Wabash National Corp (WNC) 2009 Q1 法說會逐字稿

Good morning, ladies and gentlemen. It is my pleasure to welcome you to our 2009 annual meeting of the stockholders of Wabash National Corporation. I am Martin Jischke, Chairman of the Board of Directors of the Company.

At this time, the 2009 annual meeting of stockholders of the Company will come to order. All stockholders present today should make sure they've registered at the table located in the lobby just outside our meeting room.

I would like to introduce the other Directors of the Company present today -- Dick Giromini, Jim Kelly, Stephanie Kushner, Larry Magee, Scott Sorensen, and Ron Stewart. I would also like to introduce the Company's independent public accounting firm Ernst & Young. Representatives of Ernst & Young are present today and will be available to answer any questions immediately forming the formal business session. [Urdle] is here from Ernst & Young. Also present this morning is Larry Cuculic, who will act as Secretary and record the minutes of the meeting.

The record date for stockholders entitled to notice of and to vote at this meeting is April 1, 2009. I've received the affidavit of mailing of notice of this annual meeting stating that the mailing commenced on the 22nd day of April 2009. At this time, I appoint Mr. Thomas [Blanchford] of Bank of New York Mellon Transfer Agent of the Company as Inspector of Elections. Will the Inspector of Elections please stand and offer the report? Mr. Blanchford.

Thank you. On April 1, 2009 the recommendation of this annual meeting (inaudible).

Based on the foregoing, I therefore declare that a quorum is present and that the meeting is duly qualified to consider and act upon the matters to come before it. We may now proceed to transact the business for which the meeting was called. The polls for voting on the proposals at this annual meeting will open at the conclusion of the presentation for all matters.

The first matter to be brought before the annual meeting is the nomination and election of seven directors to serve until the 2010 annual meeting of shareholders and until their successors are duly elected and qualified. This proposal is described more fully in the Company's proxy statement, sent to all stockholders in connection with this meeting. (inaudible)

Do I hear a second? Is there any discussion? Hearing none, I now declare the nominations for Director closed. A motion has been made and seconded that Richard J. Giromini, Martin C. Jischke, James D. Kelly, Stephanie K. Kushner, Larry J. Magee, Scott K. Sorensen and Ronald L. Stewart be elected to serve as directors of the Company until the 2010 annual meeting and until their successors are duly elected and qualified.

The second matter to be brought before the annual meeting is the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for Wabash National Corporation for the year ending December 31, 2009. This proposal is described more fully in the Company's proxy statement sent to all stockholders in connection with this meeting. Mr. Cuculic?

(inaudible).

Do I hear a second? Is there any discussion?

Hearing none, a motion has been made and seconded that the stockholders of the Company ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm for Wabash National Corporation for the year ending December 31, 2009.

Because no further business is scheduled to come before the stockholders, I declare the polls for each matter to be voted on at this meeting open, and direct that a vote of the stockholders be taken by written ballot on the following matters. First, the election of directors to serve until the 2010 annual meeting of stockholders and until their successors are duly elected and qualified; second, the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for Wabash National Corporation for the year ending December 31, 2009.

Each holder of common stock is entitled to one vote for each share of common stock held of record at the close of business on April 1, 2009. Ballots are now available for each stockholder or proxy present and entitled to vote at this meeting. Any stockholder who has previously given his or her proxy need not vote unless he or she decides to revoke the proxy and vote by written ballot at this meeting. If you would like a ballot, please raise your hand and one will be brought to you.

Does anyone still have a ballot that needs to be submitted? Seeing none, I declare the polls for each matter voted on this meeting closed and direct the Inspector of Elections to collect and tabulate the ballots. Given the number of shares voted by proxy, the Inspector of Elections is now able to provide a preliminary report on the voting results for each of the proposals. Because the results are preliminary, they are subject to final tabulation and to verification by the Inspector of Elections. I recognize Thomas Blanchford, the Inspector of Elections.

(inaudible). Scott K. Sorensen and Ronald L. Stewart. A majority of the [stockholders] present at the meeting in person or by proxy will be in favor of the ratification of Ernst & Young LLP as the independent registered public accounting firm for Wabash National Corporation for the year ending December 31, 2009.

Thank you, Tom. Based on the Inspector's report, I hereby declare each of Richard J. Giromini, Martin C. Jischke, James D. Kelly, Stephanie K. Kushner, Larry J. Magee, Scott K. Sorensen, and Ronald L. Stewart have been elected as a Director of Wabash National Corporation to serve as directors of the Company until the 2010 annual meeting and until his or her successor has been duly elected and qualified. I also hereby declare that the ratification of Ernst & Young LLP as the independent registered public accounting firm for Wabash National Corporation for the year ending December 31, 2009, has been approved. The Inspector of Elections will provide the Secretary with a written report of the final vote cast with respect to the matters voted on today, which will be included in the minutes of the meeting.

Now, I would like to turn the podium over to Dick Giromini to present the President and Chief Executive Officer's report. Dick?

Thank you, Martin. Good morning and welcome to Wabash National's 2008 annual stockholders' meeting. As with all of these types of presentations, this morning's contains certain forward-looking statements and information including statements about the Company's prospects, the industry outlook, backlog information, financial condition, and the like. And as you know, actual results could differ materially from those projected in the forward-looking statements. These statements should be viewed in light of the cautionary statements and risk factors set forth from time to time in the Company's filings with the Securities and Exchange Commission.

Following the positive strides at Wabash National made in 2007, the Company entered 2008 with great expectations. What occurred, however, was quite different. As the year progressed, it became more and more apparent that we were no longer facing a typical cyclical industry downturn. Rather, we were experiencing prolonged nationwide macroeconomic conditions that the transportation industry had not recently experienced and that had not previously occurred in the Company's 24 year history. A lengthy continuation of low demand in the residential housing industry combined with deterioration in the automotive sector led to significantly lower demand for transportation equipment. Higher fuel costs combined with rising raw material costs contributed to a worsening operating environment. Finally, as the credit markets tightened, access to financing for customers became ever more difficult.

Despite our best intentions and efforts, our business has been significantly impacted by this very challenging and depressed demand environment. As a result, we have adjusted our focus to one of assuring our near term viability. In response and as proper stewards of the business, we have continued since mid 2007 to implement actions that are intended to optimize our cost structure and achieve positive cash flow even at these depressed demand levels. Our actions began as far back as mid 2007 and included idling of our Mount Sterling, Kentucky flatbed facility; suspension of our previously planned Southern plant project; hiring freeze and headcount reductions; base salary freezes; benefit cuts; significant discretionary spending restrictions; and suspension of dividend distributions heading into 2009. While painful to execute a number of these actions, notably those that impact our hardworking dedicated associates, they were nonetheless prudent and necessary to assure both the near term and long term viability of the business.

However, despite these challenges and while not readily apparent, the Company was successful in achieving many of the goals that we had set for the year, following the mission that we had established in our strategic plan that we rolled out in early 2008. While much has changed in the operating environment around us, I am proud to say that we remain focused and have made notable progress on many of the 17 executable initiatives of the plan.

Beginning with our number one value, safety, I'm pleased to report that the manufacturing team delivered the best safety performance in the history of our Company, leading to continued decreases in workers' compensation cost, reduced absenteeism, and enhanced productivity -- culminating with the recognition by the National Safety Council as a recipient of the 2008 Occupational Excellence Achievement Award.

Improved systems and a commitment to excellence by our associates lead to achievement of the best process yield performance ever with continued improvement to even higher levels this year. New customer gains provided for growth in market share that resulted in achievement of a dry van share that exceeds one of every three dry vans sold across the industry, representing a nearly 6 point share for dry van share, once again establishing Wabash National as the leading manufacturer of trailer products in North America.

Acquisition of certain assets of Benson International have allowed us to enhance and expand our platform trailer offerings to now include aluminum flatbeds and dump trailers. The completion of our Lafayette transformation initiative, consisting of assembly line consolidation, increased line flexibility, greater line utilization, and consolidation of all warehousing activities under one roof, all leading to annualized savings going forward approaching $6 million for this initiative alone.

The formation of the DuraPlate products group provides a focused business unit to grow the penetration and use of our steel composite panel technology into other markets worldwide, leading to a more diversified business with less dependency on the highly cyclical semi trailer industry segment. An early win of this effort is represented in the award of the full design, manufacturing, and distribution of PODS portable storage container needs.

The formation of the transportation equipment purchasing consortium is designed to increase efficiencies and economies of scale and procurement of materials, components, and services for all participants. And finally, our continued industry leadership in the area of new product innovation, with new innovations in the area of bonded technology, enhanced door lock systems, and aerodynamic enhancing technology. These accomplishments should not go unnoticed or ignored, as they will prove to yield great benefits as we emerge from the current economic downturn.

Let me now comment about the current environment outlook for this year and some brief comments about our first quarter results that we released last evening. Simply put, industry fundamentals are at near historical lows with 2009 expected to be the bottom at a total of some 74,000 units. 2010 is projected to show some improvement, currently projected to yield some 135,000 units, approaching the 144,000 of 2008, but likely to be more back half loaded.

The ongoing weakness facing the housing industry, the impact of the automotive sector challenges, and continued weak GDP will put even more downward pressure on our ability to achieve profitability for this year. Our first quarter results were not surprising or unexpected. As we stated in our fourth quarter call, overall macroeconomic conditions had deteriorated to the worst levels in decades. That hasn't changed.

As previously shared, our first quarter was expected to be impacted by both the seasonal and cyclically low volume levels, affecting overhead absorption and by the overhang effect of high commodity prices and purchase components costs that carried through into this year. While effective in negotiating significant price reductions with many suppliers, much of the anticipated savings will begin to be realized during the current and subsequent quarters. Our confirmed order book of business for the year has shown some recent improvement, now sitting at over 45% of the total year plan, which compares to 32% at the end of the first quarter.

As the year progresses, our results will improve as we gain the full impact of our previous cost actions, plus additional ones recently implemented, and are now positioned to achieve positive cash flow sometime in the third quarter, and with expectations to return to profitability levels in 2010 even at volumes comparable to the low 2009 levels. So despite all the actions previously taken, and the many accomplishments of this past year, the reality is that the industry we serve is faced with the worst demand environment in 34 years, resulting in financial pressures that have required us to go even further in the actions we take to manage through the storm. While difficult decisions to make, these latest 2009 actions, implemented in two steps since January, were again necessary and prudent. All in, these actions combined with previous actions taken and discussed earlier will provide operating expense savings in excess of $40 million in reduced annualized cost.

Additionally, we recently announced our intent to pursue certain strategic alternatives that would provide the added liquidity that we believe is prudent and necessary to sustain our business throughout however long this economic downturn persists. And as you know, we recently completed a forbearance agreement with our bank group and are actively discussing and seeking a longer term resolution to our revolving credit facility concurrent with our strategic alternative evaluation process to bring fresh capital into the business.

Regarding the strategic alternatives, all I can share at this time is that the process is well underway and I'm pleased with the response and interest, and we've had a number of opportunities currently being reviewed and evaluated. As always, there can be no guarantee that we'll be successful in completing a transaction, but we will provide additional information when appropriate.

In summary, I'll close by saying that while 2008 proved to be a challenging year for our Company, and 2009 will likewise be every bit as challenging, Wabash National continues to be the leader in our industry, as a result of our associates who make up the very best of what our industry is all about -- dedicated, innovative passionate individuals who truly value what they do and who they are. It is an honor and privilege to serve them. The significant headwinds we faced during the past year will undoubtedly continue throughout 2009, but we remain focused and confident in the future of Wabash National. There are those who would like to write us off, but we will prove them wrong. Our leadership team is committed to improving shareholder value and the success of this great company. We thank you for your continued support. With that, I would like to turn the meeting back over to our Chairman, Dr. Jischke, to conclude the formalities. Dr. Jischke?

Thank you, Dick. If there are no additional matters to discuss, do I hear a motion for adjournment? Is there a second to the motion? Discussion? All in favor? Opposed?

The motion carries and this meeting is hereby adjourned. On behalf of the Board of Directors, I would like to thank everyone for attending. And at this time I'd like to bring our leader, our CEO, Dick Giromini back to the podium to hold a brief 10 minute Q&A session. Dick?

Thank you. All of these shy folks. I'd just like to say that -- and I'll just add to my comments of earlier, 2008 was a difficult and challenging year. It's a tough environment out there. Everyone in our industry is facing the challenges that we face. In fact, I think everyone in the total economy understands the challenges that we all are facing today. I want to assure you that we have taken the steps and we continue to take those steps necessary to assure that this Company remains viable and continues to be much stronger. As the economy improves, we fully intend to take advantage of all of the improvements that the associates, the hard working associates Wabash National have implemented throughout our operations. And I for one am very excited about the long term prospects and future of the Company. So if there are no questions, then I say thank you and I guess there's still some coffee and stuff in the back that you can enjoy. Thank you very much.