May 14, 2020, 4:43 p.m. EDT


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(EDGAR Online via COMTEX) -- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report of Wabash National Corporation (together with its subsidiaries, the "Company," "Wabash," "we," "our," or "us") 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 (the "Exchange Act"). Forward-looking statements may include the words "may," "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: our business plan; our ability to effectively manage and operate our business given the uncertainty caused by the COVID-19 pandemic; our ability to effectively 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, 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 tariffs 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, including our ability to attract and retain qualified personnel; our ability to develop and commercialize new products; acceptance of new technologies and products; government regulation; 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 Quarterly Report. Important risks and factors that could cause our actual results to be materially different from our expectations include the factors that are disclosed in "Part II, Item 1A-Risk Factors" included herein and in "Item 1A-Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019. Each forward-looking statement contained in this Quarterly 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 Quarterly Report or to reflect the occurrence of unanticipated events, except as required by law.

Table of Contents

                                                                               Three Months Ended March 31,
                                                                            2020                          2019
        Net sales                                                                100.0   %                     100.0   %
        Cost of sales                                                             90.5   %                      87.1   %
        Gross profit                                                               9.5   %                      12.9   %
        General and administrative expenses                                        6.8   %                       5.7   %
        Selling expenses                                                           2.1   %                       1.5   %
        Amortization of intangibles                                                1.4   %                       1.0   %
        Other operating expenses                                                  27.7   %                         -   %
        (Loss) income from operations                                            (28.5  %)                       4.7   %
        Interest expense                                                          (1.6  %)                      (1.3  %)
        Other, net                                                                   -   %                         -   %
        (Loss) income before income tax (benefit) expense                        (30.1  %)                       3.4   %
        Income tax (benefit) expense                                              (2.5  %)                       0.6   %
        Net (loss) income                                                        (27.6  %)                       2.8   %

For the three-month period ended March 31, 2020, we recorded net sales of $387.1 million compared to $533.2 million in the prior year period. Net sales for the three-month period ended March 31, 2020 decreased $146.1 million, or 27.4%, compared to the prior year period, due primarily to 30.3% and 43.7% decreases in new trailer unit and truck body unit shipments, respectively, which contributed to decreases in sales within each of our reportable segments. The decreases in sales and shipments compared to the prior year period are primarily attributable to overall softer demand in the industry, which was worsened by the impacts of COVID-19, and has caused delays in customer pick-ups and reduced demand for our products. Gross profit margin decreased to 9.5% in the first quarter of 2020 compared to 12.9% in the prior year period driven by fixed costs as a percentage of sales increasing year-over-year. While overall industry demand during the first quarter of 2020 was softer than anticipated and expected shipment and production levels for the remainder of 2020 have decreased from 2019 estimates, we believe we are well-positioned to navigate this uncertain environment as we have prepared for an eventual downturn in the industry over the last two years. We

                                                        Three Months Ended March 31,                                         Change
                                                           2020                  2019              Amount                   %
                                                                       (prior to elimination of intersegment sales)
        Sales by Segment
        Commercial Trailer Products                 $      250,975           $ 341,045          $  (90,070)                  (26.4  %)
        Diversified Products                                82,958              99,648             (16,690)                  (16.7  %)
        Final Mile Products                                 60,270             100,849             (40,579)                  (40.2  %)
        Eliminations                                        (7,129)             (8,368)              1,239
        Total                                       $      387,074           $ 533,174          $ (146,100)                  (27.4  %)
        New Trailers                                               (units)
        Commercial Trailer Products                          8,525              12,400              (3,875)                  (31.3  %)
        Diversified Products                                   625                 700                 (75)                  (10.7  %)
        Total                                                9,150              13,100              (3,950)                  (30.2  %)
        Used Trailers                                              (units)
        Commercial Trailer Products                             35                  50                 (15)                  (30.0  %)
        Diversified Products                                    35                  25                  10                    40.0   %
        Total                                                   70                  75                  (5)                   (6.7  %)

Commercial Trailer Products segment sales, prior to the elimination of intersegment sales, were $251.0 million for the first quarter of 2020, a decrease of $90.1 million, or 26.4%, compared to the first quarter of 2019. New trailers shipped during the first quarter of 2020 totaled 8,525 trailers compared to 12,400 trailers in the prior year period, a decrease of 31.3%. The decrease in net sales is partially attributable to the impacts of COVID-19, which have caused delays in customer pick-ups and reduced demand for our products. Revenue per new trailer unit increased approximately 6.3% compared to the prior year period.

                                                        Three Months Ended March 31,                                       Change
                                                          2020                  2019              Amount                   %
        Gross Profit by Segment
        Commercial Trailer Products                 $      23,843           $  35,940          $ (12,097)                   (33.7  %)
        Diversified Products                               15,141              20,099             (4,958)                   (24.7  %)
        Final Mile Products                                  (244)             13,524            (13,768)                  (101.8  %)
        Corporate and Eliminations                         (1,997)               (873)            (1,124)
        Total                                       $      36,743           $  68,690          $ (31,947)                   (46.5  %)

Commercial Trailer Products segment gross profit was $23.8 million for the first quarter of 2020 compared to $35.9 million for the first quarter of 2019. Gross profit, prior to the elimination of intersegment sales, as a percentage of net sales, was 9.5% in the first quarter of 2020 compared to 10.5% in the comparative 2019 period. The decreases in gross profit and gross profit as a percentage of net sales were primarily attributable to the increase in fixed costs as a percentage of net sales year-over-year. While we made purposeful efforts to mitigate the effects of the COVID-19 pandemic, our fixed costs did not proportionately decrease with the lower sales volumes experienced in the first quarter of 2020.

May 14, 2020

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