Is 2015 the Peak? And What’s Behind This Year’s Lull?

“A pessimist sees the difficulty in every opportunity; an optimist sees opportunity in every difficulty.” -Winston Churchill Agenda: How the Lull is Playing Out Is the recent “soft patch” over?

Economy: Beyond the Obvious Capacity: Across the Modes & Influences E-Commerce: Think Behavior Capacity Crunch: How Much?...

…And For How Long?

Source: Cartoon on left from BB&TCM; cartoon on right from Transport Topics 1

The Economy: Stuck Between a “Square Root” Recovery and a “Hockey Stick” Recovery

The economy is healing in spite of Washington, DC! Falling Oil Prices and a Strong Dollar are Hurting CapEx in 2015 but there are long-term positives

Source: GDP figures from BEA website; commentary BB&TCM; photos from Microsoft Office 2010 2

Why 2015 is Experiencing a “Lull”

• • • • • • •

2014 (the “Perfect Storm”)

HOS carryover from H2’13 Awful Q1’14 weather Almost no pricing in 2012-2013 Lousy rail service Port strike worries and then… Port congestion and slowdown Zaniness created by e-commerce • • • • •

2015 (“less than perfect”)

HOS restart to pre-July 2013 Class 8 tractor growth of 4.1% in last 12 months The

“creeping regulatory crunch”

is pausing until late 2015

Oil’s fall and a strong dollar are hurting some capital goods Unlikely to go back to looseness of 2012-2013, but it doesn’t feel as fun as 2014

Source: BB&TCM analysis and comments; cartoon from Transport Topics 3

Lull # 1: Industrial Production Slowed Mostly Due to Oil’s Fall

    

When IP dips below 3%, freight volumes get sloppy

In the five quarters before Q4’13, IP averaged 2.5% growth,

that stretch with one quarter (Q1’13 at 4.2%) subsidizing

IP is more important to freight creation than GDP Example

: Q1’14 GDP shrank 2.1%, but IP grew 3.9%;

but Q1’15 IP fell 0.3% and GDP fell 0.7%

Many GDP components create minimal freight—e.g., tax, law, consulting, entertainment, education, healthcare, etc.

Industrial Production Seas adj.; quarterly changes are at annual rates

6% 5% 4% 3% 2% 1% 0% -1%

2,5% Q3'12 Q3'13 4.9% Q4'13 3.9% Q1'14 5,7% Q2'14 4,1% Q3'14 4,7% Q4'14 Q1'15 Q2'15E -0,3% -0,2%

Source: BB&TCM analysis and comments of Federal Reserve Board IP data 4

Lull #2: Exports Have Been Hurt by Strong Dollar

• The strong dollar has hurt the demand for U.S. exports, making our products more expensive to overseas buyers

Exports’ Contribution to Real GDP Growth 1,5% 1,26% 1,0% 0,69%

• •

0,5%

Many international economies have slowed, a separate issue from a strong dollar

0,0% -0,5%

During Q1’15: 91,000 jobs were lost in the energy industry

-1,0% Q2'14 Q3'14 0,22% Q4'14 Q1'15 -1,5% -1,32%

Source: BB&TCM analysis of BEA GDP report 5

    

Lull #3: Class 8 Fleet up 4.4% in Last Year, But…

This includes all tractors, even 30 year old tractors

The “true” inter-city fleet (tractors 12 years old or newer) grew < 3%

The US/Canadian fleet is ~3.2M trucks; remainder is Mexico The inter-city fleet had shrunk ~16.5% from 2007-2012

LTL, tank and private fleet

grew >5%; dry van TL and reefer were ~+1% to 2% growth 3 850 3 800 3 750 3 700 3 650 3 600 3 550 3 500

N.A. Class 8 Tractor Fleet (Figs in 000s)

2,0%

3 820 1,7% 3 660

Q1'14

1,4% 3 710 3 750 1,1%

Q3'14

3 780 0,8% 1,1%

Q1'15 1,5% 1,0% 0,5% 0,0% Source: BB&TCM commentary; ACT Research and ATA (Transport Topics) for data. 6

    

Case Study: Oil’s 67% Slump in ‘85-’86; Parallels for Now?

Oil fell from $30 to $10 ~ 8 to 9 months in 1985-1986 Oil’s collapse in 2H’85 and 1H’86 contributed to a slump in industrial production (IP) those 2 years…but

there were also other factors

GDP was solid because of the 3-year phase in of the Reagan tax cuts (1982 1984), but by 1986 growth was slowing… GDP and IP accelerated in 1987 as the negative impact of oil on capex wore off and as new tax cuts (’87) kicked in Summary: Expect more stimulus from the “oil tax cut” in 2016; capex cuts and energy layoffs a drag in 2015 , but

restaurants benefitting now

8% 7% 6% 5% 4% 3% 2% $30 $25 $20 $15

IP Slumped After Oil Fell 67% 8,9% 7,3%

1984

4,2% 1,2%

1985

3,5% 1,0%

1986 GDP

5,2% 3,5%

IP 1987

5,2% Oil’s Ending Price 1984-1988 $28 $25 $18

Ending Oil Price

4,2%

1988

$16

$10 1984 1985 1986 1987 1988 9% 7% 5% 3% 1%

$15

Sources: Bureau of Economic Analysis (BEA) and Federal Reserve Board (FRB) for GDP and IP; Bloomberg for oil prices. Commentary is BB&TCM analysis. 7

The Economy: Beyond the Obvious

Source: Microsoft Office 2010 for cartoons 8

o o o

But Spending Patterns Have Changed Since 2007

The three fastest-growing

areas of spending for Americans create little freight per se

Remember the days of a $40 a month phone bill? For many families, cell and data plans today are often $200– $300 Some of the leading

decliners for spending are more “freight intensive”

than other categories

Changes in Spending by Middle-Income Americans 2013 vs. 2007 Home Internet Cellular Phones Health Insurance Homes (Rent) Health Care Education Food at Home Pets Total Spending Income Furniture Food Away From Home Alcohol Entertainment Major Appliances Homes (Owned) Women's Apparel (16+) Household Textiles Residential Phone (3,8%) (3,8%) (4,5%) (5,4%) (8,3%) (11,5%) (17,7%) (26,5%) (30,7%) 12,5% 10,5% 2,3% 0,2% 49,1% 26,0% 42,1% 24,2% 22,9% -60% -40% -20% 0% 20% 40% 60% 81,3% 80% 100%

Source: BB&TCM commentary; Bureau of Labor Statistics for US middle-income spending data 9

Housing Percolating, but Auto Leveling Off

  Housing permits are picking up after a 2-year stall in 2013-2014 Auto production is up 100% since a 2009 low (and 48% since 2011) but is beginning to level off;

1%–4% unit growth from here on out?

Housing Permits

1 500 1 000 624 1 015 500 0 1 275  

70+% of all new jobs in the last three years are part-time versus a long-term average of 53%

The average job created in 2007 paid $60K; today it is $40K; in 2014 more homes over $400K were sold than under $200K-1 st time ever

2010 2012 2014 2016E 0,0

N.A. Auto Production

8,8 5,0 10,0 11,9 13,4 15,9 16,6 17,6 17,8 18,0 15,0 20,0 Source: BB&TCM commentary, US Census Bureau (housing), and Bloomberg (auto production). Housing in 000s; autos in millions 10

• • •

Exploring the Percolating Housing Market

U.S. residential permits are up 8.1% YTD vs. +5.6% in 2014

Building Permits Issued 2013 2014 2014 YTD 2015 YTD

May permits of 1.275M highest since August ’07 at 1.321M

U.S.

990,822

+19.4%

1,046,363

+5.6%

320,100 346,100

+8.1%

But 4 key energy states (~19% of all permits) are off 3% YTD

4 Key Energy States

177,057

+9.3%

198,061

+11.9%

63,184 61,282

-3.0%

• Houston-by itself-issued 76% of what all of California did in 2014

Building Permits as a % of U.S. Permits 20% Texas Houston MSA 16,0% 15% 14,9%

• • Had these states maintained last year’s growth, permits would be up ~12% Watch: personal bankruptcies from 2007-2009 beginning to break out of 7-year credit freeze

10% 5% 0% 2013 5,2% 2014 6,1%

Source: U.S. Census Bureau; YTD building permit figures are through April for the 4 key energy states (TX, ND, OK, SD) and through May for the U.S.

16,0% 5,5% 2015 YTD

11

Households are Deleveraging…

14 13,5 13 12,5 12 11,5 11 10,5 10 9,5 9 Debt Service Ratio Financial Obligations Ratio 16,5 16 15,5 15 14,5 14 20 19,5 19 18,5 18 17,5 17 160% 140% 120% 100% 80% 60% 40% Total Household Indebtedness Source: Federal Reserve Board (FRB). Both measure household debt in different ways. The right table shows that total household indebtedness as a percent of disposable income has fallen to 107% from 138% in 2006. Photo from Microsoft Office 2010 12

…And Bank Lending is Improving

4.0% 2014 (green) & Q1'15

Credit cards

5.2%

Credit cards

2.3%

4.0% Consumer

2.5%

Consumer

1.6%

5.2% RE loans RE loans

3.8%

2.5%

12.0%

C&I loans C&I loans

12.6%

12.0% -20% 2014 -10% 2013 2012 0% 2011 2010 10% 2009 0% 5% 10% 15% Source: Federal Reserve Board. C&I = commercial and industrial, RE = real estate 13

Long-Term Positive: Household Formations Trending Up

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

0% Household Formation Ratio to Housing Starts

43% 94% 93% 53% 82% 219% 64% 107% 37% 65% 58% 85% 72% 61% 120% 188% 308%

100%

108% 149%

200% 300% 400%

Source: US Census Bureau and BB&TCM analysis; photo from Microsoft Office 2010 14

Capacity: TL, LTL, Intermodal & Other Influences

Source: Microsoft Office 2010 for photo 15

East Coast Ports May Gain Modest Share

    February 2015 survey of 403 shippers and 191 3PLs indicate they plan to migrate, on average, 20% of their volumes from West to East 40% of shippers using only the West Coast plan to shift some to East Coast 33% of retailers and 25% of manufacturers will shift some to the East JOC June 2015 survey: 43% of shippers plan to shift, but just 5% of volumes

70% 63,7% 60% 50% 40% 30% 36,3% 20% 10% 0% 65,0% 35,0% 64,0% 36,0%

West Coast East Coast Source: Global Port Tracker North America

59,4% 55,0% 45,0% 40,6%

16

20%

Shipments: LTL Led in 2014; Reefer Leads in 2015

Total TL Loads Van Flatbed Reefer LTL Tank 15%

14,9% 12,0% 12,8%

10% 5%

3,5%

0% -5%

-1,5% 2011 -3,0% -4,4% 6,1% 6,2% 6,6% 1,1% 2,7% 1,1% -1,4% 2012 1,3% 1,1% 1,1% 3,0% 2,5% 2013 -3,7% 6,8% 2,4% 3,5% 2,2% 1,8% 2,9% 2,7% 2014 3,0% 1,3% 2015 YTD -5,0%

-10% Source: ATA

TRAC

report; photo from BB&TCM; YTD is through April 2015 17

LTL Has Grown Much Faster than TL Until Recently

       Inflation-adjusted LTL shrank from 1980-2010 LTL is now growing faster than van LTL

LTL is no longer in secular decay—Why?

e-Commerce More of an industrial recovery vs. consumer Tight TL capacity 3D printing 14% 12% 10% 8% 6% 4% 2% 0%

2011

-2% -4%

-3,0%

Van

12,0% 2012 -1,4%

LTL

2013 6,8% 2,7% 3,0% 2,4% 1,1% 2014 2,7% 3,0% 2015 YTD

Source: ATA

TRAC

report; photo from BB&TCM; 2015 YTD is through April 18

• • • • •

Reefer is Really Smoking (pun intended)!

Since the end of 2006, reefer loads have grown 24.5% but trailers are up just 5.9% Reefer loads have grown ten of the last eleven years Reefer loads have averaged 3.3% annual growth since the end of 2003

Reefer trailers grew 2.4% in 2014 but could grow 4+% in 2015 Factors? Organic food, demographics (pharmaceuticals, etc), food safety regs, life sciences, etc.

140 130 120 110 100 90 80

Reefer Loads Up 24.5% ’06-’14 7,7% 101,1 6,6% 7,6%

Loads

122,7 3,1% 2,6% -4,4%

% Change

125,8 129,6 2,5% 1,1% 3,5%3,0%

10% 8% 6% 4% 2% 0% -2% -4% -6% 2006 2008 2010 2012 2014

Reefer Trailers Have Grown 5.9% in 7 Years

420 000 400 000 380 000 360 000 340 000 320 000 300 000 2006 2008 2010 2012 2014 2016E 2018E Source: BB&TCM commentary; ATA for load data; ACT Research for reefer trailers; Microsoft Office 2010 for photo.

19

• • • • •

Case Study in Reefer Trailers: Marten Transport

Since 2004 MRTN added 1,113 reefer trailers or 35% growth But MRTN added fewer than 200 tractors Its LOH fell 41% to 598 miles 5 000 4 500 4 000 3 500 3 000 2 500

Marten’s Reefer Fleet Grew 35% … 1,38 3 152 1,31 1,78 4 218 3 928 1,85 4 170

Live loads have gone from ~98% of shipments to ~80% Summary: Most of the trailer growth was to accommodate shorter LOH, more drop & hook and TOFC intermodal (slower turns than OTR) 1 200 1 000 800 600

1 006

Trailers Trailer/Tractor Ratio

… But Did It Really?

937 853 655

LOH

624 1,76 4 265 598

2,0 1,8 1,6 1,4 1,2 1,0 400 2004 2006 2008 2010 2012 2014 Source: Company reports and BB&TCM 20

US-Mexico Food Trade is Growing Rapidly

  

Even with the “great recession”, food trade between the US and Mexico has averaged 10.2% annual growth 3 of 5 years since “great recession” food trade has exceeded 16% Since 2004, exports have grown 9.9% annually while imports have averaged 10.5% annual growth

30 25 20 15 10 5 0

15,6% 11,4%

10,0

11,2% 12,4%

12,8

9,8%

15,8

16,0% 15,2% (2,5%)

17,9 21,9 US-Mexico Food Trade (Truck Only; $B)

17,5%

20% 26,5 15%

6,3% 2,8%

10% 5% 0% (5%) % Chg Yr/Yr Source: U.S. Department of Transportation, Bureau of Transportation Statistics 21

Flatbed Trends: Loads down 28% from Peak, but Sqf Growing

140 130 120 110 100 90 80 70 60 50

121,7 -0,7%

Loads % Change

3,9% -5,2% -9,5% 82,8 -20,7% -1,5%

2006 2008 2010

6,1%

2012

1,1% 90,8 -3,7% 87,5

2014 10% 5% 0% -5% -10% -15% -20% -25% 2 700 2 600 2 500 2 400

Flatbed Trailers Up 4.5% From Trough

310 000 2 300 300 000 290 000 2 200 280 000 270 000 260 000 250 000 2 100 2 000 2006 2008 2010 2012 2014 2016E 2018E

New Homes Avg. Square Feet 2 469 2 434 2 521 2 519 2 438 2 505 2 480 2 324 2 349 2 266 2 320 2 330 2 223 2 392 2 598

Sources: U.S. Census Bureau; measures avg. Sq. ft. of new construction homes; Flatbed loads from ATA TRAC report and trailer population from ACT Research. 22

HOS Impact: Much Greater than the 3% “Conventional Wisdom”

      Conventional wisdom is that solo operations were impacted by 2.5%– 3% Team operations were impacted 4%–4.5% Our survey work suggests those figures were low

Practically speaking, between the restart provision and the 30 minute break, the 3% figure didn’t make sense

Given the market tightness, we believe the 3% figure was low

Suspension of restart could free up 2%–3% capacity

50% 40% 30% 20% 10%

14% 26% 45% 15% 0% to 2% 3% to 4% 5% to 8% Over 8%

Source: BB&TCM survey of ~100 carriers in August 2014.

Measures weekly miles per truck impact.

Photo from Microsoft Office 2010.

23

• • • • • •

Driver Miles Equals Driver Smiles

Prep time = pre-trip inspection, fueling, drug tests, DOT inspections

July’13-Dec’14

PT = breaks, meals, communications, route planning, logging Time at S/R = inefficient appointments, paperwork, check-in, check-out HOS: More like 6.5 hours until suspension DTE = holidays, surges, traffic, day of week booking, network changes

A Driver's 14-Hour Day (840 minutes)

438 (7.3 30 90 108 Prep Time Personal Time Time at Shipper/Receiver UT = appointment times, parking issues, fatigue, 70 hour rule, planning uncertainty, day of week bookings hours) 120 48 Drive Time Empty Unused Time DT = Most fleets believe they can add 30–75 minutes with shipper/receiver help Drive Time Note: 660 available drive time minutes per day Source: BB&TCM and a large private fleet, sub-90 OR 24

3D Printing: Some Industries More Suitable Than Others

      Shorter supply chains Production located closer to end consumer/user Fewer prototypes needed for final manufacturing Being closer to end user will reduce the need for planes, trains, and trucks More specialized

manufacturing of custom-

designed products instead of mass production of less sophisticated products Reduce the need for products from overseas, which also reduces freight movements Aircraft Parts Low Food Electronic Toys Equipment Computers Footwear Ceramic Arms/ Glass PlasticsAuto Parts Products Ammo Pharmaceutical Furniture Apparel Paper Art/Antique Reproduction s High

Cost of Transportation…

Leather Products Source: BB&TCM analysis 25

E-Commerce: Behavior’s Impact on Freight Flows

Source: Microsoft Office 2010 for photos 26

•

Here’s What’s Being Bought Online

5 of the fastest-growing

product sales are diapers, toiletries, pet food, bottled water and computer printing paper!!!

E-Commerce as a Percentage of Overall Spending by Type of Good (2013) Books Electronics Baby Toys Sporting Goods Appliances Clothing Pet Personal Care Furniture Groceries 2% 4% 7% 16% 14% 13% 11% 24% 23% 22% Preliminary figures:

Groceries are

39%

now at 3.5% & furniture at 8%

0% 10% 20% 30% 40% 50%

Source: BB&TCM research of a variety of information 27

Capacity: Prolonged Crunch, or Rolling Headaches in 2014–2017?

Source: BB&TCM/Thom Albrecht for cartoon on left; Transport Topics for cartoon on right 28

Psst…Drivers are Older-Not Just Carrier Rhetoric!

35%    

21 years ago 30% of the drivers were 25 to 34 years old Today, they are less than 16% 21 years ago 9% of drivers were 55 to 64 years old Today, they are 20%

30% 25% 20% 15% 10% 5% 0% 2013 2003 1994 20-24 yrs 25-34 yrs 35-44 yrs 45-54 yrs 55-64 yrs 4,9% 15,6% 24,0% 29,3% 20,1% 5,6% 9,2% 21,7% 30,4% 28,7% 29,5% 26,1% 20,0% 14,0% 9,1% 65+ yrs 6,1% 2,8% 1,9% Sources: ATA , ATRI and BB&TCM analysis 29

$28

It’s Paid to be Almost Anything but a Driver!

40 Years of Ugly!--Average Hourly Driver Wages 1,6 1,5

$25

1,4

$22

1,3

$19 $16

1,2 1,1

$13 $10

1,0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Heavy and Tractor-Trailer Truck Drivers Construction Laborers Food Prep and Serving Related Occupations Automotive Service Technicians and Mechanics Registered Nurse Source: BB&TCM analysis, Bureau of Labor Statistics; photo from Microsoft Office 2010.

Chart on left is inflation-adjusted.

30

• • • •

Is the Driver Challenge Worse? Yes and No …

Q4’04 tied for worst turnover last cycle, while Q3’04 was the 3rd worst Driver turnover was >100% 24 out of 25 quarters last cycle;

it remains below 100% this cycle No, it’s not different: Pay raises immediately helped truck count (see right chart)

Yes, it’s different: What constitutes an acceptable driver hire has totally changed the last ten years

1600 1400 1200

121% 136%

110% Large TL Turnover 1000 105% Small TL Turnover 800

759

100%

97% 96% 97% 96%

600 95%

91% 92%

400

94% 94% 95%

90% 200

(16)

85% 80% 75% 70%

74% 79% 78% Large Fleet Pay Raises Began in Earnest in Q2’14; Maybe Small Fleets Couldn’t Keep Up?

0 -200 -400 -600

Q3'04 Q4'04

13:Q3 13:Q4 14:Q1 14:Q2 14:Q3 14:Q4

96% 97% 96% 96%

(463)

Truck Adds/(Deletions) *

336 370 589

Q2'14 Q3'14 Q4'14 Q1'15

Driver Turnover 160% 140% 120% 100% 80% 60% 40% 20% 0% Source: BB&TCM analysis of public carriers CGI, CVTI, JBHT (truck only), KNX, MRTN, SWFT, WERN and 2 private carriers; photo from BB&TCM;

for Q4’14, we estimate that ~1,050 tractor additions were from acquisitions, implying organic growth of 370 units. Total for the group was 1,435 including acquisitions.

Cartoon from Transport Topics .

31

o o o o o o o

Timetable for 7 Key Future Regulations

ELD rule by September 30, 2015; mandated by Sept. 2017

NHTSA to publish

speed limiters

around July 27, 2015 Carrier safety fitness determination rule to be published on August 17, 2015 (we’ll see) CDL drug and alcohol

clearinghouse

2015 rules to be published Sept. 30, Rule prohibiting

coercion

of drivers by carriers and brokers to be published by September 10, 2015 (likely to be delayed)

Minimum insurance

proposal likely to be raised; announcement in the summer or fall?

Hair follicle test

to be discussed by FMCSA; follicle; JBHT: 110 and 3,845!

Key #s

: at Schneider 120 pre-employment drivers failed drug urine test; 1,400 failed hair

Source: BB&TCM photo; regulations from the government’s advance notice of public rulemaking (ANPRM) 32

Closing Thoughts

“We can’t solve problems by using the same kind of thinking we used when we created them”

— Albert Einstein

“If You’ve Got the Bucks, We’ve Got the Trucks!”

— overheard at a trade show

“A cynic knows the price of everything and the value of nothing”

— Help your customers not be this person!

When President Obama took office in 2009, there was one person at DOT making over $170,000 annually Today, there are 1,800+ people at DOT making over $170,000. No wonder you have a headache!

Source: Cartoon from Transport Topics 33

IMPORTANT DISCLOSURES

To receive price charts on the companies mentioned in this report, please contact BB&T Capital Markets Research at 800-552-7757 x8785.

BB&T Capital Markets rating distribution by percentage (as of June 22, 2015):

All companies under coverage: Buy (1) Hold (2) Underweight/Sell (3) Not Rated (NR) 44.92% 53.44% 1.31% 0.33% All companies under coverage to which it has provided investment banking services in the previous 12 months: Buy (1) Hold (2) 23.36% 22.09% Underweight/Sell (3) Not Rated (NR) 25.00% 0.00%

BB&T Capital Markets Ratings System:

The BB&T Capital Markets Equity Research Department Stock Rating System consists of three separate ratings. The appropriate rating is determined by a stock’s estimated 12-month total return potential, which consists of the percentage price change to the 12-month price target and the current yield on anticipated dividends. A 12-month price target is the analyst’s best estimate of the market price of the stock in 12 months. A 12-month price target is highly subjective and the result of numerous assumptions, including company, industry, and market fundamentals, both on an absolute and relative basis, as well as investor sentiment, which can be highly volatile.

The definition of each rating is as follows: Buy (1): estimated total return potential greater than or equal to 10%, Hold (2): estimated total return potential greater than or equal to 0% and less than 10%, Underweight (3): estimated total return potential less than 0% B: Buy H: Hold UW: Underweight NR: Not Rated NA: Not Applicable NM: Not Meaningful SP: Suspended Stocks rated Buy (1) are required to have a published 12-month price target, while it is not required on stocks rated Hold (2) and Underweight (3).

BB&T Capital Markets Equity Research Disclosures as of June 22, 2015

BB&T Capital Markets makes a market in the securities of ArcBest Corporation, American Railcar Industries, Inc., Celadon Group, Inc., C. H. Robinson Worldwide, Inc., Con-way Incorporated, Covenant Transportation Group, Inc., Echo Global Logistics, Inc., The Greenbrier Companies, Inc., Genesee & Wyoming Inc., Heartland Express, Inc., J.B. Hunt Transport Services, Inc., Knight Transportation, Inc., Landstar System, Inc., Marten Transport, Ltd., Old Dominion Freight Line, Inc., Roadrunner Transportation Systems, Inc., Saia, Inc., Swift Transportation Company, Trinity Industries, Inc., Universal Truckload Services, Inc., Wabtec Corporation, Werner Enterprises, Inc. and YRC Worldwide Inc..

BB&T Capital Markets has managed or co-managed a public offering of securities for Covenant Transportation Group, Inc., Echo Global Logistics, Inc., Heartland Express, Inc. and Trinity Industries, Inc. in the last 12 months.

BB&T Capital Markets has received compensation for investment banking services from Covenant Transportation Group, Inc., Echo Global Logistics, Inc., Heartland Express, Inc. and Trinity Industries, Inc. in the last 12 months.

BB&T Capital Markets expects to receive or intends to seek compensation for investment banking services from ArcBest Corporation, American Railcar Industries, Inc., Celadon Group, Inc., C. H. Robinson Worldwide, Inc., Conway Incorporated, Covenant Transportation Group, Inc., Echo Global Logistics, Inc., The Greenbrier Companies, Inc., Genesee & Wyoming Inc., Heartland Express, Inc., J.B. Hunt Transport Services, Inc., Knight Transportation, Inc., Landstar System, Inc., Marten Transport, Ltd., Old Dominion Freight Line, Inc., Roadrunner Transportation Systems, Inc., Saia, Inc., Swift Transportation Company, Trinity Industries, Inc., Universal Truckload Services, Inc., Wabtec Corporation, Werner Enterprises, Inc. and YRC Worldwide Inc. in the next three months.

An affiliate of BB&T Capital Markets received compensation from ArcBest Corporation, American Railcar Industries, Inc., Con-way Incorporated, The Greenbrier Companies, Inc., Genesee & Wyoming Inc., J.B. Hunt Transport Services, Inc., Landstar System, Inc., Old Dominion Freight Line, Inc., Roadrunner Transportation Systems, Inc., Saia, Inc., Swift Transportation Company, Trinity Industries, Inc. and Wabtec Corporation for products or services other than investment banking services during the past 12 months. The analyst or employees of BB&T Capital Markets with the ability to influence the substance of this report know or have reason to know the foregoing facts.

ADDITIONAL INFORMATION AVAILABLE UPON REQUEST

For valuation methodology and related risk factors on Buy (1)–rated stocks, please refer to the body text of this report or to individual reports on any covered companies referenced in this report.

The analyst(s) principally responsible for preparation of this report received compensation that is based upon many factors, including the firm’s overall investment banking revenue.

Analyst Certification

The analyst(s) principally responsible for the preparation of this research report certify that the views expressed in this research report accurately reflect his/her (their) personal views about the subject security(ies) or issuer(s) and that his/her (their) compensation was not, is not, or will not be directly or indirectly related to the specific recommendations or views contained in this research report.

OTHER DISCLOSURES

The information and statistics in this report have been obtained from sources we believe are reliable but we do not warrant their accuracy or completeness. We do not undertake to advise the reader as to changes in figures or our views. This is not a solicitation of an order to buy or sell any securities.

BB&T Capital Markets, a division of BB&T Securities, LLC, member FINRA/SIPC, is a wholly owned nonbank subsidiary of BB&T Corporation. The securities sold, offered or recommended are not a deposit, not FDIC insured, not guaranteed by a bank, not guaranteed by any federal government agency and may go down in value.

The opinions expressed are those of the analyst(s) and not those of BB&T Corporation or its executives.

34