the rest of the year. We have sold out all of the, all the straight time slots for both our dry van business and our refrigerated. So we're not hearing anything from our customer base that would indicate that the orders are at risk. So time will tell, but that's how we are -- what we're hearing from our customers to-date. And based on conversations with them for next year certainly the conversations have been very good that's why I shared some of the early commitments as if they were looking to be in a mindset of cancelling, they won’t be quite as confident about their placement of orders or commitments for next year.

I wanted to ask secondly, I don't want to get any kind of guidance here but just hypothetically if you were to see a down year next year on the order of what we're seeing in trucks right, I am not saying it will happen but if it were to happen which is down by 25% next year. I was curious if you think of your new cost structure, if you think Wabash could keep it detrimental margins necessarily below the 30% level in 2017, if this were to take place?

I think what we would say Mike is that we’ve improved our cost structure significantly you’re seeing that in the results that we delivered this quarter and honestly we have delivered over the last 6 to 7 quarters, so significant improvement in profitability levels that surpass all time records for the company. So we’re going to manage our cost structure to whatever environment we’re facing in the industry in the core trailer business and we think we’re better positioned today to be able to manage through that than we ever have been in the industry’s history.

And just to add to that Mike it’s certainly indicative by what has been done on the DPG side of the business, where they have taken proactive actions to manage their overheads, wherever necessary to not only sustain but actually have improved their gross margins in an environment that has got a lot of headwind pressure on demand. So, we know how to do it and the team is executing and we’re prepared to deal with that in the event that at some point in time there is a softening on the rest of the business.

Got it, one last one from me, I wanted to just get your thoughts on pricing in the used trailer market, as you said Jeff if your comments on the pricing was just about new just being mix or is there any changes in the used that we should be aware of as well?

No I think the used market is still relatively stable in our view obviously the number of units that we’re taking in on the used side has decreased overtime we’re managing that very closely so that we can manage our overall exposure there. So I think you do see particularly for older equipment that there may be some softening on used pricing, newer equipment is holding up relatively well and we see that market as relatively stable.

Okay, got it guys. I will hop back in queue. Thank you very much.

Thank you.

And our next question comes from Steve Dyer from Craig-Hallum. You may begin.

So June obviously in addition of the cancellations was softer on the order front year-over-year pretty significantly, I am wondering maybe what you attribute that to, is that just a late start to ’17 ordering or was there an anomaly in there that you saw?

Well, last year was the anomaly, it was a tremendously early start to orders as we hear all through last year that it was very surprising for the whole industry how early customers want to get in, they needed equipment, I would suggest that this order season appears to be a more normal timing for engagement still earlier than in some years as I shared, we’ve already received verbal commitments for some 5,000 units from customers that ordinarily would not be making order commitments this early in July, typically that would be 2 or 3 months out. So I don’t think that we should view this as in comparison to last year, we should look at it on a more historical basis on what typically is the timing for customers to be placing orders. Certainly, there is a lot more noise in the demand environment for the fleets. It's been choppy when you look at the tonnage levels. Over the course of the last 6 to 9 months, they have been up and down, so I think customers are looking at what their needs are going forward. We heard comments from customers that there is an excess of power capacity out there and there has been some adjustments being made, so I think they're just trying to get their houses in order and the conversations as I stated earlier that we're having with customers and the feedback is very positive. In some cases, customers are looking for more equipment than they needed for this year. In other cases, they're looking for less, so it's a little early to make the total assessment. It does seem that, that in our expectation is it will be a little softer but certainly not to the levels that are being projected by some of the forecasters.

And then as you start quoting and having conversations for next year sort of what are you seeing on the pricing environment and what are you hearing in terms of new capacity coming online?

Yes, good question, thanks Steve. And the pricing environment is still very solid with a kind of order quantities, demand environment is still being very strong, it's a solid environment from that standpoint. So I don't see a lot of pressure there, we'll have to see as we go forward to see how that all plays out. But on the capacity standpoint, it's really mixed out there. You've got a couple of the folks who are putting capacity that are pretty much on target with their plans and their beginning their ramp-ups. And this is all obviously hearsay in the industry and that would be both Hyundai and Utility with their facilities. And then on the flipside, there is little slower progress that’s occurring with Great Dane’s conversion of the Fleetwood RV facility to be a dry van facility just getting going on their early part of their ramp-up there. And then what we're hearing as that Vanguard is several months behind anywhere from 3 to 6 months behind, it doesn’t look like they'll have their capacity online until sometime early 2017 or even later into the year and lot of challenges and being able to get the facility up built and get the equipment installed and proved out. So overall our assessment is that obviously no impact this year 2017-2018 is likely to be limited to maybe well 15,000 to 20,000 units of capacity addition to the industry, not the 30,000 to 35,000 units that have been talked about previously and that's just because of some of the delays in being able to actually execute and then ramp-up and get the staffing in place, the training in place and then proving our product and getting orders. So a little slower from that standpoint than what was being talked about earlier, so more of a 15,000 to 20,000 unit impact in maybe ’17 and ’18.

So more capacity and a little bit softer demand, but I think what you had said was so far your pricing expectations for next year your margin expectations remain pretty solid?

Yes, we certainly believe so at this time, the demand environment remains quite strong although there may be a level of softening, it’s not dramatic, so the capacity utilization for manufacturers will remain strong enough up to support it, that’s our belief and that’s also combining with the improvement initiatives we continue to implement throughout our operations and we have made a lot of progress with investment in productivity and velocity optimization initiatives that are really paying off for us. So that is what gives us some confidence that we’ll be able to hold on to margins for the most part.

Okay. Thanks guys.

And our next question comes from Michael Baudendistel with Stifel. You may begin.

I just want to ask you a question on the gross margin percentage on the quarter which I guess was a record and when I look at your Q, it looks like a lot of that was in the commercial trailer segment related to material costs being down or at least not keeping us with price. Could you just talk a little bit about, is there any sort of timing issue there with respect to material costs and how much of that is due to commodity cost being down versus material taken out of trailers or any other issues there?

Yes, you get a little bit of both, we have done some component design optimization that has benefitted us in that regard so there has been material cost that’s been taken out from there but on the raw commodity side, we certainly have had some benefit from raw commodity environment and just for some recollection for everyone, on the aluminum and the hot roll steel side of the business, we go out and take forward positions to -- and we price our product according to what the projections are for cost and then we actually go out and take forward positions when we secure a firm order from customers. So we mitigate any of the upside or downside that is associated with those commodities. So we don’t see an impact when it comes to aluminum and to hot roll steel or the material that goes into rear frames and the bracketry systems and all for lining gear. Likewise, we implemented program for tyres and the lumber side, tyres going back all the way to 2012 lumber more of a last 2.5 half change in the way of practices and we just pass along the cost on those to customers we will make adjustments up or down based on what happens in the market, if it there is significant movement on those. So we mitigate about 70% of the material input into the cost of a trailer that ends up being effectively fixed, but it’s built into the cost model and then of course built in to the pricing. So we don’t see as much variability but there is going to be some that we have and I can’t quantify that for you sitting here as to how much of the impact was tied designed versus tied to actual commodity fluctuation but certainly we’ve gotten some benefit from it over the last year, year and a half.

Great, that’s good detail.

The favorable margins obviously are a reflection of the pricing, the productivity and then obviously some materials as well. Having said that, I don't want to overlook the very strong margin performance that DPG delivered in the quarter and particularly with the headwinds they're facing. For them to deliver a 24.7% gross margin is really fantastic, so they were a nice contributor to the consolidated number as well.

Great, thanks for that detail. And the other question I had is on orders and backlog and the drop in backlog sequentially from 1.1 billion to 860 million, is that what you would have expected seasonally and is in your experience does that usually drop to that extent seasonally and was there any impairment of orders that may have not taken place in the second quarter because the order book for 2017 wasn't open for the full duration of the quarter?

Yes, the first question is, no, it's not unusual and in my comments earlier about, if we look at more what would happen and I'll call it normal history as opposed to the anomaly of 2015 typically would see a drop off as we get into the mid part of the year because the orders typically drop and the bills increase, so you've got just the opposite occurring there. And then as you typically proceed into the third quarter, you'd see further drop because third quarter is typically the one of the strongest, if not the strongest build quarter and it's still just starting the early ramp-up of orders on a more typical year that's why this recent history is really causing confusion for a lot of folks as they look at numbers and only looking back to one year. So we didn't find it as anything unusual, it's more of what would be considered the usual pattern. And the second question you had Mike?

Yes, it was the 2017 order book not being opened unfortunately does that impair orders in the second quarter?

Yes, this is there is always that impact, we actually shutdown accepting 2016 orders in the first quarter, so clearly in the second quarter we're already full as I stated earlier, so we've been very careful about accepting any orders for 2016 that could disrupted by any potential impact of the road construction project. So as I stated in my formal comments, straight time build slots are all full, so we do have in the event that a customer were to come to us as we progress through and we see the opportunity to handle it as we get later in the year, if a customer came back to us and said because I need 300, I need 500 units, I need 600 units. We could possibly depending on timeframe and the progress of the highway project we could take on some additional units. If it makes sense, if we had the lead times to get suspension systems and the components here go into the trailer and there was minimal interruption from the highway project. So that possibly exists by using Saturday overtime.

And our next question comes from Jeff Kauffman with Buckingham Research. You may begin.

Jeff, Dick, I'm going to ask my normal question on what we do with all this cash. The good news is you're on track for about 250 million EBITDA based on your guidance. I am looking at operating cash flow of just under 200 million we are going to spend 25 million to 30 million on CapEx maybe 50 million on share repurchase although we’re trailing behind that so far this year. You’ve already done about 45 million of debt reduction, it still leaves almost $80 million unspoken in your 0.4 times debt-to-EBITDA not forcing your hand but what do we do here, do we just let cash accumulate?

Jeff, I think as you’ve pointed out in the past in some of your research notes, it’s a high quality problem to happen and the company is in a position where we have tremendous flexibility with the strong performance that we’ve demonstrated certainly over the last 6 to 8 quarters. So we’re really excited about that flexibility and the opportunity there, I think in terms of priorities for capital allocation, obviously I’d to take some more data off the table opportunistically particularly the convertible notes which have the more near-term maturity in the year 2018 once again those aren’t callable, so we have to have the opportunity do that and we’ll continue to monitor that. We think returning capital to shareholders, through the share repurchase is value creating and it provides an ROC for the shareholder and so we’ll continue to opportunistically evaluate that as well. And then I think the last component there is really strategically growing the company we continue to be active in that regard and Dick can comment on that in a minute if he’d like. But it is something we’re going to be strategic but selective. I think it’s something that we all would like to do and we have put the company in a fantastic position from a balance sheet perspective to be able to increase our activity level there.

Jeff covered it but I’ll just reinforce that we continue to evaluate opportunities to further diversify the business grow where we believe it makes sense but it’s going to have to be strategic but selective and I just keep repeating those words because we will be very prudent stewards of the business that’s what we’ve stated in the past and we continue to look at opportunities but they’ve got to be the right ones, they’ve got to make sense and they’ve got to be priced right.

Okay, Jeff I think 100 million was the latest share repurchase authorization, we’re tracking about 9 million a quarter here is there a timeline on when that authorization gets spent and could we see more share repurchase activity to catch up, or do we just kind of stay at this 9 million to 10 million rate for the time being?

The authorization was a 2 year authorization, so it covers 2016 and 2017 I think obviously if we have access cash available, it’s something that we could accelerate if we think it makes sense and copy that over the next year and a half.

Okay, one last follow-up and then that’s good for me. The new composite floor product you mentioned you were getting ready to roll that out and that will be available now for your regular trailer product I am thinking more particular refers. How is the customer interested in that van, I mean this is really a game changer product from what I understand?

Yes, just to clarify, the product that we’re talking is the truck body product that’s ready today and we’ll be able to build and ship accept orders and then be able to build and ship later this year, the refrigerated van trailer itself different from a truck body, refrigerated van trailer are the ones that we introduced a prototype at the TMC show in Nashville earlier this year back in March and would expect that not to be available until the latter part of ’17, early ’18, so that's got a lot of development we're working with three different customers to actually test out, prove out, provide feedback optimize design before we would go forward and commercialize that, so the truck body product is the segment that we entered that's the new even duty segment that we've entered and that one is the one that we’re in production on going forward. The facilities are here and ready and I think you had the opportunity to tour and see the early stages of it late last year and that facility has continued to be staffed up and we're building product and shipping.

And our next question comes from Alex Potter with Piper Jaffray. You may begin.

I wanted to ask a question on DPG, you talk about sort of the revenue headwinds that you have had there and the good margin performance. I don't want to lose sight of that, but one of things that stood out to me within DPG was sort of the non-trailer product category which in my view has sort of been the litmus test about whether some of the new products you guys are introducing are going to gain traction and that non-trailer component of DPG comes down year-over-year for something like two years and then this quarter it turned around and was positive and can you guys sounded like that seemed like a pretty good sign, I am just wondering whether you think this is sort of the start now of restraining a positive year-over-year growth results and if so what the main maybe two or three drivers of it all?

The two areas of the diversified products business saw some nice progress in the most recent quarter, the process systems business in finally getting some traction with getting products shipped that's very lumpy. There are a lot of large high hour content type products when you talk about silos and pharmaceutical equipment. These are not your typical like a dry van that has a limited hours and tag time to actually produce something. These take a long time and they can't be just shipped or used away so I mean it takes a lot of coordination, a lot of time to produce and coordination with customers to get these shipped. So process system had a better quarter in that regard and the our Wabash composites business. As I stated in my prepared comments had a very strong quarter, the product so the truck box products that they produce are starting to really resonate and getting that traction there and that's a new product that was introduced late last year, so that was a strong quarter them. And they have expanded a suite of aerodynamic products in site skirts and rear aerodynamic devices with air open, so those are starting to resonate and pick up some additional incremental revenue and generate nice profit contribution.

Okay great. And I guess one last one maybe a sort of philosophical or strategic question. You hear a lot of people obviously focusing on this, the prospects for a downturn in 2017 not just in the trailer market but I guess in the freight market overall, Class A, the fleets its hard times for fleets and they all seem to be guiding and whenever they make public comments, it is just doomsday. But then you don’t see the follow through really on cancellations, right. So in period they really felt the world was coming to an end and things were so bad then you should see Class A and trailer cancellations spiking up which are not. So I am trying to maybe interpret what some of these fleets are saying, do you think that they are posturing in order to try to get better rates from the shippers because in the back of my mind they know that ELBs and other things and capacity constraints are on the horizon and well this isn’t that bad and is that kind of thinking at the back of their mind?

I certainly don’t want to try and think for them, they have the number of challenges that deal within their business and our job is try and help them do better by providing good products cost effectively and all that. Certainly the projections that I see continue to indicate that the demand environment for goods to be transported and you look at GDP projections at all for next year versus this year are still projected to be higher next year than they are this year. We’re continuing to see year-over-year increase and total truck tonnage loads, loads continue to increase albeit at a moderate level, but I’m not seeing any projections on that side of it as far as the demand environment for the fleets decreasing, I am seeing continued moderate growth. What we are seeing though and the headwinds that the fleets are seeing is really on the regulatory front and I think that’s what they’re probably trying to be somewhat conservative on their projections because their costs have continued to go up and if the choppiness in the market ends up causing them challenges in getting rate increase, then they look at and say while their profits will be compressed somewhat because of that. It doesn’t mean that they don’t remain healthy and they don’t continue to run their business and invest in equipment replacements where necessary to further optimize their operating costs. But I think it’s just an indicator that the environment that they’re operating in with whether it’s hours of service or electronic logging device or the big fleets are already managing through those issues but the rate environment has been choppy for them and I think that’s probably why they’re a little bit cautionary in their statements.

And our next question comes from Mike Shlisky with Seaport Global. You may begin.

I wanted to ask also about the greenhouse gas that you referenced in your comments, do you think it’s going to have a pull forward of demand as you’re current trailer products if were to happen or is it more likely after changeover, you have sales of higher tech products or more component tree looking at your trailer after it takes place.

The ELD technology that’s really tied to the power unit side.

Not at the GSG rules not the ELD.

Sorry?

Kind of …

The greenhouse gas, GSG 2.

Yes meant the GSG rules yes.

No, I don't anticipate any pull ahead the 2018 rates for the most part customers have done a lot of adoption of those technologies already, especially the customers that we deal with. So I don't know that there will be an appreciable amount of pull ahead from that standpoint. We're not anticipating there. And we're not planning on it ourselves that first phase is technology it's all available and it's been increasing in adoption over the last several years, that's what is unique about our industry. We tend to adopt those things that make sense. When I say we I am talking our customers, our industry in total adopt technology that makes sense that help optimize cost, optimize performance, reduces fuel usage by putting aerodynamic devices on. And so on so forth so the fact that the EPA is pushing through the GSG 2 regulations, longer term can be a challenge, but in the near-term it's really the real biggest issue with it is that a lot of these technologies don't do a lot of good in short haul city run type environments where you don't get the benefit of highway speeds to get the fuel economy savings and that's the big headache for fleets to do that type of haul. And those are not the ones that we deal with as much, our strength as more in the direct channels which is a lot of truckload fleets and all that, that have already adopted a lot of this technology.

So just to kind of summarize then the benefit you might get from GSG would be in ’18 rather than ’17, if there was any upside from that rule?

That's really difficult to say because again our customers have been early adopters of a lot of the technology. There is really minimal reason for them to do a pull ahead, you see I am saying. The longer term benefit for us could be that the larger fleets that are well capitalized have adopted the technologies already. The smaller carriers that are less capitalized will be more challenged if you see consolidation in the industry occur that obviously would push towards the customers that we are stronger with.

Let's talk about the platforms as well not anything assuming but some of the major off loader equipment companies maybe seeing certain cases up on I am not so sure about culture, but those other areas essentially on the oil and gas side, if we were to see any kind of increase in there in the equipment companies sales in 2017, would that be a benefit to your platform sales if that were to take place in 2017 or is there unused capacity if not shipping things around it might take till ’18 for the platform and placement to kind of perk up?

We could see some positive influence in demand from any increase in shipping activity there, so yes we will see some, I don't want to make it sound like it would be appreciable but there certainly would be some favorable impact.

And we have no further questions at this time. I will now turn the call over to Rick Giromini for closing comments.

Thank you. So while much has been done, opportunities certainly are bound we’ll 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 way 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’re on pace to deliver another record year in 2016 with a strong first half, a solid backlog, a supported demand environment and a continued strong focus on execution. Thank you for your interest in and support of Wabash National Corporation. Mike, Jeff and I all look forward to speaking with you all 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.