Annual Report 2019
Letter from the President and Chief Executive Officer
Dear Fellow Shareholders,
As I enter my third year as CEO, it is humbling to reflect on what our team accomplished during my tenure and
exciting to consider the opportunities ahead of us. 2019 was a notable year from both strategic and financial
perspectives. Our Wabash Management System continued to mature and drive improvement throughout the
organization and we achieved many financial highlights. More importantly, record revenue driven by rapid growth
in our Final Mile business speaks to the resilient Wabash National portfolio that we carefully constructed over the
past decade.
Throughout the year we made important strides in transforming Wabash in line with the strategic vision that we
have for the company. An important part of our transformation included assessing the company’s history, legacy,
competitive advantages, and culture to better align the organization and we created new organizational
capabilities to deliver on our strategy. As a result, we realigned our purpose, vision, mission, values and leadership
principles to reflect how Wabash National can best provide breakthrough customer value, long-term profitable
growth, sustainable results and a rewarding future for our employees. I encourage you to read more about our
purpose, vision, mission, values and leadership principles at the beginning of our proxy statement.
In addition to aligning our decision making and behaviors to those key principles, we are intentionally acting with
an enterprise lean mindset through deployment of the Wabash Management System. The Wabash Management
System identifies and eliminates waste, enhances process, and establishes stable and effective standard work in
every aspect of the business. By applying a lean mindset to every aspect of our business — not just the shop
floor — we are able to free resources through process improvements and connect systems to enable profitable
growth and advancement of the strategy for our people, customers and shareholders.
Throughout our business transformation, we will continue to focus on extending our seven-year record of free
cash flow conversion in excess of 100%. We will also continue to take a balanced approach to capital deployment
by funding organic growth via capital expenditure, maintaining our dividend, strengthening our balance sheet and
evaluating opportunities to repurchase our shares.
I am ever grateful for the hard work and dedication of our people; the trust and support of our customers and
suppliers; and the confidence of you, our shareholders, in Wabash National and our long-term success.
Finally, as with many companies all over the world, we continue to monitor and respond to the challenges
presented by the spread of the coronavirus (COVID-19). Our highest priority remains the safety, health and well-
being of our employees, their families and our communities. We have taken proactive measures to protect our
people and will continue to take necessary actions. We are very thankful to our employees for their continued
dedication as we collectively work together during this uncertain time.
Sincerely,
Brent L. Yeagy
President and Chief Executive Officer
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WABASH NATIONAL CORPORATION
1000 Sagamore Parkway South
Lafayette, Indiana 47905
Notice of Annual Meeting of Stockholders
When:
Tuesday, May 12, 2020,
at 10:00 a.m. Eastern time
Items of Business:
3 proposals as listed
below
Date of Mailing:
The date of mailing of
this Proxy Statement or
Notice of Internet
Availability is on or
about March 30, 2020.
Who Can Vote:
Stockholders of
each share of common
stock at the close of
business on
March 13, 2020.
Attending the Meeting:
As a result of the public
health and travel concerns
related to coronavirus or
COVID-19, we have made
alternative arrangements and
the 2020 Annual Meeting of
Stockholders will be held in a
virtual meeting (via live audio
webcast) format only. You
will not be able to attend the
2020 Annual Meeting of
Stockholders physically. You
or your proxyholder may
participate, vote, and
examine our shareholder list
at the 2020 Annual Meeting
of Stockholders by visiting
www.virtualshareholder
meeting.com/WNC2020 and
using your control number
found on your proxy card.
Items of Business:
1. To elect eight members of the Board of Directors from the nominees named in the accompanying proxy
statement;
2. To approve, on an advisory basis, the compensation of our named executive officers;
3. To ratify the appointment of Ernst & Young LLP as Wabash National Corporation’s independent registered public
accounting firm for the year ending December 31, 2020; and
To consider any other matters that properly come before the Annual Meeting or any adjournment or
postponement thereof. Management is currently not aware of any other business to come before the Annual
Meeting.
Each outstanding share of Wabash National Corporation (NYSE: WNC) Common Stock entitles the holder of record at
the close of business on March 13, 2020 to receive notice of, and to vote at, the Annual Meeting or any adjournment
or postponement of the Annual Meeting. Shares of our Common Stock can be voted at the Annual Meeting only if the
holder is present by virtual presence online or by valid proxy. Management cordially invites you to attend the Annual
Meeting by virtual presence online.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS
MEETING TO BE HELD ON MAY 12, 2020:
The Proxy Statement, Annual Report and the means to vote by internet are available at
http://www.proxyvote.com.
By Order of the Board of Directors,
Melanie D. Margolin
Senior Vice President and General Counsel, Corporate
Secretary
March 30, 2020
Whether or not you expect to attend by virtual presence online, we urge you to vote your shares at your earliest
convenience. This will ensure the presence of a quorum at the Annual Meeting. Promptly voting your shares by
signing, dating and returning the proxy card mailed with your notice, or by voting via the internet or by
telephone, will save us the expense and extra work of additional solicitation. An addressed envelope for which
no postage is required if mailed in the United States is enclosed with your proxy card. Submitting your proxy
now will not prevent you from voting your shares at the meeting by virtual presence online if you desire to do
so, as your proxy is revocable at your option. Your vote is important, so please act today.
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2020 Annual Meeting of Stockholders on May 12, 2020
Proxy Statement
Table of Contents
Proxy Statement Summary . . . . . . . . . . . . . . . . . . . . . .
1
Information About the Annual Meeting,
Proxy Materials and Voting . . . . . . . . . . . . . . . . . . . . . . 10
Proposal 1 – Election of Directors . . . . . . . . . . . . . . . . . 13
Information on Directors Standing for Election . . . 13
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Governance Guidelines & Code of Business
Conduct & Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Board Structure and its Role in Risk Oversight . . . . 20
Director Independence . . . . . . . . . . . . . . . . . . . . 20
Independent Chairman . . . . . . . . . . . . . . . . . . . . 20
Director Refreshment . . . . . . . . . . . . . . . . . . . . . . 20
Director Attendance . . . . . . . . . . . . . . . . . . . . . . . 21
Board’s Role in Risk Oversight . . . . . . . . . . . . . . 21
Committees of the Board . . . . . . . . . . . . . . . . . . . . . . 22
Nominating and Corporate Governance
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Compensation Committee . . . . . . . . . . . . . . . . . 23
Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . 23
Related Persons Transactions Policy . . . . . . . . . . . . 24
Nomination of Director Candidates . . . . . . . . . . . . . 24
Qualifications of Director Candidates . . . . . . . . 24
Director Nomination Process . . . . . . . . . . . . . . . 25
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . 25
Compensation Discussion and Analysis . . . . . . . . . . . 28
Compensation Highlights . . . . . . . . . . . . . . . . . . . . . 28
2019 Compensation Program Changes . . . . . . 28
Compensation Best Practices . . . . . . . . . . . . . . . 29
Summary of Compensation Elements . . . . . . . . 30
Our 2019 Say-on-Pay Vote . . . . . . . . . . . . . . . . . 30
Compensation Objectives and Philosophy . . . . . . . 31
Compensation Methodology and Process . . . . . . . 32
The Role of Independent Compensation
Consultant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Peer Group Analysis and Compensation
Market Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Compensation Program Elements . . . . . . . . . . . . . . 34
Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Short-Term Incentive Plan . . . . . . . . . . . . . . . . . . 34
Long-Term Incentive Plan . . . . . . . . . . . . . . . . . . 36
Perquisites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Retirement and Deferred Compensation
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Severance and Change in Control Benefits . . . 40
Executive Stock Ownership Guidelines . . . . . . . . . . 41
Insider Trading Policy and Anti-Hedging Rules . . . 41
Compensation Risk Assessment . . . . . . . . . . . . . . . . 42
Compensation Committee Report . . . . . . . . . . . . . . . . 43
Executive Compensation Tables . . . . . . . . . . . . . . . . . 44
Summary Compensation Table for the Year Ended
December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Grants of Plan-Based Awards for the Year Ended
December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Outstanding Equity Awards at Fiscal Year-End
December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Option Exercises and Stock Vested During
2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Non-Qualified Deferred Compensation . . . . . . . . . . 49
Potential Payments on Termination or Change in
Control
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Pay Ratio Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Equity Compensation Plan Information . . . . . . . . . . . 56
Proposal 2 – Advisory Vote on the Compensation of
Our Named Executive Officers . . . . . . . . . . . . . . . . . . . 57
Proposal 3 – Ratification of Appointment of
Independent Registered Public Accounting Firm . . 58
Independent Registered Public Accounting
Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Principal Accounting Fees and Services . . . . . . . . . 58
Pre-Approval Policy for Audit and Non-Audit
Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Audit Committee Report . . . . . . . . . . . . . . . . . . . . . . 59
Beneficial Ownership Information . . . . . . . . . . . . . . . . 60
Beneficial Ownership of Common Stock . . . . . . . . 60
Delinquent Section 16(a) Reports . . . . . . . . . . . . . . 61
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Availability of Certain Documents . . . . . . . . . . . . . . 62
Communications with the Board of Directors . . . . 62
Stockholder Proposals and Nominations . . . . . . . . 62
Householding of Proxy Materials . . . . . . . . . . . . . . . 63
WABASH NATIONAL CORPORATION
2020 Proxy Statement
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Proxy Statement Summary
To assist you in reviewing the proposals that may be acted upon at our 2020 Annual Meeting, the summary below
highlights certain information that is contained elsewhere in this Proxy Statement. This summary does not contain
all of the information that you should consider, and you should read the entire Proxy Statement carefully before
voting. Page references are supplied to help you find further information in this Proxy Statement.
Annual Meeting of Stockholders
Date and Time:
10:00 a.m. Eastern time on Tuesday, May 12, 2020
Virtual
Meeting Site:
www.virtualshareholdermeeting.com/WNC2020
Record Date:
March 13, 2020
Voting:
Stockholders as of the record date are entitled to vote. Each share of Common Stock is entitled
to one vote for each director nominee and one vote for each of the other proposals to be voted
on.
Company Overview
Wabash National Corporation, which we refer to herein as “Wabash,” “Wabash National,” the “Company,” “us,”
“we,” or “our,” is changing how the world reaches you. Founded in 1985 in Lafayette, Indiana as a dry van trailer
manufacturer, today we are an innovation leader of engineered solutions for the transportation, logistics and
distribution industries. Our mission is to enable customers to succeed with breakthrough ideas and solutions that
help them move everything from the first to final mile.
To that end, we design and manufacture a diverse range of products, including dry freight and refrigerated trailers,
platform trailers, bulk tank trailers, dry and refrigerated truck bodies, structural composite panels and products,
trailer aerodynamic solutions, and specialty food grade and pharmaceutical equipment. We have achieved this
diversification through acquisitions, organic growth and product innovation.
We believe our position as a leader in our key industries is the result of longstanding relationships with our core
customers, our demonstrated ability to attract new customers, our broad and innovative product lines, our
technological leadership, and our extensive distribution and service network. More importantly, we believe our
leadership position is indicative of the values and leadership principles that guide our actions.
People, Purpose and Performance Drive Our Business
Our Purpose is to change how the world reaches you.
Our Vision is to be the innovation leader of engineered solutions for the transportation, logistics and distribution
industries.
Our Mission is to enable our customers to succeed with breakthrough ideas and solutions that help them move
everything from first to final mile.
Our Values are the qualities that govern our critical leadership behaviors and accelerate our progress.
• Be Curious: We will make bold choices and encourage creativity, collaboration and risk-taking to turn
breakthrough ideas into reality.
• Have a Growth Mindset: We will be resilient and capable of the change required to succeed in a world that does
not stand still.
• Create Remarkable Teams: We will create a workplace culture that allows individuals to be their best in order to
retain and attract talent from diverse industries, geographies and backgrounds.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
1
Proxy Statement Summary
Our Leadership Principles are the behaviors that provide definition to our actions and bring our values to life.
• Embrace Diversity and Inclusion: We solicit and respect the input of others, celebrate our differences and strive
for transparency and inclusiveness.
• Seek to Listen: We listen to our customers, partners, and each other to reach the best solutions and make the
strongest decisions.
• Always Learn: To model a growth mindset, we continue learning through every stage of our careers. We do not
quit and we are not satisfied with the status quo.
• Be Authentic: Employees who thrive at Wabash National are honest, have incredible energy and demonstrate grit
in everything they do.
• Win Together: We collaborate, seek alignment and excel at cross-group communication to succeed as one team
and One Wabash.
Corporate Responsibility and Governance Highlights
At Wabash National, it’s our focus on people, purpose and performance that drives us to do better so we can
continue changing how the world reaches you. We believe that our leadership principles, as set forth above, create
a workplace culture in which our colleagues can share their talents and perspectives and are empowered to make
a difference for our customers, for each other, for our communities and for our environment. Wabash National is
committed to growing its business in a sustainable and socially responsible manner. We support the passions and
interests of our employees, and empower them to be a positive influence in the world. We are proud to provide
many opportunities to be good neighbors by volunteering time and talent to support the causes that matter most
to our employees. Below are some of the highlights of our focus and commitment:
Board Diversity
Diverse Executive Team
38% Diversity
Women
African American
13%
25%
38%
33% Diversity
Women
and
LGBTQ
17%
33%
33%
2
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Diversity and Inclusion. We
actively pursue and embrace
diversity throughout our entire
organization:
Community Involvement. We
collaborate, seek alignment and
excel at cross-group
communication to succeed as one
team and One Wabash, including
through our devotion to
philanthropy, volunteerism,
charitable giving and community
involvement.
Environmental Sustainability. We
are resilient and capable of the
change required to succeed in a
world that does not stand still,
including with respect to
environmental sustainability and
climate change.
Proxy Statement Summary
Social and Environmental Highlights
• Our Nominating and Corporate Governance Committee actively prioritizes
diversity in searches for new director candidates.
• Diverse Executive Team: 2 out of 6 of our executive officers are female and
1 is a part of the LGBTQ community.
• Diverse Board: 2 out of 8 of our directors are female and 1 is African-
American.
• Diverse Employees: 55% of our total hires of hourly employees in Q3 2019
were diverse, and we have seen an increase from Q3 2018 to Q3 2019 in
minority and female hourly employees. Over 1/3rd of our other hires in Q3
2019 were minorities.
• Focus on preventing pay imbalances among genders, including proactive
adjustments to pay, titles and/or benefits to prevent gender pay gaps.
• We donate time, needed materials and financial resources to support the
communities where we live and work.
• We believe that enriching the lives of those around us is a powerful
investment in the future, including through our significant partnerships
with, among many others, the United Way, the Salvation Army, Big Brothers
Big Sisters of America, Read to Succeed, the Wabash Center, Special
Olympics and Habitat for Humanity.
•
In 2019, we donated more than $915,000 through corporate gifts and
employee and supplier donations.
• As a way to support charitable giving, we have also adopted a Day of Giving
Policy, whereby full-time hourly and salaried employees are provided with 8
hours paid time each year to participate in that employee’s chosen
volunteer program.
• We were the first semi-trailer manufacturer in North America to earn an
ISO 14001 certification, which demonstrates our focus on minimizing our
environmental footprint and promoting responsible manufacturing.
• We have a product line that reduces aluminum content, which ultimately
reduces water needed to produce the aluminum.
• We have reduced air emissions from our painting operations by
reformulating and reducing the volatile organic compound content in our
coatings.
• We have produced a solar-powered, zero-emissions refrigerated trailer,
which was first shown at the American Trucking Associations’ Technology
and Maintenance Council annual meeting in February 2020.
• All Wabash facilities use energy-efficient lighting, and our Portland, OR
operations use 100% renewable electricity.
• Our manufacturing operations use pulse welders, which produce the same
high-quality result as traditional welders but require only 1/3rd of the
energy to run.
•
In 2019, Wabash’s recycling programs and use of recycled materials has
saved nearly 141,000 cubic yards of landfill space, 152,000 million kilowatt-
hours of electricity, 23,000 mature trees and 73,000 metric tons of
greenhouse gas emissions.
• By sourcing post-consumer resin to manufacture our DuraPlate panels, we
have diverted more than 1 billion plastic bottles from landfills.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
3
Proxy Statement Summary
Education. To model a growth
mindset, we continue learning
through every stage of our
careers, and we also believe in
supporting the next generation of
leaders who will continue to
change how the world reaches
you.
Ethics and Compliance.
Employees who thrive at Wabash
National are honest, have
incredible energy, and
demonstrate grit in everything
they do.
Awards and Recognition. Our
efforts to make bold choices and
encourage creativity,
collaboration, and risk-taking to
turn breakthrough ideas into
reality have been recognized
throughout the years.
Social and Environmental Highlights
• We support our youth through program funding, training programs,
internships and co-ops.
• We also sponsor youth clubs in our communities, including robotics clubs,
STEM programs and the Purdue University’s Women in Engineering
Program.
• We have developed an annual scholarship program, whereby we award
scholarships to certain dependents of Wabash National employees to help
them pursue their academic goals. In 2019, we awarded 16 high school
graduates with scholarships that amounted to a total of $120,000.
• We maintain a Code of Business Conduct and Ethics that lays the
foundation for our ethics and compliance program.
• We maintain an AlertLine whereby employees are able to report violations
of Wabash’s Code of Business Conduct and Ethics.
• Safety and Environmental Awards:
• 2017 Kentucky Governor’s Safety and Health Award (Cadiz, KY)
• Truck Trailer Manufacturers Association Plant Safety Awards:
• 2016: New Lisbon, WI, and San José Iturbide, Guanajuato, Mexico
• 2015: New Lisbon, WI, and Portland, OR
• 2013: San José Iturbide, Guanajuato, Mexico
• 2015 Truck Trailer Manufacturers Association Most Improved Tank Plant
(Portland, OR)
• Corporate Awards:
•
IndustryWeek 50 Best U.S. Manufacturers (2018, 2017, 2016, 2015, 2013,
2006)
•
INVESTIndiana Equity Conference Top 5 Indiana Public Company (2016)
• Supplier Diversity Development Coalition of Greater Lafayette Golden
Handshake Award for Diversity and Excellence (2016)
• Forbes 100 Most Trustworthy Companies in America (2015)
•
Indiana Employer Support of the Guard and Reserve Above and Beyond
Award (2014)
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2020 Proxy Statement
WABASH NATIONAL CORPORATION
Proxy Statement Summary
Director Independence
• 7 out of 8 director nominees are independent.
Corporate Governance Highlights
• 3 fully independent Board committees: Nominating and Corporate Governance
Committee, Compensation Committee and Audit Committee.
Board Accountability
• All directors are elected annually via majority voting standard.
• Stockholders may amend our bylaws.
Board Leadership
• Annual assessment and determination of Board leadership structure.
• We have an independent Chairperson who has a strong role and significant
governance duties, including presiding over all executive sessions of
independent directors.
Stockholder Engagement
• We routinely meet with stockholders for conversations focused on a variety of
topics, including, governance, company strategy, growth, risk management
and ESG issues.
• During 2019, we held multiple discussions with shareholders.
• One of our independent directors and our general counsel attended Blackrock’s
director day.
Board Evaluation and
Effectiveness
• Annual Board and Committee self-assessments.
• Annual two-way feedback and evaluation sessions with each director.
• Annual independent director evaluation of the Chairperson and CEO.
Board Risk Oversight
• The Board and its Committees exercise robust oversight of the Company’s
enterprise risk management system.
Board Refreshment and
Diversity
• During 2019, we added 2 new directors, and we announced that we would be
appointing a new independent Chairperson following the 2020 Annual Meeting.
• Board members represent diverse perspectives, including 2 female directors
and 1 African-American director.
• Specified director retirement age.
Director Engagement
• All of our directors attended 75% or more of the aggregate number of meetings
of our Board and the Committees on which they served.
• Limits on director/CEO membership on other public company boards.
Succession Planning
• CEO and leadership succession planning is one of our Board’s most important
responsibilities. At least once a year, our Board dedicates itself to examining the
succession plans for our complete leadership team and the board.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
5
Proxy Statement Summary
Our Management Approach
The purpose of WMS
Define, build and deploy the principles and
disciplines that enable sustainable and profitable
growth by:
Advancing our strategy
Creating breakthrough improvement
Delivering an increasing magnitude of results
P U R P O S E
Our Wabash Management System (“WMS”) is for the purpose of achieving our strategic objectives. By codifying
what makes our company great, the WMS drives focus on the interconnected processes that are critical for
success across our business. WMS is based on forward planning and continuous capability evaluation as we
simultaneously drive execution and breakthrough performance. WMS requires everyone to be an active
contributor to our enterprise-wide lean efforts and enables growth through innovation and industry leading
customer satisfaction and alliances.
Our WMS principles underpin an ongoing improvement cycle that includes Strategic Planning and Deployment,
Kaizen and Daily Management. Through the WMS, we create scalable and sustainable processes that:
• Drive organic growth within existing and new businesses
• Provide a means to acquire/obtain and integrate new businesses and capabilities
• Create and exploit new markets
• Allow for breakthrough improvement within key areas of the business
• While delivering the daily execution of our established businesses
It is through this set of standards and thinking that we create a “One Wabash” approach to our customers, add new
business capabilities, and enable profitable growth.
Team
We believe strong human capital acts as a competitive differentiator and our focus is not only on ensuring we have
the right leaders in place to drive our strategic initiatives today, but also to nurture our talent pipeline to develop
strong leaders for our Company’s future.
Strategy
Strategic planning and deployment are critical for the Company to continue growing profitably. Additionally, the
Wabash Management System also places significant emphasis on tracking key performance indicators to monitor
the effectiveness of strategy execution and create continuous improvement.
6
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Proxy Statement Summary
Execution
Continuous improvement is deeply rooted within the processes that we are standardizing throughout our
Company. We expect this to propel us to new levels of operational excellence.
Governance
We strive to achieve alignment at every layer and throughout all functional areas of our business and are focused
on ensuring the right systems are in place to facilitate all team members working toward the same shared goals.
Critical to this is the perspective that our business is constructed of three interlinked segments that benefit from
one another and are stronger as a result of being part of Wabash National.
Voting Matters and Vote Recommendation (page 11)
The following table summarizes the proposals to be considered at the Annual Meeting and the Board’s voting
recommendation with respect to each proposal.
PROPOSALS
Election of Directors
BOARD VOTE
RECOMMENDATION
PAGE
FOR EACH NOMINEE
Advisory Vote on the Compensation of Our Named Executive Officers
(“Say-on-Pay”)
Ratification of Appointment of Independent Registered Public Accounting
Firm
FOR
FOR
Board Nominees (page 13)
The following table provides summary information about each director nominee, as of the Record Date.
NAME
AGE
DIRECTOR
SINCE
OCCUPATION
INDEPENDENT
Therese M. Bassett
56
November 2019 Managing Director, NuVentures
John G. Boss
60
December 2017
John E. Kunz
55
March 2011
LLC
Former President and Chief
Executive Officer, Momentive
Performance Materials Inc.
Senior Vice President and Chief
Financial Officer, U.S. Concrete,
Inc.
Larry J. Magee
Ann D. Murtlow
65
59
February 2013
January 2005
President, Magee Ventures Group
Scott K. Sorensen
58
May 2005
Stuart A. Taylor II
59
August 2019
Brent L. Yeagy
49
October 2016
President and Chief Executive
Officer, United Way of Central
Indiana
Former President and Chief
Operating Officer, Ivanti Software
Chief Executive Officer, The Taylor
Group LLC
President and Chief Executive
Officer, Wabash National
Corporation
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
13
57
58
OTHER
PUBLIC
BOARDS
No
No
No
No
Yes
No
Yes
No
WABASH NATIONAL CORPORATION
2020 Proxy Statement
7
Proxy Statement Summary
The table below summarizes key qualifications, skills and attributes most relevant to the decision to nominate the
candidates to serve on our Board. A mark indicates a specific area of focus or experience on which the Board relies
most. The lack of a mark does not mean the director nominee does not possess that qualification or skill. Each
director nominee biography in this proxy statement describes each nominee’s qualifications and relevant
experience in more detail.
DIRECTORS
Independent
Logistics, Transportation and Distribution
Diverse Manufacturing
Supply Chain/Commodities Management
Materials Science or Engineering
Government/Regulatory
Qualified Financial Expert/Finance/Treasury
M&A
Global
Technology/IT/Cybersecurity
Marketing/Sales/Digital
Talent/Culture
Strategy Development
Therese M.
Bassett
John G.
(“Jack”)
Boss
John E.
Kunz
Larry J.
Magee
Ann D.
Murtlow
Scott K.
Sorensen
Stuart A.
Taylor II
Brent L.
Yeagy
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
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Named Executive Officer Compensation (Say-on-Pay) (page 57)
We are asking stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our
named executive officers. The primary objectives and philosophy of our compensation programs are to (i) drive
executive behaviors that maximize long-term stockholder value creation, (ii) attract and retain talented executive
officers with the skills necessary to successfully manage and grow our business, and (iii) align the interests of our
executive officers with those of our stockholders by rewarding them for strong Company performance. In support
of these objectives, in 2019, we:
• Weighted a significant portion of our executives’ compensation toward variable and performance-based
compensation. Specifically, in 2019, approximately 80.4% of our CEO’s target direct compensation (consisting
of base salary, annual cash incentives and long-term equity incentives) and, on average, 75.6% of our other
named executive officers’ target direct compensation, was delivered in stock-based and cash-based incentive
compensation through our short-term and long term incentive plans.
• Engaged an independent compensation consultant to conduct a market review of our compensation package
to ensure it was competitive with our peers.
• Encouraged our executives to be long term stockholders through rigorous stock ownership guidelines and
providing a significant portion of our NEOs compensation through equity awards.
8
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Proxy Statement Summary
Independent Registered Public Accounting Firm (page 58)
We ask that our stockholders ratify the selection of Ernst & Young LLP as our independent registered public
accountants for the year ending December 31, 2020.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on
May 12, 2020.
Our Annual Report and this Proxy Statement are available at www.proxyvote.com. To access our Annual Report
and Proxy Statement, enter the control number referenced on your proxy card.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
9
Information About the Annual Meeting, Proxy Materials and Voting
What is the Purpose of the Annual Meeting?
At the Annual Meeting, our management will report on our performance during 2019 and respond to questions
from our stockholders. In addition, stockholders will act upon the matters outlined in the accompanying Notice of
Annual Meeting of Stockholders, which include the following three proposals:
Proposal 1
To elect eight members of the Board of Directors.
Proposal 2
To hold an advisory vote on the compensation of our named executive officers.
Proposal 3
To ratify the appointment of Ernst & Young LLP as Wabash National Corporation’s
independent registered public accounting firm for the year ending December 31, 2020.
Stockholders will also consider any other matters that properly come before the Annual Meeting or any
adjournment or postponement thereof. Management is currently not aware of any other business to come before
the Annual Meeting.
Stockholders may act on the proposals by voting a proxy or voting by virtual presence online at the Annual
Meeting.
What is the purpose of the proxy materials?
We are providing these proxy materials in connection with the solicitation by our Board of Directors of proxies to
be voted at the Annual Meeting and at any adjournments or postponements thereof. The proxy materials (including
the Notice of Annual Meeting, this Proxy Statement, and our Annual Report on Form 10-K) include information that
we are required to provide to you under the rules of the Securities and Exchange Commission (the “SEC”) and are
designed to assist you in voting on the matters presented at the Annual Meeting. We first mailed the proxy
materials to stockholders on or about March 30, 2020.
What is a proxy?
A proxy is your legal designation of another person to vote on your behalf. By voting your proxy, you are giving the
persons named on the proxy card the authority to vote your shares in the manner you indicate on your proxy card.
Who is Entitled to Vote?
Only stockholders of record at the close of business on March 13, 2020 (the “Record Date”) are entitled to receive
notice of the Annual Meeting and to vote the shares of common stock of the Company (the “Common Stock”) that
they held on the Record Date at the Annual Meeting, or any postponement or adjournment of the Annual Meeting.
As of the Record Date, we had 52,846,930 shares of Common Stock outstanding and entitled to vote. Each share
of Common Stock entitles its holder to cast one vote on each matter to be voted upon.
What is the difference between a stockholder of record and a beneficial owner?
If your shares are registered directly in your name with our transfer agent, Equiniti Trust Company (f/k/a Wells
Fargo Shareowner Services), you are a “stockholder of record.” If your shares are held in a stock brokerage
account or by a bank or other custodian or nominee, you are considered the beneficial owner of shares held in
“street name.” As a beneficial owner, you have the right to direct your broker, bank or other custodian or nominee
on how to vote your shares.
Who can Attend the Annual Meeting by virtual presence online?
All stockholders of record as of the close of business on the Record Date, or their duly appointed proxies, may
attend the Annual Meeting by virtual presence online by visiting www.virtualshareholdermeeting.com/WNC2020
and providing the control number found on the proxy card. If your shares are held in “street name,” you must first
obtain a proxy issued in your name from your bank or other custodian or nominee before attending the Annual
Meeting by virtual presence online. You will need to provide the control number found on the proxy card provided
by such bank or other custodian or nominee.
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2020 Proxy Statement
WABASH NATIONAL CORPORATION
Information About the Annual Meeting, Proxy Materials and Voting
The 2020 Annual Meeting of Stockholders will be accessible through the Internet. This change is being made due
to an abundance of caution related to the coronavirus (COVID-19) and the priority we place on the health and well-
being of our stockholders, employees and other stakeholders. We have worked to offer the same participation
opportunities as were provided at the in-person portion of our past meetings while further enhancing the online
experience available to all stockholders regardless of their location. You are entitled to participate in the Annual
Meeting if you were a stockholder as of the close of business on March 13, 2020. The Annual Meeting will begin
promptly at 10:00 a.m. Eastern time, and you should allow ample time for the online check-in procedures.
Whether or not you participate in the Annual Meeting, it is important that your shares be part of the voting process.
The other methods by which you may vote are described below.
This year’s stockholder question and answer session will include questions submitted live during the Annual
Meeting. Questions may be submitted at the Annual Meeting through www.virtualshareholdermeeting.com/
WNC2020. We will post question and answers if applicable to our business on our Investor Relations website shortly
after the meeting.
The Company intends to resume holding in-person annual stockholder meetings in the future.
How do I Vote?
If you are a “stockholder of record,” you can vote on matters to come before the Annual Meeting in the following
four ways:
• Visit the website noted on your proxy card to vote via the internet;
• Use the telephone number on your proxy card to vote by telephone;
• Vote by mail by completing, dating and signing the proxy card mailed with your notice and returning it in the
provided postage-paid envelope. If you do so, you will authorize the individuals named on the proxy card,
referred to as the proxies, to vote your shares according to your instructions. If you provide no instructions, the
proxies will vote your shares according to the recommendation of the Board of Directors or, if no
recommendation is given, in their own discretion; or
• Attend the Annual Meeting by virtual presence online and cast your vote.
If you hold your shares in “street name” through a broker, then you can vote by following the materials and
instructions provided by your broker, or you can vote by virtual presence online at the Annual Meeting.
What if I vote and then change my mind?
If you are a “stockholder of record,” you may revoke your proxy at any time before it is exercised by:
• Providing written notice of revocation to the Corporate Secretary, Wabash National Corporation, 3900 McCarty
Lane, Lafayette, Indiana 47905;
• Voting again, on a later date, via the internet or by telephone (only your latest internet or telephone proxy
submitted prior to the Annual Meeting will be counted);
• Submitting another duly executed proxy bearing a later date; or
• Attending the Annual Meeting by virtual presence online and casting your vote.
Only your last vote will be the vote that is counted.
If you hold your shares in “street name,” then you must contact the record holder of your shares to change your
voting instructions.
What are the Board’s Recommendations?
The Board recommends that you vote FOR the election of each of the director nominees, FOR the approval, on an
advisory basis, of the compensation of our named executive officers, and FOR ratification of the appointment of
our auditors.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
11
Information About the Annual Meeting, Proxy Materials and Voting
What Vote is Required for Each Proposal?
The following table summarizes the vote threshold required for approval of each proposal and the effect of
abstentions, uninstructed shares held brokers, and unmarked, signed proxy cards. On all proposals, if you sign
and return a proxy or voting instruction card, but do not mark how your shares are to be voted, they will be
voted as the Board recommends.
PROPOSAL
NUMBER
ITEM
VOTE REQUIRED FOR
APPROVAL OF EACH
ITEM
ABSTENTIONS
UNINSTRUCTED
SHARES
UNMARKED,
SIGNED
PROXY
CARDS
1
2
3
Election of Directors
Majority of votes cast
No effect
Not voted
Voted “for”
Advisory vote on
executive
compensation
Majority of shares
present and entitled to
vote
Same effect as
“against”
Ratification of
Appointment of
Independent Auditor
Majority of shares
present and entitled to
vote
Same effect as
“against”
Not voted
Voted “for”
Discretionary vote Voted “for”
If you hold your shares in “street name” through a broker and you do not provide your broker with voting
instructions, then, under New York Stock Exchange (“NYSE”) Rules, your broker may elect to exercise voting
discretion with respect to “routine matters,” which includes the ratification of the appointment of our auditors
(Proposal 3). However, on “non-routine” matters, which include the election of directors (Proposal 1) and the
advisory vote on executive compensation (Proposal 2), your broker may not vote your shares unless you provide
your broker with instructions. These so-called broker “non-votes” will be counted in determining whether there is a
quorum.
What Constitutes a Quorum?
The presence at the Annual Meeting, by virtual presence online or by valid proxy, of the holders of a majority of the
shares of our Common Stock outstanding on the Record Date will constitute a quorum, permitting us to conduct
our business at the Annual Meeting. Proxies received but marked as abstentions and broker non-votes will be
included in the calculation of the number of shares considered to be present at the Annual Meeting.
Who will Bear the Costs of this Proxy Solicitation?
We will bear the cost of solicitation of proxies. This includes the charges and expenses of brokerage firms and
others for forwarding solicitation material to beneficial owners of our outstanding Common Stock. We may solicit
proxies by mail, personal interview, telephone or via the Internet through our officers, directors and other
management employees, who will receive no additional compensation for their services. In addition, we have
retained Laurel Hill Advisory Group, LLC to assist with proxy solicitation. For their services, we will pay a fee of
$6,500 plus out-of-pocket expenses.
How will my shares be voted if other matters are presented at the Annual Meeting?
As of the date of this Proxy Statement, the Board of Directors does not intend to present at the Annual Meeting any
matters other than those described in this Proxy Statement and does not know of any matters that will be
presented by other parties. If any other matter is properly brought before the meeting for action by the
stockholders, proxies will be voted in accordance with the recommendation of the Board of Directors or, in the
absence of such a recommendation, in accordance with the judgment of the proxy holder.
12
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Proposal 1 – Election of Directors
Our Bylaws provide that our Board of Directors, or the Board, shall be comprised of not less than three, nor more
than twelve, directors with the exact number to be fixed by resolution of the Board. As of the date of this Proxy
Statement, the Board is comprised of nine directors, but as previously disclosed, Dr. Jischke, our Chairman of the
Board, has chosen to retire from the Board following the 2020 Annual Meeting. As a result, the Board has fixed the
authorized number of directors at eight directors as of the 2020 Annual Meeting. At the Annual Meeting,
stockholders will be asked to elect each of the eight director nominees listed below, each of whom shall serve for a
term of one year or until his or her successor is duly elected and qualified or until his or her earlier death,
resignation or removal. Our Board of Directors intends to appoint one of our independent directors, Larry J. Magee,
as our new Chairman of the Board immediately following the Annual Meeting.
Below is information regarding each of the director nominees. Information regarding the Board’s process for
nominating directors and director qualifications can be found below under the “Corporate Governance” section of
this Proxy Statement.
Information on Directors Standing for Election
The biographies of each of the nominees below contains information regarding the experiences, qualifications,
attributes or skills that caused the Nominating and Corporate Governance Committee and the Board to determine
that the person should serve as a director of the Company. The name, age, business experience, and public
company directorships of each nominee for director, during at least the last five years, are set forth in the table
below.
Therese M. Bassett
Ms. Bassett is the Managing Director of NuVentures LLC., a consulting firm
focused on strategy, innovation and M&A pipeline development. Prior to
NuVentures, she served as Chief Strategy, Innovation, and Mergers and
Acquisitions Officer at Avnet, Inc., an electronic components and services
company, where she was responsible for identifying growth opportunities to
enhance the overall business portfolio, financial strength and global market
value. During her 26-year career with Avnet, Ms. Bassett also held the
positions of Senior Vice President, Global HR Solutions (2010-2016), Vice
President, Strategic Planning and Business Intelligence (1998-2010), Manager,
Electronic Manufacturing Services Business Development (1995-1998), and
International Export and Transportation Manager (1993-1995). She is a
graduate of Temple University and received an MBA from the University of
Age: 56
Phoenix.
Director since: November 2019
Qualifications: Ms. Bassett’s M&A, innovation and strategy expertise and
her senior leadership experience reflected in her biography support our
Board’s conclusion that she should be nominated as a director.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
13
Proposal 1 – Election of Directors
John G. Boss
Age: 60
Mr. Boss is the former President and Chief Executive Officer of Momentive
Performance Materials Inc. (“MPM”). MPM is a global producer of silicones,
quartz and specialty ceramic materials. Mr. Boss served as a director of MPM
Holdings Inc. from October 2014 to March 2020. Mr. Boss served as the
President of the Silicones & Quartz Division at MPM since joining in March
2014 to December 2014 and served as its Executive Vice President from
March 2014 to March 2020. In April 2014, shortly after Mr. Boss joined the
company, MPM filed voluntary petitions for reorganization relief pursuant to
Chapter 11 of the United States Bankruptcy Code. Mr. Boss’ career spans
more than 30 years in the specialty chemicals and materials industry,
including various executive leadership positions with Honeywell International,
a producer of commercial and consumer products from 2003 through 2014.
Mr. Boss served as Vice President and General Manager of Specialty Products,
Director since: December 2017
Vice President and General Manager of Specialty Chemicals and President of
Honeywell Safety Products at Honeywell International. Prior to joining
Honeywell, Mr. Boss held positions of increasing responsibility at Great Lakes
Chemical Corporation and Ashland Corporation (formerly International
Specialty Products). Mr. Boss has a Master of Business Administration degree
in Marketing and Finance from Rutgers Graduate School of Management in
1996 and a Bachelor’s Degree in Mechanical Engineering from West Virginia
University in 1981.
Qualifications: As reflected in his biography, Mr. Boss’ service in various
leadership positions at other public companies, particularly, his recent
service as a sitting chief executive officer at another public company
and concomitant understanding of the day-to-day complexities and
challenges of running such an organization, and his service on our
Board, support our Board’s conclusion that he should again be
nominated as a director.
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2020 Proxy Statement
WABASH NATIONAL CORPORATION
Proposal 1 – Election of Directors
John E. Kunz
Age: 55
Mr. Kunz has been the Senior Vice President and Chief Financial Officer for
U.S. Concrete, Inc., a concrete and aggregate products producer serving the
construction and building materials industries, since October 2017. Prior to
his current position, Mr. Kunz served as Vice President and Controller of
Tenneco Inc., a global manufacturer of automotive emission control and ride
control systems. In this role, which he held from March 2015 to September
2017, Mr. Kunz served as the company’s principal accounting officer with
responsibility for the company’s corporate accounting and financial reporting
globally. Prior to that, Mr. Kunz served as Tenneco’s Vice President, Treasurer
and Tax, a position he held since July 2006, preceded by his position as
Tenneco’s Vice President and Treasurer, which he held from February 2004
until July 2006. Prior to his employment with Tenneco, Mr. Kunz was the Vice
President and Treasurer of Great Lakes Chemical Corporation, a position he
Director since: March 2011
held from August 2001 until February 2004, after holding several finance
positions of increasing responsibility at Great Lakes, beginning in 1999.
Mr. Kunz holds a Master of Management in finance from the Kellogg School of
Management at Northwestern University, along with an undergraduate degree
in accounting from the University of Notre Dame.
Qualifications: As reflected in his biography, Mr. Kunz’s financial
expertise, his experience managing the financial and governance
aspects of cyclical manufacturers in the transportation, building
products, chemical and steel sectors, as well as his expertise in
managing financing and equity transactions, and his participation on our
Board all supported the Board’s conclusion that he should again be
nominated as a director.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
15
Proposal 1 – Election of Directors
Larry J. Magee
Mr. Magee has served as President of Magee Ventures Group, a consulting
firm, since May 2018. Prior to his current position, he served as Interim CEO of
Magnolia Group, LLC in Waco, Texas from April 2017 until May 2018.
Mr. Magee was President and CEO of Heartland Automotive Services, Inc., the
largest operator of quick lube retail service centers, operating over 540 Jiffy
Lube locations in North America. He held this position from April 2015 until
his retirement in October 2016. Prior to assuming the role of President and
CEO of Heartland Automotive, Mr. Magee was the President, Consumer Tire
U.S. & Canada, for Bridgestone Americas Tire Operations, LLC, a tire and
rubber manufacturing company, a position he held from January 2011 until
his retirement from Bridgestone in September 2013. He also served as
Chairman of BFS Retail & Commercial Operations, LLC and Bridgestone of
Age: 65
Canada, Inc. From December 2001 until January 2011, he served as Chairman,
Director since: January 2005
Chief Executive Officer and President of BFS Retail & Commercial Operations,
LLC. Prior to December 2001, Mr. Magee served as President of Bridgestone/
Firestone Retail Division, beginning in 1998. Mr. Magee has over 38 years
combined experience in sales, marketing, and operational management, and
held positions of increasing responsibility within the Bridgestone/Firestone
family of companies during his 38-year tenure with Bridgestone/Firestone.
Qualifications: The retail leadership expertise reflected in Mr. Magee’s
biography, including his performance as the chief executive officer and
as a board member for divisions of another company, as well as his
participation on our Board, supported the Board’s conclusion that he
should again be nominated as a director.
16
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Proposal 1 – Election of Directors
Ann D. Murtlow
Age: 59
Mrs. Murtlow is the President and Chief Executive Officer of United Way of
Central Indiana, an organization that fights for the education, financial
stability, health and basic needs for Central Indiana through the development
and support of programs and organizations that serve struggling families and
move them to self-sufficiency, a position she has held since April 1, 2013.
Prior to assuming this role, Mrs. Murtlow had a 30 year career in the global
energy industry. Mrs. Murtlow began her career as a design engineer with
Bechtel Power Corporation, one of the world’s leading designers and
constructors of electric utility infrastructure. Mrs. Murtlow then joined AES
Corporation (“AES”), where she developed a specialty in environmental
permitting and became a leader in domestic and international power plant
development. She subsequently moved to AES’s office in London where she
became an officer of AES responsible for AES’s development and operations
Director since: February 2013
in northern and central Europe. In 2002, Mrs. Murtlow was named President
and Chief Executive Officer at IPALCO Enterprises, Inc., and its subsidiary,
Indianapolis Power & Light Company. Immediately prior to joining United Way
of Central Indiana, Mrs. Murtlow provided global energy consulting services
through AM Consulting LLC. Mrs. Murtlow currently serves as a Director of
Evergy, Inc., and its subsidiaries, Evergy Kansas Central, Inc. (Kansas
corporation), Evergy Kansas South, Inc., Evergy Metro, Inc., and Evergy
Missouri West, Inc. Mrs. Murtlow holds a Bachelor of Science degree in
Chemical Engineering from Lehigh University and is a National Association of
Corporate Directors Board Leadership Fellow.
Qualifications: The financial and strategic leadership experience
reflected in Mrs. Murtlow’s biography, her service as the former chief
executive officer of a regulated electric utility company, service on the
boards of other public companies, her participation on our Board and
her experience in corporate social responsibility, supported the Board’s
decision that she should again be nominated as a director.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
17
Proposal 1 – Election of Directors
Scott K. Sorensen
Mr. Sorensen is the former President and Chief Operating Officer of Ivanti
Software and member of its Board of Directors, positions he held from 2018
through November 2019. Ivanti is a leading enterprise software provider of
unified IT solutions for the security, endpoint management and service
management requirements of customers. Prior to his role as President and
Chief Operating Officer of Ivanti Software, Mr. Sorensen served as the
President and Chief Executive Officer and was a member of the Board of
Directors of Sorenson Holdings which is a leading provider of assistive
communications products and services from 2016 – 2018. Mr. Sorensen also
held the position of Chief Operating Officer from 2012 – 2016 and served as
the Chief Financial Officer from 2007 – 2016. Previously, Mr. Sorensen served
as the Chief Financial Officer of Headwaters Inc. from 2005 – 2007 which was
Age: 58
Director since: May 2005
a diversified energy and construction materials provider. Prior to joining
Headwaters, Mr. Sorensen was the Vice President and Chief Financial Officer
of Hillenbrand Industries, a manufacturer and provider of products and
services for the health care and funeral services industries, from 2001 – 2005.
Mr. Sorensen also served in various financial leadership roles at Westinghouse
Electric and worked in the operations and aerospace practices with
McKinsey & Company.
Qualifications: Mr. Sorensen’s financial expertise and experience in
corporate finance, combined with his experience in manufacturing,
technology, strategy and mergers and acquisitions, as reflected in his
biography, and his participation on our Board, supported the Board’s
conclusion that he should again be nominated as a director.
Mr. Taylor is the Chief Executive Officer of The Taylor Group LLC, a private
equity firm focused on creating and acquiring businesses. In this role, which
he has held since 2001, Mr. Taylor oversees the firm’s sourcing and execution
of investments and acquisition and disposition transactions. In addition,
Mr. Taylor delivers deep financial and transactional expertise based on his
Wall Street career along with significant experience as a director for publicly
traded companies. He previously held positions as senior managing director
at Bear, Stearns & Co. Inc. (1999-2001), and managing director of CIBC World
Markets and head of its Global Automotive Group and Capital Goods Group
(1996-1999). He also served as managing director of the Automotive Industry
Group at Bankers Trust (1993-1996), following a 10-year position in corporate
finance at Morgan Stanley & Co. He also serves as a director for Hillenbrand
Inc. and Ball Corporation. He is a graduate of Yale University and received an
MBA from the Harvard Graduate School of Business.
Qualifications: Mr. Taylor’s in-depth knowledge of strategic M&A and
corporate development, financial expertise and service on other public
company boards, as reflected in his biography, support our Board’s
conclusion that he should be nominated as a director.
Stuart A. Taylor II
Age: 59
Director since: August 2019
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2020 Proxy Statement
WABASH NATIONAL CORPORATION
Brent L. Yeagy
Proposal 1 – Election of Directors
Mr. Yeagy serves as President and Chief Executive Officer of Wabash National
Corporation, a position he has held since June 2018. Prior to his current role,
Mr. Yeagy was President and Chief Operating Officer of Wabash National from
October 2016 to June 2018. Mr. Yeagy joined Wabash National in 2003 and
held a number of positions with increasing responsibility, including Vice
President of Manufacturing, Vice President and General Manager of
Commercial Trailer Products, and Senior Vice President – Group President,
Commercial Trailer Products. Prior to Wabash National, from 1999 to 2003,
Mr. Yeagy held various positions within human resources, environmental
engineering and safety management for Delco Remy International. Mr. Yeagy
served in various plant engineering roles at Rexnord Corporation from
December 1995 through 1999. He also served in the United States Navy from
Age: 49
1991 to 1994.
Director since: October 2016
Mr. Yeagy holds a Bachelor of Science in Environmental Engineering Science
and a Master of Science in Safety Engineering from Purdue University, and an
MBA in Business Management from Anderson University. He has also attended
executive programs at the University of Michigan’s Ross School of Business as
well as Stanford’s Graduate School of Business. Mr. Yeagy is a graduate of the
U.S. Navy’s Naval Nuclear Power Program and participated in the Navy’s Officer
Candidate Program.
Qualifications: Mr. Yeagy’s more than 25 years of experience in
executive leadership, beginning with his career in the United States Navy,
and his strong background in managing many facets of operations in a
manufacturing company, as reflected in his biography, and his role as our
President and Chief Executive Officer, supported the Board’s conclusion
that he should again be nominated as a director.
Board Recommendation
The Board of Directors
UNANIMOUSLY recommends a
vote “FOR” the election of each of
the director nominees listed above.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
19
Corporate Governance
Governance Guidelines & Code of Business Conduct & Ethics
The Board has adopted Corporate Governance Guidelines (the “Guidelines”) which set forth a framework within
which the Board oversees and governs the affairs of Wabash National. The Guidelines cover, among other things,
the composition and functions of the Board, director independence, director stock ownership, management
succession and review, Board committees, the selection of new directors, and director responsibilities and duties.
Our Board has also adopted a Code of Business Conduct and Ethics (which applies to all of our directors, officers,
and employees) and an additional Code of Business Conduct and Ethics for the Chief Executive Officer and Senior
Financial Officers (together, the “Codes”). The Codes cover, among other things, compliance with laws, rules and
regulations (including insider trading), conflicts of interest, corporate opportunities, confidentiality, protection and
use of company assets, and the reporting process for any illegal or unethical conduct. Any amendment to, or
waiver from, a provision of the Codes for a director or executive officer will be promptly disclosed and posted on
our website as required by law or the listing standards of the NYSE.
The Guidelines and the Codes are available on the Investor Relations/Corporate Governance page of our website at
www.wabashnational.com and are available in print without charge by writing to: Wabash National Corporation,
Attention: Corporate Secretary, 3900 McCarty Lane, Lafayette, Indiana 47905.
Board Structure and its Role in Risk Oversight
Director Independence
In February 2020, our Board of Directors undertook its annual review of director independence to determine the
independence of our directors in accordance with NYSE listing standards. As a result of this review, the Board of
Directors affirmatively determined that all of the directors nominated for election at the Annual Meeting and
Dr. Jischke are independent of Wabash National and its management within the meaning of the rules of NYSE, with
the exception of Brent L. Yeagy, our President and Chief Executive Officer.
Independent Chairman
The Board does not have a formal policy on whether the roles of Board Chairman and Chief Executive Officer
should be separate or combined. Rather, the Guidelines provide that the independent members of the Board may
select the Chairman of the Board and the Company’s Chief Executive Officer in the manner they consider in the
best interests of the Company.
Currently, the Board believes that it is in the best interests of the Company for the Chairman and Chief Executive
Officer positions to be held by separate persons, given the differences between the two roles in our current
management structure. Our Chief Executive Officer, among other duties, is responsible for setting the strategic
direction for the Company and the day-to-day leadership and performance of the Company, while the Chairman of
the Board, among his other responsibilities, presides at the executive sessions of our independent and
non-management directors and facilitates communication between our independent directors and management.
However, the Board reserves the right to combine the positions of the Chief Executive Officer and Chairman,
should it determine that such a change is appropriate for our Company in the future.
As noted above, given Dr. Jischke’s upcoming retirement, our Board of Directors intends to appoint one of our
independent directors, Larry J. Magee, as our new Chairman of the Board immediately following the Annual Meeting.
Director Refreshment
Our Guidelines require that, once any Board member reaches the age of 72, the Nominating and Corporate
Governance Committee must annually consider the member’s continuation on the Board, and recommend to the
20
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Corporate Governance
Board whether, in light of all the circumstances, the Board should request that such member continue to serve on,
or retire from, the Board. As of the date of the 2020 Annual Meeting, none of the director nominees will have
reached the age of 72.
Director Attendance
During 2019, our Board held four meetings. In 2019, all of the directors attended 75% or more of the total
meetings of the Board and of the committees on which they serve that were held during the period that the
director served on the Board. Our Board strongly encourages all of our directors to attend our Annual Meeting, and
in 2019, all of our then serving directors attended the Annual Meeting.
Board’s Role in Risk Oversight
Board of Directors
The Board believes that strong and effective internal controls and risk management processes are essential
elements in achieving long-term stockholder value. The Board, directly and through its committees, is
responsible for overseeing material risks potentially affecting the Company, while management is responsible
for implementing processes and controls to mitigate the effects of identified risks on the Company and
managing day-to-day risks. Management also provides the Board with regular reports regarding oversight of
financial and systemic risks within the Company.
The risk oversight by each of the Board committees is detailed below. Each committee reports to the Board of
Directors quarterly regarding the committee’s risk management considerations and actions.
Nominating and Corporate
Governance Committee
• Reviews our Guidelines and
recommends revisions as
necessary
• Evaluates director
independence
• Oversees annual evaluation of
the Board
Compensation
Committee
• Monitors our executive
compensation packages and
our incentive compensation
plans, which seek to encourage
appropriate, and not excessive,
risk-taking by our executives
and other employees
Audit
Committee
• Reviews audit and financial
•
controls
Investigates any matters
pertaining to the integrity of
management, including
conflicts of interest,
compliance with our financial
controls, and adherence to
company policies
• Regularly meets with our
General Counsel and members
of management to discuss and
assess potential enterprise
risks, including potential cyber
security risks
• Regularly meets with our
external auditors to discuss
and assess potential risks
• Reviews our risk management
practices and risk-related
policies (including the Codes)
• Evaluates potential related
person transactions
WABASH NATIONAL CORPORATION
2020 Proxy Statement
21
Corporate Governance
Committees of the Board
The Board has three standing committees: (1) the Nominating and Corporate Governance Committee, (2) the
Compensation Committee, and (3) the Audit Committee. Each committee maintains a charter, which can be
accessed electronically from the Investor Relations/Corporate Governance page of our website at
www.wabashnational.com or by writing to us at Wabash National Corporation, Attention: Corporate Secretary,
3900 McCarty Lane, Lafayette, Indiana 47905.
The following table indicates each standing committee or committees on which our directors served in 2019, other
than Mr. Yeagy, who did not serve on any committees in 2019:
NAME
Dr. Martin C. Jischke
Therese M. Bassett
John G. Boss
John E. Kunz
Larry J. Magee
Ann D. Murtlow
Scott K. Sorensen
Stuart A. Taylor II
NOMINATING AND
CORPORATE
GOVERNANCE
COMMITTEE
COMPENSATION
COMMITTEE
Member
Member
Member
Chair
Member
Member
Member
Member
Member
Member
Chair
Member
AUDIT
COMMITTEE
Member
Chair
Member
Member
Effective following the 2020 Annual Meeting, if all the nominees for election at the Annual Meeting are elected,
then such nominees will continue to serve on the committees reflected in the chart above.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee met four times during 2019. The Nominating and
Corporate Governance Committee’s responsibilities include:
• Assisting the Board by leading board member recruitment efforts, including identifying individuals or reviewing
stockholder-nominated individuals qualified to become directors, recommending to the Board the director
nominees for the next annual meeting of stockholders, and performing initial interviews of potential board
member candidates;
• Developing and recommending to the Board a set of corporate governance principles applicable to the
Company;
• Leading the Board in its annual review of the Board’s performance; and
• Recommending to the Board director nominees for each Board committee.
As part of the Nominating and Corporate Governance Committee’s annual review of the Board’s performance, and
its process for recommending director nominees for the next annual meeting of stockholders (which is described
in more detail below under “Nomination of Director Candidates,”) it regularly considers each member’s attendance
and overall contributions to the Board, the diversity of the Board’s composition (including diversity of expertise,
geography, age, gender, race, and ethnicity), and the willingness of a member to represent and serve the long-
term interests of our stockholders.
22
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Corporate Governance
Compensation Committee
The Compensation Committee met five times during 2019. The Compensation Committee’s responsibilities include:
• Considering, recommending, and approving our incentive compensation plans and our equity-based plans for
our executive officers;
• Annually reviewing and recommending to the Board the forms and amounts of director compensation; and
• Annually reviewing and approving the corporate goals and objectives relevant to the CEO’s and other executive
officers’ compensation, evaluating their performance in light of those goals and objectives, and setting
compensation levels based on the evaluations.
In 2019, as in past years, the Compensation Committee engaged an independent compensation consultant,
Meridian Compensation Partners LLC (“Meridian”). The Compensation Committee requested that Meridian provide
competitive market assessments regarding executive officer compensation, which were used by the
Compensation Committee in determining the appropriate executive officer compensation levels for 2019 that are
in line with the Company’s compensation plans, philosophies and goals. Meridian also provides market
assessments regarding non-employee director compensation.
Additional information regarding the Compensation Committee’s process for determining executive officer
compensation can be found below in the Compensation Discussion and Analysis section of this Proxy Statement
under the heading “Compensation Methodology and Process.”
Audit Committee
The Board has established a separately-designated standing Audit Committee in accordance with the requirements
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee met eight times
during 2019. In addition to the Board’s determination that each member of the Audit Committee is “independent”
within the meaning of the rules of the NYSE, the Board also determined that Messrs. Kunz, Sorensen and Taylor are
“audit committee financial experts” as defined by the rules of the SEC, and that they, along with Dr. Jischke, have
accounting and related financial management expertise within the meaning of the listing standards of the NYSE.
The Audit Committee’s responsibilities include:
• Reviewing the independence of the independent auditors and making decisions regarding engaging and
discharging independent auditors;
• Reviewing with the independent auditors the plans and results of auditing engagements;
• Reviewing and approving non-audit services provided by our independent auditors and the range of audit and
non-audit fees;
• Reviewing the scope and results of our internal audit procedures and the adequacy of the system of internal
controls;
• Overseeing special investigations, if any;
• Reviewing our financial statements and reports filed with the SEC;
• Overseeing our efforts to ensure that our business and operations are conducted in compliance with legal and
regulatory standards applicable to us, as well as ethical business practices;
• Overseeing the Company’s internal reporting system regarding compliance with federal, state and local laws;
• Establishing and implementing procedures for confidential communications for “whistleblowers” and others who
have concerns with our accounting, internal accounting controls and audit matters; and
• Reviewing our significant accounting policies.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
23
Corporate Governance
Related Persons Transactions Policy
Our Board has adopted a written Related Persons Transactions Policy that sets forth our policy and procedures for
review, approval and monitoring of transactions between the Company and “related persons.” Related persons
include directors, nominees for director, executive officers, stockholders owning 5% or greater of our outstanding
stock, and any immediate family members of the aforementioned. The Related Persons Transactions Policy is
administered by a committee designated by the Board, which is currently the Audit Committee.
Pursuant to the policy, transactions involving amounts exceeding $120,000, in which a related person has a direct
or indirect material interest, must be approved, ratified, rejected or referred to the Board by the Audit Committee.
The policy provides that as a general rule all related person transactions should be on terms reasonably
comparable to those that could be obtained by the Company in arm’s length dealings with an unrelated third
party. However, the policy takes into account that in certain cases it may be impractical or unnecessary to make
such a comparison. In such cases, the transaction may be approved in accordance with the provisions of the
Delaware General Corporation Law. When evaluating potential related person transactions, the Audit Committee
considers all reasonably available facts and circumstances and approves only the related person transactions
determined in good faith to be in compliance with, or not inconsistent with, our Code of Business Conduct and
Ethics, and the best interests of our stockholders.
The Related Persons Transaction Policy provides that management, or the affected director or officer will bring any
potentially relevant transaction to the attention of the Audit Committee. Additionally, each year, our directors and
executive officers complete questionnaires designed to elicit information about potential related person
transactions, and the directors and officers must promptly advise the Corporate Secretary if there are any changes
to the information previously provided. If a director is involved in the transaction, he or she will be recused from all
discussions and decisions with regard to the transaction, to the extent practicable. The transaction must be
approved in advance whenever practicable, and if not practicable, must be ratified as promptly as practicable. All
related person transactions will be disclosed to the full Board, and will be included in the Company’s proxy
statement and other appropriate filings as required by the rules and regulations of the SEC and the NYSE. During
2019, there were no required disclosures arising from such relationships.
Nomination of Director Candidates
Qualifications of Director Candidates
To be considered by the Nominating and Corporate Governance Committee, a director nominee must meet the
following minimum criteria:
• Has the highest personal and professional integrity;
• Has a record of exceptional ability and judgment;
• Possesses expertise, skills, experience and knowledge useful to our oversight;
•
Is able and willing to devote the required amount of time to our affairs, including attendance at Board and
committee meetings; and
• Has the interest, capacity and willingness, in conjunction with the other members of the Board, to serve the
long-term interests of the Company and its stockholders.
In reviewing these, and other relevant, criteria, the Board may consider the diversity of director candidates,
including diversity of expertise, geography, gender, race, and ethnicity. We seek independent directors who
represent a mix of backgrounds and experiences that will enhance the quality of the Board’s deliberations and
decisions. The goal in reviewing these characteristics for individual director candidates is that they, when taken
together with those of other Board members, will lead to a Board that is effective, collegial, and responsive to the
needs of the Company and its stockholders.
24
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Corporate Governance
Director Nomination Process
The Nominating and Corporate Governance Committee recommends to the Board nominees that best suit the
Board’s needs. Nominees are selected by the committee with the assistance of, if desired by the committee, a
retained search firm, after reviewing the candidates’ credentials, clearing potential conflicts, performing reference
checks, and conducting interviews with the candidates to determine if they meet the qualifications described above.
The Nominating and Corporate Governance Committee will consider stockholder recommendations for director
nominees sent to the Nominating and Corporate Governance Committee, Wabash National Corporation, Attention:
Corporate Secretary, 3900 McCarty Lane, Lafayette, Indiana 47905. Stockholder recommendations for director
nominees should include:
• The name and address of the stockholder recommending the person to be nominated;
• A representation that the stockholder is a holder of record of our stock, including the number of shares held and
the period of holding;
• A description of all arrangements or understandings between the stockholder and the recommended nominee;
• Such other information regarding the recommended nominee as would be required to be included in a proxy
statement filed pursuant to Regulation 14A under the Exchange Act;
• The consent of the recommended nominee to serve as a director if so elected; and
• All other required information set forth in our Bylaws.
Stockholders’ nominees that comply with the procedures for submitting a stockholder nomination will receive the
same consideration as other candidates identified by or to the Nominating and Corporate Governance Committee.
The procedures for submitting a stockholder nomination are set forth below under the heading “General
Information – Stockholder Proposals and Nominations.” Upon receipt by the Corporate Secretary of a stockholder
notice of a director nomination, the Corporate Secretary will notify the stockholder that the notice has been
received and will be presented to the Nominating and Corporate Governance Committee for review.
Director Compensation
The Compensation Committee makes recommendations to the full Board regarding non-employee director
compensation. Meridian reviewed our director compensation with the Compensation Committee during 2019. As a
result of such review, at the February 2019 Board meeting and based upon the recommendation of our
Compensation Committee, the annual retainers for non-employee directors’ service on the Board were revised to
the following levels:
ANNUAL RETAINERS (1)
Board
Member:
Audit Committee
Compensation Committee
Nominating and Corporate Governance Committee
Chairman of the Board
Audit Committee Chair
Compensation Committee Chair
Nominating and Corporate Governance Committee Chair
AMOUNT
$190,000 (2)
$ 10,000
$ 8,000
$ 8,000
$ 25,000
$ 15,000
$ 12,000
$ 10,000
WABASH NATIONAL CORPORATION
2020 Proxy Statement
25
Corporate Governance
(1) All annual cash retainers are paid in quarterly installments. Annual grants of restricted stock units, referenced in footnote 2 below, are paid in
full following the election of directors at the annual meeting.
(2) Consists of an $80,000 cash retainer and an award of restricted stock units of Company stock having an aggregate market value at the time of
grant of $110,000. Restricted stock units vest in full on the first anniversary of the grant date.
In addition to the above, during 2019, Mr. Boss received a one-time award of fully-vested shares of common stock
to compensate him for a partial year of service from the date of his initial appointment to the Board in December
2017 through the date of the 2018 Annual Meeting when he received his initial equity award. This treatment is
consistent with our current compensation policy for non-employee directors which provides directors with a
pro-rata award for their first year of service based on the portion of the year that they served on the Board.
Meridian continued to review our director compensation with the Compensation Committee during 2019 and
2020. As a result of such review, at the February 2020 Board meeting and based upon the recommendation of our
Compensation Committee, the annual retainers for non-employee directors’ service on the Board were revised to
the following levels:
ANNUAL RETAINERS (1)
Board
Member:
Audit Committee
Compensation Committee
Nominating and Corporate Governance Committee
Chairman of the Board
Audit Committee Chair
Compensation Committee Chair
Nominating and Corporate Governance Committee Chair
AMOUNT
$200,000 (2)
$ 10,000
$ 8,000
$ 8,000
$ 25,000
$ 15,000
$ 12,000
$ 10,000
(1) All annual cash retainers are paid in quarterly installments. Annual grants of restricted stock units, referenced in footnote 2 below, are paid in
full following the election of directors at the annual meeting.
(2) Consists of an $80,000 cash retainer and an award of restricted stock units of Company stock having an aggregate market value at the time of
grant of $120,000. Restricted stock units vest in full on the first anniversary of the grant date.
The following table summarizes the compensation paid to our directors during 2019, other than Mr. Yeagy, whose
compensation is discussed below under Executive Compensation.
Director Compensation for Year-End
December 31, 2019
(1)
FEES EARNED OR
PAID IN CASH
($)
(2)
STOCK AWARDS
($)
(3)
ALL OTHER
COMPENSATION
($)
$123,000
$110,013
$ 10,956
$ 55,012
$ 96,000
$143,583
$103,000
$110,013
$ 96,000
$110,013
$ 98,000
$110,013
$102,000
$110,013
$ 40,833
$ 73,321
$
$
—
—
$3,901
$4,181
$3,901
$
—
$4,141
$
—
TOTAL
($)
$233,013
$ 65,968
$243,484
$217,194
$209,914
$208,013
$216,154
$114,154
NAME
Martin C. Jischke
Therese M. Bassett
John G. Boss
John E. Kunz
Larry J. Magee
Ann D. Murtlow
Scott K. Sorensen
Stuart A. Taylor II
26
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Corporate Governance
(1) Consists of cash fees earned in 2019 for annual retainers. This column includes any amounts a director elects to defer pursuant to the
Non-Qualified Deferred Compensation Plan. The terms of this plan are discussed below.
(2)
For Dr. Jischke, Ms. Murtlow and Messrs. Boss, Kunz, Magee and Sorensen, consists of a grant of 7,489 restricted stock units on May 21, 2019,
which vest on May 21, 2020 and, for Mr. Boss only, a grant of 2,253 fully vested shares of common stock on November 14, 2019. For
Ms. Bassett, consists of a grant of 3,665 restricted stock units on November 20, 2019, which vest on May 21, 2020. For Mr. Taylor, consists of a
grant of 5,484 restricted stock units on August 23, 2019, which vest on May 21, 2020. As of December 31, 2019, each of the non-employee
directors other than Ms. Bassett and Mr. Taylor held 4,883 unvested restricted stock units; Ms. Bassett and Mr. Taylor held 3,665 and 5,484
unvested restricted stock units as of December 31, 2019, respectively.
(3) Consists of the Company’s match pursuant to our Non-Qualified Deferred Compensation Plan. The Company fully matches the first 3% of
earnings deferred by a participant under the Non-Qualified Deferred Compensation Plan. In addition, the Company will contribute 1⁄ 2% for
each additional percent of deferred earnings contributed by the participant, up to a maximum of 5% of the participant’s deferred earnings
(thus resulting in a maximum of a 4% Company match on a participant’s deferral of 5% of his/her earnings).
Non-employee Director Stock Ownership Guidelines
The Board believes that it is important for each director to have a financial stake in the Company because it aligns
the director’s interests with those of the Company’s stockholders. To meet this objective, the Board has
established stock ownership guidelines, which require each non-employee director to hold 50% of all Company
shares received through Company incentive compensation plans (the “Director Holding Requirement”) until the
non-employee director achieves a target ownership level equal to five (5) times the cash portion of the
non-employee director’s Annual Board Retainer (provided, however, that the Director Holding Requirement shall
never prohibit a director from withholding, selling, or tendering enough shares from an equity award to satisfy all
applicable withholding taxes on such award). Once a non-employee director has achieved his/her stated target
ownership level, s/he is no longer required to adhere to the Director Holding Requirement, unless and until his/her
ownership level falls below the target.
For purposes of calculating target ownership levels, the following types of Company shares are counted: stock
owned by the non-employee director; vested and unvested restricted stock and restricted stock units;
performance stock units deemed earned, but not yet vested; and stock owned through Company retirement plans.
Non-employee directors are required to comply with the Director Holding Requirement immediately upon their
appointment as a director and are required to meet their target ownership level within five years of becoming a
director. As of December 31, 2019, all non-employee directors had either met their target ownership level or had
more time to do so, and all directors who had not yet met their target ownership level were in compliance with the
Director Holding Requirement.
Other
The Company reimburses all directors for travel and other reasonable, necessary business expenses incurred in the
performance of their services for the Company and extends coverage to them under the Company’s travel
accident and directors’ and officers’ liability insurance policies. In addition, the Company allocates to each director
an allowance of $10,000 (every two years) to reimburse costs associated with attending continuing education
courses related to Board of Directors service.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
27
Compensation Discussion and Analysis
Table of Contents
Compensation Highlights . . . . . . . . . . . . . . . . . . . . .
28
Compensation Program Elements . . . . . . . . . . . . . 34
2019 Compensation Program Changes . . . . . . 28
Compensation Best Practices . . . . . . . . . . . . . .
Summary of Compensation Elements . . . . . . .
Our 2019 Say-on-Pay Vote . . . . . . . . . . . . . . . . .
Compensation Objectives and Philosophy . . . . .
Compensation Methodology and Process . . . . . .
29
30
30
31
32
The Role of Independent Compensation
Consultant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Peer Group Analysis and Compensation
Market Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-Term Incentive Plan . . . . . . . . . . . . . . . . .
Long-Term Incentive Plan . . . . . . . . . . . . . . . . .
Perquisites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement and Deferred Compensation
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Severance and Change in Control Benefits . . .
Executive Stock Ownership Guidelines . . . . . . . . .
Insider Trading Policy and Anti-Hedging Rules . .
Compensation Risk Assessment . . . . . . . . . . . . . . .
34
34
36
39
40
40
41
41
42
Compensation Highlights
Our compensation program is designed to motivate our executives and other salaried employees to execute our
business strategies and strive for higher company performance, while maintaining our core values, as described in
our Proxy Statement Summary. Although Wabash National’s compensation program applies to most salaried
employees, the following compensation discussion and analysis (“CD&A”) focuses on our compensation program
and policies’ applicability to our Named Executive Officers, whom we refer to as NEOs. Our NEOs for 2019 are as
follows:
Brent L. Yeagy
President and Chief Executive Officer
Dustin T. Smith
Former Senior Vice President and Group President –
Commercial Trailer Products (“Group President – CTP”);
Current Senior Vice President, Global Operations
Melanie D. Margolin
Senior Vice President and General Counsel, Corporate
Secretary
Jeffery L. Taylor
Former Senior Vice President and Chief Financial
Officer*
Michael N. Pettit
Former Senior Vice President and Group President –
Final Mile Products (“Group President – FMP”); Current
Senior Vice President and Chief Financial Officer*
*
Mr. Taylor’s employment with Wabash ended on January 16, 2020. Mr. Pettit succeeded Mr. Taylor as our Chief Financial
Officer.
2019 Compensation Program Changes
For 2019, we adopted changes to our short-term management incentive plan, or MIP Plan, and our long-term
incentive plan, or LTI Plan, that we believe strengthened the connection between pay and performance and further
aligned the incentives of our NEOs with our strategic objectives and the interests of our stockholders.
For the 2019 MIP Plan, performance was measured based on operating income (70% weighting) and free cash flow
(30% weighting), rather than the 2018 measures of operating income (80% weighting) and return on invested
capital (20% weighting), to more closely align the incentives provided by our MIP Plan with our strategic objectives
and our balanced focus on cash management.
In our 2019 LTI Plan, we introduced a new performance metric, net working capital as a percentage of revenue, for
our Performance Share Units awards to replace the cumulative free cash flow performance metric used in 2018.
We added net working capital as a percentage of revenue as a performance metric in 2019 to strengthen the
incentives provided by our LTI Plan for balance sheet discipline and our cash management objectives.
28
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Compensation Discussion and Analysis
Compensation Best Practices
Highlighted below are certain executive compensation governance practices (that we employ and avoid) that
support the needs of our business, drive performance and align with our stockholders’ long-term interests. These
practices include:
PRACTICES WE EMPLOY
PRACTICES WE AVOID
✔ Pay for Performance
✔ Market Competitive Executive Severance/Change
in Control Policy
✔ Annual Peer Review
✔ Incentive Compensation Designed to Discourage
Excessive Risk-Taking
✔ Annual NEO Performance and Pay Review
✔ Rigorous Stock Ownership Requirements for
Executives and Non-Employee Directors
✘ Pledging, Hedging, and Short Sales of Our Stock
✘ Repricing Underwater Stock Options or Stock
Appreciation Rights Without Stockholder
Approval
✘ Employment Contracts
✘ Executive Pension Plans
✘ Substantial Perquisites
✘ Having Non-Independent Directors on the
Compensation Committee
✔ Engage Independent Compensation Consulting
✘ Single Trigger Change in Control Benefits
Firm
WABASH NATIONAL CORPORATION
2020 Proxy Statement
29
Compensation Discussion and Analysis
Summary of Compensation Elements
A summary of each component of Wabash National’s compensation program is summarized in the table below. A
more detailed discussion of each element can be found below under the heading “Compensation Program
Elements.”
COMPONENT
Base Salary
Short-Term
Incentive Award
Long-Term
Incentive Award
DESCRIPTION
• Fixed cash compensation.
• Takes into consideration executive’s level
of responsibility, experience, knowledge
and performance, internal equity
considerations, and a competitive market
assessment.
• Variable short-term incentive paid in cash
based on annual performance against
company-wide financial goals.
• Purpose is to promote the achievement of
short-term financial goals aligned with
fiscal year operational objectives and
stockholder interests.
• Variable compensation delivered through a
combination of Performance Stock Units
and Restricted Stock Units.
• Objectives are to create alignment with
stockholder interests and promote
achievement of longer-term financial and
strategic objectives, reward executives for
long-term growth and performance of the
Company and encourage executive
retention.
WHERE REPORTED IN THE
EXECUTIVE COMPENSATION TABLES
• Summary Compensation Table –
“Salary” column
• Summary Compensation Table –
“Non-Equity Incentive Plan
Compensation” column
• Grants of Plan-Based Awards
Table – “Estimated Possible Payouts
Under Non-Equity Incentive Plan
Awards” column
• Summary Compensation Table –
“Stock Awards” column
• Grants of Plan-Based Awards
Table – “Estimated Possible Payouts
Under Equity Incentive Plan
Awards” column
• Outstanding Equity Awards at Fiscal
Year-End table
• Option Exercises and Stock Vested
Table
Perquisites
• We provide limited perquisites to help us
• Summary Compensation Table –
remain competitive with the market.
“All Other Compensation” column
Retirement and
Deferred
Compensation
Benefits
• The NEOs participate in our 401(k) plan,
• Summary Compensation Table –
which includes a company match, on the
same terms as all other salaried employees.
• A select group of employees, including the
NEOs, can elect to defer their base salary
and/or MIP Awards under our non-qualified
deferred compensation plan. We partially
match employee contributions when the
performance of the Company allows.
“All Other Compensation” column
• Non-Qualified Deferred
Compensation Table
Potential Payments
Upon Change in
Control and Certain
Terminations of
Employment
• Encourages executives to operate in the
best interests of stockholders both before
and after a Change in Control event.
• Potential Payments on Termination
or Change in Control Payment and
Benefits Estimate Table
• Provides market competitive benefits in the
event of certain terminations of
employment.
Our 2019 Say-on-Pay Vote
The Compensation Committee carefully considered the results of the Company’s “Say-on-Pay Vote” taken by
stockholders at its 2019 Annual Meeting, and the Committee plans to continue to carefully consider the results of
this vote each year. At the 2019 Annual Meeting, over 97% of the stockholder votes cast on the proposal were cast
30
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Compensation Discussion and Analysis
in favor of the resolution stating that the stockholders “approve the compensation of Wabash National’s executive
officers.” The Compensation Committee believes that the level of support indicated by this vote reflects favorably
on the Company’s executive compensation program, which emphasizes “pay for performance,” even in the highly
cyclical industry in which Wabash National operates.
Compensation Objectives and Philosophy
The primary objectives and philosophy of our compensation programs are to (i) drive executive behaviors that
maximize long-term stockholder value creation, (ii) attract and retain talented executive officers with the skills
necessary to successfully manage and grow our business, and (iii) align the interests of our executive officers with
those of our stockholders by rewarding them for strong Company performance. In support of these objectives, we:
• Target NEO total compensation package competitive with peers – We regularly compare our NEOs’ total
compensation levels, as well as the elements of our NEO pay, with companies of a similar industry, size and
complexity;
• Deliver a meaningful proportion of NEO compensation in share-based incentives – In 2019, 60.7% to 48.6% of
NEO total direct compensation was targeted to be delivered in the form of restricted stock units and
performance stock units, with a goal of driving sustainable stockholder value;
• Encourage NEOs to be long-term stockholders – In addition to delivering a significant portion of each of our
NEO’s compensation in share-based compensation, we also require that each of our NEOs hold shares of our
stock equal to a multiple of his or her base salary; and
• Weight a significant portion of NEO compensation toward variable and performance-based pay elements – In
2019, approximately 74.3% to 80.4% of NEO total direct compensation was targeted to be delivered in variable
Short-Term (annual) or Long-Term incentive compensation. As shown below, approximately 80.4% of Mr. Yeagy’s
target total direct compensation in 2019 was in the form of Short-Term or Long-Term incentive compensation.
Yeagy
Taylor
Margolin
m
r
e
T
g
n
o
L
RSUs/PSUs
60.7%
Base
Salary
19.6%
S
h
o
r
t
T
e
r
m
Short Term
Incentive
19.6%
m
r
e
T
g
n
o
L
RSUs/PSUs
51.3%
S
h
o
r
t
T
e
r
m
Base
Salary
28.7%
Short Term
Incentive
20.1%
P
erformance B a s e d 8
%
0 . 4
P
erformance B a s e d 7
%
1 . 3
Smith
RSUs/PSUs
43.8%
m
r
e
T
g
n
o
L
Base
Salary
34.0%
S
h
o
r
t
T
e
r
m
Short Term
Incentive
22.1%
P
erformance B a s e d 6
%
6 . 0
Pettit
RSUs/PSUs
45.7%
m
r
e
T
g
n
o
L
Base
Salary
32.0%
S
h
o
r
t
T
e
r
m
Short Term
Incentive
22.4%
P
erformance Ba s e d 6
%
8 . 0
m
r
e
T
g
n
o
L
RSUs/PSUs
42.7%
Base
Salary
34.7%
S
h
o
r
t
T
e
r
m
Short Term
Incentive
22.6%
P
erformance Bas e d 6 5 . 3
%
WABASH NATIONAL CORPORATION
2020 Proxy Statement
31
Compensation Discussion and Analysis
Compensation Methodology and Process
The Compensation Committee, consisting of only independent members of the Board, is responsible for
considering, recommending, and approving our incentive compensation plans and our equity-based plans for our
executive officers. In connection with that work, the Compensation Committee annually reviews and approves the
corporate goals and objectives relevant to the CEO’s and other executive officers’ compensation, evaluating their
performance in light of those goals and objectives, and setting compensation levels based on the evaluations. In
addition, the Compensation Committee annually reviews and recommends to the Board the forms and amounts of
director compensation.
To assist it in setting executive compensation for 2019, the Compensation Committee engaged Meridian, an
independent compensation consultant, to help ensure that our compensation packages remain competitive with
the market. (Additional details about Meridian’s role is discussed below under the heading “The Role of the
Independent Compensation Consultant.”) In addition to reviewing the market data provided by Meridian, the
Compensation Committee also considered the following factors when making compensation decisions for each of
our NEOs in 2019:
• The CEO’s evaluation of each of the other NEOs’ performance, as well as his recommendations for changes to
the NEOs’ base salaries (if any) and MIP and LTI targeted award levels. Note that the Compensation Committee
has the discretion to accept, reject or modify any of the CEO’s recommendations, and the NEOs are not present
during these discussions;
• Our Directors’ annual evaluation of the CEO’s performance, as obtained by the Nomination and Governance
Committee, and delivered by the Compensation Committee;
• The expected cost of the incentive plans to the Company and the present and future availability of shares under
our equity plans; and
• The results of our annual non-binding “say-on-pay” proposal, as discussed above under the heading “Our 2019
Say-On-Pay Vote.”
The Role of Independent Compensation Consultant
As noted above, for 2019, the Compensation Committee retained Meridian to provide compensation market data
and generally review and advise the Committee regarding our compensation programs, policies and disclosures.
Specifically, Meridian’s engagement encompasses advisory services such as annual review of executive
compensation philosophy, a competitive assessment of executive compensation levels and “pay-for-performance”
linkage, executive cash and equity incentive program design, competitive assessment of non-employee director
compensation, and other ad hoc support. Meridian works at the direction of, and reports directly to, the
Compensation Committee. Meridian does not provide any other services to Wabash National.
The Compensation Committee has evaluated Meridian as a compensation consultant, taking into consideration all
relevant factors required under NYSE listing standards, and has determined, based on its analysis in light of all
relevant factors, that the work of Meridian has not created any conflicts of interest, and that Meridian is
independent pursuant to the independence standards set forth in the NYSE listing standards promulgated
pursuant to Section 10C of the Exchange Act.
Peer Group Analysis and Compensation Market Data
As referenced above, Meridian provides the Compensation Committee with market compensation data to help the
Compensation Committee assess the competitiveness of total compensation for each NEO. However, the
Committee does not use this data to specifically “benchmark” or target a certain percentage or level of
32
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Compensation Discussion and Analysis
compensation for the NEOs compared to our peer groups. Rather, the Committee considers competitive peer
group data as one significant factor in setting pay levels and amounts, and retains the flexibility to also consider
subjective factors, such as each executive’s fulfillment of duties, teamwork, level of responsibility, knowledge, time
in position, experience and internal equity among the executives with similar experience and job responsibilities in
addition to market data.
Meridian provides the Compensation Committee with market data from the following two sources: (i) published
proxies of companies specifically selected as proxy peer companies (the “Proxy Peer Group”), and (ii) the
proprietary Equilar database (the “Equilar Peer Group”). In setting 2019 compensation, the Committee utilized data
from the Proxy Peer Group as the primary data source to assess the competitive positioning for the CEO and CFO’s
target compensation. Given the limited positional data available from proxies, the Committee utilized data from the
Equilar Peer Group as the primary data source to assess competitive positioning for the other NEOs. Data from the
Equilar Peer Group was considered a secondary data source for the CEO and CFO positions.
With the help of Meridian, the Committee reviews annually both peer groups to confirm that they continue to be
appropriate comparator groups for NEO compensation and makes adjustments as it deems appropriate. The
companies in the Proxy Peer Group and the Equilar Peer Group are similar to Wabash National in revenue,
complexity, and market capitalization, as shown in the table below:
REVENUE*
MARKET CAPITALIZATION**
Proxy Peer Group
Range
Median
Equilar Peer Group
Range
Median
$836 million to $4.201 billion
$250 million – $11.553 billion
$2.198 billion
$2.368 billion
$748 million to $4.090 billion
$623 million – $11.553 billion
Wabash National Corporation
$2.3 billion
$2.182 billion
$3.844 billion
$1.328 billion
*
Revenues for the Proxy Peer Group and the Equilar Peer Group reflect those from the most recent four quarters reported as of 9/30/2018. The
revenue shown for Wabash relates to our 2018 fiscal year.
**
As of September 30, 2018.
The companies that make up the Proxy Peer Group and Equilar Peer Group for 2019 are reported in the following
tables.
2019 PROXY PEER GROUP
A.O. Smith
Actuant Corporation
Donaldson Company
EnPro Industries, Inc.
Meritor, Inc.
Modine Manufacturing Company
Allison Transmission Holdings, Inc.
Federal Signal Corporation
Nordson Corp.
Barnes Group
Greenbrier Companies, Inc.
Tower International, Inc.
Briggs & Stratton Corporation
Harsco Corporation
Chart Industries, Inc.
IDEX Corporation
Wabtec Corporation
Woodward, Inc.
Commercial Vehicle Group, Inc.
ITT, Inc.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
33
Compensation Discussion and Analysis
A.O. Smith
Actuant Corporation
Chart Industries Inc.
Coherent Inc.
Donaldson Company
ESCO Technologies, Inc.
Federal Signal Corporation
2019 EQUILAR PEER GROUP
Flowserve Corporation
Snap-On Incorporated
Franklin Electric Co., Inc.
SPX Flow, Inc.
Graco, Inc.
Hillenbrand, Inc.
IDEX Corporation
Meritor, Inc.
Nordson Corp.
The Timken Company
The Toro Company
Tower International, Inc.
TriMas Corporation
WABCO Holdings, Inc.
Compensation Program Elements
The following information describes, in detail, each element of our executive compensation program for 2019,
including a discussion of performance metrics and compensation levels. It is intended that this information be read
in conjunction with the information provided in the tables that follow this CD&A.
Base Salary
Base salaries are intended to provide a stable source of compensation for each of our NEOs. In determining salary
levels for each of our NEOs, the Committee takes into consideration a competitive market assessment provided to
it by Meridian, the NEO’s individual performance, level of responsibility, experience and knowledge, as well as each
NEO’s current salary as compared to the other NEOs and officers of the Company. The following table shows the
changes that the Committee made to the NEOs’ base salaries during 2019 compared to their base salaries in effect
at the end of 2018. All base salary increases were effective as of January 1, 2019.
NAME
Mr. Yeagy
Mr. Taylor
Ms. Margolin
Mr. Smith
Mr. Pettit
2019 ANNUAL BASE
SALARY
% INCREASE FROM 2018
$840,000
$458,000
$400,000
$375,000
$325,000
5.0%
4.1%
6.7%
5.6%
18.2%
Our Committee’s review of the Proxy Peer Group data showed that Mr. Pettit’s base salary was approximately 26%
below the market median, so the Committee decided to provide him with significant base salary increase in 2019
in an effort to better align his compensation internally and with the external market. As shown in the table above,
the Committee also approved modest increases for each of the NEOs, in each case in recognition of the NEO’s
performance during the preceding year and to better align the NEO’s base salary with the Proxy Peer Group data.
Short-Term Incentive Plan
Our short-term incentive plan, or MIP Plan, is designed to reward participants (which include each of the NEOs as
well as other key executives and employees) with a cash bonus for meeting or exceeding financial and other
performance goals during a calendar year. At the beginning of each year, we establish a target MIP rate for each
participant, which is equal to the percentage of the participant’s base salary that he or she will receive as a cash
bonus if the MIP goals are achieved at target. However, the actual bonus received may be higher or lower,
depending on our financial performance against pre-established performance metrics, which are described in
more detail below. We also have the ability, in our discretion, to decrease (or completely eliminate) a participant’s
MIP bonus if he or she fails to meet his or her personal performance criteria reviewed during the Company’s
employee performance review process.
34
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Compensation Discussion and Analysis
MIP Target Rates
After review and consideration of peer group data and discussion with Meridian, the Committee approves target
MIP rates for each of our NEOs, expressed as a percentage of base salary. The 2019 target MIP rates for each NEO
were as follows:
Mr. Yeagy
Mr. Taylor
Ms. Margolin
Mr. Smith
Mr. Pettit
2019 TARGET MIP RATE
100%
70%
65%
70%
65%
Performance Metrics and Results for the 2019 MIP Plan
As mentioned above, we made changes to our MIP Plan performance metrics for 2019 to more closely align our
MIP incentives with our strategic objectives and our focus on cash management. Specifically, for 2019, we
replaced the return on invested capital goal that we used in 2018 with a Free Cash Flow goal for 2019, but retained
the Operating Income goal because the Committee deemed Operating Income critical to short-term success and
is also a clear and easily measurable goal for Plan participants. We defined Operating Income and Free Cash Flow
under the MIP as follows:
• Operating Income means income from operations as reported in our financial statements
• Free Cash flow is calculated as our EBITDA minus interest and taxes paid in cash, minus capital expenditures, and
plus or minus change in working capital from the beginning of the year to the end of the year (excluding income
tax accruals).
The level of achievement of Operation Income and Free Cash Flow for 2019 under the MIP are determined after
adjusting results to exclude any cumulative effects of changes in GAAP during the year; cumulative effect of
changes in applicable tax laws resulting in a discrete item of tax expense or benefit to the Company during the
year; the transaction costs (including legal, due diligence and investment banking expenses) of any merger,
acquisition or divestiture consummated during the performance period that has a total purchase or sale price of
more than $20 million; any asset write-down or goodwill impairment expense during the performance period that
exceeds $3 million; expenses associated with judgements or the settlement of any claims during the performance
period that exceed $3 million; and the effects of items that are either of an unusual nature or infrequently
occurring, as described in Financial Accounting Standards Board Accounting Standards Update No. 2015-01.
Both the Operating Income and the Free Cash Flow performance metrics under the MIP Plan may be achieved at a
threshold, target or maximum level. The threshold, target and maximum goals were based on various outcomes
considered by the Compensation Committee, with the target amounts reflecting the Company’s operating budget
approved by the Board.
Because annual targets for performance goals are set at levels based on our expected financial performance for
the year, the Committee believes that paying at 200% of a performance metric’s target for superior performance
(set at 125% or greater of the applicable metric under the Board-approved operating budget) provides appropriate
incentive to achieve outcomes clearly exceeding target expectations. However, by capping the potential payout at
200% for such superior performance, the Committee believes this reduces the risk that executives might be
motivated to pursue excessively high short-term goals to maximize short-term payouts, at the expense of the long-
term performance of the Company.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
35
Compensation Discussion and Analysis
The Committee further believes that threshold amounts, which are set at 75% or greater of the applicable metric
under the Board-approved operating budget, represent sufficient performance to warrant incentive compensation,
and that a potential payout equal to 35% of target is appropriate for such an achievement level. If the threshold
level of performance for a particular goal is not achieved, the payout for that goal is zero. Actual MIP payouts are
interpolated for performance between threshold and target or target and maximum.
The chart below details the goals necessary for the NEOs to achieve MIP payout in 2019:
(REPORTED IN
MILLIONS)
Free Cash Flow
(“FCF”)
30% of MIP Award
Corporate
Operating Income
(“OI”)
70% of MIP Award
THRESHOLD
TARGET
MAXIMUM
ACTUAL
$71.25 million
$95 million
$118.75 million
$108.64 million
$120.0 million
$160.0 million
$200.0 million
$142.79 million
Based on the results shown above, the NEOs each received an MIP payout for 2019 equal to 97.7% of target.
Long-Term Incentive Plan
Our long-term incentive plan, or LTI Plan, is designed to reward our executives, including NEOs, for increasing
stockholder value. It is also intended to be used as an attraction and retention tool in recruiting and promoting
executive talent.
Consistent with past practice, the Compensation Committee made annual LTI grants to the NEOs in February 2019
after the release of 2018 year-end financial results in connection with a regularly scheduled meeting of the
Compensation Committee. For 2019, the Compensation Committee granted a mix of Performance Share Units
(PSUs) and Restricted Stock Units (RSUs) to each of the NEOs. The PSUs and RSUs accounted for approximately
60% and 40%, respectively, of the target LTIP award value for each NEO. The Committee believes this mix is
appropriate to emphasize its goals of encouraging stock ownership in Wabash National, retaining NEOs in the long-
term, focusing NEOs on long-term growth in stockholder value and setting compensation that is reflective of
market practice.
Determining LTI Award Values
In February 2019, the Compensation Committee established the target LTI grant value for each NEO. The
Compensation Committee established the LTI grant value for each NEO based on the following factors: level of
responsibility, individual performance, peer group data, and the number of shares available under the 2017
Omnibus Incentive Plan. The LTI rate and target grant value that the Compensation Committee established for
each of the NEOs in February 2019 was as follows:
Mr. Yeagy
Mr. Taylor
Ms. Margolin
Mr. Smith
Mr. Pettit
2019
LTI TARGET
GRANT VALUE
$2,600,000
$ 820,000
$ 515,000
$ 536,000
$ 400,000
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2020 Proxy Statement
WABASH NATIONAL CORPORATION
Compensation Discussion and Analysis
Summary of Terms of PSUs and RSUs
The general terms for the PSUs and RSUs awarded to the NEOs in 2019 are listed below:
PSUs
RSUs
Performance Metrics
• Relative Total Shareholder
None
Return
• Cumulative Operating EBITDA
• Net Working Capital as a % of
Revenue
Performance Period
Three years (2019-2021)
None
Vesting Period
Restrictions/Expiration
Earned awards, if any, vest in full
on third anniversary of the grant
date
Earned only upon achievement of
at least threshold performance
level, and paid out in Wabash
National Common Stock upon
vesting
Award vests in full on third
anniversary of the grant date
Restricted until vesting date, at
which time they are settled in
Wabash National Common Stock
Performance Share Unit Performance Metrics
As mentioned above, for 2019, the Committee decided to replace the Free Cash Flow goal with New Working
Capital as a % of Revenue for two reasons: (1) to diversify performance goals since Free Cash Flow was added to our
MIP Plan, and (2) to strengthen the incentives for balance sheet discipline and cash management objectives. The
Committee chose to retain the Relative Total Shareholder Return metric and Cumulative Operating EBITDA metric to
continue to emphasize the Company’s focus on long-term stockholder value creation and growth, respectively. As a
result, the three independent performance metrics for the PSUs awarded in 2019 were as follows:
METRIC
% OF PSUs BASED ON SUCH METRIC
Relative Total Shareholder Return
(“RTSR”)
Cumulative Operating EBITDA
Net Working Capital (“NWC”) as a %
of Revenue
50%
30%
20%
Each of these metrics are independent of the other in calculating whether LTI Plan participants will earn the PSUs
attributable to such metric.
Relative Total Shareholder Return
RTSR measures our total shareholder return against the total shareholder return of our peers. For the 2019 grants,
RTSR will be measured relative to a group of similarly cyclical companies over a three-year period, as the Committee
believes this is the fairest way to track and reward Company performance with regard to stockholder return in a
highly-cyclical industry. RTSR performance will be measured in relation to the following “Cyclical Peer Group”:
Actuant Corporation (ATU)
PACCAR, Inc. (PCAR)
Modine Manufacturing Company (MOD)
Crane Co. (CR)
Tower International, Inc. (TOWR)
Oshkosh Corporation (OSK)
Meritor, Inc. (MTOR)
Commercial Vehicle Group, Inc. (CVGI)
Spartan Motors, Inc. (SPAR)
Navistar International Corporation (NAV)
Federal Signal Corporation (FSS)
Trinity Industries, Inc. (TRN)
WABASH NATIONAL CORPORATION
2020 Proxy Statement
37
Compensation Discussion and Analysis
The Cyclical Peer Group companies remain the same as in 2018, and were approved by the Committee following a
review of Meridian’s analysis showing stock price correlation among these companies as compared to that of
Wabash National. In the event any Cyclical Peer Group company ceases to be an independent, publicly traded
company, or spins off one of its businesses during the performance period, the Committee may substitute an
alternate cyclical company, in the order listed as follows: WABCO Holdings, Inc. (WBC), Timken Company (TKR)
and Manitowoc Company (MTW).
The Company must achieve an RTSR ranking level within the Cyclical Peer Group of nine or above by the end of
the three-year performance period for the NEOs to earn at least 50% of the PSUs tied to the RTSR metric. The chart
below details the potential RTSR award rates for various ranking levels that trigger payment of PSUs tied to the
RTSR metric under the 2019 LTI Plan:
Wabash National RTSR
Ranking
% of RTSR PSUs that will
vest
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th-13th
200% 190% 180% 160% 140% 120% 100% 75% 50%
0%
Cumulative Operating EBITDA and NWC as a % of Revenue
The definitions of Cumulative Operating EBITDA and NWC as a % of Revenue are as follows:
• Operating EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based
compensation, impairment of goodwill or other intangibles and other non-operating income and expense.
Cumulative Operating EBITDA Performance is calculated by totaling the Company’s Operating EBITDA results
from each of the three performance period fiscal years.
• NWC as a % of Revenue measures the Company’s management of cash. It is calculated by taking the average of
the following for each of the three years in the performance period: the quotient of (1) the sum of total accounts
receivable and inventory, less accounts payable and less customer deposits, divided by (2) net sales.
Cumulative Operating EBITDA and NWC as a % of Revenue will be adjusted to exclude: any cumulative effects of
changes in GAAP during the performance period; cumulative effect of changes in applicable tax laws resulting in a
discrete item of tax expense or benefit to the Company during the performance period; the transaction costs
(including legal, due diligence and investment banking expenses) of any merger, acquisition or divestiture
consummated during the performance period that has a total purchase or sale price of more than $30 million; any
asset write-down or goodwill impairment expense during the performance period that exceeds $3 million;
expenses associated with judgements or the settlement of any claims during the performance period that exceed
$3 million; and the effects of items that are either of an unusual nature or infrequently occurring, as described in
Financial Accounting Standards Board Accounting Standards Update No. 2015-01.
The chart below shows the level of Cumulative EBITDA performance that is necessary for the NEOs to earn the
PSUs tied to such metric:
ACTUAL PERFORMANCE AS % OF
TARGET
115%
100%
75%
< 75%
% OF PSUs EARNED
200% (Maximum)
100% (Target)
50% (Threshold)
0
38
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Compensation Discussion and Analysis
The level of NWC as a % of Revenue performance that is necessary for the NEOs to earn the PSUs tied to such
metric are as follows:
ACTUAL PERFORMANCE AS % OF
TARGET
125%
100%
85%
< 85%
% OF PSUs EARNED
200% (Maximum)
100% (Target)
50% (Threshold)
0
The percent of PSUs earned for actual Cumulative EBITDA performance or actual NWC as a % of Revenue
performance that is between the performance levels set forth above will be interpolated.
Payout of PSUs for 2017 to 2019 Performance Cycle
The PSUs granted on February 17, 2017 were subject to a three-year performance period established by the
Compensation Committee in the Company’s 2017 LTI Plan, which ended on December 31, 2019. Under the
Company’s 2017 LTI Plan, the Committee established three performance metrics — RTSR, Cumulative EBITDA
Performance, and Cumulative Free Cash Flow, weighted at 50%, 30% and 20%, respectively — for measurement
over the three-year period. These metrics were independent of the other in calculating whether LTI Plan
participants would earn the PSUs tied to such metric. The chart below details the performance goals and
achievement levels of the goals for the PSUs issued under the 2017 LTI Plan:
RTSR
50% of 2017 PSUs
Cumulative EBITDA
30% of 2017 PSUs
Cumulative Free Cash Flow
20% of 2017 PSUs
ACTUAL RESULTS
10th Within Peer
Group
$571 million
$321 million
PERFORMANCE
LEVEL ACHIEVED
% PSUs TIED TO
METRIC EARNED
Below Threshold of
9th Within Peer Group
Below Target of
$640 million
Below Target of
$375 million
0%
78%
73%
As a result, each NEO earned 38% of the total targeted number of PSUs granted to them in February 2017. Each
earned PSU vested on February 22, 2020 for the NEOs still employed by us on such date, which was three years
from the original date of grant. Upon vesting, each NEO received one share of the Company’s Common Stock for
each fully vested PSU.
Perquisites
We offer our NEOs various perquisites that the Committee believes, based on its annual compensation review, are
reasonable to remain competitive. These perquisites constitute a small percentage of total compensation, and
include executive physicals, credit monitoring, health club discounts, matching contributions to health savings
accounts, and life/disability insurance. For more information on these perquisites and to whom they are provided,
see footnote 3 to the Summary Compensation Table. In addition to the items reported in the Summary
Compensation Table, NEOs, as well as other Company employees, are provided access to seats at a local sporting
venue for personal use when not occupied for business purposes, in each case at no incremental cost to the
Company.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
39
Compensation Discussion and Analysis
Retirement and Deferred Compensation Benefits
Retirement Benefit Plan
The Company has adopted a Retirement Benefit Plan that is applicable to our NEOs. The purpose of the plan is to
clearly define benefits that are to be provided to qualified employees who retire from the workforce after service
to the Company. Additional information regarding this Plan, including definitions of key terms and a quantification
of retirement benefits, is set forth below in the section entitled Potential Payments on Termination or Change in
Control.
Tax-qualified Defined Contribution Plan
We maintain a tax-qualified defined contribution plan in the form of a traditional 401(k) plan with a Roth 401(k)
option, either of which is available to a majority of the Company’s employees, including the NEOs. When the
Company’s financial performance allows, the Company matches dollar-for-dollar the first 3% of compensation an
employee places into these plans, and matches one-half of the next 2% contributed by the employee to the plan,
up to federal limits. Any annual Company matches are reported under the “All Other Compensation” column, and
related footnote 3 of the Summary Compensation Table.
Deferred Compensation Benefits
We maintain a non-qualified deferred compensation plan that allows eligible highly-compensated employees,
including the NEOs, to voluntarily elect to defer receipt of all or a part of their cash compensation (base salary and
MIP Plan payouts). The Company matches dollar-for-dollar the first 3% of compensation an employee places into
the non-qualified deferred compensation plan, and matches one-half of the next 2% the employee contributes to
the plan, up to a maximum of 5% of the participant’s deferred earnings. Any annual Company matches are
reported under the “All Other Compensation” column and related footnote 3 of the Summary Compensation Table.
Participants may elect to invest amounts deferred under this program into one or more investment funds available
under the plan from time to time. We do not guarantee earnings on any investments or otherwise pay any above
market earnings on participants’ accounts. Participants may elect to receive the funds in a lump sum or in up to 10
annual installments following retirement, as well as limited in-service distributions. The deferred compensation
plan is unfunded and subject to forfeiture in the event of bankruptcy.
We make the non-qualified deferred compensation plan available to our highly-compensated employees as a
means to attract, retain, and motivate employees by providing an additional method to save for retirement and a
mechanism to defer taxation on a portion of compensation. Similar deferred benefits are commonly offered by
companies with whom we compete for talent.
For additional information, see the Non-Qualified Deferred Compensation Table below.
Severance and Change in Control Benefits
Executive Severance Plan
We maintain the Wabash National Corporation Executive Severance Plan (the “ESP”), which provides severance
protections to certain executives who are designated by the Compensation Committee as eligible to participate in
the ESP, including all of the NEOs. The ESP is not intended to duplicate any benefits that may be provided under
other Company compensation plans or arrangements, but rather to provide benefits to certain executives who
agree to execute a release, non-compete, and non-solicitation agreement with the Company upon non-cause
based terminations. For additional information regarding the ESP, including definitions of key terms and benefits,
see the section entitled Potential Payments on Termination or Change in Control.
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2020 Proxy Statement
WABASH NATIONAL CORPORATION
Compensation Discussion and Analysis
Change in Control Plan
We have adopted a Change in Control Plan applicable to NEOs as well as other executives of the Company, as
specifically designated by our Board of Directors. We determined that this plan was appropriate based on the
prevalence of similar plans within the market, as well as the dynamic nature of the business environment in which
we operate. We also believe the Change in Control Plan is an appropriate tool to motivate executive officers to
exhibit the proper behavior when considering potential business opportunities because defining compensation
and benefits payable under various merger and acquisition scenarios enable the NEOs to set aside personal
financial and career objectives and focus on maximizing stockholder value. Furthermore, the Change in Control
Plan encourages continuity of the leadership team through the completion of the change in control because the
plan does not provide any benefits as the result of an NEO’s voluntary termination of employment.
Additional information regarding the Change in Control Plan, including definitions of key terms and a
quantification of benefits that would be received assuming a triggering event on December 31, 2019, is set forth
below in the Potential Payments on Termination or Change in Control — Payment and Benefit Estimates table.
Executive Stock Ownership Guidelines
Our stock ownership guidelines encourage our executive officers to maintain a certain equity stake in the
Company, which aligns their interests with those of other stockholders. Our current stock ownership guidelines
provide that each executive is required to hold 100% of the net number of Company shares received through the
Company’s incentive compensation plans, meaning the total number of shares received less the number of shares
that would need to be sold, withheld, or tendered to pay withholding taxes and, if applicable, the exercise price of
stock options (the “Executive Holding Requirement”) until the executive achieves the target ownership levels set
for his/her position. Once a Company executive has achieved his/her stated target ownership level, s/he is no
longer required to adhere to the Executive Holding Requirement, unless and until his/her ownership level falls
below the target. The target ownership levels are as follows:
CEO
CFO, COO
Business Unit Presidents
Other Executive Officers
Five (5) times base salary
Three (3) times base salary
Two-and-one-half (2 1⁄ 2) times base salary
Two-and-one-half (2 1⁄ 2) times base salary
For purposes of calculating target ownership levels, the following types of Company shares are counted: stock
owned by the executive (including through retirement plans); vested and unvested restricted stock and restricted
stock units; and performance stock units deemed earned, but not yet vested. Company executives are required to
comply with the guidelines and the Executive Holding Requirement immediately upon hire or promotion and the
Compensation Committee reviews compliance with the guidelines on a periodic basis. As of December 31, 2019,
all our NEOs were in compliance with the guidelines, either because each NEO had met his or her target ownership
level or because he or she was adhering to the Executive Holding Requirement.
Insider Trading Policy and Anti-Hedging Rules
We maintain an Insider Trading Policy that applies to all our employees, including our NEOs, and directors, which
prohibits them from trading in our securities at times when they have material, non-public information about our
Company’s affairs. Our Insider Trading Policy also includes anti-hedging rules, which prohibits certain executive
officers, including our NEOs, and other employees from engaging in, directly or indirectly:
• selling short our Common Stock;
• pledging of Company securities and/or holding Company securities in margin accounts; and
WABASH NATIONAL CORPORATION
2020 Proxy Statement
41
Compensation Discussion and Analysis
• transactions in derivative securities (including put and call options), zero-cost collars, equity swaps, exchange
funds and forward sale contracts, or any other hedging and/or offsetting transactions regarding our Common
Stock that allow the holder to limit or eliminate the risk of a decrease in the value of the Company’s securities.
The following is a list of the specific employees that are covered by the anti-hedging rules in our Insider Trading
Policy: (1) all directors and executive officers as defined under Section 16 of the Exchange Act, (2) all direct
reports to our CEO, (3) all Directors of Finance for each of our business segments, (4) all Group Presidents and/or
General Managers of our financial reporting segments, (5) all Financial Reporting Department employees, (6) all
Tax and Treasury Department employees, (7) all employees regularly and routinely involved in corporate-wide
business development and/or mergers and acquisitions activities and reviews, and (8) all executive assistants to
the CEO, CFO, General Counsel and the Group Presidents or General Managers of the Company’s financial
reporting segments. In addition, the Company may deem additional persons to be temporarily subject to the anti-
hedging rules based upon certain activities or circumstances in its discretion.
Compensation Risk Assessment
The Board of Directors has concluded that the Company’s compensation policies and practices are not reasonably
likely to have a material adverse effect on the Company for the following reasons:
• the performance metrics for determining short-term incentive awards are based on publicly reported metrics
and, therefore, are not easily susceptible to manipulation;
• the maximum payouts for short-term incentive awards are capped, thereby reducing the risk that executives
might be motivated to pursue excessively high short-term goals to maximize short-term payouts;
• the maximum number of long-term incentive awards that are performance-based are also capped, thereby
reducing the risk that executives may be motivated to pursue excessively high performance targets (at the
expense of long-term strategic growth) to maximize the number of performance-based awards received; and
• the Company’s stock ownership guidelines incentivize our executives to focus on the Company’s long-term,
sustainable growth.
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2020 Proxy Statement
WABASH NATIONAL CORPORATION
Compensation Committee Report
The Compensation Committee reviewed and discussed with management the Compensation Discussion and
Analysis set forth in this Proxy Statement. Based on the review and discussion, the Compensation Committee
recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy
Statement and in the Wabash National Corporation Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 (including through incorporation by reference to this Proxy Statement).
COMPENSATION COMMITTEE
Scott K. Sorensen
Therese M. Bassett
John G. Boss
Martin C. Jischke
John E. Kunz
Larry J. Magee
Ann D. Murtlow
Stuart A. Taylor II
WABASH NATIONAL CORPORATION
2020 Proxy Statement
43
Executive Compensation Tables
In this section, we provide tabular and narrative information regarding the compensation of our NEOs for the fiscal
year ended December 31, 2019.
Summary Compensation Table for the Year Ended December 31, 2019
The following table summarizes the compensation of the NEOs for the year ended December 31, 2019 and for the
years ended December 31, 2018 and 2017.
NAME AND
PRINCIPLE POSITION
YEAR SALARY BONUS
STOCK
AWARDS (1)
NON-EQUITY
INCENTIVE PLAN
COMPENSATION (2)
ALL OTHER
COMPENSATION (3)
TOTAL
Brent L. Yeagy
President, Chief
Executive Officer,
Director
Jeffery L. Taylor
Senior Vice President,
Chief Financial Officer
Melanie D. Margolin
Senior Vice President
and General Counsel,
Corporate Secretary
Dustin T. Smith
Senior Vice President,
Group President,
Commercial Trailer
Products
Michael N. Pettit
Senior Vice President,
Group President Final
Mile Products
2019 $840,000 $ — $2,655,572
$820,285
$78,709
$4,394,566
2018 $690,666 $ — $2,107,578
$
—
$32,943
$2,831,187
2017 $500,000 $ — $1,001,270
$296,250
$42,665
$1,840,185
2019 $458,000 $ — $ 837,523
$313,076
$44,379
$1,652,978
2018 $440,000 $ — $ 927,264
$
—
$20,975
$1,388,239
2017 $425,000 $ — $ 788,260
$235,025
$41,771
$1,490,056
2019 $400,000 $ — $ 526,010
$253,898
$ 1,820
$1,181,728
2019 $375,000 $ — $ 547,458
$256,339
$36,558
$1,215,355
2018 $355,000 $ — $ 610,338
$
—
$19,780
$ 985,118
2017 $298,469 $ — $ 562,607
$166,388
$33,679
$1,061,142
2019 $325,000 $ — $ 408,544
$206,292
$34,211
$ 974,047
2018 $275,000 $ — $ 602,597
$
—
$20,900
$ 898,497
(1) Amounts represent the aggregate grant date fair value of grants of RSUs and PSUs made to each NEO during 2019 under the Company’s 2019
LTI Plan, as computed in accordance with FASB ASC Topic 718, which (1) excludes the effect of estimated forfeitures and (2) assumes that the
PSUs are earned at Target. The amounts shown for the PSU awards at the “Target” performance levels are as follows: Mr. Yeagy – $1,631,002;
Mr. Taylor – $514,394; Ms. Margolin – $323,062; Mr. Smith – $336,241; and Mr. Pettit – $250,917. If the Company achieves “Maximum”
performance levels for both PSU performance metrics, then the value of the PSUs would be as follows: Mr. Yeagy – $3,073,710; Mr. Taylor –
$969,403; Ms. Margolin – $608,828; Mr. Smith – $633,665; and Mr. Pettit – $472,867. Further information regarding the valuation of equity
awards can be found in Note 15 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31,
2019.
(2)
Represents amounts paid pursuant to our MIP Plan.
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2020 Proxy Statement
WABASH NATIONAL CORPORATION
Executive Compensation Tables
(3) Amounts in this column consist of the following amounts:
NAME
Brent L. Yeagy
Jeffery L. Taylor
Melanie D. Margolin
Dustin T. Smith
Michael N. Pettit
COMPANY
CONTRIBUTIONS
TO DEFINED
CONTRIBUTION
PLANS
(a)
EXECUTIVE
PHYSICAL
(b)
TOTAL ALL OTHER
COMPENSATION
$78,709
$42,693
$
—
$36,558
$32,928
$
—
$1,686
$1,820
$
—
$1,283
$78,709
$44,379
$ 1,820
$36,558
$34,211
(a)
(b)
Includes Company matches of amounts deferred by an NEO into the Company’s 401(k) and non-qualified deferred compensation plans.
Includes a tax gross up on the reimbursement of the executive physical for the following amounts: Mr. Taylor – $93; Ms. Margolin – $185; and
Mr. Pettit – $67.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
45
Executive Compensation Tables
Grants of Plan-Based Awards for the Year Ended December 31, 2019
The following table summarizes the awards we made under our MIP Plan and LTI Plan to our NEOs in 2019.
ESTIMATED POSSIBLE PAYOUTS
UNDER NON-
EQUITY INCENTIVE PLAN AWARDS
(1)
ESTIMATED FUTURE PAYOUTS
UNDER EQUITY INCENTIVE
PLAN AWARDS
(2)
NAME
GRANT
DATE
(1)
THRESHOLD
($)
(35%)
TARGET
($)
(100%)
MAXIMUM
($)
(200%)
THRESHOLD
(#)
(50%)
TARGET
(#)
(100%)
MAXIMUM
(#)
(200%)
Brent L. Yeagy
$294,000 $840,000 $1,680,000
ALL OTHER
STOCK
AWARDS:
NUMBER OF
SHARES OF
STOCK
OR UNITS
(3)
(#)
GRANT
DATE
FAIR VALUE
OF
STOCK AND
OPTION
AWARDS (4)
($)
2/21/2019
2/21/2019
52,596 105,192 210,384
$1,631,002
70,128 $1,024,570
Jeffery L. Taylor
$112,210 $320,600 $ 641,200
2/21/2019
2/21/2019
16,588
33,176 66,352
$ 514,394
22,117 $ 323,129
Melanie D. Margolin
$ 91,000 $260,000 $ 520,000
2/21/2019
2/21/2019
10,418
20,836 41,672
$ 323,062
13,891 $ 202,948
Dustin T. Smith
$ 91,875 $262,500 $ 525,000
2/21/2019
2/21/2019
10,843
21,686 43,372
$ 336,241
14,457 $ 211,217
Michael N. Pettit
$ 73,938 $211,250 $ 422,500
2/21/2019
2/21/2019
8,092
16,183 32,366
$ 250,917
10,789 $ 157,627
(1)
(2)
(3)
(4)
These columns show the range of cash payouts under our 2019 MIP Plan as described in the section titled “Short-Term Incentive Plan” in the
CD&A.
Represents the potential payout range of PSUs granted in 2019 pursuant to the 2017 Omnibus Incentive Plan.
Represents the number of RSUs granted in 2019 pursuant to the 2017 Omnibus Incentive Plan.
The amounts shown in this column represent the grant date fair market value of the PSUs and RSUs, as determined pursuant to FASB ASC
Topic 718, excluding the effect of estimated forfeitures. The amount reported for the PSUs represents the grant date fair value assuming the
target performance goals were met.
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2020 Proxy Statement
WABASH NATIONAL CORPORATION
Executive Compensation Tables
Outstanding Equity Awards at Fiscal Year-End December 31, 2019
The following table summarizes all equity awards that were granted in 2019 and prior years that remain
outstanding as of December 31, 2019.
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
EXERCISABLE
(#)
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS
UNEXERCISABLE
(#)
GRANT
DATE
2/23/2012
19,810
2/19/2014
8,170
2/17/2015
11,380
—
—
2/20/2013
4,620
2/19/2014
8,170
2/17/2015
11,380
—
—
—
—
2/19/2014
767
2/17/2015
1,500
—
2/19/2014
—
510
2/17/2015
1,500
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
NAME
Brent L.
Yeagy
Jeffery L.
Taylor
Melanie D.
Margolin
Dustin T.
Smith
Michael N.
Pettit
EQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER OF
UNEARNED
SHARES,
UNITS OR
OTHER
RIGHTS
THAT HAVE
NOT
VESTED
(#) (3)
EQUITY
INCENTIVE
PLAN
AWARDS:
MARKET OR
PAYOUT
VALUE OF
UNEARNED
SHARES,
UNITS OR
OTHER
RIGHTS
THAT HAVE
NOT YET
VESTED
($) (2)
NUMBER OF
SHARES OR
UNITS OF
STOCK
THAT
HAVE NOT
YET
VESTED
(#) (1)
MARKET
VALUE OF
SHARES OF
STOCK
THAT
HAVE NOT
VESTED
($) (2)
—
—
—
—
—
—
—
—
—
—
—
—
OPTION
EXERCISE
PRICE
OPTION
EXPIRATION
DATE
$10.85 2/23/2022
$13.32 2/19/2024
$14.16 2/17/2025
—
— 129,942 $1,908,845 77,863 $1,143,807
$ 9.61 2/20/2023
$13.32 2/19/2024
$14.16 2/17/2025
—
—
—
—
—
—
—
—
—
—
—
—
—
—
— 56,085 $ 823,889 26,639 $ 391,327
— 23,891 $ 350,959 10,418 $ 153,040
$13.32 2/19/2024
$14.16 2/17/2025
—
—
—
—
—
—
—
—
—
— 40,979 $ 601,984 17,459 $ 256,473
$13.32 2/19/2024
$14.16 2/17/2025
—
—
—
—
—
—
—
—
—
— 30,862 $ 453,366 12,860 $ 188,913
WABASH NATIONAL CORPORATION
2020 Proxy Statement
47
Executive Compensation Tables
(1)
This column includes all outstanding RSUs plus the PSUs that were granted during 2017 for which the performance goals were met as of
12/31/19 but did not vest until February 22, 2020. The vesting dates of these awards are as follows:
NAME
VESTING DATE
NUMBER OF UNITS
Brent L. Yeagy
Jeffery L. Taylor
Melanie D. Margolin
Dustin T. Smith
Michael N. Pettit
2/22/2020
2/21/2021
6/2/2021
2/21/2022
2/22/2020
2/21/2021
2/21/2022
5/15/2021
2/21/2022
2/22/2020
10/1/2020
2/21/2021
2/21/2022
2/22/2020
1/1/2021
2/21/2021
2/21/2022
26,125*
18,151
15,538
70,128
20,567*
13,401
22,117
10,000
13,891
10,201*
7,500
8,821
14,457
6,217*
7,500
6,356
10,789
*
Combines the RSUs and PSUs that were granted on 2/22/17.
(2) Market value is equal to the closing price of our common stock on December 31, 2019 as reported on the NYSE ($14.69 per share), times the
number of unvested shares.
(3)
The number of PSUs shown in this column reflects the threshold performance level for the 2018 awards, and the threshold performance level
for the 2019 awards in accordance with SEC regulations requiring that the number of PSUs shown be based on achieving threshold
performance goals or, if the previous fiscal year’s performance has exceeded the threshold, the next higher performance measure (target or
maximum) that exceeds the previous fiscal year’s performance. The vesting dates for these awards are as follows:
NAME
VESTING DATE
NUMBER OF UNITS
Brent L. Yeagy
Jeffery L. Taylor
Melanie D. Margolin
Dustin T. Smith
Michael N. Pettit
2/21/2021
6/2/2021
2/21/2022
2/21/2021
2/21/2022
2/21/2022
2/21/2021
2/21/2022
2/21/2021
2/21/2022
13,613
11,654
52,596
10,051
16,588
10,418
6,616
10,843
4,768
8,092
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2020 Proxy Statement
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Executive Compensation Tables
Option Exercises and Stock Vested During 2019
The following table sets forth information concerning the exercise of options and the vesting of stock awards
during 2019 by each of the NEOs:
OPTION AWARDS
STOCK AWARDS
NAME
Brent L. Yeagy
Jeffery L. Taylor
Melanie D. Margolin
Dustin T. Smith
Michael N. Pettit
NUMBER OF
SHARES
ACQUIRED ON
EXERCISE
(#)
VALUE
REALIZED
ON EXERCISE
($)
NUMBER OF
SHARES
ACQUIRED ON
VESTING
(#)
—
—
—
—
—
—
—
—
—
—
VALUE
REALIZED
ON VESTING
($) (1)
$699,859
$543,448
49,099
37,661
—
$
—
6,059
11,752
$ 87,431
$169,581
(1) Calculated as the number of shares vested multiplied by the market price of stock on the date of vesting.
Non-Qualified Deferred Compensation
The table below sets forth, for each NEO, information regarding participation in our non-qualified deferred
compensation plan.
EXECUTIVE
CONTRIBUTION
(IN LAST FY) (1)
REGISTRANT
CONTRIBUTION
(IN LAST FY) (2)
AGGREGATE
EARNINGS
(IN LAST FY)
(3)
AGGREGATE
WITHDRAWALS/DISTRIBUTIONS
AGGREGATE
BALANCE
(AT LAST
FYE) (4)
$125,401
$67,509
$179,644
$93,398
$1,288,578
$290,289
$31,493
$121,622
$72,488
$ 801,186
—
—
—
—
—
$ 31,698
$25,358
$152,211
$26,694
$ 707,022
$119,649
$21,728
$ 39,653
$14,400
$ 351,844
NAME
Brent L.
Yeagy
Jeffery L.
Taylor
Melanie D.
Margolin
Dustin T.
Smith
Michael N.
Pettit
(1) Amounts reflected in this column represent a portion of each NEO’s salary deferred in 2019. It also reflects the portion of the MIP award
earned in 2019, but not paid until 2020, that each NEO elected to defer. 100% of these amounts are also included in the “Salary” and
“Non-Equity Incentive Plan Compensation” columns in the Summary Compensation Table.
(2)
Represents company matching contributions. 100% of these amounts are also included in the Summary Compensation Table under the “All
Other Compensation” column.
(3) Amounts reflected in this column include changes in plan values during the last fiscal year, as well as any dividends and interest earned by the
plan participant with regard to the investment funds chosen by such participant during the fiscal year. No portion of this amount was reported
in the Summary Compensation Table for 2019.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
49
Executive Compensation Tables
(4)
The following represents the extent to which the amounts that are reported in this aggregate balance column were previously reported as
compensation to our NEOs in our Summary Compensation Table in years prior to 2019:
NAME
Brent L. Yeagy
Jeffery L. Taylor
Melanie D. Margolin
Dustin T. Smith
Michael N. Pettit
PRIOR YEARS
($)
$411,102
$208,386
—
$114,497
$ 27,620
Potential Payments on Termination or Change in Control
The section below describes the payments that may be made to NEOs in connection with a change in control or
pursuant to certain termination events in 2019.
Retirement Benefit Plan
The Company maintains a Retirement Benefit Plan that is applicable to all employees, including our NEOs. The Plan
provides that Retirees (as defined below) will receive the following benefits upon his or her retirement:
• ability to exercise vested stock options through the 10th anniversary of the grant date;
• ability to earn a pro-rata portion of any outstanding PSUs based on the portion of the performance period that
the Retiree was employed, to be paid at the end of the performance period based on actual performance;
• full vesting of all RSUs granted more than twelve (12) months prior to the Retiree’s retirement date;
• payment of all eligible and unused vacation pay;
• prorated MIP award payout for the year of retirement; and
• service awards for retirees celebrating a 5, 10, 15, 20 or greater service anniversary in their year of retirement.
A “Retiree” is defined as: (a) an employee attaining at least 65 years of age, with no service requirement, as of his/
her date of retirement, or (b) an employee attaining at least 55 years of age, who has completed his/her 10th year
of service with the Company as of his/her date of retirement.
Prior to 2016, Retirees received different benefits depending on whether a Retiree was considered a “Regular
Retiree” (defined as an executive attaining at least 65 years of age or older entering the tenth year of Company
service) or an “Early Retiree” (defined as an executive attaining at least 55 years of age and entering the fifth year
of Company service). As a result, certain awards that were granted prior to 2016 may receive different treatment
than that described above, depending on the Retiree’s age and years of service when he or she retires.
Benefits Upon Death or Disability
Pursuant to a policy adopted in 2016, all equity awards granted during 2016 and later shall vest in full (and without
proration) in the event of an employee’s termination of employment due to death or disability.
Executive Severance Plan
As noted previously in the CD&A, the Company maintains an Executive Severance Plan (“ESP”) that provides
additional benefits to certain designated executives, including our NEOs , in the event we terminate their
employment without cause. For purposes of the Plan, “cause” is defined as: (i) a participant’s willful and continued
failure to perform his or her principal duties; (ii) conviction of, or a plea of guilty or nolo contendere to, any
misdemeanor involving moral turpitude or dishonesty or any felony; (iii) illegal conduct or gross misconduct which
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2020 Proxy Statement
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Executive Compensation Tables
results in material and demonstrable damage to the business or reputation of the Company or an affiliate; (iv) gross
negligence resulting in material economic harm to the Company or an affiliate; (v) material violation of the
Company’s applicable Code of Business Conduct and Ethics or similar policy; or (vi) a participant’s breach of the
restrictive covenants set out in the Plan (as described below). A “termination without cause” does not include
terminations due to disability or death.
If we terminate an NEO without cause, the NEO would be entitled to receive the following severance benefits
under the ESP:
• Cash severance payments equal to a multiple of the sum of the participant’s (a) annual base salary and (b) target
MIP award for the year of termination, payable in installments over the applicable severance period. The
applicable multiple for the CEO is two times the above sum. The applicable multiple for the other NEOs is one
and a half times the above sum;
• A pro-rated MIP award payout for the year of termination, based upon actual Company performance through the
end of the performance period;
• Payment of any annual cash incentive bonus (MIP Award) that was otherwise earned for the fiscal year that
ended prior to the termination of the participant’s employment, to the extent not previously paid;
• Subject to the participant’s election of COBRA coverage, payment or reimbursement of the Company’s portion
of medical, dental and vision care premiums for a period equal to (a) 24 months for the CEO, or (b) 18 months
for the other NEOs; and
• Outplacement services with a cost to the Company not in excess of $30,000.
To receive any of the severance benefits described above, a participant must agree to release all claims against the
Company and its affiliates and comply with covenants not to compete with the Company, not to solicit or interfere
with customers of the Company and not to solicit Company employees or contractors, in each case for a period
equal to 24 months following termination, in the case of our CEO, or 18 months following termination in the case
of our other NEOs.
If a participant’s employment is terminated in connection with a change in control of the Company in circumstances
that would entitle the participant to severance benefits under the Change in Control Plan described below, then the
participant will receive severance benefits only under the Change in Control Plan, and not under the ESP.
Change in Control Plan
We also maintain a Change in Control Plan that provides severance benefits to certain designated executives,
including our NEOs, in the event their employment is terminated without cause, or they are terminated for good
reason, in either case within two (2) years of a change in control (which we refer to as a “Qualifying Termination”).
Under the Change in Control Plan:
• a “change in control” means that (i) any person or group (other than any person or group that already owned
more than 50% of the total fair market value of Company stock) acquires more than 50% of the total fair market
value of Company stock; (ii) any one person or group, acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons) ownership of stock of Company
that represents 30% or more of the total voting power of Company stock; (iii) a majority of members of the Board
is replaced during any 12-month period (without the approval of the incumbent directors); or (iv) any person or
group acquires ownership of all or substantially all of the assets of Company.
• “cause” means the employee’s (i) willful and continued failure to perform his duties; (ii) chronic alcoholism or
addiction to non-medically prescribed drugs; (iii) theft or embezzlement of company property; (iv) conviction of,
or plea of nolo contendre to, a felony or misdemeanor involving moral turpitude; or (v) material breach of any
agreement with the Company.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
51
Executive Compensation Tables
• “good reason” means (i) a material diminishment of the executive’s position; (ii) assignment of duties to the
executive that are materially inconsistent with duties performed prior to the change in control; (iii) a material
breach of any agreement with the executive; (iv) for an executive officer of the Company, no longer being
employed by the parent entity; (v) a material reduction in the executive’s base salary and annual bonus; or
(vi) requiring the executive to relocate by more than 50 miles.
If an NEO experiences a Qualifying Termination, then he or she is entitled to the following benefits:
• a cash severance payment equal to two times (three times for the CEO) the sum of (i) the NEO’s annual base
salary plus (ii) the NEO’s Target Annual Bonus. The Target Annual Bonus is equal to the greater of (A) the NEO’s
target MIP award for the year of termination, and (B) the average MIP bonus awarded to the NEO for the prior two
calendar years;
• a pro-rata portion of the executive’s Target Annual Bonus for the year in which the Qualifying Termination
occurs;
• health continuation benefits for 18 months; and
• outplacement counseling services up to a cost of $25,000.
To receive any of the severance benefits described above, a participant must agree to release all claims against the
Company and its affiliates and comply with covenants not to compete with the Company and not to solicit
customers or employees, in each case for a period equal to 24 months following termination.
Change in Control Benefits Under our LTI Plan
In addition to the above described benefits under our Change in Control Plan, the NEOs may also receive
accelerated vesting under our LTI Plan if outstanding LTI awards are not assumed in the change in control
transaction. Specifically, if not assumed in the transaction, (i) all PSUs shall be deemed earned at target if less than
half the performance period has been completed or based on actual performance if more than half the
performance period has been completed (or at target if performance is not determinable); (ii) all outstanding RSUs
shall vest in full; and (iii) all outstanding stock options shall vest in full and be immediately exercisable for a period
of 15 days prior to the scheduled consummation of the corporate transaction. In lieu of the foregoing, the
Compensation Committee may, in its direction, cash out all outstanding awards.
For the sake of clarity, no accelerated vesting will occur if the successor agrees to assume or continue the
outstanding awards, or to substitute each outstanding award for a similar award relating to the stock of the
successor entity, or a parent or subsidiary of the successor entity, with appropriate adjustments to the number of
shares of stock that would be delivered and the exercise price, grant price or purchase price relating to any such
award. However, if an NEO is thereafter terminated within 12 months of the change in control event, any assumed
award will vest immediately upon the NEO’s termination.
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2020 Proxy Statement
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Executive Compensation Tables
Potential Payments on Termination or Change in Control – Payment and
Benefit Estimates
The table below shows the estimated payments that would have been made pursuant to the policies and
agreements described above assuming the applicable triggering event occurred on December 31, 2019 and using
the share price of $14.69 for our Common Stock as of December 31, 2019, which was the closing price on the
NYSE on the last trading day of 2019. The tables below assume that the NEO executes of a release and fully
complies with any restrictive covenants and other requirements to receive benefits under the Company’s plans
CASH
SEVERANCE
(1)
PRO-RATA
MIP BONUS
(2)
ACCELERATED
VESTING OF
PSUs
(3)(4)
ACCELERATED
VESTING OF
RSUs
(3)(5)
ACCELERATED
VESTING OF
STOCK
OPTIONS
(3)(6)
WELFARE
BENEFITS
CONTINUATION
(7)
TOTAL
($)
and policies described above.
NAME
Brent L. Yeagy
Termination Without Cause
Termination Following a Change in
$3,360,000 $820,285
—
—
Control
$5,040,000 $840,000 $2,055,777 $1,769,513
Change in Control Only (3)
Retirement
Termination due to Death or Disability
Jeffery L. Taylor (8)
—
—
—
— $2,055,777 $1,769,513
— $ 644,333 $ 739,333
— $2,055,777 $1,769,513
Termination Without Cause
$1,167,900 $313,076
—
—
Termination Following a Change in
Control
$1,557,200 $320,600 $ 744,695 $ 714,198
Change in Control Only (3)
Retirement
Termination due to Death or Disability
Melanie D. Margolin
—
—
—
— $ 744,695 $ 714,198
— $ 644,333 $ 739,333
— $ 744,695 $ 714,198
Termination Without Cause
$ 990,000 $253,898
—
—
Termination Following a Change in
Control
$1,320,000 $260,000 $ 306,081 $ 350,959
Change in Control Only
Retirement
Termination due to Death or Disability
Dustin T. Smith
—
—
—
— $ 306,081 $ 350,959
— $
51,018 $ 146,900
— $ 306,081 $ 350,959
Termination Without Cause
$ 956,250 $256,339
—
—
Termination Following a Change in
Control
$1,275,000 $262,500 $ 470,124 $ 547,614
Change in Control Only
Retirement
Termination due to Death or Disability
—
—
—
— $ 470,124 $ 547,614
— $ 172,255 $ 335,240
— $ 470,124 $ 547,614
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$66,708
$4,246,993
$52,531
$9,757,821
— $3,825,290
— $1,383,666
— $3,825,290
$57,081
$1,538,051
$52,081
$3,388,768
— $1,458,893
— $ 678,649
— $1,458,893
$30,000
$1,273,898
$25,000
$2,262,040
— $ 657,040
— $ 197,918
— $ 657,040
$57,565
$1,270,154
$52,565
$2,607,803
— $1,017,738
— $ 507,495
— $1,017,738
WABASH NATIONAL CORPORATION
2020 Proxy Statement
53
Executive Compensation Tables
NAME
Michael N. Pettit
CASH
SEVERANCE
(1)
PRO-RATA
MIP BONUS
(2)
ACCELERATED
VESTING OF
PSUs
(3)(4)
ACCELERATED
VESTING OF
RSUs
(3)(5)
ACCELERATED
VESTING OF
STOCK
OPTIONS
(3)(6)
WELFARE
BENEFITS
CONTINUATION
(7)
TOTAL
($)
Termination Without Cause
$ 804,375 $206,292
—
—
Termination Following a Change in
Control
$1,072,500 $211,250 $340,926
$420,207
Change in Control Only
Retirement
Termination due to Death or Disability
—
—
—
— $340,926
$420,207
— $119,474
$261,717
— $340,926
$420,207
—
—
—
$57,565
$1,068,232
$52,565
$2,097,448
— $ 761,133
— $ 381,191
— $ 761,133
(1)
(2)
(3)
For each of the NEOs, cash severance amounts are determined under the ESP for terminations without cause and under the Change in Control
plan for a Qualifying Termination following a Change in Control.
If an NEO were terminated as of December 31, 2019 under circumstances entitling them to severance under the ESP or the Change in Control
Plan, then they would be entitled to their full MIP actual bonus for 2019 or their Target Annual Bonus (as defined above), respectively.
The amounts shown for a Change in Control Only assumes purchaser did not assume outstanding equity awards. If purchaser did assume
outstanding awards, no accelerated vesting would occur.
(4) Amounts reflected in this column for “Termination Following a Change in Control,” Change in Control Only” and “Termination due to Death or
Disability” include (i) the value of the earned PSUs granted in 2017 for which the performance period ended on December 31, 2019 (but that
vest in February 2020), (ii) the value of the unearned performance share units granted in 2018 based on the performance trend as of
December 31, 2019, and (iii) the value of the unearned PSUs granted in 2019, assuming target performance. Amounts reflected in this column
for “Retirement” include the performance share units described in (i) and a pro-rata portion of the performance share units described in
(ii) and (iii).
(5) Amounts reflected in this column for “Termination Following a Change in Control,” Change in Control Only” and “Termination due to Death or
Disability” include all outstanding restricted stock units, and amounts reflected for “Retirement” included all RSUs granted prior to January 1,
2019.
(6) All outstanding stock options were vested as of December 31, 2019, so no amount would be accelerated upon a Change in Control or
termination of employment.
(7)
Includes the value of outplacement counseling services and reimbursement for welfare benefits continuation.
(8) As previously mentioned in this Proxy Statement, Mr. Taylor’s employment with us ended on January 16, 2020. In connection with his
termination, which was considered a termination without Cause under our Executive Severance Plan, Mr. Taylor was entitled to receive the
benefits set forth in this table for a “Termination Without Cause.” He did not receive any additional benefits in connection with his termination
other than those shown in the table above.
Pay Ratio Disclosure
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are required to disclose the ratio
of the annual total compensation of our principal executive officer, our CEO, Mr. Yeagy, to our median employee’s
annual total compensation.
For 2019, we used the same median employee that we identified in 2018 as permitted by the SEC’s rules since
there were no changes to our compensation program or our employee population that we reasonably believe
would result in a significant change or our pay ratio disclosure. For 2018, we identified our median employee using
a multi-step process, as detailed below:
• We determined, as of November 1, 2018, our gross employee population of individuals working at our parent
company and consolidated subsidiaries, which was 6,748 employees. This population consisted of our full-time,
part-time, and temporary employees. We do not have any seasonal employees.
• As permitted under the SEC’s 5% de minimis rule, we adjusted the employee population to exclude 310 non-U.S.
employees (approximately 4.6% of the employee population) who work in the following foreign jurisdictions:
• United Kingdom: 75 employees
• Mexico: 235 employees
54
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Executive Compensation Tables
• Based on the exclusion of 310 non-U.S. employees who work in the above jurisdictions, our adjusted employee
population consisted of 6,438 U.S. employees.
• We then determined each employee’s base salary paid during fiscal 2018 as reflected in our payroll records. We
identified our median employee from our adjusted employee population based on this consistently applied
compensation measure.
To calculate our ratio for 2019, we calculated the annual total compensation of the median employee and our CEO
using the methodology required for disclosure of annual total compensation in the Summary Compensation Table,
except that, as permitted by the SEC’s rules, we included the value of compensation provided to the median
employee and to our CEO under our nondiscriminatory group health insurance, group life insurance and group
long-term disability insurance programs that are available generally to all salaried employees. The aggregate value
of the nondiscriminatory benefits included in the annual total compensation amounts reported below was $20,860
for our CEO and $9,318 for the median employee. The difference between our CEO’s annual total compensation as
reported below for purposes of the CEO pay ratio disclosure and his annual total compensation as reported in the
Summary Compensation Table is attributable to the inclusion of those nondiscriminatory benefits solely for
purposes of determining the CEO pay ratio.
The CEO pay ratio reported below was determined using reasonable estimates as permitted by the SEC’s rules.
This ratio should not be used as a comparison with pay ratios disclosed by other companies, as there may be
material differences in the methodologies used by other companies to estimate their CEO pay ratios, as well as
differences in worker populations, geographic locations, business strategies and compensation practices.
Annual Total Compensation of the CEO
Annual Total Compensation of the Median Employee
Ratio of CEO Annual Total Compensation to Median Employee Annual Total
Compensation
$4,415,426
$
61,291
72:1
WABASH NATIONAL CORPORATION
2020 Proxy Statement
55
Equity Compensation Plan Information
The following table summarizes information regarding our equity compensation plan as of December 31, 2019:
PLAN CATEGORY
Equity Compensation Plans
Approved by Security Holders
Equity Compensation Plans Not
Approved by Security Holders
Total
NUMBER OF SECURITIES
TO BE ISSUED UPON
EXERCISE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS
(1)
WEIGHTED AVERAGE
EXERCISE PRICE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS
(2)
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
UNDER EQUITY
COMPENSATION PLANS
(3)
2,223,641
—
2,223,641
$11.54
—
$11.54
4,116,528
—
4,116,528
(1) Consists of shares of Common Stock to be issued upon the exercise of outstanding options, and the settlement of unvested RSUs and PSUs
(assuming target payout for any PSUs for which the performance period was not yet complete as of December 31, 2019), granted under the
Wabash National Corporation 2007 Omnibus Incentive Plan (the “2007 Plan”), the Wabash National Corporation 2011 Omnibus Incentive Plan
(the “2011 Plan”), and the Wabash National Corporation 2017 Omnibus Incentive Plan (the “2017 Plan”).
(2) Consists of the weighted average exercise price of outstanding options. Because participants do not need to pay us anything to receive
shares upon the vesting of RSUs and PSUs, the weighted average exercise price does not take these awards into account.
(3) Consists of shares of Common Stock available for future issuance pursuant to the 2017 Plan.
56
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Proposal 2 – Advisory Vote on the Compensation of Our
Named Executive Officers
At our 2017 Annual Meeting, we held a non-binding, advisory stockholder vote on the frequency of future advisory
stockholder votes on the compensation of our NEOs. Our stockholders expressed a preference that advisory
stockholder votes on the compensation of our NEOs be held on an annual basis and, as previously disclosed, the
Company continued the policy to hold such votes annually. Accordingly, as required by Section 14A of the
Exchange Act, we are asking stockholders to vote to approve, on an advisory (non-binding) basis, the
compensation of the NEOs of our Company. The vote is not intended to address any specific item of
compensation, but rather the overall compensation of our named executive officers and the philosophy, policies
and practices described in this Proxy Statement. We urge you to read the “Compensation Discussion and Analysis”
and “Executive Compensation Tables” sections of this Proxy Statement, which begin on page 28 and 44,
respectively, as such sections provide details on the Company’s compensation programs and policies for our
executive officers, including the 2019 compensation of our NEOs.
This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their
views on our executive officers’ compensation. This say-on-pay vote is an advisory vote that is not binding on us.
The approval or disapproval by stockholders will not require the Board or the Compensation Committee to take
any action regarding the Company’s executive compensation practices. The final decisions on the compensation
and benefits of our NEOs and on whether, and if so, how, to address stockholder disapproval remain with the
Board and the Compensation Committee.
The Board believes that the Compensation Committee is in the best position to consider the extensive information
and factors necessary to make independent, objective, and competitive compensation recommendations and
decisions that are in the best interests of Wabash National and its stockholders.
However, the Board and our Compensation Committee value the opinions expressed by stockholders in their vote
on this proposal, and will carefully consider the outcome of the vote when making future compensation decisions
with respect to our executive officers. In that regard, the Board and our Compensation Committee carefully
considered the results of last year’s say-on-pay vote, in which over 97% of stockholders voted in favor of our
say-on-pay proposal, and took such results into account by continuing to emphasize the core principles of our
compensation philosophy and best practices of our compensation programs.
The Board urges you to carefully review the CD&A section of this Proxy Statement, together with the executive
compensation tables, and to approve the following resolution:
“RESOLVED, that the stockholders hereby approve on an advisory basis the compensation paid to the Wabash
National Corporation named executive officers, as disclosed in the Wabash National Corporation Proxy Statement
pursuant to the rules of the Securities and Exchange Commission (including the Compensation Discussion and
Analysis, compensation tables and narrative discussion).”
Board Recommendation
The Board of Directors UNANIMOUSLY
recommends that you vote “FOR” the
approval of the compensation of our
named executive officers, as disclosed in
this Proxy Statement.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
57
Proposal 3 – Ratification of Appointment of Independent
Registered Public Accounting Firm
Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors has appointed the accounting firm Ernst & Young LLP as the
independent registered public accounting firm for the Company for the year ending December 31, 2020. Ernst &
Young acted as our independent auditors for the year ended December 31, 2019. Representatives of Ernst &
Young are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they
desire and are expected to be available to respond to appropriate questions. The Audit Committee is responsible
for hiring, compensating and overseeing the independent registered public accounting firm, and reserves the right
to exercise that responsibility at any time. If the appointment of Ernst & Young is not ratified by the stockholders,
the Audit Committee is not obligated to appoint another registered public accounting firm, but the Audit
Committee will give consideration to such unfavorable vote.
Board Recommendation
The Board of Directors UNANIMOUSLY
recommends that you vote “FOR”
ratification of the appointment of Ernst &
Young LLP as the Company’s
independent registered public
accounting firm for the year ending
December 31, 2020.
Principal Accounting Fees and Services
The fees billed by Ernst & Young for professional services provided to us for the years ended December 31, 2019
and December 31, 2018 were as follows:
FEE CATEGORY
Audit Fees (1)
Audit-Related Fees (2)
Tax Fees (3)
All Other Fees (4)
Total Fees
2019
2018
($ IN THOUSANDS)
$1,768
$1,941
$
$
$
—
8
—
—
—
—
$1,776
$1,941
(1)
(2)
(3)
(4)
Fees for the audit of our consolidated financial statements and review of the interim consolidated financial statements included in quarterly
reports, and services in connection with securities offerings and registration statements.
Fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated
financial statements and are not reported under “Audit Fees.”.
Fees billed for professional services related to tax compliance, tax advice and tax planning.
Fees for services that are not included in the service categories reported above, primarily transaction related services.
In 2019 and 2018, all Ernst & Young fees were pre-approved by the Audit Committee pursuant to the pre-approval
policy described below. After consideration, the Audit Committee has concluded that the provision of non-audit
services by Ernst & Young to Wabash is compatible with maintaining the independence of Ernst & Young.
58
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Proposal 3 – Ratification of Appointment of Independent Registered Public Accounting Firm
Pre-Approval Policy for Audit and Non-Audit Fees
The Audit Committee has sole authority and responsibility to select, evaluate and, if necessary, replace the
independent auditor. The Audit Committee has sole authority to approve all audit engagement fees and terms, and
the Committee, or a member of the Committee, must pre-approve any non-audit service provided to the Company
by the Company’s independent auditor. The Audit Committee reviews the status of each engagement at its
regularly scheduled meetings. In 2019 and 2018, the Committee pre-approved all services provided by the
independent auditor. The independent auditor provides an engagement letter which is signed by the Chair of the
Audit Committee, outlining the scope of the audit and related audit fees.
Audit Committee Report
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE SOLICITING MATERIAL AND
SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY OTHER FILING BY US UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT WE
SPECIFICALLY INCORPORATE THIS REPORT.
As part of its ongoing activities, the Audit Committee has:
• Reviewed and discussed with management our audited consolidated financial statements for the year ended
December 31, 2019;
• Discussed with Ernst & Young, our independent auditors for 2019, the matters required to be discussed by the
Public Company Accounting Oversight Board and the SEC; and
• Received the written disclosures and the letter from the independent auditors required by applicable
requirements of the Public Company Accounting Oversight Board regarding the independent auditors’
communications with the Audit Committee concerning independence, and has discussed with the independent
auditors their independence.
On the basis of these reviews and discussions, the Audit Committee recommended that our audited consolidated
financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2019, for
filing with the SEC.
AUDIT COMMITTEE
John E. Kunz
Martin C. Jischke
Scott K. Sorensen
Stuart A. Taylor II
WABASH NATIONAL CORPORATION
2020 Proxy Statement
59
Beneficial Ownership Information
Beneficial Ownership of Common Stock
The following table sets forth certain information as of March 13, 2020 (unless otherwise specified), with respect to
the beneficial ownership of our Common Stock by each person who is known to own beneficially more than 5% of
the outstanding shares of Common Stock, each person currently serving as a director, each nominee for director,
each Named Executive Officer (as defined in the Compensation Discussion & Analysis below), and all directors and
executive officers as a group:
NAME AND ADDRESS OF BENEFICIAL OWNER
Black Rock, Inc. and affiliates
40 East 52nd Street
New York, New York 10022
The Vanguard Group, Inc.
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
Dimensional Fund Advisors LP
Building One, 6300 Bee Cave Road
Austin, Texas 78746
JP Morgan Chase & Co.
383 Madison Avenue
New York, New York 10179
LSV Asset Management
155 N. Wacker Drive, Suite 4600
Chicago, Illinois 60606
Therese M. Bassett
John G. Boss
Martin C. Jischke
John E. Kunz
Larry J. Magee
Melanie D. Margolin
Ann D. Murtlow
Michael N. Pettit
Dustin T. Smith
Scott K. Sorensen
Jeffery L. Taylor
Stuart A. Taylor II
Brent L. Yeagy
All of our directors and executive officers as a group (14 persons)
SHARES OF COMMON
STOCK BENEFICIALLY
OWNED (1)
PERCENT OF CLASS
(ROUNDED)
9,130,670 (2)
17.2%
6,910,886 (3)
13.1%
4,636,091 (4)
8.7%
4,070,028 (5)
7.7%
3,131,792 (6)
—
7,136
68,558
48,207
95,676
—
33,799 (7)
16,801 (8)
16,019 (9)
60,093 (10)
110,013 (11)
—
165,874
525,515 (12)
5.9%
—
*
*
*
*
—
*
*
*
*
*
—
*
1.0%
*
(1)
Less than one percent
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to
securities. Shares of Common Stock subject to restricted stock units and/or performance stock units are not deemed outstanding by the
Company for purposes of reporting on Common Stock outstanding. As such, only those units that will vest within 60 days of March 13, 2020
are deemed outstanding for purposes of computing the percentage ownership of the person holding such units. Shares of Common Stock
subject to options currently exercisable or exercisable within 60 days of March 13, 2020 are deemed outstanding for purposes of computing
the percentage ownership of the person holding such options, but are not deemed outstanding for purposes of computing the percentage
60
2020 Proxy Statement
WABASH NATIONAL CORPORATION
Beneficial Ownership Information
ownership of any other person. Except where indicated otherwise, and subject to community property laws where applicable, the persons
named in the table above have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by
them.
Based solely on a Schedule 13G/A filed February 4, 2020 by BlackRock, Inc. on its own behalf and on behalf of its subsidiaries BlackRock
(Netherlands) B.V., BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited,
BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust
Company, N.A., BlackRock International Limited, BlackRock Investment Management (Australia) Limited, BlackRock Investment Management
(UK) Ltd, BlackRock Investment Management, LLC (collectively, the “BlackRock Subsidiaries”). BlackRock, Inc. has sole voting power with
respect to 8,897,341 shares and sole dispositive power over 9,130,670 shares. None of the BlackRock Subsidiaries claim beneficial ownership
of 5% or greater of the outstanding shares of Common Stock except for BlackRock Fund Advisors.
Based solely on the Schedule 13G/A filed February 11, 2020 by The Vanguard Group, Inc. on its own behalf and on behalf of its subsidiaries
Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd. (collectively, the “Vanguard Subsidiaries”). The Vanguard Group
has sole voting power with respect to 51,191 shares, shared voting power with respect to 12,231 shares, sole dispositive power with respect
to 6,853,642 shares, and shared dispositive power with respect to 57,244 shares. None of the Vanguard Subsidiaries claim beneficial
ownership of 5% or greater of the outstanding shares of Common Stock.
Based solely on the Schedule 13G/A filed February 12, 2020 by Dimensional Fund Advisors LP and its subsidiaries. Dimensional Fund Advisors
LP has sole voting power with respect to 4,435,086 shares and sole dispositive power with respect to 4,636,091. None of Dimensional Fund
Advisors LP’s subsidiaries claim beneficial ownership of 5% or greater of the outstanding shares of Common Stock.
Based solely on the Schedule 13G filed January 29, 2020 by JP Morgan Chase & Co on its own behalf and on behalf of its subsidiaries J.P.
Morgan Investment Management Inc., JPMorgan Chase Bank, National Association, and J.P. Morgan Trust Company of Delaware (collectively,
the “JP Morgan Subsidiaries”). JP Morgan Chase & Co. has sole voting power with respect to 3,646,178 shares and sole dispositive power with
respect to 4,060,916 shares. None of the JP Morgan Subsidiaries claim beneficial ownership of 5% or greater of the outstanding shares of
Common Stock
Based solely on the Schedule 13G filed February 11, 2020 by LSV Asset Management. LSV Asset Management has sole voting power with
respect to 2,040,383 shares and sole dispositive power with respect to 3,131,792 shares.
Through a family estate planning structure, Mrs. Murtlow shares voting and investment power on all reported shares with her spouse.
Includes options held by Mr. Pettit to purchase 2,010 shares that are currently, or will be within 60 days of March 13, 2020, exercisable. Does
not include any unvested restricted stock units or performance stock units, as no such awards held by Mr. Pettit will vest within 60 days of
March 13, 2020.
Includes options held by Mr. Smith to purchase 2,267 shares that are currently, or will be within 60 days of March 13, 2020, exercisable. Does
not include any unvested restricted stock units or performance stock units, as no such awards held by Mr. Smith will vest within 60 days of
March 13, 2020.
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10) Through a family estate planning structure, Mr. Sorensen shares voting and investment power on all reported shares with his spouse.
(11)
Information as of January 16, 2020 (the date Mr. Taylor’s employment terminated). Includes options held by Mr. Taylor to purchase 24,170
shares that were exercisable on such date.
(12)
Includes options held by our executive officers to purchase an aggregate of 68,557 shares that are currently, or will be within 60 days of
March 13, 2020, exercisable. The Company’s directors do not hold any options. Does not include any shares that were held by Mr. J. Taylor
since he was not an executive officer as of March 13, 2020.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers and 10% stockholders to file reports of
ownership of our equity securities. To our knowledge, based solely on our review of the copies of such forms
furnished to us in 2019 and written representations from our executive officers and directors, we believe that all
Section 16(a) filing requirements of our directors and executive officers were met except that a late Form 4 was
filed for each of Mr. Boss, Dr. Jiscke, Mr. Kunz, Mr. Magee, Ms. Murtlow and Mr. Sorensen reporting an award of
restricted stock units.
WABASH NATIONAL CORPORATION
2020 Proxy Statement
61
General Information
Availability of Certain Documents
A copy of our 2019 Annual Report on Form 10-K is posted with this Proxy Statement. You also may obtain
additional copies without charge and without the exhibits by writing to: Wabash National Corporation, Attention:
Corporate Secretary, 3900 McCarty Lane, Lafayette, Indiana 47905. These documents also are available through
our website at www.wabashnational.com.
The charters for our Audit, Compensation, and Nominating and Corporate Governance Committees, as well as our
Corporate Governance Guidelines and the Codes, are available on the Corporate Governance page of the Investor
Relations section of our website at www.wabashnational.com and are available in print without charge by writing
to: Wabash National Corporation, Attention: Corporate Secretary, 3900 McCarty Lane, Lafayette, Indiana 47905.
Communications with the Board of Directors
Stockholders or other interested persons wishing to make known complaints or concerns about our accounting,
internal accounting controls or auditing matters, or bring other concerns to the Board or the Audit Committee, or
to otherwise communicate with our independent directors as a group or the entire Board, individually or as a
group, may do so by sending an email to board@wabashnational.com or auditcommittee@wabashnational.com, or
by writing to Wabash National Corporation, Attention: General Counsel, 3900 McCarty Lane, Lafayette, Indiana
47905. You may report your concerns anonymously or confidentially.
Stockholder Proposals and Nominations
Stockholder Proposals for Inclusion in 2021 Proxy Statement. To be eligible for inclusion in the proxy statement for
our 2021 Annual Meeting, stockholder proposals must be received by the Company’s Corporate Secretary no later
than the close of business on November 30, 2020. However, if the date of the 2021 Annual Meeting has changed
by more than 30 days from the date of the 2020 Annual Meeting indicated herein, then stockholder proposals must
be received a reasonable time before the Company begins to print and send its proxy materials for the 2021
Annual Meeting. Proposals should be sent to Wabash National Corporation, Attention: Corporate Secretary, 3900
McCarty Lane, Lafayette, Indiana 47905 and follow the procedures required by Rule 14a-8 of the Exchange Act.
Stockholder Director Nominations and other Stockholder Proposals for Presentation at the 2021 Annual Meeting.
Under our Bylaws, written notice of stockholder nominations to the Board of Directors and any other business
proposed by a stockholder that is not to be included in our proxy statement must be delivered to the Company’s
Corporate Secretary not less than 90 nor more than 120 days prior to the first anniversary of the preceding year’s
annual meeting. Accordingly, any stockholder who wishes to have a nomination or other business considered at
the 2021 Annual Meeting must deliver a written notice (containing the information specified in our Bylaws
regarding the stockholder, the nominee and the proposed action, as appropriate) to the Company’s Corporate
Secretary between January 12, 2021 and February 11, 2021. However, if the date of the 2021 Annual Meeting is
more than 30 days before or after the first anniversary of the 2020 Annual Meeting, any stockholder who wishes to
have a nomination or other business considered at the 2021 Annual Meeting must deliver written notice
(containing the information specified in our Bylaws regarding the stockholder, the nominee and the proposed
action, as appropriate) to the Company’s Corporate Secretary not earlier than 120 days prior to such Annual
Meeting and not later than the later of the 90th day prior to such Annual Meeting or the tenth day following the
public announcement of such Annual Meeting. SEC rules permit management to vote proxies in its discretion with
respect to such matters if we advise stockholders how management intends to vote. A nomination or other
proposal will be disregarded if it does not comply with the above procedure and any additional requirements set
forth in our Bylaws. Please note that these requirements are separate from the SEC’s requirements to have your
proposal included in our proxy materials.
62
2020 Proxy Statement
WABASH NATIONAL CORPORATION
General Information
Householding of Proxy Materials
Stockholders residing in the same household who hold their stock through a bank or broker may receive only one
set of proxy materials in accordance with a notice sent earlier by their bank or broker. This practice of sending only
one copy of proxy materials is called “householding” and this practice saves us money in printing and distribution
costs and reduces the environmental impact of our Annual Meeting. This practice will continue unless instructions
to the contrary are received by your bank or broker from one or more of the stockholders within the household. We
will deliver promptly, upon written or oral request, a separate copy of the proxy materials to a stockholder at a
shared address to which a single copy of the documents were delivered. A stockholder who wishes to receive
separate copies of the proxy materials, now or in the future, should submit a request to the Company by telephone
at (765) 771-5310 or by submitting a written request to Wabash National Corporation c/o Director-Investor
Relations, 3900 McCarty Lane, Lafayette, IN 47905.
If you hold your shares in “street name” and reside in a household that received only one copy of the proxy
materials, you can request to receive a separate copy in the future by following the instructions sent by your bank
or broker. If your household is receiving multiple copies of the proxy materials, you may request that only a single
set of materials be sent by following the instructions sent by your bank or broker.
By Order of the Board of Directors
March 30, 2020
Melanie D. Margolin
Senior Vice President and General Counsel Corporate
Secretary
WABASH NATIONAL CORPORATION
2020 Proxy Statement
63
[THIS PAGE INTENTIONALLY LEFT BLANK]
UNITED STATTT ES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
☐
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2019
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________
________
________ to ________
Commission File Number: 001-10883
WABASH NATIONAL
AA
CORPORATION
AA
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
1000 Sagamore Parkway South
Lafayette Indiana
(Address of Principal Executive Offices)
ff
52-1375208
(IRS Employer Identification Number)
47905
(Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
Registrant’s telephone number, including area code: (765) 771-5300
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $.01 Par Value
WNC
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,yy or an emerging
growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of
the Exchange Act.
Large accelerated filer ☒
Non-accelerated filer ☐
Emerging growth company ☐
Accelerated filer ☐
Smaller reporting company ☐
If an emerging growth company,yy indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of voting stock held by non-affiliates
Company’s common stock as quoted on the New York Stock Exchange composite tape on such date.
of the registrant as of June 28, 2019 was $881,067,878 based upon the closing price of the
ff
The number of shares outstanding of the registrant’s common stock as of February 14, 2020 was 53,082,095.
Part III of this Form 10-K incorporates by reference certain portions of the registrant’s Proxy Statement for its Annual Meeting of Stockholders to be filed within
120 days after December 31, 2019.
1
WABASH NATIONAL
AA
CORPORATION
AA
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2019
TABLE OF CONTENTS
g
Page
PART I
Item 1
Business
Item 1A
Risk Factors
Item 1B
Unresolved Staffff Comments
Item 2
Item 3
Item 4
PART II
Item 5
Item 6
Item 7
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity,yy Related Stockholder Matters and Issuer Purchases
of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A
Quantitative and Qualitative Disclosures about Market Risk
Item 8
Item 9
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A
Controls and Procedures
Item 9B
Other Information
PART III
Item 10
Directors, Executive Officers
ff
and Corporate Governance
Item 11
Executive Compensation
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13
Certain Relationships and Related Transactions, and Director Independence
Item 14
Principal Accountant Fees and Services
PART IV
Item 15
Exhibits and Financial Statement Schedules
Item 16
Form 10-K Summary
AA
SIGNATURES
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4
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21
21
22
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24
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39
69
69
71
72
72
72
72
72
72
72
75
FORWARR
RD LOOKING STATTT EMENTS
National Corporation (together with its subsidiaries, “Wabash,”
ThisAnnual Report on Form 10-K (the “Annual Report”) of Wabash
“Company,”yy “us,” “we,” or “our”) contains “forward-looking statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Forward-looking statements may include the words “may,”yy “will,” “estimate,” “intend,” “continue,” “believe,” “expect,”
“plan” or “anticipate” and other similar words. Our “forward-looking statements” include, but are not limited to, statements
regarding:
WW
a
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▪
▪
▪
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our business plan;
our ability to effectively
ff
integrate Supreme and realize expected synergies and benefits from the Supreme acquisition;
our expected revenues, income or loss;
our ability to manage our indebtedness;
our strategic plan and plans for future operations;
financing needs, plans and liquidity,yy including for working capital and capital expenditures;
our ability to achieve sustained profitability;
reliance on certain customers and corporate relationships;
availability and pricing of raw materials, including the impact of tariffsff or other international trade developments;
availability of capital and financing;
dependence on industry trends;
the outcome of any pending litigation or notice of environmental dispute;
export sales and new markets;
engineering and manufacturing capabilities and capacity,yy including our ability to attract and retain qualified personnel;
our ability to develop and commercialize new products;
acceptance of new technologies and products;
government regulations; and
assumptions relating to the foregoing.
Although we believe that the expectations expressed in our forward-looking statements are reasonable, actual results could differ
materially from those projected or assumed in our forward-looking statements. Our future financial condition and results of
operations, as well as any forward-looking statements, are subject to change and are subject to inherent risks and uncertainties,
such as those disclosed in this Annual Report. Each forward-looking statement contained in this Annual Report reflects our
management’s view only as of the date on which that forward-looking statement was made. We are not obligated to update forward-
looking statements or publicly release the result of any revisions to them to reflect events or circumstances after the date of this
Annual Report or to reflect the occurrence of unanticipated events, except as required by law.
ff
Currently known risks and uncertainties that could cause actual results to differ
ff materially from our expectations are described
throughout this Annual Report, including in “Item 1A. Risk Factors.” We urge you to carefully review that section for a more
complete discussion of the risks of an investment in our securities.
3
PART I
ITEM 1—BUSINESS
Overview
National Corporation, which we refer to herein as “Wabash,”
National,” the “Company,”yy “us,” “we,” or “our,”
Wabash
a
was incorporated as a corporation in Delaware in 1991, with its principal executive
is changing how the world reaches you. Wabash
offices
in Lafayette, Indiana, as a dry van trailer manufacturer. Today we are an innovation leader of engineered solutions for the
ff
transportation, logistics, and distribution industries. Our mission is to enable customers to succeed with breakthrough ideas and
solutions that help them move everything from first to final mile.
“WabashWW
WW
a
To that end, we design and manufacture a diverse range of products, including dry freight and refrigerated trailers, platform trailers,
bulk tank trailers, dry and refrigerated truck bodies, structural composite panels and products, trailer aerodynamic solutions, and
specialty food grade and pharmaceutical equipment. We have achieved this diversification through acquisitions, organic growth,
and product innovation.
We believe our position as a leader in our key industries is the result of longstanding relationships with our core customers, our
demonstrated ability to attract new customers, our broad and innovative product lines, our technological leadership, and our
extensive distribution and service network. More importantly,yy we believe our leadership position is indicative of the values and
leadership principles that guide our actions.
Operating Segments
We manage our business in three reportable segments: Commercial Trailer Products (“CTP”), Diversified Products (“DPG”), and
Final Mile Products (“FMP”). Each of these reportable segments offers
a diverse portfolio of industrial solutions for the end
markets and industries that they serve.
ff
Commercial Trailer Products
Diversified Products
Final Mile Products
■ Dry and Refrigerated Van Trailers
■ Tank Trailers and Truck-Mounted
rr
Tanks
■ Platform Trailers
■ Composite Panels and Products
■ Aftermarket Parts and Service
■ Food, Dairy,yy and Beverage
Equipment
■ Truck-Mounted
rr
Dry Bodies
■ Truck-Mounted
rr
Refrigerated
Bodies
■ Service and Stake Bodies
■ Containment and Aseptic Systems
■ Fiberglass Reinforced Plywood
Panels
■ Aftermarket Parts and Service
■ Upfitting Parts and Service
Commercial
rr
Trailer Products
rr
Commercial Trailer Products designs and manufactures dry and refrigerated vans, platform trailers and other transportation related
®, DuraPlate®, DuraPlateHD®,
equipment. Commercial Trailer Products’ transportation equipment is marketed under the Wabash
ArcticLite®, Transcraft® and Benson® brands. In addition, we recently introduced DuraPlate® Cell Core, a modified DuraPlate®
panel that reduces the weight of a conventional 53 foot DuraPlate® trailer by 300 pounds. Commercial Trailer Products sells
directly to many of the largest companies in the trucking industry,yy as well as through a network of independent dealers. Commercial
Trailer Products also operates a wood flooring production facility that manufactures laminated hard wood oak products for van
trailers.
a
Diversified Products
rr
The Diversified Products segment has historically been comprised of four strategic business units: Tank Trailer, Process Systems,
Equipment. On January 22, 2019, the Company announced that it completed a transaction
Composites, and Aviation and Truckrr
to divest the Aviation and Truckrr
Equipment business unit to Garsite Progress, LLC, an entity formed by AFI Partners, a New York-
based private equity firm. The Tank Trailer business designs and manufactures liquid transportation systems, including stainless
steel and aluminum tank trailers, for the North American chemical, dairy,yy food and beverage, and petroleum and energy service
markets. Tank Trailers are marketed under the Walker Transport, Brenner® Tank, Bulk International and Beall® Trailer brands.
Our Process Systems business designs and manufactures isolators, stationary silos and downflow booths for the chemical, dairy,yy
under the Walker®
food and beverage, pharmaceutical and nuclear markets. Process Systems markets its product offerings
Engineered Products and Extract Technology® brands. Our Composites business includes offerings
under our DuraPlate® composite
panel technology,yy which contains unique properties of strength and durability that can be utilized in numerous applications in
addition to trailers and truck bodies. Leveraging our DuraPlate® panel technology,yy our Composites business has designed and
ff
ff
4
manufactured numerous proprietary products, including a full line of aerodynamic solutions designed to improve overall trailer
aerodynamics and fuel economy,yy most notably the DuraPlate® AeroSkirt®, AeroSkirt CX™, Ventix DRS™ and AeroFin XL®. In
addition, we utilize our DuraPlate® technology in the production of truck bodies, overhead doors, foldable portable storage
containers, truck boxes, decking systems, and other industrial applications. These products are sold to original equipment
manufacturers and aftermarket customers.
Final Mile Products
rr
The Company added the Final Mile Products reportable segment following the acquisition of Supreme Industries, Inc. (“Supreme”)
completed on September 27, 2017. The Final Mile Products segment designs and manufactures cutaway,yy dry-freight, refrigerated,
and stake bodies. This acquisition accelerated our growth and expanded our presence in the final mile space, with increased
distribution paths and greater customer reach, and supports our mission to enable customers to succeed with breakthrough ideas
and solutions that help them move everything from first to final mile. Final Mile Product truck bodies are offered
in aluminum,
FiberPanel PW,WW FiberPanel HC, or DuraPlate®, and are marketed under Kold King®, Iner-City®, Spartan, as well as other Wabash
brands that leverage our fleet-proven DuraPlate® technology utilized in dry van trailers. Our Final Mile Products also include our
molded structural composite truck bodies and fiberglass reinforced plywood used on some of our truck bodies. In addition, we
have recently introduced our molded structural composites technology to our truck bodies. With the acquisition of Supreme, our
truck body line was expanded to include Classes 2 through 5, allowing us to serve a large variety of end customers in the final
mile space. Final Mile Products sells both direct to customers and through a large independent dealer network.
a
ff
Strategy
National has established a strategic framework for value creation with three pillars focused on innovation, business
Wabash
a
optimization and strategic growth, all supported by a company culture of continuous improvement.
■ Continue innovation leadership
INNOVATVV E
■ Develop new capabilities and capacity to enable growth
■ Improve durability and reduce weight with material technologies
■ Margin enhancement through integration, alignment and shared service activities
OPTIMIZE
■ Utilize the Wabash
a
Management System and lean manufacturing to drive margin enhancement
through continuous focus on efficiency
ff
■ Expand Final Mile platform
GROW
■ Commercialize Molded Structural Composites refrigerated van and truck bodies
■ Increase business development capabilities
We believe that if we are successful in focusing on each of these three pillars, we will be well-positioned to advance our commitment
to deliver long-term profitable growth within each of our reportable segments, support margin enhancement through lean
Management System, and successfully deliver value to our shareholders. By continuing
manufacturing principles and the Wabash
to be an innovation leader in the transportation, logistics, and distribution industries we expect to leverage our existing assets and
capabilities into higher margin products and markets by delivering value-added customer solutions. Optimizing our product
portfolio, operations and processes to enhance manufacturing efficiency
and agility is expected to well-position the Company to
ff
drive margin expansion and reinforce our customer relationships. Growing strategically may diversify our revenue stream and
allow us to leverage our technology across more markets.
a
Acquisition Strategy
We believe that our businesses have significant opportunities to grow through disciplined strategic acquisitions. When evaluating
acquisition targets, we generally look for opportunities that exhibit the following attributes:
▪
▪
▪
▪
▪
Customer-focused solutions;
Access to new technology and innovation;
Strong management team that is a cultural fit;
Aligned with our core competencies in purchasing, operations, distribution and product development; and
Growth markets, whether end-markets or geographical, within the transportation, logistics, and distribution industries.
5
Capital Allocation Strategy
We believe that a balanced and disciplined capital allocation strategy is necessary to support our growth initiatives and create
shareholder value. The objectives and goals of the Company’s capital allocation strategy are summarized below:
Maintain Liquidity:
§ Manage the business for the long-term
§ Be equipped for changes in market conditions and strategic growth opportunities
Debt Management:
§ Reduce debt and de-lever the Company
Reinvest for
Growth:
Dividends:
§ Fund capital expenditures and research and development that support growth and productivity
initiatives
§ Maintain our regular dividend which has been paid for the last three consecutive years
Share Repurchases:
§ Opportunistically repurchase shares
§ Offset
ff
dilution from stock based compensation
Industry and Competition
rr
in the U.S., according to the American Trucking
Association (“ATAAA ”), was estimated to be a $796.7 billion industry in
Trucking
2018, representing approximately 80% of the total U.S. transportation industry revenue. Furthermore, ATATT estimates that
approximately 71% of all freight tonnage in 2018 was carried by trucks. Trailer demand is a direct function of the amount of freight
to be transported. To meet this continued high demand for freight, truck carriers will need to replace and expand their fleets, which
typically results in increased trailer orders.
rr
Transportation in the U.S., including trucking, is a cyclical industry that has experienced three cycles over the last 20 years. In
each of the last three cycles the decline in freight tonnage preceded the general U.S. economic downturn by approximately two
and one-half years and the recovery has generally preceded that of the economy as a whole. The trailer industry generally follows
the transportation industry,yy experiencing cycles in the early and late 90’s lasting approximately 58 and 67 months, respectively.
Truckrr
freight tonnage, according to ATATT statistics, started declining year-over-year in 2006 and remained at depressed levels
through 2009. The most recent cycle concluded in 2009, lasting a total of 89 months. After three consecutive years with total trailer
demand well below normal replacement demand levels estimated to be approximately 220,000 trailers, the period ending December
31, 2019 demonstrated six consecutive years of healthy demand in which there were total trailer shipments of approximately
269,000, 308,000, 286,000, 288,000, 323,000, and 328,000 for the years ending 2014, 2015, 2016, 2017, 2018, and 2019,
respectively. In our view,ww we expect to see softened demand in 2020 going forward to be more consistent with historical levels.
However, overall demand is expected to be in excess of replacement demand and industry specific indicators we track, including
ATA’TT s truck tonnage index, carrier/fleet profitability,yy employment growth, housing and auto sectors, as well as the overall gross
domestic product, continue to be positive indicators.
Trailer manufacturers compete primarily through the quality of their products, customer relationships, innovative technology,yy and
price. We have seen others in the industry also pursue the development and use of composite sidewalls that compete directly with
our DuraPlate® products. Our product development is focused on maintaining a leading position with respect to these products
and on development of new products and markets, leveraging our proprietary DuraPlate® product, as well as our expertise in the
engineering and design of customized products.
than our historical core van and platform trailer
Our Diversified Products segment, in most cases, participates in markets different
The customers and end markets that our Diversified Products segment serve are broader and more diverse than
ff
product offerings.
the trailer industry,yy including environmental, pharmaceutical, biotech, oil and gas, and specialty vehicle markets. In addition, our
diversification efforts
pertain to new and emerging markets and many of the products are driven by regulatory requirements or,
in most cases, customer-specific needs.
ff
ff
Our Final Mile Products segment competes in the specialized vehicle industry,yy which is highly competitive with only a few national
competitors and many smaller, regional companies. As a result of this broad competition, we are often faced with competitive
pricing pressures. Other competitive factors include quality of product, lead times, geographic proximity to customers, and the
ability to manufacture a product customized to customer specifications. With our national presence, diverse product offerings,
and
broad customer relationships, we believe that we are well positioned to meet the competitive challenges presented.
ff
Competitive Strengths
We believe our core competitive strengths include:
▪
Core Customer Relationships – We are the leading provider of trailers to a significant number of top tier trucking
Long-TermTT
companies, generating a revenue base that has helped to sustain us as one of the market leaders. Our van products are preferred
6
▪
▪
▪
by many of the industry’s leading carriers. We are also a leading provider of liquid-transportation systems and engineered
products and we have a strong customer base, consisting of mostly private fleets, and have earned a leading market position
across many of the markets we serve. In addition, we are a leading manufacturer of truck bodies, and we have a strong customer
base of large national fleet leasing companies and large retailers.
Technology and Innovation – We continue to be recognized by the trucking industry as a leader in developing technology
to provide value-added solutions for our customers that reduce trailer operating costs, improve revenue opportunities, and
solve unique transportation problems. Throughout our history,yy we have been and we expect we will continue to be a leading
innovator in the design and production of trailers and related products. As discussed above, we recently introduced DuraPlate®
Cell Core, a modified DuraPlate® panel that reduces the weight of a conventional 53 foot DuraPlate® trailer by 300 pounds.
In addition, recent new trailer introductions and value-added options include the introduction of the Molded Structural
Body with molded structural
Composite Refrigerated Van, the commercial launch of the Cold Chain Series Refrigerated Truckrr
composite technology,yy both offering
advanced thermal and operational performance; Lean Duplex tank trailer, a stainless
steel option that reduces weight while providing enhanced performance characteristics over typical chemical tank trailers;
Plus®, a proprietary single-lock rear door mechanism; and the DuraPlate® AeroSkirt®, Ventix DRS™, AeroFin XL®
Trustlock
rr
andAeroSkirt CX™, durable aerodynamic solutions that provide improved fuel efficiencies
when used in specific combinations.
ff
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Our DuraPlate® proprietary technology offers
what we believe to be a superior trailer, which customers value. A DuraPlate®
trailer is a composite plate trailer using material that contains a high-density polyethylene core bonded between high-strength
steel skins. We believe that the competitive advantages of our DuraPlate® trailers compared to standard trailers include
providing a lower total cost of ownership through the following:
ff
▪
▪
▪
▪
▪
Extended Service Life – operate three to five years longer;
Lower Operating and Maintenance Costs – greater durability and performance;
Less Downtime – higher utilization for fleets;
Extended Warranty – warranty period for DuraPlate® panels is ten years; and
Improved Resale Value – higher trade-in and resale values.
We have been manufacturing DuraPlate® trailers for over 24 years and through December 2019 have sold nearly 800,000
DuraPlate® trailers. We believe that this proven experience, combined with ownership and knowledge of the DuraPlate® panel
technology,yy will help ensure continued industry leadership in the future.
rear under ride guard, and the introduction of the Truckrr
We have also focused on a customer-centered approach in developing product enhancements for other industries we serve.
Some of the more recent innovations include: the introduction of DuraPlate® Cell Core technology,yy the introduction of RIG-16
Body line leveraging our fleet-proven DuraPlate® technology
offset
ff
for dry truck bodies as well as the introduction of a revolutionary proprietary composite designed to improve weight and
in refrigerated truck body applications. These technology innovations will allow us to continue providing
ff
thermal efficiency
unrivaled value to our customers and differentiate
from our competitors.
a
Wabash
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Significant Brand Recognition – We have been one of the most widely recognized brands in the industry and we participate
broadly in the transportation industry through all of our business segments.
Enterprise Lean and the Wabash Management System (WMS) – Safety,yy quality,yy delivery,yy cost, morale, and environment are
the core elements of our program of continuous improvement. We currently maintain an ISO 14001 registration of the
Environmental Management System at five facilities, which include our Lafayette, Indiana; Cadiz, Kentucky; San JoséIturbide,
Mexico; Portland, Oregon; and Harrison, Arkansas locations. In addition, we have achieved ISO 9001 registration of the
Quality Management Systems at our Lafayette, Indiana and Cadiz, Kentucky facilities.
We recently institutionalized the WMS, which standardizes best practices throughout the company and allows us to efficiently
scale the business. By codifying what makes our Company great into four key areas (Team,
Strategy,yy Execution, and
TT
Governance), WMS drives increased focus on the processes that are critical for our success.
ff
▪ Corporate Culture – We believe strong human capital acts as a competitive differentiator
and our focus is not only on ensuring
we have the right leaders in place to drive our strategic initiatives today,yy but also to nurture our talent pipeline to develop
strong leaders for our company’s future. To that end, we benefit from an experienced, value-driven management team and
dedicated workforce.
ff
We strive to achieve alignment at every layer and throughout all functional areas of our business and are focused on ensuring
the right systems are in place to facilitate all team members working toward the same shared goals. Critical to this is the
perspective that our business is constructed of three interlinked segments that benefit from one another and are stronger as a
result of being part of Wabash
National.
a
7
▪ Extensive Distribution Network – We utilize a network of 27 independent dealers with approximately 80 locations throughout
North America to distribute our van trailers, and our Transcraft distribution network consists of 65 independent dealers with
approximately 93 locations throughout North America. Our tank trailers are distributed through a network of 54 independent
dealers with 55 locations throughout North America. Additionally,yy our truck body dealer network consists of more than 1,000
commercial dealers. Our dealers primarily serve mid-market and smaller sized carriers and private fleets in the geographic
region where the dealer is located and occasionally may sell to large fleets.
Regulation
Truckrr
trailer length, height, width, maximum weight capacity and other specifications are regulated by individual states. The
federal government also regulates certain safety and environmental sustainability features incorporated in the design and use of
truck and tank trailers, as well as truck bodies. These regulations include: requirements to install Electronic Logging Devices, the
use of aerodynamic devices and fuel saving technologies, as well as operator restrictions as to hours of service and minimum
driver safety standards (see the section on “Industry Trends” in Item 7 for more details on these regulations). In addition, most
tank trailers we manufacture have specific federal regulations and restrictions that dictate tank design, material type and thickness.
Manufacturing operations are subject to environmental laws enforced by federal, state and local agencies (see “Environmental
Matters”).
Products
Since our inception, we have worked to expand our product offerings
from a single truck trailer dry van product to a broad range
of engineered solutions for the transportation, logistics, and distribution industries. We manage a diverse product portfolio, maintain
long-standing customer relationships, and focuses on innovative and breakthrough technologies within three operating segments.
ff
Our current Commercial Trailer Products segment primarily includes the following products:
▪
▪
▪
▪
▪
▪
Dry Van Trailers. The dry van market represents our largest product line and includes trailers sold under the DuraPlate®
DuraPlateHD® trademarks. Our DuraPlate® trailers utilize a proprietary technology that consists of a composite plate wall for
increased durability and greater strength.
Platform Trailers. Platform trailers are sold under the Transcraft® and Benson® trademarks. Platform trailers consist of a
trailer chassis with a flat or “drop” loading deck without permanent sides or a roof. These trailers are primarily utilized to
haul steel coils, construction materials and large equipment. In addition to our all steel and combination steel and aluminum
platform trailers, we also offer
a premium all-aluminum platform trailer.
ff
,yy maximum payload capacity,yy and superior damage
Refrigerated Trailers. Our refrigerated trailers provide thermal efficiency
resistance. Our refrigerated trailers are sold under the ArcticLite® trademark and use our proprietary SolarGuard® technology,yy
coupled with our foaming process, which we believe enables customers to achieve lower costs through reduced operating
hours of refrigeration equipment and therefore reduced fuel consumption. In 2016, Wabash
launched a proprietary molded
structural composite with thermal technology which, based on our testing, provides improved thermal performance for
refrigerated trailers by up to 25% and is up to 20% lighter than standard refrigerated trailers while still maintaining strength
and durability.
a
ff
Specialty Trailers. These products include a wide array of specialty equipment and services generally focused on products
that require a higher degree of customer specifications and requirements. These specialty products include converter dollies,
Big Tire Hauler, and Steel Coil Hauler trailers.
Aftermarket Parts and Service. Aftermarket component products are manufactured to provide continued support to our
customers throughout the life-cycle of the trailer. Aurora Parts & Accessories, LLC is the exclusive supplier of the aftermarket
component products for our dry van, refrigerated and platform trailers. Utilizing our on-site service centers, we provide a
wide array of quality aftermarket parts and services to our customers.
Used Trailers. These products includes the sale of used trailers through our used fleet sales center to facilitate new trailer
sales with a focus on selling both large and small fleet trade packages to the wholesale market as well as through our branch
network to enable us to re-market and promote new trailer sales.
▪ Wood Products.
rr
We manufacture laminated hardwood oak flooring used primarily in our dry van trailer segment at our
manufacturing operations located in Harrison, Arkansas.
Our current Diversified Products segment primarily includes the following products:
▪
Tank Trailers. Tank Trailers currently has several principal brands dedicated to transportation products including Walker
Transport, Brenner® Tank, Bulk Tank International, and Beall® Trailers. Equipment sold under these brands include stainless
steel and aluminum liquid and dry bulk tank trailers and other transport solutions for the dairy,yy food and beverage, chemical,
environmental, petroleum and refined fuel industries. We also provide parts and maintenance and repair services for tank
trailers and other related equipment through our five Brenner Tank Service centers.
8
▪ Walker Transport – Founded as the original Walker business in 1943, the Walker Transport brand includes stainless steel
tank trailers for the dairy,yy food and beverage end markets.
▪
▪
▪
Brenner® Tank – Founded in 1900, Brenner® Tank manufactures stainless steel and aluminum tank trailers, dry bulk
trailers, and fiberglass reinforced poly tank trailers, as well as vacuum tank trailers for the oil and gas, chemical, energy
and environmental services end markets.
Bulk Tank International – Manufactures stainless steel tank trailers for the oil and gas and chemical end markets.
Beall® Trailers – With tank trailer production dating to 1928, the Beall® brand includes aluminum tank trailers and related
tank trailer equipment for the dry bulk and petroleum end markets.
rr
Systems. Process Systems currently sells products under the Walker Engineered Products and Extract Technology®
Process
brands and specializes in the design and production of a broad range of products including: a portfolio of products for storage,
mixing and blending, including process vessels, as well as round horizontal and vertical storage silo tanks; containment and
isolation systems for the pharmaceutical, chemical, and nuclear industries, including custom designed turnkey systems and
spare components for full service and maintenance contracts; containment systems for the pharmaceutical, chemical and
biotech markets.
▪ Walker Engineered Products – Since the 1960s, Walker has marketed stainless steel storage tanks and silos, mixers, and
processors for the dairy,yy food and beverage, pharmaceutical, chemical, craft brewing, and biotech end markets under the
Walker Engineered Products brand.
▪
Extract Technology® – Since 1981, the Extract Technology® brand has included stainless steel isolators and downflow
booths, as well as custom-fabricated equipment, including workstations and drum booths for the pharmaceutical, fine
chemical, biotech and nuclear end markets.
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Composites. Our Composites business is focused on the use of DuraPlate® composite panels beyond the semi-trailer market.
include truck bodies, overhead doors, and other industrial applications. We continue to develop new products
Product offerings
and actively explore markets that can benefit from the proven performance of our proprietary technology. We offer
three
solutions designed to significantly improve trailer aerodynamics and fuel economy featuring a trailer drag reduction system
to manage airflow across the entire length of trailer, or Ventix DRS™, an aerodynamic tail devised to direct airflow across the
rear of the trailer, or AeroFin XL®, and a new lighter version of our AeroSkirt design called AeroSkirt CX™. We also offer
our EPAPP Smartway® approved DuraPlate® AeroSkirt®.
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▪
▪
The Final Mile Products segment, established after the acquisition of Supreme in 2017, primarily includes the following products:
▪
▪
▪
▪
▪
▪
Signaturerr Van Bodies. Signature van bodies range from 8 to 28 feet in length with exterior walls assembled from one of several
material options including pre-painted aluminum, FiberPanel PW,WW FiberPanel HC, or DuraPlate®. Additional features include
molded composite front and side corners, LED marker lights, sealed wiring harnesses, hardwood or pine flooring, and various
door configurations to accommodate end-user loading and unloading requirements. This product is adaptable for a diverse
range of uses in dry-freight transportation.
® Cutaway Van Bodies. An ideal route truck for a variety of commercial applications, the Iner-City bodies are
Iner-City
rr
manufactured on cutaway chassis which allow access from the cab to the cargo area. Borrowing many design elements from
Supreme’s larger van body,yy the Iner-City is shorter in length (8 to 18 feet) than a typical van body.
Spartan Service Bodies. Built on a cutaway chassis and constructed of FiberPanel PW or DuraPlate®, the Spartan cargo van
provides the smooth maneuverability of a commercial van with the full-height and spacious cargo area of a truck body. In
lengths of 8 to 14 feet and available with a variety of pre-designed options, the Spartan cargo van is a bridge product for those
moving up from a traditional cargo van into the truck body category.
Kold King® Insulated Van Bodies. Kold King® insulated bodies, in lengths up to 28 feet, provide versatility and dependability
for temperature controlled applications. Flexible for either hand-load or pallet-load requirements, they are ideal for multi-
stop distribution of both fresh and frozen products.
Stake Bodies. Stake bodies are flatbeds with various configurations of removable sides. The stake body is utilized for a broad
range of agricultural and construction industries’ transportation needs.
Final Mile Series and Cold Chain Series. Introduced in 2015, we have combined fleet-proven equipment designs and advanced
materials to create a line of high performance refrigerated and dry freight truck bodies for Class 6, 7, and 8 chassis. The truck
body product leverages our DuraPlate® technology utilized in dry van trailers and also introduces a revolutionary proprietary
molded structural composite designed to improve weight and thermal efficiency
in refrigerated truck body applications.
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Customers
Our customer base has historically included many of the nation’s largest truckload common carriers, leasing companies, private
fleet carriers, less-than-truckload common carriers, and package carriers. We continue to expand our customer base and achieve
diversification through acquisitions, organic growth, product innovation, and through our extensive distribution and service
network. All of these efforts
have been accomplished while maintaining our relationships with our core customers. Our five largest
customers together accounted for approximately 27%, 25%, and 24% of our aggregate net sales in 2019, 2018 and 2017, respectively.
No individual customer accounted for more than 10% or more of our aggregate net sales during the past three years. International
sales accounted for less than 10% of net sales for each of the last three years.
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Our Commercial Trailer Products segment has established relationships as a supplier to many large customers in the transportation
industry,yy including the following:
▪
▪
▪
▪
▪
▪
Truckload Carriers: Averitt Express, Inc.; Covenant Transportation Group, Inc.; Cowan Systems, LLC; Crete Carrier
Corporation; Heartland Express, Inc.; J.B Hunt Transport, Inc.; Knight-Swift Transportation Holdings Inc.; Schneider National,
Inc.; U.S. Xpress Enterprises, Inc.; and Werner Enterprises, Inc.
Less-Than-Truckload
TT
YRC Worldwide, Inc.
Carriers: FedEx Corporation; Old Dominion Freight Lines, Inc.; R&L Carriers Inc.; Saia, Inc.; and
Refrigerated Carriers: CR England, Inc.; K&B Transportation, Inc.; Prime, Inc.; and Southern Refrigerated Transport, Inc.
Leasing Companies: Matlack Leasing; Penske Truckrr
Lease, Inc.
Leasing Company; Wells Fargo Equipment Finance, Inc.; and Xtra
Private Fleets: C&S Wholesale Grocers, Inc.; Dollar General Corporation; and Safeway,yy Inc.
Liquid Carriers: Dana Liquid Transport Corporation; Evergreen Tank Solutions LLC; Kenan Advantage Group, Inc.; Oakley
Transport, Inc.; Quality Carriers, Inc.; Superior Tank, Inc.; and Trimac Transportation.
Through our Diversified Products segment we also sell our products to several other customers including, but not limited to:
GlaxoSmithKline Services Unlimited; W.M. Sprinkman; Dairy Farmers of America; Nestlé; Matlack Leasing LLC; and Wabash
Manufacturing, Inc. (an unaffiliated
company).
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Through our Final Mile Products segment we sell to fleet leasing customers and direct customers including, but not limited to:
Penske Truckrr
Rental, LLC; Enterprise Holdings, Inc.; and
Rent-A-Center.
Leasing Company; Ryder System, Inc.; Amazon.com; Budget Truckrr
Marketing and Distribution
We market and distribute our products through the following channels:
▪
▪
Factory direct accounts; and
Independent dealerships.
Factory direct accounts are generally large fleets that are high volume purchasers. Historically,yy we have focused on the factory
direct market in which customers are highly knowledgeable of the life-cycle costs of equipment and, therefore, are best equipped
to appreciate the innovative design and value-added features of our products, as well as the value proposition for lower total cost
of ownership over the life-cycle of our products.
We also sell our van, platform, and tank trailers through a network of independent dealers. Additionally,yy our truck body products
are sold through commercial dealers. Our dealers primarily serve mid-market and smaller sized carriers and private fleets in the
geographic region where the dealer is located and occasionally may sell to large fleets. The dealers may also perform service and
warranty work for our customers.
Raw Materials
We utilize a variety of raw materials and components including specialty steel coil, stainless steel, plastic, aluminum, lumber,
tires, landing gear, axles and suspensions, which we purchase from a limited number of suppliers. Raw material costs as a percentage
of net sales for 2019 were relatively consistent with 2018. However, significant price fluctuations or shortages in raw materials
or finished components have had, and could have in the future, adverse effects
on our results of operations. In 2020 and for the
foreseeable future, we expect that the raw materials used in the greatest quantity will be steel, aluminum, plastic, and wood. We
will endeavor to pass along raw material and component cost increases. Price increases used to offset
inflation or disruption of
supply in core materials have generally been successful, although sometimes are delayed. Increases in prices for these purposes
represent a risk in execution. In an effort
of price fluctuations, we only hedge certain commodities that have
to minimize the effect
the potential to significantly impact our results of operations.
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Backlog
Orders that have been confirmed by customers in writing, have defined delivery timeframes and can be produced during the next
18 months are included in our backlog. Orders that comprise our backlog may be subject to changes in quantities, delivery,yy
specifications, terms or cancellation. Our backlog of orders at December 31, 2019 and 2018 was approximately $1,127 million
and $1,788 million, respectively. We expect to complete the majority of our backlog orders as of December 31, 2019 within the
next 12 months.
Patents and Intellectual Property
We hold or have applied for 159 patents in the U.S. on various components and techniques utilized in our manufacture of
transportation equipment and engineered products. In addition, we hold or have applied for 193 patents in foreign countries.
Our patents include intellectual property related to the manufacture of trailers, containers, and aerodynamic-related products using
our proprietary DuraPlate® products as well as other lightweight panel products, truck body,yy trailer, and aerodynamic-related
products utilizing other composite materials, our containment and isolation systems, and other engineered products – all of which
we believe offer
us a significant competitive advantage in the markets in which we compete.
ff
Our DuraPlate® patent portfolio includes several patents and pending patent applications, which cover not only utilization of our
DuraPlate® products in the manufacture of trailers, but also cover a number of aerodynamic-related products aimed at increasing
of trailers. U.S. and foreign patents and patent applications in our DuraPlate® patent portfolio have expiration
the fuel efficiency
ff
dates extending until 2036. Certain U.S. patents relating to the combined use of DuraPlate® panels and logistics systems within
the sidewalls of our dry van trailers will not expire until 2027 or after; several other issued U.S. patents and pending patent
applications relating to the use of DuraPlate® panels, or other composite materials, within aerodynamic-related products as well
as modular storage and shipping containers will not begin to expire until after 2030.Additionally,yy we also believe that our proprietary
DuraPlate® and DuraPlate®Cell Core production processes, which have been developed and refined since 1995, offer
us a significant
competitive advantage in the industry – above and beyond the benefits provided by any patent protection concerning the use and/
or design of our DuraPlate® products. We believe the proprietary knowledge of these processes and the significant intellectual and
capital hurdles in creating similar production processes provide us with an advantage over others in the industry who utilize
composite sandwich panel technology.
ff
Our intellectual property portfolio further includes a number of patent applications related to the manufacture of truck bodies and
trailers using our high-performance MSC Technology™ polymer composite component parts. These patents and patent applications
cover the polymer composite component structure and method of manufacturing the same. We believe the intellectual property
related to this emerging use of polymer composite technology in our industry,yy including proprietary knowledge of the processes
involved in manufacturing these components and the resulting products, will offer
us a significant market advantage to continue
to create proprietary products exploiting this technology. These patent applications will not begin to expire until 2036. Additionally,yy
our intellectual property portfolio includes patents and patent applications related to the rear impact guard (“RIG”). The RIG
patents and patent applications include RIG designs which surpass the current and proposed federal regulatory RIG standards for
the U.S. and Canada.
ff
In addition, our intellectual property portfolio includes patents and patent applications covering many of our engineered products,
including our containment and isolation systems, as well as many trailer industry components. These products have become highly
desirable and are recognized for their innovation in the markets we serve. The engineered products patents and patent applications
relate to our industry leading isolation systems, sold under the Extract Technologies® brand name. These patents will not begin
to expire until 2021 and 2022. The patents relating to our proprietary trailer-industry componentry include, for example, those
Lock Plus® door locking mechanism, the Max Clearance® Overhead Door System, which provides additional
covering the Trust
overhead clearance when an overhead-style rear door is in the opened position that would be comparable to that of swing-door
models, the use of bonded intermediate logistics strips, the bonded D-ring hold-down device, bonded skylights, and the DuraPlate®
arched roof. The patents covering these products will not expire before 2029. We believe all of these proprietary products offer
us a competitive market advantage in the industries in which we compete.
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®, Wabash
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We also hold or have applied for 48 trademarks in the U.S. as well as 63 trademarks in foreign countries. These trademarks include
National®, Transcraft®, Benson®, Extract Technology®, Beall®, Brenner®, and Supreme® brand names as
the Wabash
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well as trademarks associated with our proprietary products such as DuraPlate®, Transcraft Eagle®, Arctic Lite®, Kold King®, and
Iner-City®. Additionally,yy we utilize several tradenames that are each well-recognized in their industries, including Walker Transport,
Walker Stainless Equipment, Walker Engineered Products and Bulk Tank International. Our trademarks associated with additional
Lock Plus® EZ-7®, DuraPlate
proprietary products include MSC Technology™, MaxClearance® Overhead Door System, Trust
Aeroskirt®, Aeroskirt CX®, DuraPlate HD®, SolarGuard®, VentixDRS®, AeroFin XL® and EZ-Adjust®. We believe these
trademarks are important for the identification of our products and the associated customer goodwill; however, our business is not
materially dependent on such trademarks.
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Environmental Matters
Our facilities are subject to various environmental laws and regulations, including those relating to air emissions, wastewater
discharges, the handling and disposal of solid and hazardous wastes and occupational safety and health. Our operations and facilities
have been, and in the future may become, the subject of enforcement actions or proceedings for non-compliance with such laws
or for remediation of company-related releases of substances into the environment. Resolution of such matters with regulators can
result in commitments to compliance abatement or remediation programs and, in some cases, the payment of penalties (see “Legal
Proceedings” in Item 3 for more details).
We believe that our facilities are in substantial compliance with applicable environmental laws and regulations. Our facilities have
incurred, and will continue to incur, capital and operating expenditures and other costs in complying with these laws and regulations.
on
However, we currently do not anticipate that the future costs of environmental compliance will have a material adverse effect
our business, financial condition or results of operations.
ff
Employees
As of December 31, 2019 and 2018, we had approximately 6,900 and 7,100 full-time employees, respectively. Throughout 2019,
essentially all of our active employees were non-union. Our temporary employees represented approximately 14% of our overall
production workforce as of December 31, 2019 as compared to approximately 11% at the end of the prior year period. We place
a strong emphasis on maintaining good employee relations and development through competitive compensation and related
benefits, a safe work environment, and promoting educational programs and quality improvement teams. We believe strong human
and our focus is not only on ensuring we have the right leaders in place to drive our
capital acts as a competitive differentiator
strategic initiatives today,yy but also to nurture our talent pipeline to develop strong leaders for Wabash’
s future.
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Website Access to Company Reports
We use our Investor Relations website, ir.wabashnational.com, as a channel for routine distribution of important information,
including news releases, presentations and financial information. We post filings as soon as reasonably practicable after they are
electronically filed with, or furnished to, the Securities Exchange Commission (“SEC”), including our annual, quarterly,yy and
current reports on Forms 10-K, 10-Q and 8-K, our proxy statements and any amendments to those reports or statements. All such
postings and filings are available on our Investor Relations website free of charge. The SEC also maintains a website, www.sec.gov,v
that contains reports, proxy and information statements and other information regarding issuers that file electronically with the
SEC. The content on any website referred to in this Annual Report on Form 10-K is not incorporated by reference into this Annual
Report on Form 10-K unless expressly noted.
Information About Our Executive Officers
The following are the executive officers
ff
of the Company:
Name
Brent L. Yeagy
M. Kristin Glazner
Melanie D. Margolin
Kevin J. Page
Michael N. Pettit
Dustin T. Smith
Age
49
42
48
58
45
42
ff
, Director
Position
President and Chief Executive Officer
Senior Vice President and Chief Human Resources Officer
Senior Vice President and General Counsel, Corporate Secretary
Senior Vice President and Group President, Diversified Products and Final Mile Products
Senior Vice President and Chief Financial Officer
ff
Senior Vice President and Group President, Commercial Trailer Products
ff
ff
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L. Yeagy.yy Mr. Yeagy was appointed to President and Chief Executive Officer
June 2, 2018. Mr. Yeagy had been
rr
Brent
President and Chief Operating Officer
, and a Director of the Company since October 2016. Previously,yy he served as Senior Vice
President - Group President of Commercial Trailer Products Group from June 2013 to October 2016 and Vice President and General
Manager for the Commercial Trailer Products Group from 2010 to 2013. Mr. Yeagy has held numerous operations related roles
National in February 2003. Prior to joining the Company,yy Mr. Yeagy held various roles within Human
since joining Wabash
Resources, Environmental Engineering and Safety Management for Delco Remy International from July 1999 through February
2003. Mr. Yeagy served in various Plant Engineering roles at Rexnord Corporation from December 1995 through June 1999. Mr.
Yeagy is a veteran of the United States Navy,yy serving from 1991 to 1994. He received his Masters of Business Administration
from Anderson University and his Master and Bachelor degrees in Science from Purdue University. He is also a graduate of the
University of Michigan, Ross School of Business Program in Executive Management and the Stanford Executive Program.
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effective
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M. Kristin Glazner. Ms. Glazner was appointed to Senior Vice President and Chief Human Resources Officer
of the Company
on November 14, 2018. Prior to this appointment, Ms. Glazner served as Vice President - Corporate Human Resources of the
Company. She first joined the Company in February 2010 as Corporate Counsel and served in that role until October 2017, when
she was appointed to the position of Vice President - Human Resources and Legal Administration. Prior to joining the Company,yy
Ms. Glazner was an attorney with the law firm Baker & Daniels LLP (now known as Faegre Baker Daniels LLP) from 2002 to
2010. She holds a Juris Doctor degree from Indiana University Maurer School of Law and a Bachelor of Arts degree from Butler
University.
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r
Melanie D. Margolin
. Ms. Margolin was appointed Senior Vice President and General Counsel, Corporate Secretary in May
2018. Prior to joining the Company,yy Ms. Margolin was Deputy General Counsel at Cummins Inc., leading the Global Litigation
function and serving as lead lawyer for the Engine/Power Systems Business Units and Latin America legal operations. She joined
Cummins, a $20 billion (2017) global company that designs, manufactures, and distributes power solutions, in 2013. Prior to
Cummins, Ms. Margolin was an equity partner with Frost Brown Todd in Indianapolis, Indiana. Past experience also includes
practicing law at Alholm, Monahan in Chicago, Illinois, and at the Chicago Housing Authority.
Kevin J. Page. Mr. Page was appointed to Senior Vice President and Group President, Diversified Products Group and Final Mile
Products in January 2020, after serving as the Senior Vice President and Group President, Diversified Products since October
2017. Mr. Page joined the Company in February 2017 as Vice President and General Manager, Final Mile and Distributed Services.
Prior to joining the Company,yy Mr. Page was Interim President of Truckrr
Accessories Group, LLC from June 2015 to September
2016, and Vice President of Sales, Marketing and Business Development from April 2012 to June 2015. Additionally,yy he served
as President of Universal Trailer Cargo Group from June 2008 to December 2011. Mr. Page also had a 23-year tenure at Utilimaster
Corporation serving in various sales roles, including Vice President of Sales and Marketing. Mr. Page has a Bachelor of Arts in
Economics from Wabash
College and an MBA (Executive) from Notre Dame. Throughout his career he has also completed
executive programs at the University of Chicago, Harvard Business School, University of Michigan, and American Management
Association.
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Michael N. Pettit. Mr. Pettit was appointed Senior Vice President and Chief Financial Officer
January 16, 2020. Mr.
Pettit had been Senior Vice President and Group President, Final Mile Products since January 1, 2018. Mr. Pettit previously served
as Vice President of Finance and Investor Relations since 2014, and has recently served as the Company’s Final Mile Products
segment integration leader, following the Company’s acquisition of Supreme Industries, Inc. in September 2017. He joined Wabash
National in 2012 and has held a number of positions with increasing responsibility,yy including Director of Finance for Commercial
Trailer Products. Prior to Wabash
National, from 1998 to 2012, Mr. Pettit held various finance positions with increasing
responsibility at Ford Motor Company. Mr. Pettit earned his Masters of Business Administration from Indiana University and his
Bachelor of Science in Industrial Management from Purdue University.
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effective
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Dustin T. Smith. Mr. Smith has served as Senior Vice President and Group President, Commercial Trailer Products since October
1, 2017. Most recently he served as Senior Vice President and General Manager, Commercial Trailer Products. Mr. Smith joined
Wabash
National in 2007 and has held a number of positions with increasing responsibility,yy including Director of Finance, Director
a
National, from 2000 to 2007, Mr.
of Manufacturing, and Vice President of Manufacturing for Wabash
Smith held various positions at Ford Motor Company in Dearborn Michigan, across both product development and manufacturing
divisions, including Plant Controller. His 19+ years of experience in finance and operations gives Mr. Smith a unique understanding
of how manufacturing systems directly affect
financial results. Mr. Smith holds a Bachelor of Science in Accounting and an MBA
in Corporate Finance from Purdue University. He has also attended several executive programs at the Booth School of Management
from University of Chicago, as well as Northwestern’s Kellogg School of Management.
National. Prior to Wabash
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ITEM 1A—RISK FACTORS
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You should carefully consider the risks described below in addition to other information contained or incorporated by reference
in this Annual Report before investing in our securities. Realization of any of the following risks could have a material adverse
ff
effect
on our business, financial condition, cash flows and results of operations.
Risks Related to Our Business, Strategy and Operations
Our business is highly cyclical and a downturn could have a material adverse effect on our business, financial condition
and results of operations.
The truck trailer manufacturing industry historically has been and is expected to continue to be cyclical, as well as affected
by
overall economic conditions. Customers historically have replaced trailers in cycles that run from five to 12 years, depending on
service and trailer type. Poor economic conditions can adversely affect
demand for new trailers and has led to an overall aging of
trailer fleets beyond a typical replacement cycle. Customers’ buying patterns can also be influenced by regulatory changes, such
as federal hours-of-service rules as well as overall truck safety and federal emissions standards.
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through the implementation of our strategic plan do not insulate us
The steps we have taken to diversify our product offerings
from this cyclicality. During downturns, we operate with a lower level of backlog and have had to temporarily slow down or halt
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production at some or all of our facilities, including extending normal shut down periods and reducing salaried headcount levels.
An economic downturn may reduce, and in the past has reduced, demand for trailers and our other products, resulting in lower
on our business, financial condition and results of operations.
ff
sales volumes and lower prices and could have a material adverse effect
Demand for our products is sensitive to economic conditions over which we have no control and that may have a material
adverse effect on our business, financial condition and results of operations.
Demand for our products is sensitive to changes in economic conditions, including changes related to unemployment, consumer
confidence, consumer income, new housing starts, industrial production, government regulations, and the availability of financing
and interest rates. The status of these economic conditions periodically have an adverse effect
on truck freight and the demand for
and the pricing of our products, and have also resulted in, and could in the future result in, the inability of customers to meet their
on our business, financial condition and
contractual terms or payment obligations, which could have a material adverse effect
results of operations.
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Global economic weakness could have a material adverse effect on our business, financial condition and results of operations.
While the trailer industry has recently experienced a period of strong demand levels, we cannot provide any assurances that we
will be profitable in future periods or that we will be able to sustain or increase profitability in the future. Increasing our profitability
will depend on several factors including our ability to increase our overall trailer volumes, improve our gross margins, gain
continued momentum on our product diversification efforts
and manage our expenses. If we are unable to sustain profitability in
the future, we may not be able to meet our payment and other obligations under our outstanding debt agreements.
ff
We continue to be reliant on the credit, housing and construction-related markets in the U.S. The same general economic concerns
faced by us are also faced by our customers. We believe that some of our customers are highly leveraged and have limited access
to capital, and their continued existence may be reliant on liquidity from global credit markets and other sources of external
financing. Lack of liquidity by our customers could impact our ability to collect amounts owed to us and our failure to collect
these amounts could have a material adverse effect
on our business, financial condition and results of operations.
ff
Changes in US trade policy,yy including the imposition of tariffs and the resulting consequences, may have a material adverse
effect on our business, financial condition and results of operations.
The U.S. government has announced, and in some cases implemented, a new approach to trade policy,yy including renegotiating or
potentially terminating certain trade agreements, as well as implementing or increasing tariffsff on foreign goods and raw materials
and potential tariffsff have resulted, or may result, in increased prices for certain imported
such as steel and aluminum. These tariffsff
goods and raw materials. While we source the majority of our materials and components domestically,yy tariffsff
and potential tariffsff
have caused, and may continue to cause, increases and volatility in prices for domestically sourced goods and materials that we
require for our products, particularly aluminum and steel. When the costs of our components and raw materials increase, we may
not be able to hedge or pass on these costs to our customers, which could have a material adverse effect
on our business, financial
condition and results of operations.
ff
We may not be able to execute on our long-term strategic plan and growth initiatives, or meet our long-term financial
goals, and this may have a material adverse effect on our business, financial condition and results of operations.
Our long-term strategic plan is intended to generate long-term value for our shareholders while delivering profitable growth through
all our business segments. The long-term financial goals that we expect to achieve as a result of our long-term strategic plan and
organic growth initiatives are based on certain assumptions, which may prove to be incorrect. We cannot provide any assurance
that we will be able to fully execute on our strategic plan or growth initiatives, which are subject to a variety of risks including
our ability to: diversify the product offerings
of our non-trailer businesses; leverage acquired businesses and assets to grow sales
with our existing products; design and develop new products to meet the needs of our customers; increase the pricing of our
cost increases and expand gross margins; and execute potential future acquisitions, mergers, and
products and services to offset
other business development opportunities. If we are unable to successfully execute on our strategic plan, we may experience
increased competition, material adverse financial consequences and a decrease in the value of our stock. Additionally,yy our
management’s attention to the implementation of the strategic plan, which includes our efforts
at diversification, may distract them
from implementing our core business which may also have material adverse financial consequences.
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ff
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We have a limited number of suppliers of raw materials and components; increases in the price of raw materials or the
inability to obtain raw materials could have a material adverse effect on our business, financial condition and results of
operations.
We currently rely on a limited number of suppliers for certain key components and raw materials in the manufacturing of our
products, such as tires, landing gear, axles, suspensions, specialty steel coil, stainless steel, plastic, aluminum and lumber. From
time to time, there have been and may in the future be shortages of supplies of raw materials or components, or our suppliers may
place us on allocation, which would have an adverse impact on our ability to meet demand for our products. Shortages and
our working capital position.
allocations may result in inefficient
operations and a build-up of inventory,yy which can negatively affect
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14
In addition, price volatility in commodities we purchase that impacts the pricing of raw materials could have negative impacts on
our operating margins. The loss of any of our suppliers or their inability to meet our price, quality,yy quantity and delivery requirements
could have a material adverse effect
on our business, financial condition and results of operations.
ff
Our diversification strategy may not be successfully executed, which could have a material adverse effect on our business,
financial condition and results of operations.
In addition to our commitment to long-term profitable growth within each of our existing reporting segments, our strategic initiatives
include a focus on diversification, both organic and strategic, to continue to transform Wabash
into a lean, innovation leader of
engineered solutions with a higher growth and margin profile and successfully deliver a greater value to our shareholders.
Organically,yy our focus is on profitably growing and diversifying our operations by leveraging our existing assets, capabilities, and
technology into higher margin products and markets and thereby providing value-added customer solutions. Strategically,yy we
continue to focus on becoming a more diversified industrial manufacturer, broadening the product portfolio we offer
, the customers
and end markets we serve, and our geographic reach.
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Some of our existing diversification efforts
are in the early growth stages and future success is largely dependent on continued
customer adoption of our new product solutions and general expansion of our customer base and distribution channels. We also
expect future acquisitions to form a key component of strategic diversification. Diversification through acquisitions involve
identifying and executing on transactions and managing successfully the integration and growth of acquired companies and
put a strain on our administrative,
products, all of which involve significant resources and risk of failure. Diversification efforts
to diversify
ff
operational and financial resources and make the determination of optimal resource allocation difficult.
the business organically and/or strategically do not meet the expectations we have, it could have a material adverse effect
on our
ff
business, financial condition and results of operations.
If our efforts
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ff
Volatility in the supply of vehicle chassis and other vehicle components could have a material adverse effect on our Final
Mile Products business.
With the exception of some specialty vehicle products, we generally do not purchase vehicle chassis for our inventory and accept
shipments of vehicle chassis owned by dealers or end-users for the purpose of installing and/or manufacturing our specialized
truck bodies on such chassis. Historically,yy General Motors Company (“GM”) and Ford Motor Company (“Ford”) have been the
primary suppliers of chassis. In the event of a disruption in supply from one major supplier, we would attempt to use another major
supplier, but there can be no assurance that this attempt would be successful. Nevertheless, in the event of chassis supply disruptions,
there could be unforeseen consequences that may have a material adverse effect
on our truck body operations.
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We also face risks relative to finance and storage charges for maintaining an excess supply of chassis from GM and Ford. Under
the converter chassis pool agreements, if a chassis is not delivered to a customer within a specified time frame, we are required
to pay finance or storage charges on such chassis.
A change in our customer relationships or in the financial condition of our customers could have a material adverse effect
on our business, financial condition and results of operations.
We have longstanding relationships with a number of large customers to whom we supply our products. We do not have long-
term agreements with these customers. Our success is dependent, to a significant extent, upon the continued strength of these
relationships and the growth of our core customers. We often are unable to predict the level of demand for our products from these
us also often adversely
customers, or the timing of their orders. In addition, the same economic conditions that adversely affect
affect
our customers. Furthermore, we are subject to a concentration of risk as the five largest customers together accounted for
ff
approximately 27% of our aggregate net sales in 2019. Over the previous three years, no customer has individually accounted for
greater than 10% of our annual aggregate net sales. The loss of a significant customer or unexpected delays in product purchases
could have a material adverse effect
on our business, financial condition and results of operations.
ff
ff
Significant competition in the industries in which we operate may result in our competitors offering new or better products
and services or lower prices, which could have a material adverse effect on our business, financial condition and results of
operations.
The industries in which we participate are highly competitive. We compete with other manufacturers of varying sizes, some of
which have substantial financial resources. Manufacturers compete primarily on the quality of their products, customer
relationships, service availability and price. Barriers to entry in the standard trailer and truck body manufacturing industry are
low. As a result, it is possible that additional competitors could enter the market at any time. In the recent past, manufacturing
the industry,yy
over-capacity and high leverage of some of our competitors, along with bankruptcies and financial stresses that affected
contributed to significant pricing pressures.
ff
If we are unable to successfully compete with other manufacturers, we could lose customers and our revenues may decline. In
the market prices of our new and used equipment, which, in turn, may
addition, competitive pressures in the industry may affect
have a material adverse effect
on our business, financial condition and results of operations.
ff
ff
15
Our Final Mile Products segment competes in the highly competitive specialized vehicle industry which may impact its
financial results.
The competitive nature of the specialized vehicle industry creates a number of challenges for our Final Mile Products segment.
Important factors include product pricing, quality of product, lead times, geographic proximity to customers, and the ability to
manufacture a product customized to customer specifications. Specialized vehicles are produced by a number of smaller, regional
on our business, financial condition
companies which create product pricing pressures that could have a material adverse effect
and results of operations.
ff
Our technology and products may not achieve market acceptance or competing products could gain market share, which
could have a material adverse effect on our business, financial condition and results of operations.
to meet our customer needs through our established brands, such as
We continue to optimize and expand our product offerings
DuraPlate®, DuraPlateHD®, DuraPlate® Cell Core, DuraPlate AeroSkirt®, ArcticLite®, Transcraft®, Benson®, MSC Technology™,
Walker Transport, Brenner® Tank, Bulk Tank International, Extract Technology®, Supreme®, Iner-City®, Spartan, and Kold King®.
While we target product development to meet customer needs, there is no assurance that our product development efforts
will be
embraced and that we will meet our strategic goals, including sales projections. Companies in the truck transportation industry,yy a
very fluid industry in which our customers primarily operate, make frequent changes to maximize their operations and profits.
ff
ff
We have seen a number of our competitors follow our leadership in the development and use of composite sidewalls that bring
them into direct competition with our DuraPlate® products. Our product development is focused on maintaining our leadership
for these products but competitive pressures may erode our market share or margins. We hold patents on various components and
techniques utilized in our manufacturing of transportation equipment and engineered products with expiration dates ranging from
2020 to 2038. We continue to take steps to protect our proprietary rights in our products and the processes used to produce them.
However, the steps we have taken may not be sufficient
or may not be enforced by a court of law. If we are unable to protect our
intellectual properties, other parties may attempt to copy or otherwise obtain or use our products or technology. If competitors are
able to use our technology,yy our ability to effectively
on
our business, financial condition and results of operations. In addition, litigation related to intellectual property could result in
substantial costs and efforts
compete could be harmed and this could have a material adverse effect
which may not result in a successful outcome.
ff
ff
ff
ff
Our backlog may not be indicative of the level of our future revenues.
Our backlog represents future production for which we have written orders from our customers that can be produced in the next
18 months. Orders that comprise our backlog may be subject to changes in quantities, delivery,yy specifications and terms, or
cancellation. Our reported backlog may not be converted to revenue in any particular period and actual revenue from such orders
may not equal our backlog. Therefore, our backlog may not be indicative of the level of our future revenues.
Disruption of our manufacturing operations could have an adverse effect on our business, financial condition and results
of operations.
We manufacture our van trailer products at two facilities in Lafayette, Indiana, a flatbed trailer facility in Cadiz, Kentucky,yy a
hardwood floor facility in Harrison, Arkansas, six liquid-transportation systems facilities in New Lisbon, Wisconsin; Fond du Lac,
Wisconsin; Portland, Oregon; and Queretaro, Mexico, three engineered products facilities in New Lisbon, Wisconsin; Elroy,yy
Wisconsin; Huddersfield, United Kingdom, seven truck body facilities in Goshen, Indiana; Ligonier, Indiana; Cleburne, Texas;
Georgia; Jonestown, Pennsylvania; Moreno Valley,yy California; and Lafayette, Indiana, and produce composite products
ff
Griffin,
at facilities in Lafayette, Indiana and Frankfort, Indiana. An unexpected disruption in our production at any of these facilities for
any length of time could have material adverse effect
on our business, financial condition and results of operations.
ff
International operations are subject to increased risks, which could have a material adverse effect on our business, financial
condition and results of operations.
Our ability to manage our business and conduct operations internationally requires considerable management attention and
resources and is subject to a number of risks, including the following:
▪
▪
▪
▪
▪
▪
challenges caused by distance, language and cultural differences
governments;
ff
and by doing business with foreign agencies and
longer payment cycles in some countries;
uncertainty regarding liability for services and content;
credit risk and higher levels of payment fraud;
currency exchange rate fluctuations and our ability to manage these fluctuations;
foreign exchange controls that might prevent us from repatriating cash earned outside the U.S.;
16
▪
▪
▪
▪
▪
import and export requirements that may prevent us from shipping products or providing services to a particular market
and may increase our operating costs;
potentially adverse tax consequences;
higher costs associated with doing business internationally;
different
ff
expectations regarding working hours, work culture and work-related benefits; and
different
ff
employee/employer relationships and the existence of workers’ councils and labor unions.
Compliance with complex foreign and U.S. laws and regulations that apply to international operations may increase our cost of
doing business and could expose us or our employees to fines, penalties and other liabilities. These numerous and sometimes
conflicting laws and regulations include import and export requirements, content requirements, trade restrictions, tax laws,
environmental laws and regulations, sanctions, internal and disclosure control rules, data privacy requirements, labor relations
laws, and U.S. laws such as the Foreign Corrupt Practices Act and substantially equivalent local laws prohibiting corrupt payments
to governmental officials
and/or other foreign persons. Although we have policies and procedures designed to cause compliance
employees, contractors or agents will not violate our
with these laws and regulations, there can be no assurance that our officers,
policies. Any violation of the laws and regulations that apply to our operations and properties could result in, among other
consequences, fines, environmental and other liabilities, criminal sanctions against us, our officers
or our employees, and
our products and services to one or more countries and could also materially damage our
prohibitions on our ability to offer
ff
to diversify our business, our ability to attract and retain employees, our business and could have
reputation, our brand, our efforts
a material adverse effect
on our business, financial condition and results of operations.
ff
ff
ff
ff
ff
The inability to attract and retain key personnel could have a material adverse effect on our business, financial condition
and results of operations.
Our ability to operate our business and implement our strategies depends, in part, on the efforts
and other
key associates. Our future success depends, in large part, on our ability to attract and retain qualified personnel, including
manufacturing personnel, sales professionals and engineers. The unexpected loss of services of any of our key personnel or the
failure to attract or retain other qualified personnel could have a material adverse effect
on our business, financial condition and
results of operations.
of our executive officers
ff
ff
ff
We rely significantly on information technology to support our operations and if we are unable to protect against service
interruptions or security breaches, it could have a material adverse effect on our business, financial condition and results
of operations.
We depend on a number of information technologies to integrate departments and functions, to enhance the ability to service
customers, to improve our control environment and to manage our cost reduction initiatives. We have put in place a number of
systems, processes, and practices designed to protect against the failure of our systems, as well as the misappropriation, exposure
or corruption of the information stored thereon. Unintentional service disruptions or intentional actions such as intellectual property
theft, cyber-attacks, unauthorized access or malicious software, may lead to such misappropriation, exposure or corruption if our
protective measures prove to be inadequate. Any issues involving these critical business applications and infrastructure may
adversely impact our ability to manage operations and the customers we serve. We could also encounter violations of applicable
law or reputational damage from the disclosure of confidential business, customer, or employee information or the failure to protect
the privacy rights of our employees in their personal identifying information. In addition, the disclosure of non-public information
could lead to the loss of our intellectual property and diminished competitive advantages. Should any of the foregoing events
occur, we may be required to incur significant costs to protect against damage caused by these disruptions or security breaches in
the future, any of which could have a material adverse effect
on our business, financial condition and results of operations.
ff
We are subject to extensive governmental laws and regulations, and our costs related to compliance with, or our failure to
comply with, existing or future laws and regulations could have a material adverse effect on our business, financial condition
and results of operations.
The length, height, width, maximum weight capacity and other specifications of truck and tank trailers are regulated by individual
states. The federal government also regulates certain trailer safety features, such as lamps, reflective devices, tires, air-brake
systems and rear-impact guards. In addition, most tank trailers we manufacture have specific federal regulations and restrictions
that dictate tank design, material type and thickness. Changes or anticipation of changes in these regulations can have a material
impact on our financial results, as our customers may defer purchasing decisions and we may have to re-engineer products. We
are subject to various environmental laws and regulations dealing with the transportation, storage, presence, use, disposal and
handling of hazardous materials, discharge of storm water and underground fuel storage tanks, and we may be subject to liability
associated with operations of prior owners of acquired property. In addition, we are subject to laws and regulations relating to the
employment of our employees and labor-related practices.
17
If we are found to be in violation of applicable laws or regulations in the future, it could have a material adverse effect
on our
business, financial condition and results of operations. Our costs of complying with these or any other current or future regulations
may be material. In addition, if we fail to comply with existing or future laws and regulations, we may be subject to governmental
or judicial fines or sanctions.
ff
Product liability and other legal claims could have a material adverse effect on our business, financial condition and results
of operations.
As a manufacturer of products widely used in commerce, we are subject to product liability claims and litigation, as well as
warranty claims. From time to time claims may involve material amounts and novel legal theories, and any insurance we carry
may not provide adequate coverage to insulate us from material liabilities for these claims.
In addition to product liability claims, we are subject to legal proceedings and claims that arise in the ordinary course of business,
such as workers’ compensation claims, OSHA investigations, employment disputes and customer and supplier disputes arising
out of the conduct of our business. Litigation may result in substantial costs and may divert management’s attention and resources
from the operation of our business, which could have a material adverse effect
on our business, financial condition and results of
operations.
ff
An impairment in the carrying value of goodwill and other long-lived intangible assets could negatively affect our operating
results.
We have a substantial amount of goodwill and purchased intangible assets on our balance sheet as a result of acquisitions. At
December 31, 2019, approximately 62% of these long-lived intangible assets were concentrated in our Final Mile Products segment,
37% were concentrated in our Diversified Products segment, and 1% was concentrated in our Commercial Trailer Products segment.
The carrying value of goodwill represents the fair value of an acquired business in excess of identifiable assets and liabilities as
of the acquisition date. The carrying value of other long-lived intangible assets represents the fair value of trademarks and trade
names, customer relationships and technology as of the acquisition date, net of accumulated amortization. Under generally accepted
accounting principles, goodwill is required to be reviewed for impairment at least annually,yy or more frequently if potential interim
indicators exist that could result in impairment, and other long-lived intangible assets require review for impairment only when
indicators exist. If any business conditions or other factors cause profitability or cash flows to significantly decline, we may be
our operating results. Events and conditions that
required to record a non-cash impairment charge, which could adversely affect
could result in impairment include a prolonged period of global economic weakness, a decline in economic conditions or a slow,ww
weak economic recovery,yy sustained declines in the price of our common stock, adverse changes in the regulatory environment,
adverse changes in the market share of our products, adverse changes in interest rates, or other factors leading to reductions in the
long-term sales or profitability that we expect.
ff
Our ability to fund operations and pay dividends is limited by our operational results, cash on hand, and available borrowing
capacity under our revolving credit facility.yy
Our ability to fund our working capital needs and capital expenditures, and our ability to pay dividends on our common stock, is
limited by the net cash provided by operations, cash on hand and available borrowings under our revolving credit facility. Declines
in net cash provided by operations, increases in working capital requirements necessitated by an increased demand for our products
and services, decreases in the availability under the revolving credit facility or changes in the credit our suppliers provide to us,
could rapidly exhaust our liquidity.
We recently reinstituted a policy of paying regular quarterly dividends on our common stock, but there is no assurance
that we will have the ability to continue a regular quarterly dividend.
In December 2016, our Board of Directors approved the reinstatement of a dividend program under which we will pay regular
quarterly cash dividends to holders of our common stock. Prior to 2017, no dividends had been paid since the third quarter of
2008. Our ability to pay dividends, and our Board of Directors’ determination to maintain our current dividend policy,yy will depend
on numerous factors, including:
▪
▪
▪
▪
the state of our business, competition, and changes in our industry;
changes in the factors, assumptions, and other considerations made by our Board of Directors in reviewing and revising
our dividend policy;
our future results of operations, financial condition, liquidity needs, and capital resources; and
our various expected cash needs, including cash interest and principal payments on our indebtedness, capital expenditures,
the purchase price of acquisitions, and taxes.
Each of the factors listed above could negatively affect
all. In addition, the Board may elect to suspend or alter the current dividend policy at any time.
ff
our ability to pay dividends in accordance with our dividend policy or at
18
Changes to U.S. or foreign tax laws could affect our effective tax rate and our future profitability.yy
Changes in tax legislation could significantly impact our overall profitability,yy the provisions for income taxes, the amount of taxes
payable and our deferred tax asset and liability balances. On December 22, 2017, the Tax Cuts & Jobs Act (“the Act”) was signed
into law. The Act contained numerous new and changed provisions related to the US federal taxation of domestic and foreign
starting January 1, 2018 for calendar year corporate taxpayers and
corporate operations. Most of these provisions went into effect
within the financial statements in the period of enactment.
ff
companies were required to record the income tax accounting effects
We have completed our accounting for the tax effects
of enactment of the Act and we will continue to monitor further regulatory
guidance issued by the Department of Treasury and Internal Revenue Service with regard to new provisions under the Act.
ff
ff
Our indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations thereunder.rr
As of December 31, 2019, we had approximately $461.0 million of total indebtedness, and approximately $167.6 million of
additional borrowings were available and undrawn under the Revolving Credit Agreement (as defined below). We also have other
contractual obligations and currently pay a regular quarterly dividend of approximately $0.08 per share, or approximately $4.3
million in the aggregate per quarter.
Our debt level could have significant consequences on future operations and financial position. For example, it could:
▪
▪
▪
▪
▪
▪
▪
negatively affect
ff
our ability to pay principal and interest on our debt;
increase our vulnerability to general adverse economic and industry conditions;
limit our ability to fund future capital expenditures and working capital, to engage in future acquisitions or development
activities, or to otherwise realize the value of our assets and opportunities fully because of the need to dedicate a substantial
portion of our cash flow from operations to payments of interest and principal or to comply with any restrictive terms of
our debt;
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
impair our ability to obtain additional financing or to refinance our indebtedness in the future;
place us at a competitive disadvantage compared to our competitors that may have proportionately less debt; and
impact our ability to continue to fund a regular quarterly dividend.
We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions
to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating
performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative,
regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities
to permit us to fund our day-to-day operations or to pay the principal, premium, if any,yy and interest on our indebtedness.
sufficient
ff
ff
If our cash flows and capital resources are insufficient
to fund our debt service obligations, and other cash requirements, we could
face substantial liquidity problems and could be forced to reduce or delay capital expenditures or to sell assets or operations, seek
additional capital or restructure or refinance our indebtedness. We may not be able to effect
any such alternative measures, if
necessary,yy on commercially reasonable terms or at all and, even if successful, such alternative actions may not allow us to meet
our scheduled debt service obligations. The indenture governing the Senior Notes, the Revolving Credit Agreement, and Term
Loan Credit Agreement (each, as defined below) restrict (a) our ability to dispose of assets and use the proceeds from any such
dispositions and (b) the Company’s and our subsidiaries’ ability to raise debt or certain equity capital to be used to repay the our
indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount
sufficient
to meet any debt service obligations then due.
ff
ff
Our inability to generate sufficient
reasonable terms or at all, would materially and adversely affect
satisfy our indebtedness.
ff
ff
cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially
our financial position and results of operations and our ability to
If we cannot make scheduled payments on our debt, it will be in default and, as a result, holders of Senior Notes could declare all
outstanding principal and interest to be due and payable, the lenders under the Revolving Credit Agreement and Term Loan Credit
Agreement could terminate their commitments to loan money,yy our secured lenders could foreclose against the assets securing such
borrowings and we could be forced into bankruptcy or liquidation.
Despite current indebtedness levels, we may still be able to incur substantially more debt. This could further exacerbate
the risks described above.
We and our subsidiaries have incurred substantial indebtedness in connection with the Supreme acquisition and may be able to
incur substantial additional indebtedness in the future. Although the indenture governing the Senior Notes, the Revolving Credit
19
Agreement, and Term Loan Credit Agreement contain, restrictions on the incurrence of additional indebtedness, these restrictions
are and will be subject to a number of qualifications and exceptions and the additional indebtedness incurred in compliance with
these restrictions could be substantial. If new debt is added to our current debt levels, the related risks that we and our subsidiaries
now face could intensify.
Provisions of the Senior Notes could discourage a potential future acquisition of us by a third party.yy
or more expensive for a third party to acquire us. Upon the
Certain provisions of the Senior Notes could make it more difficult
occurrence of certain transactions constituting a fundamental change, holders of the Senior Notes will have the right, at their
option, to require us to repurchase all of their Senior Notes, as applicable, or any portion of the principal amount of such Senior
Notes, as applicable. In addition, the indentures governing the Senior Notes prohibit us from engaging in certain mergers or
acquisitions unless, among other things, the surviving entity assumes our obligations under the Senior Notes. These and other
provisions of the Senior Notes could prevent or deter a third party from acquiring us even where the acquisition could be beneficial
to our stockholders.
ff
Our Term Loan Credit Agreement, Senior Notes indenture, and Revolving Credit Agreement contain restrictive covenants
that, if breached, could limit our financial and operating flexibility and subject us to other risks.
Our Term Loan Credit Agreement, Senior Notes indenture, and revolving credit facility include customary covenants limiting our
ability to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock, enter into transactions with
affiliates,
merge, dissolve, repay subordinated indebtedness, make investments and dispose of assets. As required under our
ff
Revolving Credit Agreement, we are required to maintain a minimum fixed charge coverage ratio of not less than 1.0 to 1.0 as of
the end of any period of 12 fiscal months when excess availability under the facility is less than 10% of the total revolving
commitment.
If availability under the Revolving Credit Agreement is less than 15.0% of the total revolving commitment or if there exists an
event of default, amounts in any of the Borrowers’ and the Revolver Guarantors’ deposit accounts (other than certain excluded
accounts) will be transferred daily into a blocked account held by the Revolver Agent and applied to reduce the outstanding amounts
under the facility.
As of December 31, 2019, we believe we are in compliance with the provisions of our Term Loan Credit Agreement, Senior Notes
indenture, and our revolving credit facility. Our ability to comply with the various terms and conditions in the future may be
ff
affected
by events beyond our control, including prevailing economic, financial and industry conditions.
Risks Related to an Investment in Our Common Stock
Future sales of our common stock in the public market could lower the market price for our common stock.
ff
In the future, we may sell additional shares of our common stock to raise capital. We cannot predict the size of future issuances
if any,yy that they may have on the market price for our common stock. The issuance and sale of substantial amounts
or the effect,
the market price of our common
of common stock, or the perception that such issuances and sales may occur, could adversely affect
stock and impair our ability to raise capital through the sale of additional equity securities.
ff
Our common stock has experienced, and may continue to experience, price and trading volume volatility.yy
The trading price and volume of our common stock has been and may continue to be subject to large fluctuations. The market
price and volume of our common stock may increase or decrease in response to a number of events and factors, including:
▪
▪
▪
▪
▪
▪
▪
▪
▪
trends in our industry and the markets in which we operate;
changes in the market price of the products we sell;
the introduction of new technologies or products by us or by our competitors;
changes in expectations as to our future financial performance, including financial estimates by securities analysts and
investors;
operating results that vary from the expectations of securities analysts and investors;
announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures,
financings or capital commitments;
changes in laws and regulations;
general economic and competitive conditions; and
changes in key management personnel.
20
This volatility may adversely affect
the prices of our common stock regardless of our operating performance. To the extent that
the price of our common stock declines, our ability to raise funds through the issuance of equity or otherwise use our common
stock as consideration will be reduced. These factors may limit our ability to implement our operating and growth plans.
ff
Also, shareholders may from time to time engage in proxy solicitations, advance shareholder proposals or otherwise attempt to
effect
changes or acquire control over the Company. Such shareholder campaigns could disrupt the Company’s operations and
ff
divert the attention of the Company’s Board of Directors and senior management and employees from the pursuit of business
strategies and adversely affect
the Company’s results of operations and financial condition.
ff
Risks Related to the Supreme Acquisition
We may continue to experience difficulties with our integration of Supreme.
We have experienced, and may continue to experience, greater than anticipated difficulties
in our integration of Supreme into our
existing operations or we may not be able to achieve the anticipated benefits of the acquisition, including cost savings and other
synergies. In addition, it is possible that the continued integration process could result in the loss of key employees, errors or
delays in systems implementation, the disruption of our ongoing business or inconsistencies in standards, controls, procedures
and policies that adversely affect
our ability to maintain relationships with customers and employees or to achieve the anticipated
benefits of the acquisition. We also expect that our ongoing integration of Supreme will place a significant burden on our
management, employees, and internal resources, which could otherwise have been devoted to other business opportunities and
improvements. These continued integration matters may have an adverse effect
on us, our business, financial position and results
of operations.
ff
ff
ff
ITEM 1B—UNRESOLVED STAFFTT
COMMENTS
None.
ITEM 2—PROPERTIES
We have manufacturing and retail operations located throughout the United States as well as facilities in Mexico and the United
Kingdom. Properties owned by Wabash
are subject to security interests held by our lenders. We believe the facilities we are now
using are adequate and suitable for our current business operations and the currently foreseeable level of operations. The following
table provides information regarding the locations of our major facilities. In addition, we have other facilities in the United States
and one in the United Kingdom:
a
Location
Cadiz, Kentucky
Cleburne, Texas
Fond du Lac, Wisconsin
Goshen, Indiana
ff
Griffin,
Georgia
Jonestown, Pennsylvania
Owned or Leased
Owned/Leased
Owned/Leased
Owned
Owned
Owned
Owned/Leased
Lafayette, Indiana
Owned/Leased
Description of Activities at
Location
Manufacturing
Manufacturing
Manufacturing
Manufacturing
Segment
Commercial Trailer Products
Final Mile Products
Diversified Products
Final Mile Products
Manufacturing
Manufacturing
Corporate Headquarters,
Manufacturing, and Used
Trailers
Final Mile Products
Final Mile Products
Commercial Trailer Products,
Diversifed Products and Final Mile
Products
Moreno Valley,yy
California
New Lisbon, Wisconsin
San Jose Iturbidé,
Mexico
Owned/Leased
Manufacturing
Final Mile Products
Owned
Owned
Manufacturing
Manufacturing
Diversified Products
Diversified Products
ITEM 3—LEGAL PROCEEDINGS
As of December 31, 2019, we were named as a defendant or were otherwise involved in numerous legal proceedings and
governmental examinations, in connection with the conduct of our business activities, in various jurisdictions, both in the United
States and internationally. On the basis of information currently available to us, management does not believe that existing
proceedings and investigations will have a material impact on our consolidated financial condition or liquidity if determined in a
manner adverse to the Company. However, such matters are unpredictable, and we could incur judgments or enter into settlements
our financial statements. Costs associated with the litigation
ff
for current or future claims that could materially and adversely affect
21
and settlements of legal matters are reported within General and Administrative Expenses in the Consolidated Statements of
Operations.
Environmental
rr
Disputes
In August 2014, the Company received notice as a potentially responsible party (“PRP”) by the South Carolina Department of
Health and Environmental Control (the “DHEC”) pertaining to the Philip Services Site located in Rock Hill, South Carolina
pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and corresponding South
Carolina statutes. PRPs include parties identified through manifest records as having contributed to deliveries of hazardous
substances to the Philip Services Site between 1979 and 1999. The DHEC’s allegation that the Company was a PRP arises out of
National (or any of its former or current
four manifest entries in 1989 under the name of a company unaffiliated
ff
National
subsidiaries) that purport to be delivering a de minimis amount of hazardous waste to the Philip Services Site “c/o Wabash
Corporation.” As such, the Philip Services Site PRP Group (the “PRP Group”) notified Wabash
in August 2014 that it was offering
the Company the opportunity to resolve any liabilities associated with the Philip Services Site by entering into a Cash Out and
Reopener Settlement Agreement (the “Settlement Agreement”) with the PRP Group, as well as a Consent Decree with the DHEC.
from the PRP Group to enter into the Settlement Agreement and Consent Decree, while
The Company has accepted the offer
reserving its rights to contest its liability for any deliveries of hazardous materials to the Philips Services Site. The requested
settlement payment is immaterial to the Company’s financial conditions or operations, and as a result, if the Settlement Agreement
and Consent Decree are finalized, the payment to be made by the Company thereunder is not expected to have a material adverse
ff
effect
on the Company’s financial condition or results of operations.
with Wabash
a
a
a
ff
ff
On November 13, 2019, the Company received a notice as a PRP by the Indiana Department of Environmental Management
related to substances found at a property located at 817 South Earl Avenue, Lafayette, Indiana (“the Site”). The Site is not owned
by the Company but is in close proximity to certain of our owned properties. The notice alleges that the Company is a PRP in
addition to several other PRPs for hazardous substances contaminating the site under both Indiana state law and the
CERCLA. Review of publicly available records reveal that the Site is owned by Raisor Development Group, LLC and currently
operates as “Premier Auto Detailing & Wash”. As of December 31, 2019, based on the information available the Company does
not expect this matter to have a material adverse effect
on its financial condition or results of operations.
ff
ITEM 4—MINE SAFETY DISCLOSURES
Not Applicable.
PART II
—
ITEM 5—55 MARKET
PURCHASES OF EQUITY SECURITIES
FOR REGISTRANT’S’ COMMON STOCK,
TT
TT
RELATED STOCKHOLDER
MATTERS AND ISSUER
Information Regarding our Common Stock
Our common stock is traded on the New York Stock Exchange under the ticker symbol “WNC.” The number of record holders
of our common stock at February 14, 2020 was 596.
In December 2016, our Board of Directors approved the reinstatement of a dividend program under which we pay regular quarterly
cash dividends to holders of our common stock. Prior to 2017, no dividends had been paid since the third quarter of 2008. Payments
of cash dividends depends on our future earnings, capital availability,yy financial condition, and the discretion of our Board of
Directors.
Our Certificate of Incorporation, as amended and approved by our stockholders, authorizes 225 million shares of capital stock,
consisting of 200 million shares of common stock, par value $0.01 per share, and 25 million shares of preferred stock, par value
$0.01 per share.
22
Performance Graph
The following graph shows a comparison of cumulative total returns for an investment in our common stock, the S&P500 Composite
Index and the Dow Jones Transportation Index. It covers the period commencing December 31, 2014 and ending December 31,
2019. The graph assumes that the value for the investment in our common stock and in each index was $100 on December 31,
2014.
Comparative of Cumulative Total Return
December 31, 2014 through December 31, 2019
among Wabash
National Corporation, the S&P 500 Index
a
and the Dow Jones Transportation Index
$200
$180
$160
$140
$120
$100
$80
$60
2014
2015
2016
2017
2018
2019
Wabash National
S&P 500 Index
DJ Transportation Index
Base Period
December 31,
Indexed Returns
Years ended December 31,
Company/Index
National Corporation
a
Wabash
S&P 500 Index
Dow Jones Transportation Index
2014
$100.00
$100.00
$100.00
2015
$95.71
$99.27
$82.15
2016
$127.99
$108.74
$98.95
2017
$177.51
$129.86
$116.11
2018
$108.80
$121.76
$100.33
2019
$125.59
$156.92
$119.27
Purchases of Our Equity Securities
In November 2018, the Company announced that the Board of Directors approved the repurchase of an additional $100 million
in shares of common stock over a three year period. This authorization was an increase to the previous $100 million repurchase
programs approved in February 2017 and February 2016. The repurchase program is set to expire on February 28, 2022. During
the fourth quarter of 2019, there were 707,461 shares repurchased pursuant to our Repurchase Program. Additionally,yy for the
quarter ended December 31, 2019, there were 9,396 shares surrendered or withheld to cover minimum employee tax withholding
obligations upon the vesting of restricted stock awards. As of December 31, 2019, $69.1 million remained available under the
program.
Period
October 2019
November 2019
December 2019
Total
Total Number of
Shares Purchased
75,090
126,476
515,291
716,857
$
$
$
$
Average Price
Paid per Share
Total Number of Shares
Purchased as Part of
Publicly Announced Plans
or Programs
Maximum Amount That May
Yet Be Purchased Under the
Plans or Programs
($ in millions)
68,547
126,476
512,438
707,461
$
$
$
$
79.1
77.1
69.1
69.1
13.40
15.72
15.64
15.42
23
ITEM 6—SELECTED FINANCIAL DATA
National for each of the five years in the period ending
The following selected consolidated financial data with respect to Wabash
December 31, 2019, have been derived from our consolidated financial statements. The following information should be read in
conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated
financial statements and notes thereto included elsewhere in this Annual Report.
a
Statement of Operations Data:
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Amortization of intangibles
Acquisition expenses
Impairment
Income from operations
Interest expense
Other, net
Income before income taxes
Income tax expense
Net income
Dividends declared per share
Basic net income per common share
Diluted net income per common share
Balance Sheet Data:
Working capital
Total assets
Total debt and finance leases
Stockholders’ equity
Years Ended December 31,
2019
2018
2017
2016
2015
(dollars in thousands, except per share data)
$ 2,319,136
2,012,754
306,382
$ 2,267,278
1,983,627
283,651
$ 1,767,161
1,506,286
260,875
$ 1,845,444
1,519,910
325,534
$ 2,027,489
1,724,046
303,443
143,125
20,471
—
—
142,786
(27,340)
2,285
117,731
28,156
89,575
0.320
1.64
1.62
$
$
$
$
128,160
19,468
68
24,968
110,987
(28,759)
13,776
96,004
26,583
69,421
0.305
1.22
1.19
$
$
$
$
103,413
17,041
9,605
—
130,816
(16,400)
8,122
122,538
11,116
111,422
0.255
1.88
1.78
282,011
$
277,743
$
292,723
$
$
$
$
$
$ 1,304,591
$ 1,304,393
$ 1,351,513
$
$
456,091
520,988
$
$
505,911
473,849
$
$
551,413
506,063
$
$
$
$
$
$
$
$
101,399
19,940
—
1,663
202,532
(15,663)
(1,452)
185,417
65,984
119,433
0.060
1.87
1.82
314,791
898,733
237,836
472,391
$
$
$
$
$
$
$
$
100,728
21,259
—
1,087
180,369
(19,548)
2,490
163,311
59,022
104,289
—
1.55
1.50
318,430
950,126
315,633
439,811
ITEM 7—MANAGEMENT’S’ DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) describes the matters that
we consider to be important to understanding the results of our operations for each of the two years in the period ended December 31,
2019, and our capital resources and liquidity as of December 31, 2019. Our discussion begins with our assessment of the condition
of the North American trailer industry along with a summary of the actions we have taken to strengthen the Company. We then
analyze the results of our operations for the last two years, including the trends in the overall business and our operating segments,
followed by a discussion of our cash flows and liquidity,yy capital markets events and transactions, our debt obligations, and our
contractual commitments. We also provide a review of the critical accounting judgments and estimates that we have made that
we believe are most important to an understanding of our MD&A and our consolidated financial statements. We conclude our
MD&A with information on recent accounting pronouncements that we adopted during the year, if any,yy as well as those not yet
adopted that may have an impact on our financial accounting practices.
As a result of the acquisition of Supreme in the third quarter of 2017, we now manage our business in three segments: Commercial
Trailer Products, Diversified Products, and Final Mile Products. The Commercial Trailer Products segment manufactures standard
and customized van and platform trailers and other transportation related equipment for customers who purchase directly from us
or through independent dealers. The Diversified Products segment, comprised of three strategic business units including, Tank
Trailer, Process Systems, and Composites, focuses on our commitment to expand our customer base and diversify our product
24
offerings
and revenues. The Final Mile Products segment manufactures specialized commercial vehicles that are attached to a
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truck chassis, including cutaway and dry-freight van bodies, refrigerated units, and stake bodies, for customers who purchase
directly from us or through independent dealers. The acquisition of Supreme, a leading manufacturer of specialized commercial
vehicles, is the continuation of our growth and diversification strategy into the rapidly growing final mile space. The Final Mile
Products segment was created in the fourth quarter of 2017.
For discussion of results of operations for the year ended December 31, 2017, see Item 7— Management's Discussion and Analysis
of Financial Condition and Results of Operations of our 2018 Annual Report on Form 10-K, filed with the SEC on February 28,
2019.
Executive Summary
2019 was another strong year for the trailer industry. According to ACT estimates, total new trailer industry production in the
United States was 333,400 units in 2019, which represents a 3.2% increase from production volumes in 2018. This represents the
ninth consecutive year that total trailer demand exceeded normal replacement demand levels, currently estimated to be
approximately 220,000 trailers per year.
The Company’s operating performance highlights the success of our growth and diversification initiatives driven by our long-
term strategic plan to continue to transform the Company into an innovation leader of engineered solutions for the transportation,
logistics, and distribution industries, while maintaining our focus and expertise in lean and six sigma optimization initiatives to
support a higher growth and margin profile.
Operating income in 2019 totaled $142.8 million and operating income margin was 6.2%. The addition of Supreme in September
2017 was a key accomplishment as it has not only added revenue and profit opportunity,yy but has also provided, and will continue
to provide, significant diversification into a high-growth segment driven by the ever-increasing adoption of e-commerce.
ff
both organic and strategic, to continue to transform Wabash
In addition to our commitment to sustain profitable growth within each of our existing reporting segments, our long-term strategic
initiatives include a focus on diversification efforts,
into lean, innovation
leader of engineered solutions with a higher growth and margin profile and successfully deliver a greater value to our shareholders.
Our ability to generate solid margins and cash flows and a healthy balance sheet should position the Company with ample resources
to (1) fund our internal capital needs to support both organic growth and productivity improvements, (2) continue the planned
reduction of our debt obligations, (3) return capital to shareholders and (4) selectively pursue strategic acquisitions. As evidenced
to strategically identify potential acquisition targets
by our purchase of Supreme in September 2017, we continue our internal effort
that we believe can create shareholder value and accelerate our growth and diversification efforts,
while leveraging our strong
competencies in manufacturing execution, sourcing and innovative engineering leadership to assure strong value creation.
Organically,yy our focus is on profitably growing and diversifying our operations through leveraging our existing assets, capabilities
and technology into higher margin products and markets and thereby providing value-added customer solutions.
a
ff
ff
Throughout 2019 we demonstrated our commitment to be responsible stewards of the business by maintaining a balanced approach
to capital allocation. Our operational performance, healthy backlog and industry outlook, and financial position provided us the
opportunity to take specific actions as part of the ongoing commitment to prudently manage the overall financial risks of the
Company,yy returning capital to our shareholders and deleveraging our balance sheet. These actions included completing $30.9
million in share repurchases as authorized by our Board of Directors, voluntarily making prepayments on our Term Loan Credit
Agreement totaling $50.0 million, and paying dividends to our shareholders of $17.8 million. Collectively,yy these actions demonstrate
our confidence in the financial outlook of the Company and our ability to generate cash flow,ww both near and long term, and reinforces
our overall commitment to deliver shareholder value while maintaining the flexibility to continue to execute our strategic plan for
profitable growth and diversification.
The outlook for the overall trailer market for 2020 indicates a softer demand environment compared to the last several years.
However, the most recent estimates from industry forecasters, ACT and FTR, indicate demand levels expected to be in excess of
the estimated replacement demand in every year through 2024. More specifically,yy ACT is currently estimating 2020 demand will
be approximately 239,000 trailers, a decrease of 28.3% as compared to 2019, with 2021 through 2024 industry demand levels
ranging between 241,900 and 283,600 trailers. In addition, FTR anticipates trailer production for 2020 at approximately 270,000
trailers, a decrease of 17.9% as compared to 2019 levels. In addition, industry forecasters indicate that further reductions in demand
are unlikely and that production has shifted to a more sustainable rate from the high levels the last couple years.
In addition to the softening industry demand, there are downside risks relating to issues with both the domestic and global economies,
including the housing, energy and construction-related markets in the U.S. Other potential risks as we proceed into 2020 primarily
relate to our ability to effectively
manage our manufacturing operations as well as the cost and supply of raw materials, commodities
and components. Significant increases in the cost of certain commodities, raw materials or components have had, and may continue
on our results of operations. As has been our practice, we will endeavor to pass raw material and
to have, an adverse effect
to
component price increases to our customers in addition to continuing our cost management and hedging activities in an effort
minimize the risk that changes in material costs could have on our operating results. In addition, we rely on a limited number of
ff
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ff
25
suppliers for certain key components and raw materials in the manufacturing of our products, including tires, landing gear, axles,
suspensions, aluminum extrusions, chassis and specialty steel coil. At the current and expected demand levels, there may be
shortages of supplies of raw materials or components which would have an adverse impact on our ability to meet demand for our
products. Despite these risks, we believe we are well positioned to capitalize on the expected strong overall demand levels while
maintaining or growing margins through improvements in product pricing as well as productivity and other operational excellence
initiatives.
Operating Performance
We measure our operating performance in five key areas – Safety/Morale, Quality,yy Delivery,yy Cost Reduction, and Environment.
We maintain a continuous improvement mindset in each of these key performance areas. Our mantra of being better today than
yesterday and better tomorrow than we are today is simple, straightforward, and easily understood by all our employees.
Safety/Morale. The safety of our employees is our number one value and highest priority. We continually focus on reducing the
severity and frequency of workplace injuries to create a safe environment for our employees and minimize workers compensation
costs. We believe that our improved environmental, health and safety management translates into higher labor productivity and
lower costs as a result of less time away from work and improved system management. In eleven of the last thirteen years at least
one of our manufacturing sites has been recognized for safety,yy including recent awards from the Truckrr
Trailer Manufacturer
Association’s Plant Safety Awards granted to our New Lisbon, Wisconsin and San José Iturbide, Mexico facilities. In 2017, our
Cadiz, Kentucky facility received the Governor’s Award for Safety and Health. Our focus on safety also extends beyond our
facilities. We are a founding member of the Cargo Tank Risk Management Committee, a group dedicated to reducing the hazards
faced by workers on and around cargo tanks.
Quality.yy We monitor product quality on a continual basis through a number of means for both internal and external performance
as follows:
▪
▪
Internal performance. Our primary internal quality measurement is Process Yield. Process Yield is a performance metric that
measures the impact of all aspects of the business on our ability to ship our products at the end of the production process. As
with previous years, the expectations of the highest quality product continue to increase while maintaining Process Yield
performance and reducing rework. In addition, we currently maintain an ISO 9001 registration of our Quality Management
System at our Lafayette operations.
External performance. We actively track our warranty claims and costs to identify and drive improvement opportunities in
quality and reliability. Early life cycle warranty claims for our van trailers are trended for performance monitoring. Using a
unit-based warranty reporting process to track performance and document failure rates, early life cycle warranty units per
100 trailers shipped averaged approximately 2.4, 2.5, and 3.3 units in 2019, 2018 and 2017, respectively. Continued low claim
rates have been driven by our successful execution of continuous improvement programs centered on process variation
reduction, and responding to the input from our customers. We expect that these activities will continue to drive down our
total warranty cost profile.
Delivery/Productivity.yy We measure productivity on many fronts. Some key indicators include production line cycle-time, labor-
hours per trailer or truck body and inventory levels. Improvements over the last several years in these areas have translated into
significant improvements in our ability to better manage inventory flow and control costs.
▪
▪
During the past several years, we have focused on productivity enhancements within manufacturing assembly and sub-
assembly areas through developing the capability for mixed model production. These efforts
have resulted in throughput
ff
improvements in our Lafayette, Indiana, Goshen, Indiana, and Cadiz, Kentucky facilities.
Through deployment of the Wabash
Management System, all of our business reporting segments have focused on increasing
velocity at all our manufacturing locations. We have engaged in extensive lean training and deployed purposeful capital to
accelerate our productivity initiatives.
a
a
Management System allows us to develop and scale high standards of
Cost Reduction and our Operating System. The Wabash
approach and standardized processes to drive and monitor
excellence across the organization. We believe in a “One Wabash”
performance inside our manufacturing facilities. Continuous improvement is a fundamental component of our operational
excellence focus. Our balanced scorecard process, for example, has allowed us to improve all areas of manufacturing including
safety,yy quality,yy on-time delivery,yy cost reduction, employee morale and environment. By focusing on continuous improvement and
utilizing our balanced scorecard process, we have realized total cost per unit reductions as a result of increased capacity utilization
of all facilities, while maintaining a lower level of fixed overhead. We are investing capital in our processes to reduce variable
cost, lower inherent safety risk in our processes, and improve overall consistency in our manufacturing processes. This approach
continues to drive value in both the products we offer
our customers and the processes our associates work within.
a
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Environment. We strive to manufacture products that are both socially responsible and environmentally sustainable. We
demonstrate our commitment to sustainability by maintaining ISO 14001 registration of our Environmental Management System
26
at our Lafayette, Indiana; Cadiz, Kentucky; San JoséIturbide, Mexico; Frankfort, Indiana; Portland, Oregon; and Harrison,Arkansas
locations. In 2005, our Lafayette, Indiana facility was one of the first trailer manufacturing operations in the world to be ISO 14001
registered. Being ISO 14001 registered requires us to demonstrate quantifiable and third-party verified environmental
improvements. At our facilities, we have pursued a wide-range of environmental initiatives including employee-based recycling
programs that reduce waste being sent to the landfill, energy improvement projects to reduce carbon emissions, restored a natural
wildlife habitat to enhance the environment and protect native animals. Our Portland, Oregon facility is using renewable energy
and also received the City of Portland’s Sustainability at Work certification in 2017. Our San José Iturbide, Mexico facility was
recognized with Clean Industry certification from Mexico’s Federal Agency of Environmental Protection for adhering to
environmental care in its manufacturing processes.
Industry Trends
rr
in the U.S., according to the American Trucking
Trucking
Association (“ATAAA ”), was estimated to be a $796.7 billion industry in
2018, representing approximately 80% of the total U.S. transportation industry revenue. This represents an increase of 13.8% from
ATA’TT s 2017 estimate. Furthermore, ATATT estimates that approximately 71% of all freight tonnage in 2018 was carried by trucks.
Trailer demand is a direct function of the amount of freight to be transported. To monitor the state of the industry,yy we evaluate a
number of indicators related to trailer manufacturing and the transportation industry. Recent trends we have observed include the
following:
rr
Transportation / Trailer Cycle. The trailer industry generally follows the transportation industry cycles. After three consecutive
years with total trailer demand well below normal replacement demand levels estimated to be approximately 220,000 trailers, the
five year period ending December 2015 demonstrated consecutive years of significant improvement in which the total U.S. trailer
market increased year-over-year. In 2016, trailer shipments decreased but rebounded in 2017 and 2018, with 2018 representing an
all-time industry record. This all-time industry record set in 2018 was surpassed in 2019 with trailer shipments totaling approximately
328,000.
New Trailer Shipments
204,000
232,000
234,000
269,000
308,000
286,000
290,000
323,000
328,000
Year-Over-YearYY Change (%)
64%
14%
1%
15%
14%
(7%)
1%
11%
2%
1
2012
2013
2014
2015
2016
2017
2018
2019
As we enter the eleventh year of economic growth, ACT is estimating softened, more historically consistent production levels within
the trailer industry in 2020 at approximately 239,000 and forecasting annual new trailer production levels for the four year period
ending 2024 of approximately 241,900, 267,500, 275,300, and 283,600, respectively. Our view is generally consistent with ACT
that trailer demand will soften in 2020 to more historically normalized levels and then begin growth in the years thereafter, and
remain above replacement demand for 2020.
New Trailer Orders. According to ACT, total orders in 2019 were approximately 205,000 trailers, a 51% decrease from 421,000
trailers ordered in 2018. Total orders for the dry van segment, the largest within the trailer industry,yy were approximately 115,000,
a decrease of 56% from 2018. These decreases are generally consistent with our expectations due to the high levels of orders and
production the last couple of years.
Transportation Regulations and Legislation. There are several different
and legislation that are expected to have an impact on trailer demand, including:
ff
areas within both federal and state government regulations
▪
ff
ff
and National Highway Trafficff
SafetyAdministration (“NHTSA”) proposed
The U.S. Environmental ProtectionAgency (“EPA”)PP
new greenhouse gas regulations in July 2015, in an effort
to reduce fuel consumption and production of carbon dioxide of
heavy duty commercial vehicles. Following a comment period, the final rule was released in August 2016. The regulations are
presently under review processes in Congress, within the EPA,PP
and NHTSA that will ultimately determine whether this rule
The Phase 2 greenhouse gas trailer (“GHG2”) rules were initially set to require compliance starting
actually goes into effect.
in January 2018. The Truckrr
Trailer Manufacturers Association (“TTMA”) filed a petition in the U.S. Court of Appeals seeking
review of the rule as it relates to the authority of the agencies to regulate trailers under the Clean Air Act. In addition, TTMA
also filed for a Stay to suspend enforcement of the rule, to allow time for the EPAPP and NHTSA to reconsider the trailer provisions
in the rule. In October 2017, the Court of Appeals granted the motion for Stay of the GHG2 rule as it applies to trailers.
Ultimately,yy while compliance is on hold, the final impact on the trailer industry will not be known until there is a final ruling
on the TTMA lawsuit. The rule itself focuses mainly on van trailers, and is divided into four increasingly stringent greenhouse
gas reduction standards. The rule requires fuel saving technologies on van trailers, such as trailer side skirts, low rolling
resistance tires, and automatic tire inflation systems. For tank trailers and flatbed trailers, the rule will require low rolling
resistant tires and automotive tire inflation systems. More stringent van trailer standards would come into play in model years
2021, 2024 and 2027 – requiring more advanced fuel efficiency
technologies, such are rear boat tails and higher percentage
improvement side skirts and tires. In addition to increasing the cost of a trailer, these regulations may also lead to a higher
demand for various aerodynamic device products.
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27
▪
In December 2017, the California Air Resource Board (“CARB”) unveiled its own proposal for new greenhouse gas standards
for medium- and heavy-duty trucks and trailers that operate in California. The CARB rules are similar to the EPA’PP s current
GHG2 standards for vehicles, but CARB made additions to counter pending EPAPP challenges to repeal rules pertaining to trailers.
On September 27, 2018, CARB approved for adoption the California Phase 2 GHG regulation. That regulation largely aligns
California’s GHG emission standards and test procedures with the federal Phase 2 GHG emission standards and test procedures
and provides nationwide consistency for engine and vehicle manufacturers, which will require trailers be equipped with the
fuel savings technologies outlined in the EPAPP GHG2 rules. We believed the likely start date was 2020. However, considering
the uncertainty presented by the EPAPP GHG2 circumstances, including the stay of the federal standards, CARB has suspended
its enforcement of the California GHG trailer standards for a period of at least two years (calendar years 2020 and 2021). We
will continue to monitor the CARB rulemaking.
Other Developments. Other developments and potential impacts on the industry include:
▪ While we believe the need for trailer equipment will be positively impacted by the legislative and regulatory changes addressed
above, these demand drivers could be offset
ff
by factors that contribute to the increased concentration and density of loads.
▪
▪
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company profitability,yy which can be influenced by factors such as fuel prices, freight tonnage volumes, and government
Trucking
regulations, is highly correlated with the overall economy of the U.S.; carrier profitability significantly impacts demand for,
and the financial ability to purchase new trailers.
Fleet equipment utilization has been rising due to increasing freight volumes, new government regulations and shortages of
qualified truck drivers. As a result, trucking companies are under increased pressure to look for alternative ways to move freight,
leading to more intermodal freight movement. We believe that railroads are at or near capacity,yy which will limit their ability
to respond to freight demand pressures. Therefore, we expect that the majority of freight in our industry will continue to be
moved by truck and, according to ATA,TT while trucking’s share of total freight tonnage will decrease slightly in 2030 from the
current year, freight tonnage carried by trucks is expected to increase to 14.2 billion tons in 2030 from the current 11.7 billion
tons.
Results of Operations
The following table sets forth certain operating data as a percentage of net sales for the periods indicated:
Net sales
Cost of sales
Gross profit
General and administrative expenses
Selling expenses
Amortization of intangibles
Other operating expenses
Income from operations
Interest expense
Other, net
Income before income taxes
Income tax expense
Net income
Years Ended December 31,
2018
100.0 %
87.5 %
12.5 %
2019
100.0 %
86.8 %
13.2 %
2017
100.0 %
85.2 %
14.8 %
4.7 %
1.5 %
0.9 %
— %
6.2 %
(1.2)%
0.1 %
5.1 %
1.2 %
3.9 %
4.2 %
1.5 %
0.8 %
1.1 %
4.9 %
(1.3)%
0.6 %
4.2 %
1.1 %
3.1 %
4.4 %
1.5 %
1.0 %
0.5 %
7.4 %
(1.0)%
0.5 %
6.9 %
0.6 %
6.3 %
28
2019 Compared to 2018
Net Sales
Net sales in 2019 increased $51.9 million, or 2.3%, compared to 2018. By business segment, net sales prior to intersegment
eliminations and related trailer units sold were as follows (dollars in thousands):
Sales by Segment
Commercial Trailer Products
Diversified Products
Final Mile Products
Eliminations
Total
New Trailers
Commercial Trailer Products
Diversified Products
Total
Used Trailers
Commercial Trailer Products
Diversified Products
Total
Year Ended December 31,
Change
2019
2018
Amount
%
(prior to elimination of intersegment sales)
$ 1,521,541
384,516
441,910
$ 1,536,939
393,971
358,249
$
(15,398)
(9,455)
83,661
(1.0%)
(2.4%)
23.4 %
(28,831)
$ 2,319,136
(21,881)
$ 2,267,278
$
51,858
2.3 %
(units)
54,650
2,850
57,500
(unniits)
75
75
150
59,500
2,650
62,150
950
150
1,100
(4,850)
200
(4,650)
(8.2%)
7.5 %
(7.5%)
(875)
(75)
(950)
(92.1%)
(50.0%)
(86.4%)
Commercial Trailer Products segment sales, prior to the elimination of intersegment sales, were $1.5 billion in 2019, a decrease
of $15.4 million, or 1.0%, compared to 2018. The decrease in sales was primarily due to an 8.2% decrease in new trailer shipments
as 54,650 trailers were shipped in 2019 compared to 59,500 trailer shipments in 2018. Pricing efforts
undertaken in response to
increases in commodity and labor costs experienced in 2018 partially offset
the decrease in volume of new trailer sales. Used
trailer sales decreased $9.2 million, or 95.5%, compared to 2018 primarily due to an 875 unit decrease in used trailer sales. Parts
and service sales in 2019 increased $5.4 million, or 15.3%, compared to 2018, which is attributable to a stronger focus on servicing
this market.
ff
ff
Diversified Products segment sales, prior to the elimination of intersegment sales, were $384.5 million in 2019, a decrease of $9.5
million, or 2.4%, compared to 2018. New trailer sales increased $33.3 million, or 20.2%, due to a 7.5% increase in new trailer
shipments, as approximately 2,850 trailers were shipped in 2019 compared to 2,650 trailers shipped in 2018 on higher demand
for tank trailers. Also contributing to the sales increase of new trailer sales were the pricing efforts
undertaken in response to
increases in commodity and labor costs experienced in 2018. Equipment and other sales decreased $32.2 million, or 31.1%,
primarily due to a $30.5 million decrease as a result of the divestiture of theAVTE business in January 2019. Sales of our components,
parts and service product offerings
in 2019 decreased $9.1 million, or 7.4%, compared to 2018, primarily due to $2.1 million of
lower sales as a result of the sale of the AVTE business and lower demand for our decking systems and other trailer parts and
accessories.
ff
ff
body unit shipments increased 15.3%, which combined with pricing efforts
Final Mile Products segment sales, prior to the eliminations of intersegment sales, were $441.9 million in 2019 compared to $358.2
undertaken
million in 2018, a 23.4% increase. Truckrr
in response to increases in commodity and labor costs experienced in 2018 drove a $77.3 million increase in new truck body sales
compared to 2018. The increase in truck body unit shipments is attributable to improved chassis availability compared to prior
year, our efforts
to increase the visibility of chassis supply resulting in improved production scheduling and less production
disruptions compared to prior year, and overall demand for our products within the final mile market. The remaining increase in
sales is attributable to increased sales of parts and services as a result of an increased focus of servicing this market, which included
opening a new facility in 2019.
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29
Cost of Sales
Cost of sales was $2.0 billion in 2019, an increase of $29.1 million, or 1.5%, compared to 2018. Cost of sales is comprised of
material costs, a variable expense, and other manufacturing costs, comprised of both fixed and variable expenses, including direct
and indirect labor, outbound freight, and overhead expenses.
Commercial Trailer Products segment cost of sales was $1.3 billion in 2019, a decrease of $24.2 million, or 1.8%, compared to
2018. The decrease was primarily driven by a $27.8 million decrease in materials costs driven by lower new trailer sales volumes,
partially offset
by an increase in the price of materials due to cost inflation as compared to 2018. Other manufacturing costs
increased $3.6 million as compared to 2018, including direct and indirect labor, outbound freight and overhead expenses.
ff
Diversified Products segment cost of sales, prior to the elimination of intersegment sales, was $309.9 million in 2019, a decrease
of $15.6 million, or 4.8%, compared to 2018. This decrease was the result of the divestiture of the AVTE business which resulted
in a $32.8 million decrease in cost of sales which was partially offset
by a $17.2 million increase in material costs and other
manufacturing costs in 2019 compared to 2018, which is in line with the increase in new trailer shipments.
ff
Final Mile Products segment cost of sales was $384.1 million in 2019 compared to $309.5 million in 2018, an increase of $74.6
million or 24.1%. The increase was driven by a $48.7 million increase in materials costs and a $25.9 million increase in other
manufacturing costs related to increased sales volumes and product mix.
Gross Profit
Gross profit was $306.4 million in 2019, an increase of $22.7 million, or 8.0% from 2018. Gross profit as a percentage of sales,
or gross margin, was 13.2% in 2019 as compared to 12.5% in 2018. Gross profit by segment was as follows (in thousands):
Gross Profit by Segment
Commercial Trailer Products
Diversified Products
Final Mile Products
Corporate and Eliminations
Total
Year Ended December 31,
Change
2019
2018
$
%
$
$
177,190
74,588
$
168,343
68,428
57,815
(3,211)
48,771
(1,891)
8,847
6,160
9,044
(1,320)
5.3%
9.0%
18.5%
$
306,382
$
283,651
$
22,731
8.0%
Commercial Trailer Products segment gross profit was $177.2 million in 2019 compared to $168.3 million in 2018, an increase
of $8.8 million. Gross profit, as a percentage of net sales prior to the elimination of intersegment sales, was 11.6% in 2019 as
compared to 11.0% in 2018, an increase of 60 basis points. The increases in gross profit and gross profit margin as compared to
2018 were attributable to our pricing efforts
to mitigate the impact of higher material and operating costs.
ff
Diversified Products segment gross profit was $74.6 million in 2019 compared to $68.4 million in 2018. Gross profit, as a percentage
of net sales prior to the elimination of intersegment sales, was 19.4% in 2019 compared to 17.4% in 2018, an increase of 200 basis
points. The increase in gross margin is primarily due to the divestiture of the AVTE business which had a gross margin of (0.5)%
and
in 2018. The remaining gross margin improvement and the increase in gross profit is attributable to operational efficiencies
higher sales volumes.
ff
Final Mile Products segment gross profit was $57.8 million in 2019 compared to $48.8 million in the fourth quarter of 2018. Gross
profit, as a percentage of sales, was 13.1% in 2019, compared to 13.6% in 2018. The increase in gross profit compared to 2018
was primarily driven by higher sales volumes and our pricing efforts.
The 50 basis point decrease in gross margin is primarily due
to increased material costs as a result of a higher take rate on lower margin options.
ff
General and Administrative Expenses
General and administrative expenses were $108.3 million in 2019, an increase of $13.2 million, or 13.8%, compared to 2018. The
increase was largely due to an approximate $8.0 million increase in employee-related costs, including benefits and incentive
programs, and increases in various other administrative expenses. These increases were partially offset
by lower general and
administrative expenses as a result of the sale of the AVTE business in January 2019. General and administrative expenses, as a
percentage of net sales, were 4.7% in 2019 compared to 4.2% in 2018.
ff
Selling Expenses
Selling expenses were $34.9 million in 2019, an increase of $1.8 million, or 5.5%, compared to 2018. The increase was due to a
$2.2 million increase in employee-related costs, including benefits and incentive programs, and a $1.6 million increase in advertising
30
and promotion efforts.
in January 2019. As a percentage of net sales, selling expenses were 1.5% in both 2019 and 2018.
These increases were partially offset
by lower selling expenses as a result of the sale of the AVTE business
ff
ff
Amortization of Intangibles
Amortization of intangibles was $20.5 million in 2019 compared to $19.5 million in 2018. Amortization of intangibles for both
periods primarily includes amortization expense recognized for intangible assets recorded from the acquisition of Walker in May
2012, certain assets acquired from Beall in February 2013, and Supreme in September 2017.
Impairment
There was no impairment expense in 2019, however, during 2018 impairment expense totaled $$25.0 million,
million which was attributable
to the AVTE business within the Diversified Products reportable segment. In the third quarter of 2018, the Company identified
indicators of impairment and performed an impairment analysis of the goodwill, intangible assets and long-lived assets, resulting
in a $12.0 million impairment charge. In the fourth quarter of 2018, with the financial framework of an agreement to sell the
Aviation and Truckrr
Equipment business largely agreed to with the buyers, the Company evaluated the remaining assets for
impairment based on the economics of the, then proposed, transaction. As a result of the Company’s impairment analysis, an
impairment of $13.0 million was recorded to fully impair all current assets of the business.
Other Income (Expense)
Interest
expense in 2019 totaled $27.3 million compared to $28.8 million in 2018. Interest expense in the current year is primarily
rr
related to interest and non-cash accretion charges on our Term Loan Credit Agreement and Senior Notes. The decrease from 2018
was due to our voluntary prepayments totaling approximately $50.0 million against our Term Loan Credit Agreement during 2019
and the retirement of the Convertible Notes completed in 2018.
Other,rr net for 2019 represented income of $2.3 million as compared to income of $13.8 million for 2018. Income for the current
year is primarily related to interest income and the sale of a building asset that resulted in an immaterial gain. Income for the prior
year was primarily related to the gains recognized on the sale of former branch locations throughout 2018.
Income Taxesaa
tax rate for 2019
We recognized income tax expense of $28.2 million in 2019 compared to $26.6 million in 2018. The effective
was 23.9%, which differs
from the U.S. Federal statutory rate of 21% primarily due to the impact of state and local taxes and tax
credits related to research and development expenses. Cash paid for income taxes in 2019 and 2018 were $20.4 million and $24.2
million, respectively.
ff
ff
Liquidity and Capital Resources
Capital Structure
Our capital structure is comprised of a mix of debt and equity. As of December 31, 2019, our debt to equity ratio was approximately
to support the growth within our businesses and
0.9:1.0. Our long-term objective is to generate operating cash flows sufficient
increase shareholder value. This objective will be achieved through a balanced capital allocation strategy of maintaining strong
liquidity,yy deleveraging our balance sheet, investing in the business, both organically and strategically,yy and returning capital to our
shareholders. Throughout 2019, and in keeping to this balanced approach, we repurchased $30.9 million of common stock under
the share repurchase program approved by our Board of Directors, paid dividends of $17.8 million, and made voluntary prepayments
totaling approximately $50.0 million against our Term Loan Credit Agreement. For 2020, we expect to continue our commitment
to fund our working capital requirements and capital expenditures while also deleveraging our balance sheet through cash flows
from operations as well as available borrowings under our existing Revolving Credit Agreement and returning capital to our
shareholders.
ff
Debt Agreements and Related Amendments
Convertible Senior Notes
ff
In April 2012, we issued Convertible Senior Notes due 2018 (the “Convertible Notes”) with an aggregate principal amount of
$150 million in a public offering.
The Convertible Notes bear interest at a rate of 3.375% per annum from the date of issuance,
payable semi-annually on May 1 and November 1, and matured on May 1, 2018. The Convertible Notes were senior unsecured
obligations ranked equally with our existing and future senior unsecured debt. We used the net proceeds of $145.1 million from
the sale of the Convertible Notes to fund a portion of the purchase price of the acquisition of Walker Group Holdings (“Walker”)
in May 2012. We accounted separately for the liability and equity components of the Convertible Notes in accordance with
authoritative guidance for convertible debt instruments that may be settled in cash upon conversion.
WW
During 2018, we used $80.2 million in cash, excluding interest, to settle $44.6 million in principal of the Convertible Notes of
which none were converted to common shares. The excess of the cash settlement amount over the principal value of the Convertible
Notes was accounted for as a reacquisition of equity,yy resulting in a $35.5 million reduction to additional paid-in capital during
31
2018. For the years ended December 31, 2018 and 2017, we recognized a loss on debt extinguishment of $0.2 million and $0.1
million, respectively related to settlements and the retirement of the Convertible Notes, which is included in Other,rr net on our
Consolidated Statements of Operations.
Senior Notes
On September 26, 2017, we issued Senior Notes due 2025 (the “Senior Notes”) in an offering
pursuant to Rule 144A or Regulation
S under the Securities Act of 1933, as amended, with an aggregate principal amount of $325 million. The Senior Notes bear interest
at the rate of 5.50% per annum from the date of issuance, and pay interest semi-annually in cash on April 1 and October 1 of each
year. We used the net proceeds of $318.9 million from the sale of the Senior Notes to finance a portion of the acquisition of Supreme
and to pay related fees and expenses.
ff
The Senior Notes will mature on October 1, 2025. At any time prior to October 1, 2020, we may redeem some or all of the Senior
Notes for cash at a redemption price equal to 100% of the aggregate principal amount of the Senior Notes being redeemed plus
an applicable make-whole premium set forth in the indenture for the Senior Notes and accrued and unpaid interest to, but not
including, the redemption date. Prior to October 1, 2020, we may redeem up to 40% of the Senior Notes at a redemption price of
105.50% of the principal amount, plus accrued and unpaid interest to, but not including, the redemption date, with the proceeds
of certain equity offerings
so long as if, after any such redemption occurs, at least 60% of the aggregate principal amount of the
Senior Notes remains outstanding. On and after October 1, 2020, we may redeem some or all of the Senior Notes at redemption
prices (expressed as percentages of principal amount) equal to 102.750% for the twelve-month period beginning on October 1,
2020, 101.375% for the twelve-month period beginning October 1, 2021 and 100.000% beginning on October 1, 2022, plus accrued
and unpaid interest to, but not including, the redemption date. Upon the occurrence of a Change of Control (as defined in the
indenture for the Senior Notes), unless we have exercised our optional redemption right in respect of the Senior Notes, the holders
of the Senior Notes have the right to require us to repurchase all or a portion of the Senior Notes at a price equal to 101% of the
aggregate principal amount of the Senior Notes, plus any accrued and unpaid interest to, but not including, the date of repurchase.
ff
The Senior Notes are guaranteed on a senior unsecured basis by all of our direct and indirect existing and future domestic restricted
subsidiaries, subject to certain exceptions. The Senior Notes and related guarantees are our and the guarantors’ general unsecured
senior obligations and are subordinate to all of our and the guarantors’ existing and future secured debt to the extent of the assets
securing that secured debt. In addition, the Senior Notes are structurally subordinate to any existing and future debt and other
obligations of any of our subsidiaries that are not guarantors, to the extent of the assets of those subsidiaries.
The indenture for the Senior Notes restricts our ability and the ability of certain of our subsidiaries to: (i) incur additional
indebtedness; (ii) pay dividends or make other distributions in respect of, or repurchase or redeem, our capital stock or with respect
to any other interest or participation in, or measured by,yy our profits; (iii) make loans and certain investments; (iv) sell assets;
(v) create or incur liens; (vi) enter into transactions with affiliates;
and (vii) consolidate, merge or sell all or substantially all of
our assets. These covenants are subject to a number of important exceptions and qualifications. During any time when the Senior
Notes are rated investment grade by Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services and no event of
default has occurred and is continuing, many of such covenants will be suspended and the Company and its subsidiaries will not
be subject to such covenants during such period.
ff
The indenture for the Senior Notes contains customary events of default, including payment defaults, breaches of covenants, failure
to pay certain judgments and certain events of bankruptcy,yy insolvency and reorganization. If an event of default occurs and is
continuing, the principal amount of the Senior Notes, plus accrued and unpaid interest, if any,yy may be declared immediately due
and payable. These amounts automatically become due and payable if an event of default relating to certain events of bankruptcy,yy
insolvency or reorganization occurs. As of December 31, 2019, we were in compliance with all covenants.
Contractual coupon interest expense and accretion of discount and fees for the Senior Notes for the years ended December 31,
expense on
2019, 2018 and 2017 was $18.5 million and $18.5 million and $4.8 million, respectively,yy and is included in Interest
our Consolidated Statements of Operations.
rr
Revolving Credit Agreement
On December 21, 2018, we entered into the Second Amended and Restated Credit Agreement (the “Revolving Credit Agreement”),
among us, certain of our subsidiaries as borrowers (together with us, the “Borrowers”), the lenders from time to time party thereto,
Wells Fargo Capital Finance, LLC, as the administrative agent, joint lead arranger and joint bookrunner (the “Revolver Agent”),
and Citizens Business Capital, a division of Citizens Asset Finance, Inc., as syndication agent, joint lead arranger and joint
bookrunner, which amended and restated our existing amended and restated revolving credit agreement, dated as of May 8, 2012.
The Revolving Credit Agreement is guaranteed by certain of our subsidiaries (the “Revolver Guarantors”) and is secured by (i)
first priority security interests (subject only to customary permitted liens and certain other permitted liens) in substantially all
personal property of the Borrowers and the Revolver Guarantors, consisting of accounts receivable, inventory,yy cash, deposit and
securities accounts and any cash or other assets in such accounts and, to the extent evidencing or otherwise related to such property,yy
all general intangibles, licenses, intercompany debt, letter of credit rights, commercial tort claims, chattel paper, instruments,
32
supporting obligations, documents and payment intangibles (collectively,yy the “Revolver Priority Collateral”), and (ii) second-
priority liens on and security interests in (subject only to the liens securing the Term Loan Credit Agreement (as defined below),
customary permitted liens and certain other permitted liens) (A) equity interests of each direct subsidiary held by the Borrowers
and each Revolver Guarantor (subject to customary limitations in the case of the equity of foreign subsidiaries), and (B) substantially
all other tangible and intangible assets of the Borrowers and the Revolver Guarantors including equipment, general intangibles,
intercompany notes, insurance policies, investment property and intellectual property (in each case, except to the extent constituting
Revolver Priority Collateral), but excluding real property (collectively,yy including certain material owned real property that does
not constitute collateral under the Revolving Credit Agreement, the “TermTT
Priority Collateral”). The respective priorities of the
security interests securing the Revolving Credit Agreement and the Term Loan Credit Agreement are governed by an Intercreditor
Agreement, dated as of May 8, 2012, between the Revolver Agent and the Term Agent (as defined below), as amended (the
“Intercreditor Agreement”). The Revolving Credit Agreement has a scheduled maturity date of December 21, 2023, subject to
certain springing maturity events.
Under the Revolving Credit Agreement, the lenders agree to make available to us a $175 million revolving credit facility. We have
the option to increase the total commitment under the facility to up to $275 million, subject to certain conditions, including obtaining
commitments from any one or more lenders, whether or not currently party to the Revolving Credit Agreement, to provide such
increased amounts. Availability under the Revolving Credit Agreement will be based upon quarterly (or more frequent under
certain circumstances) borrowing base certifications of the Borrowers’ eligible inventory and eligible accounts receivable, and
will be reduced by certain reserves in effect
from time to time. Subject to availability,yy the Revolving Credit Agreement provides
for a letter of credit subfacility in an amount not in excess of $15 million, and allows for swingline loans in an amount not in
excess of $17.5 million. Outstanding borrowings under the Revolving Credit Agreement will bear interest at an annual rate, at the
Borrowers’ election, equal to (i) LIBOR plus a margin ranging from 1.25% to 1.75% or (ii) a base rate plus a margin ranging from
0.25% to 0.75%, in each case depending upon the monthly average excess availability under the revolving loan facility. The
Borrowers are required to pay a monthly unused line fee equal to 0.20% times the average daily unused availability along with
other customary fees and expenses of the Revolver Agent and the lenders.
ff
The Revolving Credit Agreement contains customary covenants limiting our ability and the ability of certain of our affiliates
to,
among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock, enter into transactions with affiliates,
merge, dissolve, repay subordinated indebtedness, make investments and dispose of assets. In addition, we will be required to
maintain a minimum fixed charge coverage ratio of not less than 1.0 to 1.0 as of the end of any period of 12 fiscal months
(commencing with the month ending December 31, 2018) when excess availability under the Revolving Credit Agreement is less
than 10% of the total revolving commitment.
ff
ff
If availability under the Revolving Credit Agreement is less than 15% of the total revolving commitment or if there exists an event
of default, amounts in any of the Borrowers’ and the Revolver Guarantors’ deposit accounts (other than certain excluded accounts)
will be transferred daily into a blocked account held by the Revolver Agent and applied to reduce the outstanding amounts under
the facility.
Subject to the terms of the Intercreditor Agreement, if the covenants under the Revolving Credit Agreement are breached, the
lenders may,yy subject to various customary cure rights, require the immediate payment of all amounts outstanding and foreclose
on collateral. Other customary events of default in the Revolving Credit Agreement include, without limitation, failure to pay
obligations when due, initiation of insolvency proceedings, defaults on certain other indebtedness, and the incurrence of certain
judgments that are not stayed, satisfied, bonded or discharged within 30 days.
As of December 31, 2019 and 2018, we had no outstanding borrowings under the Revolving Credit Agreement and were in
compliance with all covenants. Our liquidity position, defined as cash on hand and available borrowing capacity on the Revolving
Credit Agreement, amounted to $308.1 million as of December 31, 2019. In connection with the execution of the Revolving Credit
Agreement, we recognized a loss on debt extinguishment of $0.1 million during 2018, which is included in Other,rr net on the
Company’s Consolidated Statements of Operations.
Term Loan Credit Agreement
Loan Credit Agreement”), dated as of May
In May 2012, we entered into a Term Loan Credit Agreement (as amended, the “TermTT
8, 2012, among us, the several lenders from time to time party thereto, Morgan Stanley Senior Funding, Inc., as administrative
agent (the “TermTT
Agent”), joint lead arranger and joint bookrunner, and Wells Fargo Securities, LLC, as joint lead arranger and
joint bookrunner, which provides for, among other things, (x) a senior secured term loan of $188.0 million that matures on March
Loans”), and (y) an uncommitted accordion feature to provide
19, 2022, subject to certain springing maturity events (the “TermTT
for additional senior secured term loans of up to $75 million plus an unlimited amount provided that the senior secured leverage
ratio would not exceed 3.00 to 1.00, subject to certain conditions (the “TermTT
Loan Facility”).
On February 24, 2017, we entered into Amendment No. 3 to the Term Loan Credit Agreement (“Amendment No. 3”). As of
February 24, 2017, $189.5 million of the Tranche B-2 Loans were outstanding. Under Amendment No. 3, the lenders agreed to
33
provide us term loans in the same aggregate principal amount of the outstanding Tranche B-2 Loans (the “Tranche
which were used to refinance the outstanding Tranche B-2 Loans.
TT
B-3 Loans”),
In connection with, and in order to permit under the Term Loan Credit Agreement, the Senior Notes offering
and the acquisition
of Supreme, on August 18, 2017, we entered into Amendment No. 4 to the Term Loan Credit Agreement (“Amendment No. 4”).
Amendment No. 4 also permitted us to incur certain other indebtedness in connection with the Supreme acquisition and to acquire
certain liens and obligations of Supreme upon the consummation of the Supreme acquisition.
ff
Furthermore, on November 17, 2017, we entered into Amendment No. 5 to the Term Loan Credit Agreement (“Amendment No.
5”). As of the Amendment No. 5 date, $188.0 million of the Term Loans were outstanding. Under Amendment No. 5, the lenders
agreed to provide us term loans in the same aggregate principal amount of the outstanding Term Loans (“Tranche
B-4 Loans”),
which were used to refinance the outstanding Term Loans.
TT
The Tranche B-4 Loans bear interest at a rate, at the Company’s election, equal to (i) LIBOR (subject to a floor of 0%) plus a
margin of 225 basis points or (ii) a base rate (subject to a floor of 0%) plus a margin of 125 basis points. We are not subject to any
financial covenants under the Term Loan Facility.
The Term Loan Credit Agreement is guaranteed by certain of our subsidiaries, and is secured by (i) first-priority liens on and
security interests in the Term Priority Collateral, and (ii) second-priority security interests in the Revolver Priority Collateral.
The Term Loan Credit Agreement contains customary covenants limiting our ability to, among other things, pay cash dividends,
merge, dissolve, pay offff subordinated
incur debt or liens, redeem or repurchase stock, enter into transactions with affiliates,
indebtedness, make investments and dispose of assets. Subject to the terms of the Intercreditor Agreement, if the covenants under
the Term Loan Credit Agreement are breached, the lenders may,yy subject to various customary cure rights, require the immediate
payment of all amounts outstanding and foreclose on collateral. Other customary events of default in the Term Loan Credit
Agreement include, without limitation, failure to pay obligations when due, initiation of insolvency proceedings, defaults on certain
other indebtedness, and the incurrence of certain judgments that are not stayed, satisfied, bonded or discharged within 60 days.
As of December 31, 2019, we were in compliance with all covenants.
ff
For the years ended December 31, 2019, 2018 and 2017, under the Term Loan Credit Agreement the Company paid interest of
$7.8 million, $8.0 million and $7.4 million, respectively,yy and paid principal of $50.5 million, $1.9 million, and $1.9 million,
respectively. During 2019, the Company recognized losses on debt extinguishment totaling approximately $0.2 million in
connection with the prepayment of principal. In connection withAmendment No. 3 andAmendment No. 5, the Company recognized
a loss on debt extinguishment of approximately $0.7 million during 2017. The losses on debt extinguishment are included in Other,rr
net on the Company’s Consolidated Statements of Operations. As of December 31, 2019 and December 31, 2018, the Company
had $135.2 million and $185.7 million, respectively,yy outstanding under the Term Loan Credit Agreement, of which none and $1.9
million, respectively,yy was classified as current on the Company’s Consolidated Balance Sheets.
For the years ended December 31, 2019, 2018, and 2017, the Company incurred charges of $0.2 million in each period for
expense in the Consolidated Statements of
amortization of fees and original issuance discount which is included in Interest
Operations.
rr
Cash Flow
2019 compared to 2018
Cash provided by operating activities for 2019 totaled $146.3 million, compared to $112.5 million in 2018. The cash provided by
operations during the current year was the result of net income adjusted for various non-cash activities, including depreciation,
amortization, net gain on the sale of assets, deferred taxes, loss on debt extinguishment, stock-based compensation, and accretion
of debt discount of $145.5 million, and a $0.8 million decrease in our working capital. Changes in key working capital accounts
for 2019 and 2018 are summarized below (in thousands):
Source (use) of cash:
Accounts receivable
Inventories
Accounts payable and accrued liabilities
Net source (use) of cash
2019
2018
Change
$
$
8,327
(2,510)
(817)
5,000
$
$
(39,539) $
(18,713)
32,653
(25,599) $
47,866
16,203
(33,470)
30,599
Accounts receivable decreased by $8.3 million in 2019 compared to an increase of $39.5 million for 2018. Days sales outstanding,
a measure of working capital efficiency
that measures the amount of time a receivable is outstanding, was approximately 27 days
as of both December 31, 2019 and 2018. The decrease in accounts receivable for 2019 was primarily due to strong customer
collections during the current year. Increases in inventory in 2019 and 2018 resulted in a use of cash of $2.5 million and $18.7
ff
34
million, respectively. Our inventory turns, a commonly used measure of working capital efficiency
that measures how quickly
inventory turns per year was approximately 8 times in 2019 compared to 10 times in 2018. The increase in inventory for 2019
by a decrease in raw materials inventory due
resulted from higher finished goods and work in progress inventories partially offset
to softer demand as of December 31, 2019 compared to December 31, 2018. Accounts payable and accrued liabilities decreased
by $0.8 million in 2019 compared to an increase of $32.7 million for 2018. Days payable outstanding, a measure of working capital
efficiency
that measures the amount of time a payable is outstanding, was 24 days in 2019 and 31 days in 2018. The decrease in
ff
2019 was primarily due to lower raw materials inventory and the overall timing of payments compared to 2018, partially offset
by an increase in accrued liabilities attributed to employee-related costs, including benefits and incentive programs.
ff
ff
ff
Investing activities used $36.9 million during 2019 compared to $13.2 million used in 2018. Investing activities for 2019 included
capital expenditures $37.6 million to support growth and improvement initiatives at our facilities partially offset
by proceeds from
the sale of assets totaling $0.8 million due to the sale of a building asset that resulted in an immaterial gain. Cash used in investing
activities in 2018 was primarily related to capital expenditures to support growth and improvement initiatives at our facilities
totaling $34.0 million, partially offset
by proceeds from the sale of certain branch location assets totaling $17.8 million.
ff
ff
Financing activities used $101.6 million during 2019, primarily related to principal payments on our Term Loan Credit Agreement
of $50.5 million, common stock repurchases of $33.7 million, and cash dividends paid to our shareholders of $17.8 million.
Financing activities used $158.1 million during 2018, primarily related to the repurchase of Convertible Notes totaling $80.2
million, repurchases of common stock through our share repurchase program totaling $58.4 million, and cash dividends paid to
our shareholders and holders of our Convertible Notes of $17.8 million.
As of December 31, 2019, our liquidity position, defined as cash on hand and available borrowing capacity,yy amounted to $308.1
million, representing a decrease of $8.6 million from December 31, 2018. Total debt and finance lease obligations amounted to
$456.1 million as of December 31, 2019. Based on the financial position of the Company at December 31, 2019, the expected
demand environment within the trailer industry,yy and the current and anticipated operational performance of all three of our reportable
segments, we believe our cash on hand, available borrowing capacity,yy and future cash flows from operating activities will enable
us to fund our planned operation levels, working capital requirements, capital expenditures, and debt service requirements in 2020.
Contractual Obligations and Commercial Commitments
A summary of our contractual obligations and commercial commitments, both on and offff balance sheet, as of December 31, 2019
are as follows (in thousands):
2020
2021
2022
2023
2024
Thereafter
Total
Debt:
Revolving Facility (due 2023)
$
Term Loan Credit Facility (due 2022)
Senior Notes (due 2025)
Finance Leases (including principal and
interest)
Total debt
Other:
Operating Leases
Total other
Other commercial commitments:
Letters of Credit
Raw Material Purchase Commitments
Chassis Agreements and Programs
$
—
—
—
361
361
—
—
—
361
361
$
—
$
135,228
—
30
135,258
$
—
—
—
—
—
4,986
4,986
7,432
83,922
13,473
4,477
4,477
2,551
2,551
1,855
1,855
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
851
851
—
—
—
—
$
—
—
325,000
$
—
135,228
325,000
—
752
325,000
460,980
1,242
1,242
15,962
15,962
—
—
—
—
7,432
83,922
13,473
104,827
Total other commercial commitments
104,827
Total obligations
$ 110,174
$
4,838
$ 137,809
$
1,855
$
851
$
326,242
$ 581,769
Scheduled payments for our Revolving Credit Facility exclude interest payments as rates are variable. Borrowings under the
Revolving Credit Facility bear interest at a variable rate based on the London Interbank Offer
Rate (LIBOR) or a base rate
determined by the lender’s prime rate plus an applicable margin, as defined in the agreement. Outstanding borrowings under the
Revolving Credit Facility bear interest at a rate, at our election, equal to (i) LIBOR plus a margin ranging from 1.25% to 1.75%
or (ii) a base rate plus a margin ranging from 0.25% to 0.75%, in each case depending upon the monthly average excess availability
under the Revolving Credit Facility. We are required to pay a monthly unused line fee equal to 0.20% times the average daily
unused availability along with other customary fees and expenses of our agent and lenders.
ff
35
Scheduled payments for our Term Loan Credit Agreement, as amended, exclude interest payments as rates are variable. Borrowings
under the Term Loan Credit Agreement, as amended, bear interest at a variable rate, at our election, equal to (i) LIBOR (subject
to a floor of 0.00%) plus a margin of 2.25% or (ii) a base rate (subject to a floor of 0.00%) plus a margin of 1.25%. The Term Loan
Credit Agreement matures in March 2022 subject to certain springing maturity events.
Scheduled payments for our Senior Notes exclude interest payments. The Senior Notes bear interest at the rate of 5.5% per annum
from the date of issuance, payable semi-annually on April 1 and October 1.
Finance leases represent future minimum lease payments including interest. Operating leases represent the total future minimum
lease payments.
We have standby letters of credit totaling $7.4 million issued in connection with workers compensation claims and surety bonds.
We have $83.9 million in purchase commitments through December 2020 for various raw material commodities, including
aluminum, steel, polyethylene and nickel as well as other raw material components which are within normal production
requirements.
We, through our subsidiary Supreme, obtain most vehicle chassis for its specialized vehicle products directly from the chassis
manufacturers under converter pool agreements. Chassis are obtained from the manufacturers based on orders from customers,
and in some cases, for unallocated orders. The agreements generally state that the manufacturer will provide a supply of chassis
to be maintained at the Company’s facilities with the condition that we will store such chassis and will not move, sell, or otherwise
dispose of such chassis except under the terms of the agreement. In addition, the manufacturer typically retains the sole authority
to authorize commencement of work on the chassis and to make certain other decisions with respect to the chassis including the
terms and pricing of sales of the chassis to the manufacturer’s dealers. The manufacturer also does not transfer the certificate of
origin to the Company nor permit the Company to sell or transfer the chassis to anyone other than the manufacturer (for ultimate
resale to a dealer). Although the Company is party to related finance agreements with manufacturers, the Company has not
historically settled, nor expects to in the future settle, any related obligations in cash. Instead, the obligation is settled by the
manufacturer upon reassignment of the chassis to an accepted dealer, and the dealer is invoiced for the chassis by the
manufacturer. Accordingly,yy as of December 31, 2019 the Company’s outstanding chassis converter pool with the manufacturer
totaled $10.2 million and has included this financing agreement on the Company’s Consolidated Balance Sheets within Prepaid
expenses and other and Other accrued liabilities. All other chassis programs through its Supreme subsidiary are handled as
consigned inventory belonging to the manufacturer and totaled approximately $3.3 million. Under these agreements, if the chassis
is not delivered to a customer within a specified time frame the Company is required to pay a finance or storage charge on the
chassis. Additionally,yy the Company receives finance support funds from manufacturers when the chassis are assigned into the
Company’s chassis pool. Typically,yy chassis are converted and delivered to customers within 90 days of the receipt of the chassis
by the Company.
rr
The total amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of
tax benefits, was $2.1 million at December 31, 2019. Payment of these obligations would result from settlements with taxing
in determining the timing of settlements, these obligations are not included in the table above.
authorities. Due to the difficulty
We do not expect to make a tax payment related to these obligations within the next year that would significantly impact liquidity.
ff
Significant Accounting Policies and Critical Accounting Estimates
Our significant accounting policies are more fully described in Note 2 to our consolidated financial statements. Certain of our
accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for
calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments
are based on our historical experience, terms of existing contracts, evaluation of trends in the industry,yy information provided by
our customers and information available from other outside sources, as appropriate.
We consider an accounting estimate to be critical if it requires us to make assumptions about matters that were uncertain at the
time we were making the estimate or changes in the estimate or different
estimates that we could have selected would have had
ff
a material impact on our financial condition or results of operations.
Warranties. We estimate warranty claims based on our historical information and the nature, frequency and average cost of claims
of our various product lines, combined with our current understanding of existing claims, recall campaigns and discussions with
our customers. Actual experience could differ
from the amounts estimated requiring adjustments to these liabilities in future
periods. Due to the uncertainty and potential volatility of the factors contributing to developing estimates, changes in our
assumptions could materially affect
our results of operations.
ff
ff
Legal and Other Contingencies. The outcomes of legal proceedings and claims brought against us and other loss contingencies
are subject to significant uncertainty. We establish legal contingency reserves when we determine that it is probable that a liability
has been incurred and the amount of loss can be reasonably estimated. In determining the appropriate accounting for loss
contingencies, we consider the likelihood of loss or the incurrence of a liability,yy as well as our ability to reasonably estimate the
36
amount of loss. We regularly evaluate current information available to us to determine whether an accrual should be established
or adjusted. Estimating the probability that a loss will occur and estimating the amount of a loss or a range of loss involves
significant judgment and such matters are unpredictable. We could incur judgments or enter into settlements for current or future
claims that could materially impact our results of operations.
Impairment of Long-Lived Assets and Definite-Lived Intangible Assets. We review,ww on at least a quarterly basis, the financial
performance of each business unit for indicators of impairment. In reviewing for impairment indicators, we also consider events
or changes in circumstances such as business prospects, customer retention, market trends, potential product obsolescence,
competitive activities and other economic factors. An impairment loss is recognized when the carrying value of an asset group
exceeds the future net undiscounted cash flows expected to be generated by that asset group. The impairment loss recognized is
the amount by which the carrying value of the asset group exceeds its fair value.
Goodwill. We assess goodwill for impairment at the reporting unit level on an annual basis as of October 1, after the annual
planning process is complete. More frequent evaluations may be required if we experience changes in our business climate or as
a result of other triggering events that may take place. If the carrying value exceeds fair value, the asset is considered impaired
and is reduced to its fair value.
In assessing goodwill for impairment, we may choose to initially evaluate qualitative factors to determine if it is more likely than
not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment is not conclusive, then an
impairment analysis for goodwill is performed at the reporting unit level using a quantitative approach. The quantitative test is a
comparison of the fair value of the reporting unit, determined using a combination of the income and market approaches, to its
recorded amount. If the recorded amount exceeds the fair value, an impairment is recorded to reduce the carrying amount to fair
value, but will not exceed the amount of goodwill that is recorded.
The process of evaluating goodwill for impairment is subjective and requires significant judgment at many points during the
analysis. If we elect to perform an optional qualitative analysis, we consider many factors including, but not limited to, general
economic conditions, industry and market conditions, financial performance and key business drivers, long-term operating plans,
and potential changes to significant assumptions used in the most recent fair value analysis for the reporting unit. When performing
a quantitative goodwill impairment test, we generally determine fair value using a combination of an income-based approach and
a market-based approach. The fair value determination consists primarily of using significant unobservable inputs (Level 3) under
the fair value measurement standards. We believe the most critical assumptions and estimates in determining the estimated fair
value of our reporting units include, but are not limited to, the amounts and timing of expected future cash flows which is largely
dependent on expected EBITDA margins, the discount rate applied to those cash flows, and terminal growth rates. The assumptions
used in determining our expected future cash flows consider various factors such as historical operating trends and long-term
operating strategies and initiatives. The discount rate used by each reporting unit is based on our assumption of a prudent investor’s
required rate of return of assuming the risk of investing in a particular company. The terminal growth rate reflects the sustainable
operating income a reporting unit could generate in a perpetual state as a function of revenue growth, inflation and future margin
expectations. Future events and changing market conditions may,yy however, lead us to re-evaluate the assumptions we have used
to test for goodwill impairment, including key assumptions used in our expected EBITDA margins and cash flows, as well as other
key assumptions with respect to matters out of our control, such as discount rates and market multiple comparables.
Goodwill impairment test
As of December 31, 2019, goodwill allocated to our CTP,PP DPG, and FMP segments was approximately $2.6 million, $140.7
million, and $167.7 million, respectively. In connection with our annual goodwill impairment test, we performed a quantitative
assessment for each reporting unit as of October 1, 2019, utilizing a combination of the income and market approaches, the results
of which we weighted evenly. No impairment was indicated as the fair value of each reporting unit exceeded its respective carrying
value.
ff
In the fourth quarter of 2019, the FMP reporting unit did not perform in-line with internal expectations, driven by several operational
inefficiencies,
which we identified as an indicator of impairment. As a result, we performed an interim quantitative assessment as
of December 31, 2019, utilizing a combination of the income and market approaches, which we weighted evenly. No impairment
was indicated as the fair value of the reporting unit exceeded its carrying value. The results of the quantitative analysis performed
indicated the fair value of the FMP reporting unit exceeded the carrying value by approximately 3%. Key assumptions used in the
analysis were a discount rate of 16.0%, EBITDA margin, and a terminal growth rate of 3.0%. Since the acquisition of Supreme
in 2017, which is when we added the FMP reporting unit, we have invested, and intend to continue to invest, in growth and
productivity initiatives that will drive strong future profitability. While the financial benefits from these initiatives have not
materialized as quickly as anticipated and thus have resulted in lower than projected post-acquisition EBITDA for the reporting
unit, we continue to believe these projects will result in significant future earnings. Future events and changing market conditions
may,yy however, lead us to re-evaluate the assumptions we have used to test for goodwill impairment, including key assumptions
used in our expected EBITDA margins and cash flows, as well as other key assumptions with respect to matters out of our control,
37
such as discount rates and market multiple comparables. Based on the results of the interim quantitative test, we performed
sensitivity analysis around the key assumptions used in the analysis, the results of which were: (a) a 100 basis point decrease in
the EBITDA margin used to determine expected future cash flows would have resulted in an impairment of approximately $19.5
million, (b) a 50 basis point increase in the discount rate would have resulted in an impairment of approximately $5.0 million, and
(c) a 100 basis point decrease in the terminal growth rate would have resulted in an impairment of approximately $5.4 million.
Subsequent impairment indicators
Subsequent to December 31, 2019, the Company’s market capitalization has declined, which may be an indicator of impairment.
We believe this decline in our market capitalization is primarily due to softer trailer production estimates from ACT and FTR for
2020 and 2021 compared to 2019. The Company will continue to assess the impact of its market capitalization and any other
indicators of potential impairment. It is possible that if the Company’s market capitalization decline is more than temporary,yy or if
other indicators of impairment are identified, an interim impairment analysis may be necessary,yy which could result in an impairment
of goodwill.
Other
Inflation
Inflation impacts prices paid for labor, materials and supplies. Significant increases in the costs of production or certain commodities,
raw materials, and components could have an adverse impact on our results of operations. As has been our practice, we will
endeavor to offset
the impact of inflation through selective price increases, productivity improvements and hedging activities.
ff
g
New Accounting Pronouncements
For information related to new accounting standards, see Note 3 of the Notes to Consolidated Financial Statements in Part II Item
8 of this Form 10-K.
ITEM 7A–QUANTITATTT IVETT
AND QUALITATTT IVETT
DISCLOSURES ABOUT MARKET RISK
In addition to the risks inherent in our operations, we have exposure to financial and market risk resulting from volatility in commodity
prices and interest rates. The following discussion provides additional detail regarding our exposure to these risks.
Commodity Price Risks
We are exposed to fluctuation in commodity prices through the purchase of various raw materials that are processed from commodities
such as aluminum, steel, lumber, nickel, copper and polyethylene. Given the historical volatility of certain commodity prices, this
exposure can significantly impact product costs. We manage some of our commodity price changes by entering into fixed price
contracts with our suppliers and through financial derivatives. To the extent that we are unable to offset
the increased commodity
costs in our product prices, our results would be materially and adversely affected.
As of December 31, 2019, we had $83.9 million
in raw material purchase commitments through December 2020 for materials that will be used in the production process, as compared
to $147.5 million as of December 31, 2018. We typically do not set prices for our products more than 45-90 days in advance of our
commodity purchases and can, subject to competitive market conditions, take into account the cost of the commodity in setting our
prices for each order. As of December 31, 2019, a hypothetical 100 basis-point change in commodity prices based on our raw material
purchase commitments through December 2020 would result in a corresponding change in cost of goods sold over a one-year period
of approximately $8.4 million. This sensitivity analysis does not account for the change in the competitive environment indirectly
related to the change in commodity prices and the potential managerial action taken in response to these changes.
ff
ff
rr
Interest
Rates
As of December 31, 2019, we had no floating rate debt outstanding under our Revolving Credit Facility and for 2019 we maintained
no floating rate borrowings under our Revolving Credit Facility. In addition, as of December 31, 2019, we had outstanding borrowings
under our Term Loan Credit Agreement, as amended, totaling $135.2 million that bear interest at a floating rate, subject to a minimum
interest rate. Based on the average borrowings under our revolving facility and the outstanding indebtedness under our Term Loan
Credit Agreement a hypothetical 100 basis-point change in the floating interest rate would result in a corresponding change in interest
expense over a one-year period of approximately $1.4 million. This sensitivity analysis does not account for the change in the
competitive environment indirectly related to the change in interest rates and the potential managerial action taken in response to
these changes.
rr
Foreign
Exchange Rates
We are subject to fluctuations in the British pound sterling and Mexican peso exchange rates that impact transactions with our foreign
subsidiaries, as well as U.S. denominated transactions between these foreign subsidiaries and unrelated parties. A ten percent change
in the British pound sterling or Mexican peso exchange rates would have an immaterial impact on results of operations. We do not
hold or issue derivative financial instruments for speculative purposes.
38
ITEM 8—FINANCIAL STATTT EMENTS
TT
AND SUPPLEMENTARTT
Y DATA
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2019 and 2018
Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017
Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, 2018 and 2017
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017
Notes to Consolidated Financial Statements
Page
41
43
44
45
46
47
48
39
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Wabash National Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Wabash
National Corporation (the Company) as of December 31,
2019 and 2018, the related consolidated statements of operations, comprehensive income, stockholders’ equity,yy and cash flows for
each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly,yy in all material respects, the financial
position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2019, in conformity with US generally accepted accounting principles.
a
We also have audited, in accordance with the standards of the Public CompanyAccounting Oversight Board (United States) (PCAOB),
the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and
our report dated February 25, 2020 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the
critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not,
by communicating the critical audit matter below,w providing a separate opinion on the critical audit matter or on the account or
disclosure to which it relates.
Description of the
Matter
Valuation of Goodwill
At December 31, 2019, the Company’s goodwill was $311.0 million. As discussed in Note 2 to the
consolidated financial statements, goodwill is tested for impairment at the reporting unit level at least annually
or whenever events or changes in circumstances indicate its carrying value may not be recoverable.
Auditing management’s annual goodwill impairment test was complex and highly judgmental due to the
significant estimation required to determine the fair values of the reporting units. In particular, the fair value
estimates were sensitive to significant assumptions, such as changes in the discount rate, EBITDA margin,
by expectations about future market or economic conditions.
and terminal growth rates, which are affected
ff
40
rr
How We Addressed
the Matter in Our
Audit
ff
We obtained an understanding, evaluated the design and tested the operating effectiveness
of controls over
the Company’s goodwill impairment testing process, including controls over management’s review of the
significant data and assumptions described above.
To test the estimated fair values of the Company’s reporting units, we performed audit procedures that
included, among others, assessing methodologies, testing the significant assumptions discussed above used
to develop the prospective financial information and testing the underlying data used by the Company in its
analysis. We compared the prospective financial information developed by management to the historical
performance of each reporting unit as well as current industry and economic trends, and evaluated the
expected impacts of the Company’s operating strategies and initiatives on the significant assumptions. In
addition, we tested management’s reconciliation of the fair value of the reporting units to the market
capitalization of the Company. We involved our internal valuation specialists to assist in our evaluation of
the methodologies used by the Company,yy the discount rate assumptions and the calculations of each reporting
unit’s fair value.
/s/ ERNST & YOUNG LLP
We have served as the Company’s auditor since 2002.
Indianapolis, Indiana
February 25, 2020
41
WABASH NATIONAL
CONSOLIDATEDAA
CORPORATION
BALANCE SHEETS
AA
AA
(Dollars in thousands)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net
Inventories
Prepaid expenses and other
Total current assets
Property,yy plant, and equipment, net
Goodwill
Intangible assets
Other assets
Total assets
Current liabilities:
Liabilities and Stockholders' Equity
Current portion of long-term debt
Current portion of finance lease obligations
Accounts payable
Other accrued liabilities
Total current liabilities
Long-term debt
Finance lease obligations
Deferred income taxes
Other non-current liabilities
Total liabilities
Commitments and contingencies
Stockholders' equity:
$
$
$
December 31,
2019
2018
$
140,516
172,737
186,914
41,222
541,389
221,346
311,026
189,898
40,932
132,690
181,064
184,404
51,261
549,419
206,991
311,084
210,328
26,571
1,304,591
$
1,304,393
—
$
327
134,821
124,230
259,378
455,386
378
37,576
30,885
783,603
1,880
299
153,113
116,384
271,676
503,018
714
34,905
20,231
830,544
Common stock, $0.01 par value: 200,000,000 shares authorized; 53,473,620 and
55,135,788 shares outstanding, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost: 21,640,109 and 19,372,735 common shares, respectively
Total stockholders' equity
Total liabilities and stockholders' equity
750
638,917
221,841
(3,978)
(336,542)
520,988
1,304,591
$
$
744
629,039
150,244
(3,343)
(302,835)
473,849
1,304,393
The accompanying notes are an integral part of these Consolidated Statements.
42
WABASH NATIONAL
AA
STATTT EMENTS OF OPERATIONS
CORPORATION
AA
AA
CONSOLIDATEDAA
(Dollars in thousands, except per share amounts)
Net sales
Cost of sales
Gross profit
General and administrative expenses
Selling expenses
Amortization of intangible assets
Acquisition expenses
Impairment
Income from operations
Other income (expense):
Interest expense
Other, net
Other expense, net
Income before income tax
Income tax expense
Net income
Net income per share:
Basic
Diluted
Weighted average common shares outstanding (in thousands):
Basic
Diluted
Dividends declared per share
Year Ended December 31,
$
$
$
$
2019
2,319,136
2,012,754
306,382
108,274
34,851
20,471
—
—
142,786
(27,340)
2,285
(25,055)
117,731
28,156
89,575
1.64
1.62
54,695
55,290
$
$
$
$
2018
2,267,278
1,983,627
283,651
95,114
33,046
19,468
68
24,968
110,987
(28,759)
13,776
(14,983)
96,004
26,583
69,421
1.22
1.19
56,996
58,430
2017
1,767,161
1,506,286
260,875
77,825
25,588
17,041
9,605
—
130,816
(16,400)
8,122
(8,278)
122,538
11,116
111,422
1.88
1.78
59,358
62,599
0.320
$
0.305
$
0.255
$
$
$
$
$
The accompanying notes are an integral part of these Consolidated Statements.
43
WABASH NATIONAL
AA
CORPORATION
AA
CONSOLIDATEDAA
STATTT EMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
Net income
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment and other
Unrealized loss on derivative instruments
Total other comprehensive (loss) income
Comprehensive income
Year Ended December 31,
2019
2018
$
89,575
$
69,421
$
712
(1,347)
(635)
88,940
$
(193)
(765)
(958)
68,463
$
$
2017
111,422
462
—
462
111,884
The accompanying notes are an integral part of these Consolidated Statements.
44
WABASH NATIONAL
AA
CORPORATION
AA
CONSOLIDATEDAA
STATTT EMENTS OF STOCKHOLDERS’ EQUITY
(Dollars in thousands)
Common Stock
Shares
Amount
Additional
Paid-In
Capital
Retained
Earnings
(Deficit)
Accumulated
Other
Comprehensive
Losses
Treasury
Stock
Total
Balances at December 31, 2016
60,129,631
$
725
$ 640,883
$
3,591
$
(2,847) $ (169,961) $ 472,391
Net income for the year
Foreign currency translation and other
111,422
462
Stock-based compensation
Stock repurchase
650,218
(3,726,809)
7
10,422
Equity component of convertible senior
notes repurchase
Common stock dividends
Common stock issued in connection with:
(3,655)
(16,285)
Stock option exercises
511,453
5
5,785
111,422
462
10,429
(74,491)
(74,491)
(3,655)
(16,285)
5,790
Balances at December 31, 2017
57,564,493
$
737
$ 653,435
$
98,728
$
(2,385) $ (244,452) $ 506,063
Net income for the year
Foreign currency translation and other
69,421
Stock-based compensation
Stock repurchase
404,628
(2,935,978)
6
10,163
Equity component of convertible senior
notes repurchase
Common stock dividends
Unrealized loss on derivative instruments,
net of tax
Common stock issued in connection with:
(35,519)
(17,905)
Stock option exercises
102,645
1
960
(193)
(765)
69,421
(193)
10,169
(58,383)
(58,383)
(35,519)
(17,905)
(765)
961
Balances at December 31, 2018
55,135,788
$
744
$ 629,039
$ 150,244
$
(3,343) $ (302,835) $ 473,849
Net income for the year
Foreign currency translation and other
Stock-based compensation
Stock repurchase
Common stock dividends
Unrealized loss on derivative instruments,
net of tax
Common stock issued in connection with:
319,430
(2,072,798)
5
9,031
Stock option exercises
91,200
1
847
89,575
(17,978)
712
(1,347)
(33,707)
89,575
712
9,036
(33,707)
(17,978)
(1,347)
848
Balances at December 31, 2019
53,473,620
$
750
$ 638,917
$ 221,841
$
(3,978) $ (336,542) $ 520,988
The accompanying notes are an integral part of these Consolidated Statements.
45
WABASH NATIONAL
AA
STATTT EMENTS OF CASH FLOWS
CORPORATION
AA
CONSOLIDATEDAA
(Dollars in thousands)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Year Ended December 31,
2019
2018
2017
$
89,575
$
69,421
$
111,422
Depreciation
Amortization of intangibles
Net gain on sale of property,yy plant and equipment
Loss on debt extinguishment
Deferred income taxes
Stock-based compensation
Non-cash interest expense
Impairment of goodwill and other assets
Accounts receivable
Inventories
Prepaid expenses and other
Accounts payable and accrued liabilities
Other, net
Net cash provided by operating activities
Cash flows from investing activities
Capital expenditures
Proceeds from sale of property,yy plant and equipment
Acquisitions, net of cash acquired
Other, net
Net cash used in investing activities
Cash flows from financing activities
Proceeds from exercise of stock options
Borrowings under senior notes
Dividends paid
Borrowings under revolving credit facilities
Payments under revolving credit facilities
Principal payments under finance lease obligations
Proceeds from issuance of term loan credit facility
Principal payments under term loan credit facility
Principal payments under industrial revenue bond
Debt issuance costs paid
Convertible senior notes repurchase
Stock repurchase
Net cash (used in) provided by financing activities
Cash and cash equivalents:
Net increase (decrease) in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of year
Cash, cash equivalents, and restricted cash at end of year
Supplemental disclosures of cash flow information:
Cash paid for interest
Cash paid for income taxes
21,886
20,471
(109)
165
3,420
9,036
1,045
—
8,327
(2,510)
(3,809)
(817)
(396)
146,284
(37,645)
785
—
—
21,215
19,468
(10,148)
280
(2,976)
10,169
1,745
24,968
(39,539)
(18,713)
4,548
32,653
(620)
112,471
(34,009)
17,776
—
3,060
(36,860)
(13,173)
848
—
961
—
(17,797)
(17,768)
619
(619)
(308)
—
(50,470)
—
(164)
—
(33,707)
(101,598)
937
(937)
(290)
—
(1,880)
(93)
(476)
(80,200)
(58,383)
(158,129)
7,826
132,690
140,516
26,234
20,379
$
$
$
(58,831)
191,521
132,690
27,386
24,243
$
$
$
$
$
$
18,012
17,041
(8,046)
799
(14,682)
10,429
2,258
—
31,943
(13,158)
(2,014)
(963)
(8,662)
144,379
(26,056)
10,860
(323,487)
6,443
(332,240)
5,790
325,000
(15,315)
713
(713)
(600)
377,519
(386,577)
(583)
(6,783)
(8,045)
(74,491)
215,915
28,054
163,467
191,521
9,479
41,391
The accompanying notes are an integral part of these Consolidated Statements.
46
WABASH NATIONAL
AA
CORPORATION
AA
NOTES TO CONSOLIDATEDAA
FINANCIAL STATTT EMENTS
1. DESCRIPTION OF THE BUSINESS
National Corporation (the “Company,”yy
Wabash
National”) manufactures a diverse range of products
a
including: dry freight and refrigerated trailers, platform trailers, bulk tank trailers, dry and refrigerated truck bodies, truck-mounted
tanks, intermodal equipment, structural composite panels and products, trailer aerodynamic solutions, and specialty food grade
National®, Beall®,
and pharmaceutical equipment. Its innovative products are sold under the following brand names: Wabash
Benson®, Brenner® Tank, Bulk Tank International, DuraPlate®, Extract Technology®, Supreme®, Transcraft®, Walker Engineered
Products, and Walker Transport.
or “WabashWW
WW
“Wabash”
a
2. SUMMARYRR OF SIGNFICANT ACCOUNTING POLICIES
Basis of Consolidation. The consolidated financial statements reflect the accounts of the Company and its wholly-owned and
majority-owned subsidiaries. All significant intercompany profits, transactions and balances have been eliminated in consolidation.
Reclassifications. Certain prior period amounts have been reclassified to conform to the current year presentation.
Use of Estimates. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that directly affect
the amounts reported in its consolidated
financial statements and accompanying notes. Actual results could differ
ff
from these estimates.
ff
Cash and Cash Equivalents. Cash and cash equivalents include all highly liquid investments with a maturity of three months or
less at the time of purchase.
Accounts Receivable. Accounts receivable are shown net of allowance for doubtful accounts and primarily include trade receivables.
The Company records and maintains a provision for doubtful accounts for customers based upon a variety of factors including
the Company’s historical collection experience, the length of time the account has been outstanding and the financial condition
of the customer. If the circumstances related to specific customers were to change, the Company’s estimates with respect to the
collectability of the related accounts could be further adjusted. The Company’s policy is to write-offff receivables when they are
determined to be uncollectible. Provisions to the allowance for doubtful accounts are charged to Selling and General and
administrative expenses in the Consolidated Statements of Operations. The following table presents the changes in the allowance
for doubtful accounts (in thousands):
Balance at beginning of year
Provision
Write-offs,
ff
net of recoveries
Balance at end of year
Years ended December 31,
2019
2018
2017
$
$
$
665
282
(277)
670
$
$
869
63
(267)
665
$
951
119
(201)
869
Inventories. Inventories are stated at the lower of cost, determined on either the first-in, first-out or average cost method, or net
realizable value. The cost of manufactured inventory includes raw material, labor and overhead.
Prepaid Expenses and Other.rr Prepaid expenses and other as of December 31, 2019 and 2018 consists of the following (in
thousands):
Chassis converter pool agreements
Income tax receivables
Insurance premiums & maintenance agreements
Assets held for sale
All other
December 31,
2019
2018
$
$
10,164
8,701
3,217
3,020
16,120
41,222
$
$
22,273
9,872
3,313
3,039
12,764
51,261
Chassis converter pool agreements represent chassis transferred to the Company on a restricted basis by the manufacturer, who
retains the sole authority to authorize commencement of work on the chassis and to make certain other decisions with respect to
the chassis including the terms and pricing of sales to the manufacturer’s dealers. Assets held for sale are related to the Company’s
47
locations which are being actively marketed for sale and unused land parcels. Insurance premiums and maintenance agreements
are charged to expense over the contractual life, which is generally one year or less. Other prepaid items consist primarily of
contract assets related to contracts for which the Company recognizes revenue on an over time basis and investments held by the
Company’s captive insurance subsidiary. As of December 31, 2019 and 2018, there was no restricted cash included in prepaid
expenses and other current assets.
Property,yy Plant and Equipment. Property,yy plant and equipment are recorded at cost, net of accumulated depreciation. Maintenance
and repairs are charged to expense as incurred, while expenditures that extend the useful life of an asset are capitalized. Depreciation
is recorded using the straight-line method over the estimated useful lives of the depreciable assets. The estimated useful lives are
up to 33 years for buildings and building improvements and range from three to ten years for machinery and equipment.
Goodwill. Goodwill represents the excess purchase price over fair value of the net assets acquired. The Company determines its
reporting units at the individual operating segment level, or one level below,ww when there is discrete financial information available
that is regularly reviewed by segment management for evaluating operating results. The Company reviews goodwill for impairment,
at the reporting unit level, annually on October 1 and whenever events or changes in circumstances indicate its carrying value may
not be recoverable. In accordance with ASC 350, Intangibles - Goodwill and Other, goodwill is reviewed for impairment utilizing
either a qualitative assessment or a quantitative process.
The Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads
to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity
has an unconditional option to bypass the qualitative assessment in any period and proceed directly to performing the quantitative
impairment test, which is the option the Company has historically chosen.
For reporting units in which the Company performs the quantitative analysis, the Company compares the carrying value, including
goodwill, of each reporting unit with its estimated fair value. If the fair value of the reporting unit exceeds its carrying value, the
is recognized as an impairment
goodwill is not considered impaired. If the carrying value is greater than the fair value, the difference
loss charged to the reporting unit. After an impairment loss is recognized, the adjusted carrying amount of goodwill shall be its
new accounting basis.
ff
The Company exercised its unconditional option to bypass the qualitative assessment of goodwill for all of its reporting units and
instead prepared a quantitative assessment to estimate the fair value of each reporting unit at the annual testing date of October 1,
2019 utilizing a combination of the income approach and the market approach, weighted equally. Based on the quantitative
assessment performed, all of the Company’s reporting units exceeded their carrying values; as such, there was no goodwill
impairment as a result of the 2019 annual goodwill impairment test.
ff
In the fourth quarter of 2019, the FMP reporting unit did not perform in-line with internal expectations, driven by several operational
inefficiencies,
which the Company identified as an indicator of impairment. As a result, the Company performed an interim
quantitative assessment as of December 31, 2019, utilizing a combination of the income and market approaches, which were
weighted evenly. No impairment was indicated as the fair value of the reporting unit exceeded its carrying value. The results of
the quantitative analysis performed indicated the fair value of the FMP reporting unit exceeded the carrying value by approximately
3%. Key assumptions used in the analysis were a discount rate of 16.0%, EBITDA margin, and a terminal growth rate of 3.00%.
The primary driver in the reduction of the fair value of the FMP reporting unit was a reduction of expected future cash flows.
Future events and changing market conditions may,yy however, lead the Company to re-evaluate the assumptions used to test for
goodwill impairment, including key assumptions used in our expected EBITDA margins and cash flows, as well as other key
assumptions with respect to matters out of our control, such as discount rates and market multiple comparables.
In the third quarter of 2018, the Aviation and Truckrr
reporting unit within the Diversified Products reportable
AA
segment did not perform in-line with forecasted results driven by unfavorable market conditions that the Company believed would
continue to impact the reporting unit for the foreseeable future. As a result, an indicator of impairment was identified, and the
Company performed an interim quantitative assessment as of September 30, 2018, utilizing a combination of the income and
market approaches. The results of the quantitative analysis indicated the carrying value of the reporting unit exceeded the fair
value of the reporting unit and, accordingly,yy a goodwill impairment of $4.9 million was recorded.
Equipment (“AVTE”)
Long-Lived Assets. Long-lived assets, consisting primarily of intangible assets and property,yy plant and equipment, are reviewed
for impairment whenever facts and circumstances indicate that the carrying amount may not be recoverable. Specifically,yy this
process involves comparing an asset’s carrying value to the estimated undiscounted future cash flows the asset is expected to
generate over its remaining life. If this process were to result in the conclusion that the carrying value of a long-lived asset would
not be recoverable, a write-down of the asset to fair value would be recorded through a charge to operations. Fair value is determined
based upon discounted cash flows or appraisals as appropriate.
In the third quarter of 2018, due to the impairment indicators noted above related to the AVTE reporting unit with the Diversified
Products reportable segment, the Company performed an interim impairment assessment of the long-lived assets of the AVTE
48
reporting unit, including intangible assets and property,yy plant and equipment. Based on the results of our analysis it was determined
that the carrying values of the trade names and property,yy plant and equipment of the AVTE reporting unit exceeded their fair values
and, accordingly,yy an asset impairment charge totaling $7.1 million was recorded.
AVTEVV
Impairments. On January 22, 2019 the Company announced the divestiture of the AVTE business. In the fourth quarter of
2018, with the financial framework of the agreement to sell the AVTE business largely agreed to with the buyers, the Company
evaluated the remaining assets of AVTE for impairment based on the economics of the, then proposed, transaction. As a result of
the Company’s impairment analysis, an impairment of $13.0 million was recorded to fully impair all current assets of the AVTE
business.
Other Assets. The Company capitalizes the cost of computer software developed or obtained for internal use. Capitalized software
is amortized using the straight-line method over three to seven years. As of December 31, 2019 and 2018, the Company had
software costs, net of amortization, of $7.2 million and $7.9 million, respectively. Amortization expense for 2019, 2018, and 2017
was $1.7 million, $1.5 million, and $1.3 million, respectively.
Warranties. The Company offers
a limited warranty for its products with a coverage period that ranges between one and five years,
except that the coverage period for DuraPlate® trailer panels is ten years. The Company passes through component manufacturers’
warranties to our customers. The Company’s policy is to accrue the estimated cost of warranty coverage at the time of the sale.
ff
The following table presents the changes in the product warranty accrual included in Other accrued liabilities (in thousands):
Balance as of January 1
Provision for warranties issued in current year
Liability adjustment due to divestiture of business
Net adjustment to warranty accrual
Payments
Balance as of December 31
2019
2018
$
$
22,247
8,027
—
(2,320)
(5,379)
$
22,575
$
20,132
8,026
(420)
—
(5,491)
22,247
ff
Self Insured
Liabilities. The Company is self-insured up to specified limits for medical and workers’ compensation coverage. The
self-insurance reserves have been recorded to reflect the undiscounted estimated liabilities, including claims incurred but not
reported, as well as catastrophic claims as appropriate.
The following table presents the changes in the self-insurance accrual included in Other accrued liabilities (in thousands):
Balance as of January 1
Expense
Payments
Balance as of December 31
2019
2018
$
$
$
9,890
57,733
(54,689)
12,934
$
9,996
66,493
(66,599)
9,890
aa
Income Taxes.
The Company determines its provision or benefit for income taxes under the asset and liability method. The asset
and liability method measures the expected tax impact at current enacted rates of future taxable income or deductions resulting
from differences
in the tax and financial reporting basis of assets and liabilities reflected in the Consolidated Balance Sheets.
ff
Future tax benefits of tax losses and credit carryforwards are recognized as deferred tax assets. Deferred tax assets are reduced by
a valuation allowance to the extent management determines that it is more-likely-than-not the Company would not realize the
value of these assets.
The Company accounts for income tax contingencies by prescribing a “more-likely-than-not” recognition threshold that a tax
position is required to meet before being recognized in the financial statements.
Used Trailer Trade Commitments. The Company may accept trade-in of used trailers when a customer enters into a contract to
purchase a new trailer. However, in the contracts for the sale of the new trailers, there is no commitment to repurchase that trailer
or a similar trailer in the future. As of December 31, 2019, the Company had $3.5 million in outstanding trade commitments, which
also represented the estimated net realizable value of the underlying used trailer, and no outstanding trade commitments as of
December 31, 2018. On occasion, the amount of the trade allowance provided for in the used trailer commitments, or cost, may
exceed the net realizable value of the underlying used trailer. In these instances, the Company’s policy is to recognize the loss
related to these commitments at the time the new trailer revenue is recognized. Net realizable value of used trailers is measured
considering market sales data for comparable types of trailers.
49
Concentration of Credit Risk. Financial instruments that potentially subject us to significant concentrations of credit risk consist
principally of cash, cash equivalents and customer receivables. We place our cash and cash equivalents with high quality financial
institutions. Generally,yy we do not require collateral or other security to support customer receivables.
Research and Development. Research and development expenses are charged to Cost of sales and General and administrative
expenses in the Consolidated Statements of Operations as incurred and were $19.5 million, $8.8 million, and $3.9 million in 2019,
2018 and 2017, respectively.
3. NEW ACCOUNTING PRONOUNCEMENTS
ff
FF
issued Accounting Standards Update (“ASU”) 2016-02,
In February 2016, the Financial Accounting Standards Board (“FASB”)
“Leases (TopicTT
842)”. This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and
obligations created by leases of greater than twelve months. Leases will be classified as either finance or operating, with
classification affecting
the pattern of expense recognition in the income statement. The Company has identified its existing lease
contracts and calculated the right-of-use (“ROU”) assets, which are reflected in Other assets on the Consolidated Balance Sheets,
and lease liabilities, which are reflected in the Other accrued liabilities and Other non-current
liabilities on the Consolidated
for the Company as of January 1, 2019. Adoption of the new standard resulted in
Balance Sheets. This guidance was effective
the recording of ROU assets and lease liabilities of $9.9 million as of January 1, 2019. The FASB has issued further ASUs related
to the standard providing an optional transition method allowing entities to not recast comparative periods. The Company elected
the practical expedients upon transition that retained the lease classification and initial direct costs for any leases that existed prior
to adoption of the standard. The Company did not reassess whether any contracts entered into prior to adoption are leases. The
Company has approximately $16.7 million of noncancelable future rental obligations as of December 31, 2019, as shown in Note
11.
rr
ff
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses,” which introduced new guidance for an
approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment
model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with
credit deterioration since their origination. Instruments in scope include loans, held-to-maturity debt securities, and net investments
in leases as well as reinsurance and trade receivables. In November 2018, the FASB issued ASU 2018-19, which clarifies that
for us beginning January 1,
operating lease receivables are outside the scope of the new standard. This standard will be effective
2020. The Company expects that the new credit losses model will not have a material impact on its consolidated financial statements.
ff
4. REVENUE RECOGNITION
ff
606) effective
January 1, 2018.
The Company adopted FASB ASU No. 2014-09, Revenue from Contracts with Customers (TopicTT
The adoption of Topic 606 did not have a material impact on the consolidated financial statements. The Company recognizes
revenue from the sale of its products when obligations under the terms of a contract with our customers are satisfied; this occurs
with the transfer of control of our products and replacement parts or throughout the completion of service work. Revenue is
measured as the amount of consideration we expect to receive in exchange for transferring promised goods or services to a customer
and excludes all taxes collected from the customer. Shipping and handling fees are included in Net sales and the associated costs
included in Cost of sales in the Consolidated Statements of Operations. For shipping and handling costs that take place after the
transfer of control, the Company is applying the practical expedient and treating it as a fulfillment cost. Incidental items that are
immaterial in the context of the contract are recognized as expense. For performance obligations satisfied over time, which include
certain equipment-related sales within our Diversified Products reportable segment that have no alternative use and contain an
enforceable right to payment, as well as service work whereby the customer simultaneously receives and consumes the benefits
provided, the Company recognizes revenue on the basis of the Company’s efforts
or inputs to the satisfaction of these performance
obligations, measured by actual total cost incurred to the total estimated costs for each project. Total revenue recognized over time
was not material to the consolidated financial statements for all periods presented.
ff
The Company has identified three separate and distinct performance obligations: 1) the sale of a trailer or equipment, 2) the sale
of replacement parts, and 3) service work. For trailer, truck body,yy equipment, and replacement part sales, control is transferred
and revenue is recognized from the sale upon shipment to or pick up by the customer in accordance with the contract terms. The
Company does not have any material extended payment terms as payment is received shortly after the point of sale. Accounts
receivable are recorded when the right to consideration becomes unconditional. The Company does have customers who pay for
the product prior to the transfer of control which is recorded as customer deposits in Other accrued liabilities as shown in Note
8. Customer deposits are recognized as revenue when the Company performs its obligations under the contract and transfers control
of the product.
50
5. GOODWILL AND OTHER INTANGIBLE
TT
ASSETS
Goodwill.
During the fourth quarters of 2019, 2018, and 2017, the Company completed its goodwill impairment test using the quantitative
assessment. During the third quarter of 2018, the Company performed an interim impairment analysis after identifying indicators
of impairment based on the results of the AVTE reporting unit. Based on this assessment, it was determined that all of the goodwill
allocated to the AVTE reporting unit was impaired resulting in an impairment charge for the Diversified Products reporting segment
of $4.9 million. Based on all other assessments performed in each of the last three years, the Company believed it was more likely
than not that the fair value of its reporting units were greater than their carrying amount and no additional impairment of goodwill
was recognized.
For the year ended December 31, 2019, the changes in the carrying amounts of goodwill were as follows (in thousands):
Balance at December 31, 2017
Goodwill
Accumulated impairment losses
Net balance at December 31, 2017
Acquisition of Supreme
ff
Effects
of foreign currency
Goodwill impairments during 2018
Balance at December 31, 2018
Goodwill
Accumulated impairment losses
Net balance as of December 31, 2018
ff
Effects
of foreign currency
Impact of divestiture on goodwill
Impact of divestiture on accumulated impairment
losses
Balance as of December 31, 2019
Goodwill
Accumulated impairment losses
Commercial
Trailer Products
Diversified
Products
Final Mile
Products
Total
$
$
4,288
(1,663)
2,625
—
—
—
4,288
(1,663)
2,625
—
—
—
$
145,604
—
145,604
—
84
(4,944)
145,688
(4,944)
140,744
(58)
(4,944)
4,944
$
169,235
—
169,235
(1,520)
—
—
167,715
—
167,715
—
—
—
4,288
(1,663)
140,686
167,715
—
—
319,127
(1,663)
317,464
(1,520)
84
(4,944)
317,691
(6,607)
311,084
(58)
(4,944)
4,944
312,689
(1,663)
Net balance as of December 31, 2019
$
2,625
$
140,686
$
167,715
$
311,026
Intangible Assets.
As of December 31, 2019, the balances of intangible assets, other than goodwill, were as follows (in thousands):
Tradenames and trademarks
Customer relationships
Technology
Total
Weighted
Average
Amortization
Period
20 years
13 years
12 years
Gross
Intangible
Assets
Accumulated
Amortization
Net Intangible
Assets
$
$
53,103
$
(17,962) $
282,863
14,045
350,011
$
(132,903)
(9,248)
(160,113) $
35,141
149,960
4,797
189,898
51
As of December 31, 2018, the balances of intangible assets, other than goodwill, were as follows (in thousands):
Tradenames and trademarks
Customer relationships
Technology
Total
Weighted
Average
Amortization
Period
20 years
13 years
12 years
Gross
Intangible
Assets
Accumulated
Amortization
Net Intangible
Assets
$
$
$
53,103
282,736
14,045
(15,307) $
(116,222)
(8,027)
349,884
$
(139,556) $
37,796
166,514
6,018
210,328
Intangible asset amortization expense was $20.5 million, $19.5 million, and $17.0 million for 2019, 2018, and 2017, respectively.
Annual intangible asset amortization expense for the next 5 fiscal years is estimated to be $21.4 million in 2020; $23.5 million in
2021; $18.1 million in 2022; $15.4 million in 2023; and $15.2 million in 2024.
6. INVENTORIES
Inventories, net of reserves, consist of the following (in thousands):
Raw materials and components
Finished goods
Work in progress
Used trailers
Aftermarket parts
7. PROPERTYRR ,YY PLANT AND EQUIPMENT
$
December 31,
2019
2018
$
105,332
58,224
14,269
2,499
6,590
115,083
48,698
13,119
1,083
6,421
$
186,914
$
184,404
Depreciation expense, which is recorded in Cost of sales
and General and administrative expenses in the Consolidated Statements
of Operations, as appropriate, on property,yy plant and equipment was $20.2 million, $19.7 million, and $16.7 million in 2019, 2018,
and 2017, respectively,yy and includes amortization of assets recorded in connection with the Company’s finance lease agreements.
As of December 31, 2019 and 2018, the assets related to the Company’s finance lease agreements are recorded within Property
,yy
plant and equipment, net in the Consolidated Balance Sheets in the amount of $2.9 million and $3.1 million, respectively,yy net of
accumulated depreciation of $1.7 million and $1.6 million, respectively.
rr
ff
Property,yy plant and equipment, net consist of the following (in thousands):
Land
Buildings and building improvements
Machinery and equipment
Construction in progress
Less: accumulated depreciation
December 31,
2019
2018
$
36,794
146,210
287,332
36,179
506,515
35,485
141,098
266,803
31,772
475,158
(285,169)
221,346
$
(268,167)
206,991
$
$
52
8. OTHER ACCRUED LIABILITIES
The following table presents the major components of Other accrued liabilities (in thousands):
Customer deposits
Chassis converter pool agreements
Warranty
Payroll and related taxes
Self-insurance
Accrued interest
Operating lease obligations
Accrued taxes
All other
9. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
Senior notes due 2025
Term loan credit agreement
Less: unamortized discount and fees
Less: current portion
Convertible Senior Notes
$
December 31,
2019
2018
$
19,324
10,164
22,575
25,263
12,934
4,696
4,369
10,344
14,561
23,483
22,273
22,247
16,096
9,890
4,779
—
7,653
9,963
$
124,230
$
116,384
December 31,
2019
December 31,
2018
$
325,000
$
135,228
460,228
(4,842)
—
$
455,386
$
325,000
185,699
510,699
(5,801)
(1,880)
503,018
ff
In April 2012, the Company issued Convertible Senior Notes due 2018 (the “Convertible Notes”) with an aggregate principal
The Convertible Notes bear interest at a rate of 3.375% per annum from the date of
amount of $150 million in a public offering.
issuance, payable semi-annually on May 1 and November 1, and matured on May 1, 2018. The Convertible Notes were senior
unsecured obligations of the Company ranking equally with its existing and future senior unsecured debt. The Company used the
net proceeds of $145.1 million from the sale of the Convertible Notes to fund a portion of the purchase price of the acquisition of
in May 2012. The Company accounted separately for the liability and equity components of
Walker Group Holdings (“Walker”)
the Convertible Notes in accordance with authoritative guidance for convertible debt instruments that may be settled in cash upon
conversion.
WW
During 2018, the Company used $80.2 million in cash, excluding interest, to settle $44.6 million in principal of the Convertible
Notes of which none were converted to common shares. The excess of the cash settlement amount over the principal value of the
Convertible Notes was accounted for as a reacquisition of equity,yy resulting in a $35.5 million reduction to additional paid-in capital
during 2018. For the years ended December 31, 2018 and December 31, 2017, we recognized a loss on debt extinguishment of
$0.2 million and $0.1 million, respectively,yy related to settlements and the retirement of the Convertible Notes, which is included
in Other,rr net on the Company’s Consolidated Statements of Operations.
Contractual coupon interest expense and accretion of discount and fees on the liability component for the Convertible Notes for
the years ended December 31, 2019, 2018, and 2017 included in Interest
expense on the Company’s Consolidated Statements of
Operations were as follows (in thousands):
rr
Contractual coupon interest expense
Accretion of discount and fees on the liability component
$
$
—
—
$
$
470
461
$
$
1,570
1,537
Year Ended December 31,
2019
2018
2017
53
Senior Notes
pursuant to Rule 144A
On September 26, 2017, the Company issued Senior Notes due 2025 (the “Senior Notes”) in an offering
or Regulation S under the Securities Act of 1933, as amended, with an aggregate principal amount of $325 million. The Senior
Notes bear interest at the rate of 5.50% per annum from the date of issuance, and pay interest semi-annually in cash on April 1
and October 1 of each year. The Company used the net proceeds of $318.9 million from the sale of the Senior Notes to finance a
portion of the acquisition of Supreme and to pay related fees and expenses.
ff
The Senior Notes will mature on October 1, 2025. At any time prior to October 1, 2020, the Company may redeem some or all of
the Senior Notes for cash at a redemption price equal to 100% of the aggregate principal amount of the Senior Notes being redeemed
plus an applicable make-whole premium set forth in the indenture for the Senior Notes and accrued and unpaid interest to, but not
including, the redemption date. Prior to October 1, 2020, the Company may redeem up to 40% of the Senior Notes at a redemption
price of 105.50% of the principal amount, plus accrued and unpaid interest to, but not including, the redemption date, with the
proceeds of certain equity offerings
so long as if, after any such redemption occurs, at least 60% of the aggregate principal amount
of the Senior Notes remains outstanding. On and after October 1, 2020, the Company may redeem some or all of the Senior Notes
at redemption prices (expressed as percentages of principal amount) equal to 102.750% for the twelve-month period beginning
on October 1, 2020, 101.375% for the twelve-month period beginning October 1, 2021 and 100.000% beginning on October 1,
2022, plus accrued and unpaid interest to, but not including, the redemption date. Upon the occurrence of a Change of Control (as
defined in the indenture for the Senior Notes), unless the Company has exercised its optional redemption right in respect of the
Senior Notes, the holders of the Senior Notes have the right to require the Company to repurchase all or a portion of the Senior
Notes at a price equal to 101% of the aggregate principal amount of the Senior Notes, plus any accrued and unpaid interest to, but
not including, the date of repurchase.
ff
The Senior Notes are guaranteed on a senior unsecured basis by all direct and indirect existing and future domestic restricted
subsidiaries, subject to certain restrictions. The Senior Notes and related guarantees are the Company and the guarantors’ general
unsecured senior obligations and are subordinate to all of the Company and the guarantors’ existing and future secured debt to the
extent of the assets securing that secured obligation. In addition, the Senior Notes are structurally subordinate to any existing and
future debt of any of the Company’s subsidiaries that are not guarantors, to the extent of the assets of those subsidiaries.
The indenture for the Senior Notes restricts the Company’s ability and the ability of certain of its subsidiaries to: (i)incur additional
indebtedness; (ii) pay dividends or make other distributions in respect of, or repurchase or redeem, its capital stock or with respect
to any other interest or participation in, or measured by,yy its profits; (iii) make loans and certain investments; (iv) sell assets; (v)
create or incur liens; (vi) enter into transactions with affiliates;
and (vii) consolidate, merge or sell all or substantially all of its
assets. These covenants are subject to a number of important exceptions and qualifications. During any time when the Senior
Notes are rated investment grade by Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services and no event of
default has occurred or is continuing, many of such covenants will be suspended and the Company and its subsidiaries will not
be subject to such covenants during such period.
ff
The indenture for the Senior Notes contains customary events of default, including payment defaults, breaches of covenants, failure
to pay certain judgments and certain events of bankruptcy,yy insolvency and reorganization. If an event of default occurs and is
continuing, the principal amount of the Senior Notes, plus accrued and unpaid interest, if any,yy may be declared immediately due
and payable. These amounts automatically become due and payable if an event of default relating to certain events of bankruptcy,yy
insolvency or reorganization occurs. As of December 31, 2019, the Company was in compliance with all covenants.
Contractual coupon interest expense and accretion of discount and fees for the Senior Notes for the years ended December 31,
2019, 2018 and 2017, was $18.5 million, $18.5 million and $4.8 million, respectively and is included in Interest
expense on the
Company’s Consolidated Statements of Operations.
rr
Revolving Credit
rr
Agreement
rr
On December 21, 2018, the Company entered into the Second Amended and Restated Credit Agreement (the “Revolving Credit
Agreement”), among the Company,yy certain of its subsidiaries as borrowers (together with the Company,yy the “Borrowers”), the
lenders from time to time party thereto, Wells Fargo Capital Finance, LLC, as the administrative agent, joint lead arranger and
joint bookrunner (the “Revolver Agent”), and Citizens Business Capital, a division of Citizens Asset Finance, Inc., as syndication
agent, joint lead arranger and joint bookrunner, which amended and restated the Company’s existing amended and restated revolving
credit agreement, dated as of May 8, 2012.
The Revolving Credit Agreement is guaranteed by certain subsidiaries of the Company (the “Revolver Guarantors”) and is secured
by (i) first priority security interests (subject only to customary permitted liens and certain other permitted liens) in substantially
all personal property of the Borrowers and the Revolver Guarantors, consisting of accounts receivable, inventory,yy cash, deposit
and securities accounts and any cash or other assets in such accounts and, to the extent evidencing or otherwise related to such
property,yy all general intangibles, licenses, intercompany debt, letter of credit rights, commercial tort claims, chattel paper,
instruments, supporting obligations, documents and payment intangibles (collectively,yy the “Revolver Priority Collateral”), and (ii)
54
second-priority liens on and security interests in (subject only to the liens securing the Term Loan Credit Agreement (as defined
below), customary permitted liens and certain other permitted liens) (A) equity interests of each direct subsidiary held by the
Borrowers and each Revolver Guarantor (subject to customary limitations in the case of the equity of foreign subsidiaries), and
(B) substantially all other tangible and intangible assets of the Borrowers and the Revolver Guarantors including equipment,
general intangibles, intercompany notes, insurance policies, investment property and intellectual property (in each case, except to
the extent constituting Revolver Priority Collateral), but excluding real property (collectively,yy including certain material owned
Priority Collateral”). The
real property that does not constitute collateral under the Revolving Credit Agreement, the “TermTT
respective priorities of the security interests securing the Revolving Credit Agreement and the Term Loan Credit Agreement are
governed by an Intercreditor Agreement, dated as of May 8, 2012, between the Revolver Agent and the Term Agent (as defined
below), as amended (the “Intercreditor Agreement”). The Revolving Credit Agreement has a scheduled maturity date of
December 21, 2023, subject to certain springing maturity events.
Under the Revolving Credit Agreement, the lenders agree to make available to the Company a $175 million revolving credit
facility. The Company has the option to increase the total commitment under the facility to up to $275 million, subject to certain
conditions, including obtaining commitments from any one or more lenders, whether or not currently party to the Revolving Credit
Agreement, to provide such increased amounts. Availability under the Revolving Credit Agreement will be based upon quarterly
(or more frequent under certain circumstances) borrowing base certifications of the Borrowers’ eligible inventory and eligible
accounts receivable, and will be reduced by certain reserves in effect
from time to time. Subject to availability,yy the Revolving
Credit Agreement provides for a letter of credit subfacility in an amount not in excess of $15 million, and allows for swingline
loans in an amount not in excess of $17.5 million. Outstanding borrowings under the Revolving Credit agreement will bear interest
at an annual rate, at the Borrowers’ election, equal to (i) LIBOR plus a margin ranging from 1.25% to 1.75% or (ii) a base rate
plus a margin ranging from 0.25% to 0.75%, in each case depending upon the monthly average excess availability under the
revolving loan facility. The Borrowers are required to pay a monthly unused line fee equal to 0.20% times the average daily unused
availability along with other customary fees and expenses of the Revolver Agent and the lenders.
ff
The Revolving Credit Agreement contains customary covenants limiting the ability of the Company and certain of its affiliates
to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase stock, enter into transactions with affiliates,
merge, dissolve, repay subordinated indebtedness, make investments and dispose of assets. In addition, the Company will be
required to maintain a minimum fixed charge coverage ratio of not less than 1.0 to 1.0 as of the end of any period of 12 fiscal
months (commencing with the month ending December 31, 2018) when excess availability under the Revolving Credit Agreement
is less than 10% of the total revolving commitment.
ff
ff
If availability under the Revolving Credit Agreement is less than 15% of the total revolving commitment or if there exists an event
of default, amounts in any of the Borrowers’ and the Revolver Guarantors’ deposit accounts (other than certain excluded accounts)
will be transferred daily into a blocked account held by the Revolver Agent and applied to reduce the outstanding amounts under
the facility.
Subject to the terms of the Intercreditor Agreement, if the covenants under the Revolving Credit Agreement are breached, the
lenders may,yy subject to various customary cure rights, require the immediate payment of all amounts outstanding and foreclose
on collateral. Other customary events of default in the Revolving Credit Agreement include, without limitation, failure to pay
obligations when due, initiation of insolvency proceedings, defaults on certain other indebtedness, and the incurrence of certain
judgments that are not stayed, satisfied, bonded or discharged within 30 days.
In connection with the Second Amended and Restated Credit Agreement, the Company recognized a loss on debt extinguishment
of $0.1 million during 2018, which is included in Other,rr net on the Company’s Consolidated Statements of Operations. As of
December 31, 2019 and 2018, the Company had no outstanding borrowings under the Credit Agreement and was in compliance
with all covenants. The Company’s liquidity position, defined as cash on hand and available borrowing capacity on the Revolving
Credit Facility,yy amounted to $308.1 million as of December 31, 2019 and $299.5 million as of December 31, 2018.
Term Loan Credit
rr
Agreement
rr
In May 2012, the Company entered into the Term Loan Credit Agreement (as amended, the “TermTT
Loan Credit Agreement”), dated
as of May 8, 2012, among the Company,yy the several lenders from time to time party thereto, Morgan Stanley Senior Funding, Inc.,
as administrative agent (the “TermTT
Agent”), joint lead arranger and joint bookrunner, and Wells Fargo Securities, LLC, as joint
lead arranger and joint bookrunner, which provides for, among other things, (x) a senior secured term loan of $188.0 million that
matures on March 19, 2022, subject to certain springing maturity events (the “TermTT
Loans”), and (y) an uncommitted accordion
feature to provide for additional senior secured term loans of up to $75 million plus an unlimited amount provided that the senior
secured leverage ratio would not exceed 3.00 to 1.00, subject to certain conditions (the “TermTT
Loan Facility”).
On February 24, 2017, the Company entered into Amendment No. 3 to the Term Loan Credit Agreement (“Amendment No. 3”).
As of February 24, 2017, $189.5 million of the Tranche B-2 Loans were outstanding. Under Amendment No. 3, the lenders agreed
to provide to the Company term loans in the same aggregate principal amount of the outstanding Tranche B-2 Loans (the “Tranche
B-3 Loans”), which were used to refinance the outstanding Tranche B-2 Loans.
TT
55
In connection with, and in order to permit under the Term Loan Credit Agreement, the Senior Notes offering
and the acquisition
of Supreme, on August 18, 2017, the Company entered into Amendment No. 4 to the Term Loan Credit Agreement (“Amendment
No. 4”). Amendment No. 4 also permitted the Company to incur certain other indebtedness in connection with the Supreme
acquisition and to acquire certain liens and obligations of Supreme upon the consummation of the Supreme acquisition.
ff
Furthermore, on November 17, 2017, the Company entered into Amendment No. 5 to the Term Loan Credit Agreement
(“Amendment No. 5”). As of the Amendment No. 5 date, $188.0 million of the Term Loans were outstanding. Under Amendment
No. 5, the lenders agreed to provide to the Company term loans in the same aggregate principal amount of the outstanding Term
TT
Loans (“Tranche
B-4 Loans”), which were used to refinance the outstanding Term Loans.
The Tranche B-4 Loans bear interest at a rate, at the Company’s election, equal to (i) LIBOR (subject to a floor of 0%) plus a
margin of 225 basis points or (ii) a base rate (subject to a floor of 0%) plus a margin of 125 basis points. The Company is not
subject to any financial covenants under the Term Loan Facility.
The Term Loan Credit Agreement is guaranteed by certain of the Company’s subsidiaries, and is secured by (i) first-priority liens
on and security interests in the Term Priority Collateral, and (ii) second-priority security interests in the Revolver Priority Collateral.
The Term Loan Credit Agreement contains customary covenants limiting the Company’s ability to, among other things, pay cash
dividends, incur debt or liens, redeem or repurchase stock, enter into transactions with affiliates,
merge, dissolve, pay offff
subordinated indebtedness, make investments and dispose of assets. Subject to the terms of the Intercreditor Agreement, if the
covenants under the Term Loan Credit Agreement are breached, the lenders may,yy subject to various customary cure rights, require
the immediate payment of all amounts outstanding and foreclose on collateral. Other customary events of default in the Term Loan
Credit Agreement include, without limitation, failure to pay obligations when due, initiation of insolvency proceedings, defaults
on certain other indebtedness, and the incurrence of certain judgments that are not stayed, satisfied, bonded or discharged within
60 days. As of December 31, 2019, the Company was in compliance with all covenants.
ff
For the years ended December 31, 2019, 2018 and 2017, under the Term Loan Credit Agreement the Company paid interest of
$7.8 million, $8.0 million and $7.4 million, respectively,yy and paid principal of $50.5 million, $1.9 million, and $1.9 million,
respectively. During 2019, the Company recognized losses on debt extinguishment totaling approximately $0.2 million in
connection with the prepayment of principal. In connection withAmendment No. 3 andAmendment No. 5, the Company recognized
a loss on debt extinguishment of approximately $0.7 million during 2017. The losses on debt extinguishment are included in Other,rr
net on the Company’s Consolidated Statements of Operations. As of December 31, 2019 and December 31, 2018, the Company
had $135.2 million and $185.7 million, respectively,yy outstanding under the Term Loan Credit Agreement, of which none and $1.9
million, respectively,yy was classified as current on the Company’s Consolidated Balance Sheets.
For the years ended December 31, 2019, 2018, and 2017, the Company incurred charges of $0.2 million in each period for
amortization of fees and original issuance discount which is included in Interest
expense in the Consolidated Statements of
Operations.
rr
10. FINANCIAL DERIVATVV IVE INSTRUMENTS
Commodity Pricing Risk
As of December 31, 2019, the Company was party to commodity swap contracts for specific commodities with notional amounts
of approximately $81.5 million. The Company uses commodity swap contracts to mitigate the risks associated with fluctuations
in commodity prices impacting its cash flows related to inventory purchases from suppliers. The Company does not hedge all
commodity price risk.
At inception, the Company designated the commodity swap contracts as cash flow hedges. The contracts mature at specified
portion of the hedging transaction is recognized
monthly settlement dates through January 2021. The change in fair value effective
in Accumulated Other Comprehensive Income (“AOCI”) and transferred to earnings when the forecasted hedged transaction takes
place or when the forecasted hedged transaction is no longer probable to occur.
ff
56
Financial Statement Presentation
rr
As of December 31, 2019 and 2018, the fair value carrying amount of the Company’s derivative instruments were recorded as
follows (in thousands):
Derivatives designated as hedging instruments
Commodity swap contracts
Commodity swap contracts
Total derivatives designated as hedging instruments
Balance Sheet Caption
Asset / (Liability) Derivatives
December 31,
2019
December 31,
2018
Prepaid expenses and other
Other accrued liabilities
$
$
$
1,290
(3,216)
(1,926) $
17
(1,146)
(1,129)
The following table summarizes the gain or loss recognized inAOCI as of December 31, 2019 and 2018 and the amounts reclassified
from AOCI into earnings for the years ended December 31, 2019, 2018, and 2017 (in thousands):
Amount of Gain (Loss)
Recognized in
AOCI on Derivatives
(Effective Portion, net of tax)
December 31,
December 31,
2018
2019
Location of Gain
(Loss) Reclassified
from AOCI into
Earnings
(Effective Portion)
Amount of Gain (Loss) Reclassified from
AOCI into Earnings
Year Ended December 31,
2019
2018
2017
Derivatives instruments
Commodity swap contracts
$
(2,112) $
(765) Cost of sales
$
(2,297) $
142
$
—
Over the next 12 months, the Company expects to reclassify approximately $2.8 million of pretax deferred losses related to the
commodity swap contracts from AOCI to cost of sales as inventory purchases are settled.
11. LEASES
The Company records a right-of-use ("ROU") asset and lease liability for substantially all leases for which it is a lessee, in
accordance with ASC 842. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company
recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has no significant lease
agreements in place for which the Company is a lessor. At inception of a contract, the Company considers all relevant facts and
circumstances to assess whether or not the contract represents a lease by determining whether or not the contract conveys the right
to control the use of an identified asset, either explicit or implicit, for a period of time in exchange for consideration.
ff
space, land, and equipment. Some leases include one or more options to
The Company leases certain industrial spaces, office
renew,ww with renewal terms that can extend the lease term from generally one to 5 years. The exercise of lease renewal options is
at the Company’s sole discretion, and are included in the lease term only to the extent such renewal options are reasonably certain
of being exercised upon lease commencement. Certain leases also include options to purchase the leased property. The depreciable
life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase
option reasonably certain of exercise. Leased assets obtained in exchange for new operating lease liabilities during the year ended
December 31, 2019 were approximately $2.3 million. As of December 31, 2019, leases that the Company has signed but have not
yet commenced are immaterial.
57
Leased assets and liabilities included within the Consolidated Balance Sheets consist of the following (in thousands):
Classification
December 31, 2019
Right-of-Use Assets
Operating
Finance
Total leased ROU assets
Liabilities
Current
Operating
Finance
Noncurrent
Operating
Finance
Total lease liabilities
Other assets
Property,yy plant and equipment, net
Other accrued liabilities
Current portion of finance lease obligations
Non-current liabilities
Finance lease obligations
$
$
$
$
14,246
2,945
17,191
4,369
327
10,041
378
15,115
Lease costs included in the Consolidated Statements of Operations consist of the following (in thousands):
Operating lease cost
Finance lease cost
Classification
Cost of sales, selling expenses and genneeral and
administrative expense
Amortization of ROU leased assets
Depreciation and amortization
Interest on lease liabilities
Interest expense
Net lease cost
Maturity of the Company’s lease liabilities is as follows (in thousands):
2020
2021
2022
2023
2024
Thereafter
Total lease payments
Less: interest
Present value of lease payments
Operating Leases
Finance Leases
$
$
$
4,986
$
4,477
2,551
1,855
851
1,242
15,962
1,552
14,410
$
$
361
361
30
—
—
—
752
47
705
Twelve Months
Ended December 31,
2019
$
$
$
$
5,172
144
65
5,381
5,347
4,838
2,581
1,855
851
1,242
16,714
Total
58
As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the
information available at the commencement date in determining the present value of lease payments.
Remaining llease term andand
didiscount rates are as f ll
follows:
i i
Weighted average remaining lease term (years)
Operating leases
Finance leases
Weighted average discount rate
Operating leases
Finance leases
Lease costs i
included iin hthe
l d d
Consolidated Statements of
d
lid
hCash lFlows are as f ll
follows (i(in h
thousands):
d )
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
12. FAIR VALUE MEASUREMENTS
December 31, 2019
4.0
2.1
5.17%
6.16%
Twelve Months
Ended December 31,
2019
$
$
$
5,016
53
308
The Company’s fair value measurements are based upon a three-level valuation hierarchy. These valuation techniques are based
upon the transparency of inputs (observable and unobservable) to the valuation of an asset or liability as of the measurement date.
Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market
assumptions. These two types of inputs create the following fair value hierarchy:
▪
▪
▪
Level 1 — Valuation is based on quoted prices for identical assets or liabilities in active markets;
Level 2 — Valuation is based on quoted prices for similar assets or liabilities in active markets, or other inputs that are
observable for the asset or liability,yy either directly or indirectly,yy for the full term of the financial instrument; and
Level 3 — Valuation is based upon other unobservable inputs that are significant to the fair value measurement.
Recurring Fair Value Measurements
rr
The Company maintains a non-qualified deferred compensation plan which is offered
to senior management and other key
employees. The amount owed to participants is an unfunded and unsecured general obligation of the Company. Participants are
offered
various investment options with which to invest the amount owed to them, and the plan administrator maintains a record
ff
of the liability owed to participants by investment. To minimize the impact of the change in market value of this liability,yy the
Company has elected to purchase a separate portfolio of investments through the plan administrator similar to those chosen by
the participant.
ff
The investments purchased by the Company include mutual funds, which are classified as Level 1, and life-insurance contracts
valued based on the performance of underlying mutual funds, which are classified as Level 2. Additionally,yy upon the Company’s
acquisition of Supreme, the Company acquired a pool of investments made by a wholly owned captive insurance subsidiary. These
investments are comprised of mutual funds, which are classified as Level 1.
The fair value of the Company’s derivatives is estimated with a market approach using third-party pricing services, which have
been corroborated with data from active markets or broker quotes.
59
Fair value measurements and the fair value hierarchy level for the Company’s assets and liabilities measured at fair value on a
recurring basis as of December 31, 2019 are shown below (in thousands):
December 31, 2019
Commodity swap contracts
Mutual funds
Life-insurance contracts
December 31, 2018
Commodity swap contracts
Mutual funds
Life-insurance contracts
Estimated Fair Value of Debt
Frequency
Recurring
Recurring
Recurring
Recurring
Recurring
Recurring
$
$
$
$
$
$
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Asset /
(Liability)
(1,926) $
7,367
15,072
$
$
(1,129) $
4,140
15,333
$
$
—
7,367
—
—
4,140
—
$
$
$
$
$
$
(1,926) $
—
15,072
$
$
(1,129) $
—
15,333
$
$
—
—
—
—
—
—
The estimated fair value of debt at December 31, 2019 consists primarily of the Senior Notes due 2025 and borrowings under the
Term Loan Credit Agreement (see Note 10). The fair value of the Senior Notes due 2025, Term Loan Credit Agreement, and the
Revolving Credit Facility are based upon third party pricing sources, which generally do not represent daily market activity or
represent data obtained from an exchange, and are classified as Level 2. The interest rates on the Company’s borrowings under
the Revolving Credit Facility are adjusted regularly to reflect current market rates and thus carrying value approximates fair value
for these borrowings. All other debt approximates their fair value as determined by discounted cash flows and are classified as
Level 3.
The Company’s carrying and estimated fair value of debt at December 31, 2019 and December 31, 2018 were as follows (in
thousands):
Instrument
Senior notes due 2025
Term loan credit
agreement
December 31, 2019
Fair Value
December 31, 2018
Fair Value
Carrying
Value
Level 1
Level 2
Level 3
Carrying
Value
Level 1
Level 2
Level 3
$ 320,572
$
134,814
$ 455,386
$
—
—
—
$ 320,572
$
134,814
$ 455,386
$
—
—
—
$ 319,941
$
184,957
$ 504,898
$
—
—
—
$ 278,688
$
181,985
$ 460,673
$
—
—
—
The fair value of debt is based on current public market prices for disclosure purposes only. Unrealized gains or losses are not
recognized in the financial statements as long-term debt is presented at the carrying value, net of unamortized premium or discount
and unamortized deferred financing costs in the financial statements.
13. COMMITMENTS AND CONTINGENCIES
a. Litigation
As of December 31, 2019, the Company was named as a defendant or was otherwise involved in numerous legal proceedings and
governmental examinations, in connection with the conduct of its business activities, in various jurisdictions, both in the United
States and internationally. On the basis of information currently available to it, management does not believe that existing
proceedings and investigations will have a material impact on our consolidated financial condition or liquidity if determined in a
manner adverse to the Company. However, such matters are unpredictable, and we could incur judgments or enter into settlements
our financial statements. Costs associated with the litigation
ff
for current or future claims that could materially and adversely affect
and settlements of legal matters are reported within General and administrative expenses in the Consolidated Statements of
Operations.
60
Environmental
rr
Disputes
In August 2014, the Company received notice as a potentially responsible party (“PRP”) by the South Carolina Department of
Health and Environmental Control (the “DHEC”) pertaining to the Philip Services Site located in Rock Hill, South Carolina
pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) and corresponding South
Carolina statutes. PRPs include parties identified through manifest records as having contributed to deliveries of hazardous
substances to the Philip Services Site between 1979 and 1999. The DHEC’s allegation that the Company was a PRP arises out of
National (or any of its former or current
four manifest entries in 1989 under the name of a company unaffiliated
ff
subsidiaries) that purport to be delivering a de minimis amount of hazardous waste to the Philip Services Site “c/o Wabash
National
Corporation.” As such, the Philip Services Site PRP Group (the “PRP Group”) notified Wabash
in August 2014 that it was offering
the Company the opportunity to resolve any liabilities associated with the Philip Services Site by entering into a Cash Out and
Reopener Settlement Agreement (the “Settlement Agreement”) with the PRP Group, as well as a Consent Decree with the DHEC.
The Company has accepted the offer
from the PRP Group to enter into the Settlement Agreement and Consent Decree, while
reserving its rights to contest its liability for any deliveries of hazardous materials to the Philips Services Site. The requested
settlement payment is immaterial to the Company’s financial conditions or operations, and as a result, if the Settlement Agreement
and Consent Decree are finalized, the payment to be made by the Company thereunder is not expected to have a material adverse
ff
effect
on the Company’s financial condition or results of operations.
with Wabash
a
a
a
ff
ff
On November 13, 2019, the Company received a notice as a PRP by the Indiana Department of Environmental Management related
to substances found at a property located at 817 South Earl Avenue, Lafayette, Indiana (“the Site”). The Site is not owned by the
Company but is in close proximity to certain of our owned properties. The notice alleges that the Company is a PRP in addition
to several other PRPs for hazardous substances contaminating the site under both Indiana state law and the CERCLA. Review of
publicly available records reveal that the Site is owned by Raisor Development Group, LLC and currently operates as “Premier
Auto Detailing & Wash”. As of December 31, 2019, based on the information available the Company does not expect this matter
to have a material adverse effect
on its financial condition or results of operations.
ff
rr
b. Environmental
Litigation Commitments and Contingencies
The Company generates and handles certain material, wastes and emissions in the normal course of operations that are subject to
various and evolving federal, state and local environmental laws and regulations.
The Company assesses its environmental liabilities on an on-going basis by evaluating currently available facts, existing technology,yy
presently enacted laws and regulations as well as experience in past treatment and remediation efforts.
Based on these evaluations,
the Company estimates a lower and upper range for treatment and remediation efforts
and recognizes a liability for such probable
costs based on the information available at the time. As of December 31, 2019, the Company had reserved estimated remediation
costs of $0.1 million for activities at existing and former properties which are recorded within Other accrued liabilities on the
Consolidated Balance Sheets.
ff
ff
c. Letters of Credit
rr
As of December 31, 2019, the Company had standby letters of credit totaling $7.4 million issued in connection with workers
compensation claims and surety bonds.
rr
d. Purchase
Commitments
The Company has $83.9 million in purchase commitments at December 2019 for various raw material commodities, including
aluminum, steel, nickel, and polyethylene, as well as other raw material components which are within normal production
requirements.
e. Chassis Converter Pool Agreements
rr
The Company,yy through Supreme, obtains most vehicle chassis for its specialized vehicle products directly from the chassis
manufacturers under converter pool agreements. Chassis are obtained from the manufacturers based on orders from customers,
and in some cases, for unallocated orders. The agreements generally state that the manufacturer will provide a supply of chassis
to be maintained at the Company’s facilities with the condition that we will store such chassis and will not move, sell, or otherwise
dispose of such chassis except under the terms of the agreement. In addition, the manufacturer typically retains the sole authority
to authorize commencement of work on the chassis and to make certain other decisions with respect to the chassis including the
terms and pricing of sales of the chassis to the manufacturer’s dealers. The manufacturer also does not transfer the certificate of
origin to the Company nor permit the Company to sell or transfer the chassis to anyone other than the manufacturer (for ultimate
resale to a dealer). Although the Company is party to related finance agreements with manufacturers, the Company has not
historically settled, nor expects to in the future settle, any related obligations in cash. Instead, the obligation is settled by the
manufacturer upon reassignment of the chassis to an accepted dealer, and the dealer is invoiced for the chassis by the
manufacturer. Accordingly,yy as of December 31, 2019 the Company’s outstanding chassis converter pool with the manufacturer
totaled $10.2 million and has included this financing agreement on the Company’s Consolidated Balance Sheets within Prepaid
rr
61
expenses and other and Other accrued liabilities. All other chassis programs through its Supreme subsidiary are handled as
consigned inventory belonging to the manufacturer and totaled approximately $3.3 million. Under these agreements, if the chassis
is not delivered to a customer within a specified time frame the Company is required to pay a finance or storage charge on the
chassis. Additionally,yy the Company receives finance support funds from manufacturers when the chassis are assigned into the
Company’s chassis pool. Typically,yy chassis are converted and delivered to customers within 90 days of the receipt of the chassis
by the Company.
14. PER SHARE OF COMMON STOCK
Per share results have been calculated based on the average number of common shares outstanding. The calculation of basic and
diluted net income per share is determined using net income applicable to common stockholders as the numerator and the number
of shares included in the denominator as follows (in thousands, except per share amounts):
Basic net income per share:
Net income applicable to common stockholders
Weighted average common shares outstanding
Basic net income per share
Diluted net income per share:
Net income applicable to common stockholders
Weighted average common shares outstanding
Dilutive shares from assumed conversion of convertible senior notes
Dilutive stock options and restricted stock
Diluted weighted average common shares outstanding
Diluted net income per share
Year Ended December 31,
2019
2018
2017
89,575
54,695
1.64
$
$
69,421
56,996
1.22
$
$
111,422
59,358
1.88
89,575
$
69,421
$
111,422
54,695
—
595
55,290
1.62
$
56,996
455
979
58,430
1.19
$
59,358
1,726
1,515
62,599
1.78
$
$
$
$
For the years ended December 31, 2019, 2018, and 2017, there were no options excluded from average diluted shares outstanding
as the average market price of the common shares was greater than the exercise price. In addition, the calculation of diluted net
income per share for the years ending December 31, 2018 and 2017 includes the impact of the Company’s Convertible Senior
Notes as the average stock price of the Company’s common stock during these periods was above the initial conversion price of
approximately $11.70 per share. The convertible notes matured in May 2018, so there were no dilutive shares in 2019.
15. STOCK-BASED COMPENSATION
AA
On May 18, 2017, the shareholders of the Company approved the 2017 Omnibus Incentive Plan (the “2017 Incentive Plan”) which
authorizes 3,150,000 shares for issuance under the plan. Awards granted under the 2017 Incentive Plan may be in the form of stock
options, stock appreciation rights, restricted stock, restricted stock units, other share-based awards, and cash awards to directors,
ff
officers,
and other eligible employees of the Company.
The Company recognizes all share-based awards to eligible employees based upon their fair value. The Company’s policy is to
recognize expense for awards that have service conditions only subject to graded vesting using the straight-line attribution method.
Total stock-based compensation expense was $9.0 million, $10.2 million and $10.4 million in the years ended December 31, 2019,
2018 and 2017, respectively. The amount of compensation costs related to nonvested stock options and restricted stock not yet
recognized was $12.6 million at December 31, 2019, for which the weighted average remaining life was 1.8 years.
Restricted Stock
Restricted stock awards vest over a period of one to three years and may be based on the achievement of specific financial
performance metrics and market conditions. These shares are valued at the market price on the date of grant and are forfeitable
in the event of terminated employment prior to vesting.
62
A summary of all restricted stock activity during 2019 is as follows:
Restricted Stock Outstanding at December 31, 2018
Granted
Vested
Forfeited
Restricted Stock Outstanding at December 31, 2019
Number of
Shares
1,495,564
853,994
(514,006)
(143,853)
1,691,699
$
$
Weighted
Average
Grant Date
Fair Value
20.77
15.22
12.53
23.30
20.24
During 2019, 2018, and 2017, the Company granted 853,994, 593,705 and 794,700 shares of restricted stock, respectively,yy with
aggregate fair values on the date of grant of $13.0 million, $14.6 million, and $17.2 million, respectively. The total fair value of
restricted stock that vested during 2019, 2018 and 2017 was $7.4 million, $15.0 million and $13.5 million, respectively.
Stock Options
Stock options are awarded with an exercise price equal to the market price of the underlying stock on the date of grant, become
fully exercisable three years after the date of grant and expire ten years after the date of grant. No stock options have been granted
by the Company since February 2015.
A summary of all stock option activity during 2019 is as follows:
Options Outstanding at December 31, 2018
Exercised
Forfeited
Expired
Options Outstanding at December 31, 2019
Options Exercisable at December 31, 2019
531,942
531,942
$
$
Number of
Options
Weighted
Average
Exercise Price
11.26
$
(91,200) $
—
9.30
—
633,593
$
(10,451) $
13.98
11.54
11.59
Weighted
Average
Remaining
Contractual
Life
Aggregate
Intrinsic Value
($ in millions)
3.8
3.1
3.2
$
$
$
$
1.3
0.5
1.7
1.6
The total intrinsic value of stock options exercised during 2019, 2018, and 2017 was $0.5 million, $1.5 million and $4.4 million,
respectively.
16. STOCKHOLDERS’ EQUITY
Sharerr Repurchase
rr
Program
rr
On November 14, 2018, the Board of Directors approved the extension of the Company’s existing stock repurchase program for
an additional three-year period and authorizing up to an additional $100 million in repurchases. Stock repurchases under this
program may be made in the open market or in private transactions at times and in amounts determined by the Company. As of
December 31, 2019, $69.1 million remained available under the program.
Common and Preferr
edrr
rr
Stock
The Board of Directors has the authority to issue common and unclassed preferred stock of up to 200 million shares and 25 million
shares, respectively,yy with par value of $0.01 per share, as well as to fix dividends, voting and conversion rights, redemption
provisions, liquidation preferences, and other rights and restrictions.
63
Accumulated Other Comprehensive
rr
Income
Changes in AOCI by component, net of tax, for the years ended December 31, 2019, 2018, and 2017 are summarized as follows
(in thousands):
Balances at December 31, 2016
Net unrealized gains (losses) arising during the period
Less: Net realized gains (losses) reclassified to net income
Net change during the period
Balances at December 31, 2017
Net unrealized gains (losses) arising during the period(a)
Less: Net realized gains (losses) reclassified to net income(b)
Net change during the period
Balances at December 31, 2018
Net unrealized gains (losses) arising during the period(c)
Less: Net realized gains (losses) reclassified to net income(d)
Net change during the period
Balances at December 31, 2019
Foreign
Currency
Translation
and Other
(2,847) $
462
—
462
(2,385)
(193)
—
(193)
(2,578)
712
—
$
Derivative
Instruments
—
—
—
—
—
(660)
105
(765)
(765)
(3,059)
(1,712)
712
(1,866) $
(1,347)
(2,112) $
$
$
Total
(2,847)
462
—
462
(2,385)
(853)
105
(958)
(3,343)
(2,347)
(1,712)
(635)
(3,978)
— — — — — — — — —
(a) Derivative instruments net of $230 thousand of tax benefit for the year ended December 31, 2018.
(b) Derivative instruments net of $37 thousand of tax expense for the year ended December 31, 2018.
(c) Derivative instruments net of $1,031 thousand of tax benefit for the year ended December 31, 2019.
(d) Derivative instruments net of $585 thousand of tax benefit for the year ended December 31, 2019.
17. EMPLOYEE SAVINGS
AA
PLANS
Substantially all of the Company’s employees are eligible to participate in a defined contribution plan under Section 401(k) of the
Internal Revenue Code. The Company also provides a non-qualified defined contribution plan for senior management and certain
key employees. Both plans provide for the Company to match, in cash, a percentage of each employee’s contributions up to certain
limits. The Company’s matching contribution and related expense for these plans was approximately $10.2 million, $7.9 million,
and $7.3 million for 2019, 2018, and 2017, respectively.
18. INCOME TAXES
Income Beforerr Income Taxesaa
The consolidated income before income taxes for 2019, 2018, and 2017 consists of the following (in thousands):
Domestic
Foreign
Total income before income taxes
Income Taxaa Expense
Years Ended December 31,
2019
2018
2017
$
$
116,886
845
117,731
$
$
94,978
1,026
96,004
$
$
121,897
641
122,538
The Tax Cuts and Jobs Act of 2017 (“the Act”) was enacted on December 22, 2017, and, among other changes, reduced the federal
statutory tax rate from 35.0% to 21.0%. In accordance with U.S. GAAP for income taxes, as well as SEC Staffff Accounting Bulletin
No. 118 (“SAB 118”), the Company made reasonable estimates of the impact of the Act and recorded these estimates in its results
for the year ended December 31, 2017. SAB 118 allowed for a measurement period of up to one year, from the date of enactment,
to complete the Company’s accounting for the impact of the Act. During the provisional period prescribed by SAB 118, the
Company reversed $1.3 million of deferred tax assets with regards to incentive compensation for executives whose compensation
is subject to the updated Internal Revenue Code Section 162(m) limitation amounts.
64
The Act also included a provision that functions as a global minimum tax referred to as Global Intangible Low-taxed Income
(“GILTI”)
that applies to certain income generated by Controlled Foreign Corporations (“CFC”). U.S. shareholders are required
LL
to include on a current basis the aggregate amount of certain income generated by its CFC, regardless of repatriation. For the years
ended December 31, 2019 and 2018, the Company calculated the tax but the impact on the financial statements is not material.
The consolidated income tax expense for 2019, 2018 and 2017 consists of the following components (in thousands):
Current
Federal
State
Foreign
Deferred
Federal
State
Foreign
Total consolidated expense
Years Ended December 31,
2019
2018
2017
$
$
$
18,167
6,233
336
24,736
2,760
620
40
3,420
28,156
$
$
22,120
7,271
168
29,559
(1,613)
(1,312)
(51)
(2,976)
26,583
$
21,316
4,327
155
25,798
(16,065)
1,459
(76)
(14,682)
11,116
The following table provides a reconciliation of differences
ff
from the U.S. Federal statutory rates as follows (in thousands):
Pretax book income
Federal tax expense at applicable statutory rate
State and local income taxes (net of federal benefit)
Benefit of domestic production deduction
Change in income tax reserves
Tax credits
Remeasurement of deferred taxes
Nondeductible officer
ff
compensation
Compensation expense
Other
Total income tax expense
Deferredrr
Taxesaa
Years Ended December 31,
2019
2018
2017
$
117,731
$
96,004
$
122,538
24,723
5,513
—
—
(3,301)
—
—
1,317
(96)
28,156
$
20,161
4,737
—
—
—
(421)
1,152
(1,009)
1,963
26,583
$
42,888
5,047
(3,450)
(11,925)
—
(19,796)
—
(1,943)
295
11,116
$
The Company’s deferred income taxes are primarily due to temporary differences
between financial and income tax reporting for
incentive compensation, depreciation of property,yy plant and equipment, amortization of intangibles, and other accrued liabilities.
ff
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Companies are required to assess whether valuation allowances should
be established against their deferred tax assets based on the consideration of all available evidence, both positive and negative,
using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively
verified.
The Company assesses, on a quarterly basis, the realizability of its deferred tax assets by evaluating all available evidence, both
positive and negative, including: (1) the cumulative results of operations in recent years, (2) the nature of recent losses, if applicable,
(3) estimates of future taxable income, (4) the length of net operating loss carryforwards (“NOLs”) and (5) the uncertainty associated
with a possible change in ownership, which imposes an annual limitation on the use of these carryforwards.
65
As of December 31, 2019 and 2018, the Company retained a valuation allowance of $0.8 million and $0.8 million, respectively,yy
against deferred tax assets related to various state and local NOLs that are subject to restrictive rules for future utilization.
As of December 31, 2019 and 2018, the Company had no U.S. federal tax NOLs. The Company had various multi-state income
tax NOLs aggregating approximately $46.4 million which will expire between 2020 and 2030, if unused.
The components of deferred tax assets and deferred tax liabilities as of December 31, 2019 and 2018 were as follows (in thousands):
Deferred tax assets
Tax credits and loss carryforwards
Accrued liabilities
Incentive compensation
Other
Deferred tax liabilities
Property,yy plant and equipment
Intangibles
Other
Net deferred tax liability before valuation allowances and reserves
Valuation allowances
Net deferred tax liability
Taxaa Reserves
December 31,
2019
2018
$
$
672
7,489
14,420
5,423
28,004
(17,899)
(44,477)
(2,379)
(64,755)
(36,751)
(825)
(37,576) $
$
657
7,285
12,132
6,747
26,821
(14,695)
(42,343)
(3,841)
(60,879)
(34,058)
(847)
(34,905)
The Company’s policy with respect to interest and penalties associated with reserves or allowances for uncertain tax positions is
to classify such interest and penalties in Income tax expense on the Consolidated Statements of Operations. As of December 31,
2019 and 2018, the total amount of unrecognized income tax benefits, including interest and penalties, was approximately $2.1
million and $1.8 million, respectively,yy all of which, if recognized, would impact the effective
income tax rate of the Company. As
of December 31, 2019 and 2018, the Company had recorded a total of $0.7 million and $0.6 million, respectively,yy of accrued
interest and penalties related to uncertain tax positions. The Company expects no significant changes to the facts and circumstances
underlying its reserves and allowances for uncertain income tax positions as reasonably possible during the next 12 months. As
of December 31, 2019, the Company is subject to unexpired statutes of limitation for U.S. federal income taxes for the years 2016
through 2018. The Company is also subject to unexpired statutes of limitation for Indiana state income taxes for the years 2016
through 2018.
ff
A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, was as follows
(in thousands) and all balances as of December 31, 2019 were included in either Other noncurrent
income
taxes in the Company’s Consolidated Balance Sheets:
liabilities or Deferredrr
rr
lBalance at
January 1, 2018
y
Increase in prior year tax positions
Balance at December 31, 2018
Increase in prior year tax positions
Balance at December 31, 2019
Unrecognized
Tax Benefits
$
$
495
682
1,177
245
1,422
66
19. SEGMENTS
Segment Reporting
The Company manages its business in three segments: Commercial Trailer Products, Diversified Products, and Final Mile Products.
The Commercial Trailer Products segment manufactures standard and customized van and platform trailers and other transportation
related equipment for customers who purchase directly from the Company or through independent dealers. The Diversified Products
segment, comprised of three strategic business units including, Tank Trailer, Process Systems and Composites, focuses on the
Company’s commitment to expand its customer base, diversify its product offerings
and revenues and extend its market leadership
by leveraging its proprietary DuraPlate® panel technology,yy drawing on its core manufacturing expertise and making available
products that are complementary to truck and tank trailers and transportation equipment. The Final Mile Products segment
manufactures truck bodies for customers in the final mile space.
ff
Previously,yy the Company managed its business in two segments: Commercial Trailer Products and Diversified Products. In 2017,
the Company completed the acquisition of Supreme. As a result, the Company created a new reporting segment referred to as the
Final Mile Products segment, which includes the Supreme operations and certain other truck body operations which were previously
included in the Commercial Trailer Products segment. The Company has not restated the historical comparative periods due to
the immaterial impact of the existing truck body activities on the presented segments and periods.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies except
that the Company evaluates segment performance based on income from operations. The Company has not allocated certain
corporate related administrative costs, interest and income taxes included in the corporate and eliminations segment to the
Company’s other reportable segments. The Company accounts for intersegment sales and transfers at cost plus a specified mark-
up.
Reportable segment information is as follows (in thousands):
Commercial
Trailer Products
Diversified
Products
Final Mile
Products
Corporate and
Eliminations
Consolidated
2019
Net sales
External customers
Intersegment sales
Total net sales
Depreciation and amortization
Income (Loss) from operations
Assets
2018
Net sales
External customers
Intersegment sales
Total net sales
Depreciation and amortization
Income (Loss) from operations
Assets
2017
Net sales
External customers
Intersegment sales
Total net sales
Depreciation and amortization
Income (Loss) from operations
Assets
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
441,910
—
,
441,910
11,361
9,804
511,862
358,249
—
,
358,249
8,314
7,907
484,634
70,461
—
,
70,461
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
—
$
(28,831)
)
,
(
) $
(28,831) $
,
(
2,319,136
—
,
2,319,136
,
$
1,708
(42,643) $
$
113,155
42,357
142,786
1,304,591
—
$
)
(21,881)
,
(
) $
(21,881) $
,
(
2,267,278
—
,
2,267,278
,
$
1,561
(35,682) $
$
115,153
40,683
110,987
1,304,393
—
$
(13,040)
)
,
(
) $
(13,040) $
,
(
1,767,161
—
,
1,767,161
,
$
1,152
(2,098) $
$
404,246
$
1,690
(39,461) $
$
294,911
35,053
130,816
1,351,513
1,519,592
1,949
,
,
,
1,521,541
10,667
145,877
362,328
1,536,687
252
,
1,536,939
,
9,631
141,795
355,183
1,348,251
131
,
1,348,382
,
9,975
151,999
311,705
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
357,634
26,882
,
,
384,516
18,621
29,748
317,246
372,342
,
21,629
,
393,971
$
$
$
$
$
$
$
$
$
21,177
$
(3,033) $
$
349,423
348,449
12,909
,
,
361,358
22,236
20,376
340,651
$
$
$
$
$
$
67
Customer Concentration
The Company is subject to a concentration of risk as the five largest customers together accounted for approximately 27%, 25%
and 24% of the Company’s aggregate net sales in 2019, 2018 and 2017, respectively. In addition, for each of the last three years
there were no customers whose revenue individually represented 10% or more of our aggregate net sales. International sales
accounted for less than 10% in each of the last three years.
Product
rr
Information
ff
The Company offers
products primarily in four general categories: (1) new trailers, (2) used trailers, (3) components, parts and
service, and (4) equipment and other. The following table sets forth the major product categories and their percentage of consolidated
net sales (dollars in thousands):
Year ended December 31, 2019
New trailers
Used trailers
Components, parts and service
Equipment and other
Total net external sales
Year ended December 31, 2018
New trailers
Used trailers
Components, parts and service
Equipment and other
Total net external sales
Year ended December 31, 2017
New trailers
Used trailers
Components, parts and service
Equipment and other
Total net external sales
$
$
$
$
$
$
Commercial
Trailer Products
Diversified
Products
Final Mile
Products
$
1,464,636
435
40,344
16,126
198,043
2,044
113,024
71,405
—
15,023
426,887
Eliminations
—
$
—
(27,902)
(929)
Consolidated
$ 1,662,679
2,479
140,489
513,489
1,521,541
$
384,516
$
441,910
$
(28,831) $ 2,319,136
Commercial
Trailer Products
Diversified
Products
1,473,583
$
164,790
$
9,618
34,994
18,744
3,514
122,099
103,568
Final Mile
Products
—
—
9,968
348,281
Consolidated
Eliminations
—
$
—
(21,811)
$ 1,638,373
13,132
145,250
(70)
470,523
1,536,939
$
393,971
$
358,249
$
(21,881) $ 2,267,278
Consolidated
Final Mile
Products
—
Eliminations
—
$
$ 1,413,689
13,998
154,526
—
(13,040)
—
184,948
(13,040) $ 1,767,161
$
—
1,877
68,584
70,461
71.7%
0.1%
6.1%
22.1%
100.0%
72.2%
0.6%
6.4%
20.8%
100.0%
80.0%
0.8%
8.7%
10.5%
100.0%
Commercial
Trailer Products
Diversified
Products
1,273,584
$
140,105
$
10,720
48,008
16,070
1,348,382
$
3,278
117,681
100,294
361,358
$
68
20. CONSOLIDATEDAA
RR
QUARTERL
YLL FINANCIAL DATAAA (UNAUDITED)
The following is a summary of the unaudited quarterly results of operations for fiscal years 2019, 2018 and 2017 (dollars in
thousands, except per share amounts):
2019
Net sales
Gross profit
Net income
Basic net income per share(1)
Diluted net income per share(1)
2018
Net sales
Gross profit
Net income
Basic net income per share(1)
Diluted net income per share(1)
2017
Net sales
Gross profit
Net income
Basic net income per share(1)
Diluted net income per share(1)
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
533,174
68,690
14,780
0.27
0.27
491,319
64,119
21,272
0.37
0.35
362,716
59,357
20,173
0.34
0.32
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
626,053
87,650
30,960
0.56
0.56
612,690
85,315
31,902
0.55
0.54
435,903
67,679
22,945
0.38
0.36
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
580,908
77,735
25,460
0.47
0.46
553,073
65,162
4,664
0.08
0.08
425,098
60,963
18,947
0.32
0.30
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
579,001
72,307
18,375
0.34
0.34
610,196
69,056
11,584
0.21
0.21
543,444
72,876
49,357
0.84
0.80
— — — — — — — — —
(1) Basic and diluted net income per share is computed independently for each of the quarters presented. Therefore, the sum of the quarterly net
income per share may differ
ff
from annual net income per share due to rounding.
ITEM 9—CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
DISCLOSURE
TT
ON ACCOUNTING AND FINANCIAL
None.
ITEM 9A—CONTROLS AND PROCEDURES
Disclosurerr Controlsrr
rr
and Procedur
esrr
We maintain disclosure controls and procedures that are designed to provide reasonable assurance to our management and board
of directors that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934,
as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange
Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our
Chief Executive Officer
, as appropriate to allow timely decisions regarding required disclosure. Based
on an evaluation conducted under the supervision and with the participation of the Company’s management, including our Chief
of the design and operation of our disclosure controls and
Executive Officer
procedures as of December 31, 2019, including those procedures described below,ww we, including our Chief Executive Officer
and
our Chief Financial Officer
, determined that those controls and procedures were effective.
and our Chief Financial Officer
and Chief Financial Officer
ff
, of the effectiveness
ff
ff
ff
ff
ff
ff
ff
Changes in Internal Controlsrr
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act, identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that
or are reasonably likely to materially affect
occurred during the fourth quarter of fiscal year 2019 that have materially affected
our internal control over financial reporting.
ff
ff
Report of Management on Internal Controlrr over Financial Reporting
The management of Wabash
National Corporation (“the Company”) is responsible for establishing and maintaining adequate
internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide
a
69
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of the financial statements in accordance with U.S. generally accepted accounting principles; (3) provide
reasonable assurance that receipts and expenditures of the Company are being made only in accordance with authorizations of
management and directors of the Company; and (4) provide reasonable assurance regarding prevention or timely detection of
on the financial statements.
unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect
ff
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
ff
of the Company’s internal control over financial reporting as of December 31, 2019, based
Management assessed the effectiveness
on criteria for effective
internal control over financial reporting described in Internal Control – Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)) (COSO). Based on this assessment,
management has concluded that internal control over financial reporting is effective
as of December 31, 2019.
ff
ff
ff
Ernst & Young LLP,PP an Independent Registered Public Accounting Firm, has audited the Company’s consolidated financial
statements as of and for the year ended December 31, 2019, and its report on internal controls over financial reporting as of
December 31, 2019 appears on the following page.
Brent L. Yeagy
Michael N. Pettit
February 25, 2020
President and Chief Executive Officer
ff
Senior Vice President and Chief Financial Officer
ff
70
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Wabash National Corporation
Opinion on Internal Control over Financial Reporting
a
National Corporation’s internal control over financial reporting as of December 31, 2019, based on
We have audited Wabash
criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Wabash
National Corporation (the Company)
maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2019, based on the
COSO criteria.
a
ff
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated statements
of operations, comprehensive income, stockholders’ equity,yy and cash flows for each of the three years in the period ended
December 31, 2019, and the related notes and our report dated February 25, 2020 expressed an unqualified opinion thereon.
Basis for Opinion
ff
internal control over financial reporting and for its assessment
The Company’s management is responsible for maintaining effective
of internal control over financial reporting included in the accompanying Report of Management on Internal
of the effectiveness
Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
ff
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects.
ff
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness
exists, testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and performing
such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for
our opinion.
ff
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect
on the financial statements.
ff
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
to future periods are subject to the risk that controls may become inadequate because
projections of any evaluation of effectiveness
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
ff
/s/ ERNST & YOUNG LLP
Indianapolis, Indiana
February 25, 2020
ITEM 9B—OTHER INFORMATION
None.
71
PART III
ITEM 10—DIRECTORS,
TT
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The Company hereby incorporates by reference the information contained under the heading “Information About Our Executive
Officers”
from Item 1 Part I of this Annual Report.
ff
The Company hereby incorporates by reference the information contained under the headings “Delinquent Section 16(a) Reports,”
“Proposal 1 - Election of Directors” and “Corporate Governance” from its definitive Proxy Statement to be delivered to stockholders
of the Company and filed with the SEC within 120 days after the end of the fiscal year covered by this Annual Report in connection
with the 2020 Annual Meeting of Stockholders to be held May 12, 2020.
Code of Ethics
As part of our system of corporate governance, our Board of Directors has adopted a Code of Business Conduct and Ethics (“Code
of Ethics”) that is specifically applicable to our Chief Executive Officer
This Code of Ethics is
available within the Corporate Governance section of the Investor Relations page of our website at www.wabashnational.com.
under, or any amendments to, our Code
We will disclose any waivers for our Chief Executive Officer
of Ethics by posting such information on our website at the address above.
and Senior Financial Officers.
or Senior Financial Officers
ff
ff
ff
ff
ITEM 11—EXECUTIVE COMPENSATION
The Company hereby incorporates by reference the information contained under the headings “Compensation Discussion and
Analysis,” “Compensation Committee Report,” “Executive Compensation Tables”
and “Corporate Governance— Director
Compensation” from its definitive Proxy Statement to be delivered to the stockholders of the Company and filed with the SEC
within 120 days after the end of the fiscal year covered by this Annual Report in connection with the 2020 Annual Meeting of
Stockholders to be held May 12, 2020.
a
ITEM 12—SECURITY OWNERSHIP OF CERTAINTT
STOCKHOLDER
MATTERS
TT
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
The Company hereby incorporates by reference the information contained under the headings “Beneficial Ownership Information
— Beneficial Ownership of Common Stock” and “Equity Compensation Plan Information” from its definitive Proxy Statement
to be delivered to the stockholders of the Company and filed with the SEC within 120 days after the end of the fiscal year covered
by this Annual Report in connection with the 2020 Annual Meeting of Stockholders to be held on May 12, 2020.
ITEM 13—CERTAINTT
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORTT
INDEPENDENCE
The Company hereby incorporates by reference the information contained under the headings “Corporate Governance— Board
Structure and its Role in Oversight— Director Independence” and “Corporate Governance— Related Persons Transactions Policy”
from its definitive Proxy Statement to be delivered to the stockholders of the Company and filed with the SEC within 120 days
after the end of the fiscal year covered by this Annual Report in connection with the 2020 Annual Meeting of Stockholders to be
held on May 12, 2020.
ITEM 14—PRINCIPALPP
ACCOUNTANT
TT
FEES AND SERVICES
Information required by Item 14 of this form and the audit committee’s pre-approval policies and procedures regarding the
engagement of the principal accountant are incorporated herein by reference to the information contained under the heading
“Proposal 3— Ratification of Appointment of Independent Registered Public Accounting Firm” from the Company’s definitive
Proxy Statement to be delivered to the stockholders of the Company and filed with the SEC within 120 days after the end of the
fiscal year covered by this Annual Report in connection with the 2020 Annual Meeting of Stockholders to be held on May 12,
2020.
PART IV
ITEM 15—EXHIBITS AND FINANCIAL STATTT EMENT
TT
SCHEDULES
(a) Financial Statements: The Company has included all required financial statements in Item 8 of this Annual Report. The
financial statement schedules have been omitted as they are not applicable or the required information is included in the Notes
to the consolidated financial statements.
(b) Exhibits: Reference is made to the Exhibit Index of this Annual Report for a list of exhibits filed with this Annual Report or
incorporated herein by reference to the document.
ITEM 16 – FORM 10-K SUMMARY
None.
EXHIBIT INDEX
72
No.
2.01
3.01
3.02
4.01
4.02
4.03
4.04
4.05
4.06
Agreement and Plan of Merger, dated as of August 8, 2017, by and among Wabash
and Redhawk Acquisition Corporation (21)
a
National Corporation, Supreme Industries, Inc.
Description
Amended and Restated Certificate of Incorporation of the Company,yy as amended (10)
Amended and Restated Bylaws of the Company,yy as amended (9)
Specimen Stock Certificate (1)
Indenture, dated as of April 23, 2012, by and between the Company and Wells Fargo Bank, National Association, as trustee (14)
Indenture, dated as of September 26, 2017, by and among Wabash
Wells Fargo Bank, National Association, as trustee (24)
a
Form of 5.50% Senior Notes due 2025 (24)
National Corporation, the several guarantors named therein and
Second Supplemental Indenture, dated as of August 17, 2018, between Wabash
Wells Fargo Bank, National Association, as trustee (2)
a
National Corporation, a Delaware corporation, and
Description of Securities (28)
10.01#
Corporate Plan for Retirement – Executive Plan (3)
10.02#
Form of Non-Qualified Stock Option Agreement under the 2007 Omnibus Incentive Plan (6)
10.03#
2007 Omnibus Incentive Plan, as amended (7)
10.04#
2011 Omnibus Incentive Plan (11)
10.05#
2017 Omnibus Incentive Plan (20)
10.06#
Change in Control Severance Pay Plan (12)
10.07# Wabash
a
National Corporation Executive Severance Plan (4)
10.08
10.09
10.1
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.2
10.21
10.22#
21.1
23.1
SecondAmended and Restated CreditAgreement dated December 21, 2018 among Wabash
a
of Wabash
agent (13)
National Corporation, certain subsidiaries
National Corporation, the lenders from time to time party thereto and Wells Fargo Capital Finance, LLC, as administrative
a
Amended and Restated General Continuing Guaranty,yy dated as of May 8, 2012, by and among each subsidiary of Wabash
National
Corporation party thereto in favor of Wells Fargo Capital Finance, LLC, as administrative agent for the secured parties under the
Amended and Restated Credit Agreement, dated May 8, 2012 (15)
a
Credit Agreement, dated as of May 8, 2012, by and among the Wabash
National Corporation, the several lenders from time to time
a
party thereto Morgan Stanley Senior Funding, Inc., as administrative agent, joint lead arranger and joint bookrunner, and Wells
Fargo Securities, LLC, as joint lead arranger and joint bookrunner (15)
Amendment No. 1 to Credit Agreement, dated April 25, 2013, by and among Wabash
Funding, Inc., as administrative agent, and each lender party thereto (16)
a
National Corporation, Morgan Stanley Senior
Amendment No. 2 to Credit Agreement, dated as of March 19, 2015, by and among Wabash
Senior Funding, Inc. and each lender party thereto (17)
a
National Corporation, Morgan Stanley
Amendment No. 3 to Credit Agreement, dated as of February 24, 2017, among Wabash
Funding, Inc., as administrative agent, and each lender party thereto (18)
a
National Corporation, Morgan Stanley Senior
Amendment No. 4 to Credit Agreement, dated as of August 18, 2017, by and among Wabash
subsidiaries party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent, and each lender party thereto (22)
National Corporation, certain of its
a
Amendment No. 5 to Credit Agreement, dated as of November 17, 2017, by and among Wabash
credit parties thereto, Morgan Stanley Senior Funding, Inc., as administrative agent, and each lender party thereto (25)
National Corporation, the other
a
National Corporation party
General Continuing Guarantee, dated as of May 8, 2012, by and among each subsidiary of Wabash
thereto in favor of Morgan Stanley Senior Funding, Inc., as administrative agent for the secured parties under the Credit Agreement,
dated May 8, 2012 (15)
a
Joinder and First Amendment to Amended and Restated Credit Agreement, First Amendment to Amended and Restated Security
Agreement and First Amendment to Amended and Restated Guaranty Agreement, dated as of June 4, 2015, by and among Wabash
National Corporation, certain of its subsidiaries designated as Loan Parties (as defined in the Amendment), Wells Fargo Capital
Finance, LLC, as arranger and administrative agent, PNC National Bank National Association, and the other Lenders party thereto
(8)
a
Form of Tender and VotingAgreement, dated as ofAugust
Corporation and each of the officers
ff
ff
and directors and certain holders of Class B common stock party thereto (21)
8, 2017, by and among Wabash
a
National Corporation, RedhawkAcquisition
Commitment Letter, dated as of August 8, 2017, by and among Wabash
Wells Fargo Bank, National Association, Wells Fargo Securities, LLC and Wells Fargo Capital Finance, LLC (21)
National Corporation, Morgan Stanley Senior Funding, Inc.,
a
Purchase Agreement, dated as of September 15, 2017, by and among Morgan Stanley & Co. LLC and Wells Fargo Securities, LLC,
as representatives of the other initial purchasers named therein, Wabash
National Corporation and the subsidiary guarantors (23)
a
Form of Indemnification Agreement with Directors and Executive Officers
ff
(27)
Employment Transition Agreement, dated as of December 14, 2017, by and between Wabash
Giromini (26)
a
National Corporation and Richard J.
List of Significant Subsidiaries (28)
Consent of Ernst & Young LLP (28)
73
31.1
31.2
32.1
101
104
Certification of Principal Executive Officer
ff
(28)
Certification of Principal Financial Officer
ff
(28)
Written Statement of Chief Executive Officer
2002 (18 U.S.C. Section 1350) (28)
ff
and Chief Financial Officer
ff
Pursuant to Section 906 of the Sarbanes-Oxley Act of
a
The following materials from Wabash
National Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019
are filed herewith, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at
December 31, 2019 and 2018, (ii) the Consolidated Statements of Operations for the twelve months ended December 31, 2019,
2018, and 2017, (iii) the Consolidated Statements of Comprehensive Income for the twelve months ended December 31, 2019, 2018,
and 2017, (iv) the Consolidated Statements of Stockholders’ Equity for the twelve months ended December 31, 2019, 2018, and
2017, (v) the Consolidated Statements of Cash Flows for the twelve months ended December 31, 2019, 2018, and 2017, and (vi)
Notes to the Consolidated Financial Statements. The instance document does not appear in the interactive data file because its XBRL
tags are embedded within the Inline XBRL document. (28)
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) (28)
# Management contract or compensatory plan
Incorporated by reference to the Registrant’s registration statement on Form S-3 (Registration No. 333-27317) filed on May 16,
1997
Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended September 30, 2018 (File No. 001-10883)
Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended March 31, 2005 (File No. 001-10883)
Incorporated by reference to the Registrant’s Form 8-K filed on December 16, 2015 (File No. 001-10883)
(1)
(2)
(3)
(4)
(5) Reserved
(6)
(7)
(8)
(9)
Incorporated by reference to the Registrant’s Form 8-K filed on May 24, 2007 (File No. 001-10883)
Incorporated by reference to the Registrant’s Form 10-K for the year ended December 31, 2007 (File No. 001-10883)
Incorporated by reference to the Registrant’s Form 8-K filed on June 10, 2015 (File No. 001-10883)
Incorporated by reference to the Registrant’s Form 8-K filed on August 4, 2009 (File No. 001-10883)
(10)
Incorporated by reference to the Registrant’s Form 10-Q for the quarter ended September 30, 2011 (File No. 001-10883)
(11)
Incorporated by reference to the Registrant’s Form 8-K filed on May 25, 2011 (File No. 001-10883)
(12)
Incorporated by reference to the Registrant’s Form 8-K filed on September 14, 2011 (File No. 001-10883)
(13)
Incorporated by reference to the Registrant’s Form 8-K filed on December 27, 2018 (File No.001-10883)
(14)
Incorporated by reference to the Registrant’s Form 8-K filed on April 23, 2012 (File No.001-10883)
(15)
Incorporated by reference to the Registrant’s Form 8-K filed on May 14, 2012 (File No 001-10883)
(16)
Incorporated by reference to the Registrant’s Form 8-K filed on April 29, 2013 (File No 001-10883)
(17)
Incorporated by reference to the Registrant’s Form 8-K filed on March 23, 2015 (File No 001-10883)
(18)
Incorporated by reference to the Registrant’s Form 8-K filed on February 27, 2017 (File No 001-10883)
(19) Reserved
(20)
Incorporated by reference to the Registrant’s Form S-8 filed on May 18, 2017 (File No. 333-218085)
(21)
Incorporated by reference to the Registrant’s Form 8-K filed on August 9, 2017 (File No. 001-10883)
(22)
Incorporated by reference to the Registrant’s Form 8-K filed on August 22, 2017 (File No. 001-10883)
(23)
Incorporated by reference to the Registrant’s Form 8-K filed on September 15, 2017 (File No. 001-10883)
(24)
Incorporated by reference to the Registrant’s Form 8-K filed on September 26, 2017 (File No. 001-10883)
(25)
Incorporated by reference to the Registrant’s Form 8-K filed on November 22, 2017 (File No. 001-10883)
(26)
Incorporated by reference to the Registrant’s Form 8-K filed on December 15, 2017 (File No. 001-10883)
(27)
Incorporated by reference to the Registrant’s Form 8-K filed on December 15, 2017 (File No. 001-10883)
(28) Filed herewith
74
AA
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
WABASH NATIONAL
AA
CORPORATION
AA
February 25, 2020
By:
/s/ Michael N. Pettit
Michael N. Pettit
Senior Vice President and Chief Financial Officer
(Principal Financial Officer
ff
and Principal Accounting Officer)
ff
ff
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant in the capacities and on the date indicated.
Signature and Name
Title
Date
/s/ Brent L. Yeagy
Brent L. Yeagy
President and Chief Executive Officer
(Principal Executive Officer)
ff
ff
, Director
February 25, 2020
/s/ Michael N. Pettit
Senior Vice President and Chief Financial Officer
ff
February 25, 2020
Michael N. Pettit
(Principal Financial Officer
ff
and Principal Accounting Officer)
ff
/s/ Martin C. Jischke
Chairman of the Board of Directors
February 25, 2020
Dr. Martin C. Jischke
/s/ Therese M. Bassett
Director
Therese M. Bassett
/s/ John G. Boss
John G. Boss
/s/ John E. Kunz
John E. Kunz
Director
Director
/s/ Larry J. Magee
Director
Larry J. Magee
/s/ Ann D. Murtlow
Ann D. Murtlow
Director
/s/ Scott K. Sorensen
Director
Scott K. Sorensen
/s/ Stuart A. Taylor II
Stuart A. Taylor II
Director
75
February 25, 2020
February 25, 2020
February 25, 2020
February 25, 2020
February 25, 2020
February 25, 2020
February 25, 2020
CERTIFICATIAA ONS
Exhibit 31.1
I, Brent L. Yeagy, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Wabas
a
h National Corporation;
2. Based on my knowledge, this report does not contain any untrut e statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for,
the periods presented in this report;
4. The registrat na t's other
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal contrott
defined in Exchange Act Rules 13a-15(f) and 15d-15(f))ff
for the registrant and have:
ff
certifying
offiff cer and I are responsible for establishing and maintaining disclosureu contrott
ls and
ial reporting (as
l over financaa
t
a) Designed such disclosure control
s and procedures, or caused such disclosure controls and procedures to be
designed under our supeu rvision, to ensure that material information relating to the registrant, including its
consolidated subsu idiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
tt
b) Designed such internal contrott
over financial
reporting to be designed under our supeu rvision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
l over financial reporting, or causeaa
d such internal control
t
c) Evaluated the effeff ctiveness of the registrant's disclosure control
our conclusions about the effectiv
covered by this report based on such evaluation; and
s and procedures and presented in this report
eness of the disclosure controls and procedures, as of the end of the period
ff
tt
d) Disclosed in this report any change in the registrant's internal
during the registrant's most recent fiscal quarter (the registrant’s fourtht
report) that has materially affeff cted, or is reasonablya
over financial reporting; and
rr
likely to materially affect
control over financial reporting that occurredrr
fiscal quarter in the case of an annual
, the registrant's internal control
ff
5. The registrant's other
l
offiff cer and I have disclosed, based on our most recent evaluation of internal contrott
over financial reporting, to the registrant's auditors and the audit committee of the registrat nt's board of directors (or
persons performing the equiq valent functions):
ff
certifying
t
a) All significant deficiencies and material weaknesses in the design or operation of internal control
financial reporting which are reasonably likely to adversely affect
summarize and report financial information; and
over
the registrant's ability to record, process,
ff
t
b) Any fraudaa
role in the registrant's internal control over financial reporting.
or not material, that involves management or other
t
, whether
t
emplmm oyees who have a significant
Date: Februarr
ry 25, 2020
/s/ Brent L. Yeagy
Brent L. Yeagy
President and Chief Executive Officer
(Principal Executive Officer)
ff
ff
CERTIFICATIAA ONS
Exhibit 31.2
I, Michael N. Pettit, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Wabas
a
h National Corporation;
2. Based on my knowledge, this report does not contain any untrut e statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for,
the periods presented in this report;
4. The registrat na t's other
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal contrott
defined in Exchange Act Rules 13a-15(f) and 15d-15(f))ff
for the registrant and have:
ff
certifying
offiff cer and I are responsible for establishing and maintaining disclosureu contrott
ls and
ial reporting (as
l over financaa
t
a) Designed such disclosure control
s and procedures, or caused such disclosure controls and procedures to be
designed under our supeu rvision, to ensure that material information relating to the registrant, including its
consolidated subsu idiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
tt
b) Designed such internal contrtt ol over financial reporting, or causeaa
over financial
reporting to be designed under our supeu rvision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
d such internal control
t
c) Evaluated the effeff ctiveness of the registrant's disclosure control
s and procedures and presented in this report
our conclusions aboa ut the effeff ctiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
tt
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred
fiscal quarter in the case of an annual
during the registrant's most recent fiscal quarter (the registrant’s fourtht
report) that has materially affeff cted, or is reasonablya
, the registrant's internal control
ff
over financial reporting; and
likely to materially affect
5. The registrant's other
l
offiff cer and I have disclosed, based on our most recent evaluation of internal contrott
over financial reporting, to the registrant's auditors and the audit committee of the registrat nt's board of directors (or
persons performing the equiq valent functions):
ff
certifying
t
a) All significant deficiencies and material weaknesses in the design or operation of internal control
financial reporting which are reasonably likely to adversely affect
summarize and report financial information; and
over
the registrant's ability to record, process,
ff
t
b) Any fraudaa
role in the registrant's internal control over financial reporting.
or not material, that involves management or other
t
, whether
t
emplmm oyees who have a significant
Date: Februarr
ry 25, 2020
/s/ Michael N. Pettit
Michael N. Pettit
Senior Vice President and Chief Financial Officer
(Principal Financial Offiff cer)
ff
Written Statement of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
Exhibit 32.1
The undersigned, the President and Chief Executive Offiff cer and the Senior Vice President and Chief Financial Officer
"Companmm y"), each hereby certifies that, to his knowledge, on Februaryrr 25, 2020:
of Wabash National Corporation (thet
(a)
(b)
the Annual Report on Form 10-K of the Company for
the year ended Decembem r 31, 2019 filed
on February 25, 2020, with the Securities and Exchange Commission (the “Report”) fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
/s/ Brent L. Yeagy
Brent L. Yeagy
President and Chief Executive Officer
February 25, 2020
/s/ Michael N. Pettit
Michael N. Pettit
Senior Vice President and Chief Financial Officer
February 25, 2020
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging,
that appears in typed form within the electronic version of this written statement
or otherwise adopting the signaturett
requiq red by Section 906, has been provided to Wabash National Corporation and will be retained by Wabaa
sh National
Corporation and furnirr shed to the Securities and Exchange Commission or its staffff upon request.
(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)(cid:86)
Directors
Stockholder Information
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)
Director of the Board
M. Kristin Glazner
Senior Vice President and Chief Human
(cid:53)(cid:72)(cid:86)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:86)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)
Melanie D. Margolin
Senior Vice President and General Counsel
Corporate Secretary
Kevin J. Page
Senior Vice President, Customer Value Creation
Michael N. Pettit
(cid:54)(cid:72)(cid:81)(cid:76)(cid:82)(cid:85)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)
Dustin T. Smith
Senior Vice President, Global Operations
Auditors
Ernst & Young LLP
111 Monument Circle
Suite 2600
Indianapolis, IN 46204-5120
Transfer Agent
EQ Shareowner Services
1110 Centre Pointe Curve
Suite 101
Mendota Heights, MN 55120-4100
Telephone: 1-800-468-9716
Fax: 651-450-4033
Form 10-K
In lieu of a separate annual report to stockholders,
enclosed is Wabash National Corporation’s
Form 10-K, which includes as an exhibit the
(cid:70)(cid:72)(cid:85)(cid:87)(cid:76)(cid:191)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:54)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:22)(cid:19)(cid:21)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)
Sarbanes Oxley Act.
Stock Listing
Symbol: WNC
New York Stock Exchange
Internet Address
www.wabashnational.com
Dr. Martin C. Jischke
Chairman of the Board
Retired President, Purdue University
Therese Bassett
Managing Director
NuVentures LLC
John G. Boss
(cid:41)(cid:82)(cid:85)(cid:80)(cid:72)(cid:85)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)
Momentive Performance Materials Inc.
John E. Kunz
(cid:54)(cid:72)(cid:81)(cid:76)(cid:82)(cid:85)(cid:3)(cid:57)(cid:76)(cid:70)(cid:72)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)
U.S. Concrete, Inc.
Larry J. Magee
President
Magee Ventures Group
Ann D. Murtlow
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)
United Way of Central Indiana
Scott K. Sorensen
(cid:41)(cid:82)(cid:85)(cid:80)(cid:72)(cid:85)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)
Ivanti Software
Stuart A. Taylor II
(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)
The Taylor Group LLC
Brent L. Yeagy
(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:191)(cid:70)(cid:72)(cid:85)
Wabash National Corporation
Requests
For stockholder requests for information, please contact:
Wabash National Corporation
c/o Director - Investor Relations
1000 Sagamore Parkway S.
Lafayette, IN 47905
(765) 771-5310
investor.relations@wabashnational.com
Wabash National Corporation
1000 Sagamore Parkway South
Lafayette, IN 47905