Ticker: CNW Date of Presentation: 04/16/2015 Equity Analysis by: Michael Haberkorn Devopama Pant Terry Kwan Yunlu Liu

Agenda Introduction Macroeconomic Overview Industry Analysis CNW Business Overview Stock Market Performance Financial Analysis Valuation Recommendation

Introduction The leader in freight transportation and logistics. Started in 1929 in Portland,OR Structure: 5 wholly owned subsidiaries- Con-way Freight Con-way Truckload Con-way Enterprise Services Menlo Worldwide Logistics Con-way Manufacturing

Macroeconomic Overview

Truck Transportation Revenue Growth Forecast Industry Forecast Revenue for US truck transportation forecast to grow at an annual rate of 5% through 2019 Truck Transportation Revenue Growth Forecast First Research forecasts are based on INFORUM forecasts that are licensed from the Interindustry Economic Research Fund, Inc. (IERF) in College Park, MD. INFORUM's "interindustry-macro" approach to modeling the economy captures the links between industries and the aggregate economy First Research

Source: IBIS World, FRED, Nasdaq, dshort.com Key Industry Drivers Source: IBIS World, FRED, Nasdaq, dshort.com

Company Overview Head Quarter: Ann Arbor, MI  3rd largest transportation and logistics company in America, (2013~Fortune 500 list) A $5.8 billion portfolio of transportation solutions delivered by 30,000 employees through three business units: Premium less-than-truckload Transportation management Warehousing Brokerage Premium truckload

President and Chief Executive Officer Management Douglas W. Stotlar President and Chief Executive Officer W. Gregory Lehmkuhl President Freight Robert L. Bianco, Jr. President Menlo Joseph M. Dagnese President Truckload

Freight- Less than Truckload

Truckload

Logistics Services

Locations Global operations in 20 countries across 5 continents More than 500 operating locations across North America

Employee Compensation and Pension Company had Defined Benefit Pension Plans before 2006 Any recruitment after 2006 gets Defined Contribution (3-5% of salary to the fund) Pension liabilities decreasing year over year Discount Rate for Plan obligation: 4.2% Dock workers are not a part of a Union Management looks capable of decreasing the pension obligation further

Risk Factors Economic Cyclicality Industry Competition Government Regulation and Taxes Price and Availability of Fuel Labor Organization Defined Benefit Plan 10-K

Porter’s Five Forces Threats of Substitutes Rivalry HIGH Threats of Substitutes Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Many other modes of transportation: Air, Rail, Barges, Pipelines: HIGH Relatively fewer suppliers than buyers, products are important to buyer’s business, products are not differentiated: MEDIUM Limited capital, experience and expertise required to enter the industry: MEDIUM-HIGH Low concentration in market, with undifferentiated services and low switching costs: MEDIUM

SWOT Analysis Strengths Weaknesses Opportunities Threats Robust operational network complemented with strong fleet operations Wide portfolio of services enhances revenue generation capacity Largely dependent on few customers could impact financial condition Overdependence on the US market could expose to the risk of downturns Opportunities Threats Growing road freight market in the US could create demand for the services Rising demand for intermodal services could improve the revenues An increase in oil prices will also significantly impact its revenue Stringent government regulations could impact business operations 2014 10K Page 7 http://clients1.ibisworld.com.proxy2.library.illinois.edu/reports/us/industry/currentperformance.aspx?entid=1133 Marketline

Technical Analysis Yahoo Finance

Financial Analysis Ratios For the Fiscal Period Ending   For the Fiscal Period Ending 12 months Dec-31-2010 12 months Dec-31-2011 12 months Dec-31-2012 12 months Dec-31-2013 12 months Dec-31-2014 Profitability Return on Assets % 0.1% 2.9% 3.3% 3.1% 4.1% Return on Equity % 0.5% 11.2% 13.1% 10.0% 11.7% Gross Margin % 17.0% 18.0% 18.2% 19.6% 20.0% EBIT Margin % 2.1% 3.6% 3.9% 3.7% 4.4% Net Income Margin % 1.7% 1.9% 1.8% 2.4% Asset Turnover Total Asset Turnover 1.7x 1.8x Fixed Asset Turnover 3.6x 3.4x 3.5x Accounts Receivable Turnover 9.6x 9.5x 9.8x Inventory Turnover 194.9x 185.7x 198.6x 186.9x 195.3x Short Term Liquidity Current Ratio 1.6x Quick Ratio 1.5x Avg. Days Sales Out. 38.1 38.5 37.4 Avg. Days Inventory Out. 1.9 2.0 1.8 Avg. Days Payable Out. 25.6 27.3 27.0 29.9 29.1 Avg. Cash Conversion Cycle 14.4 13.2 12.3 10.1 11.3 Long Term Solvency Total Debt/Total Asset 28.3% 26.1% 24.5% 23.1% 22.4% LT Debt/Equity 87.8% 94.7% 85.8% 63.2% 60.2% EBIT / Interest Exp. 4.0x 3.8x 4.8x Altman Z Score 2.87 2.95 3.05 3.1 3.39

DuPont Analysis

Greenblatt Analysis Greenblatt Ratios 2010 2011 2012 2013 2014   2010 2011 2012 2013 2014 Tangible Asset 1490.0 1550.2 1620.3 1655.4 1748.8 Enterprise Value 2109.9 2047.9 2051.8 2422.4 2806.8 EBIT 104.7 190.8 220.2 203.2 258.3 EBIT/Tangible Asset 7.0% 12.3% 13.6% 14.8% EBIT/EV 5.0% 9.3% 10.7% 8.4% 9.2% Shares Outstanding 53.17 56.10 56.49 57.24 58.02 x Share Price 32.30 30.55 30.60 37.91 43.37 Market Cap (in million) 1717.37 1713.91 1728.47 2169.99 2516.26 Less Total Cash and ST- Investments 421.42 451.27 432.98 484.50 441.04 Plus Debt 813.90 785.27 756.35 736.93 731.63 2109.85 2047.92 2051.84 2422.42 2806.84

For the Fiscal Period Ending Financial Projection Income Statement Historical Projected For the Fiscal Period Ending 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E Revenues   Freight 2,624.0 3,075.1 3,247.1 3,392.6 3,466.1 3,632.1 $ 3,810.04 $ 3,996.73 $ 4,192.57 $ 4,398.00 $ 4,613.51 % Growth 17.19% 5.59% 4.48% 2.17% 4.79% 4.90% Logistics 1,331.9 1,478.0 1,590.0 1,726.2 1,540.4 1,717.7 $ 1,803.60 $ 1,893.78 $ 1,988.47 $ 2,087.89 $ 2,192.28 10.97% 7.58% 8.57% -10.76% 11.51% 5.00% Truckload 564.1 569.7 615.0 635.6 636.8 631.5 $ 652.35 $ 677.14 $ 697.45 $ 715.59 $ 734.19 1.01% 7.95% 3.34% 0.20% -0.83% 3.30% 3.80% 3.00% 2.60% Corporate (271.2) (223.7) (162.2) (174.1) (170.0) (175.2) $ (175.20) $ (175.20) -17.51% -27.49% 7.34% -2.35% 3.06% 0.00% Total Revenues 4,269.2 4,952.0 5,290.0 5,580.2 5,473.4 5,806.1 6,090.78 6,392.44 6,703.29 7,026.28 7,364.78 4.95% 4.86% 4.82% Cost Of Goods Sold 3,469.9 4,109.0 4,335.7 4,567.4 4,399.5 4,645.8 4,858.40 5,083.04 5,313.45 5,551.91 5,800.97 % of Revenue 81.3% 83.0% 82.0% 81.8% 80.4% 80.0% 79.77% 79.52% 79.27% 79.02% 78.77% Gross Profit 799.3 843.0 954.3 1,012.9 1,073.8 1,160.3 1,232.39 1,309.40 1,389.83 1,474.37 1,563.81 Depreciation & Amort. 192.4 192.5 202.6 216.2 230.8 242.7 248.66 280.15 313.88 350.08 389.04 4.51% 3.89% 3.83% 3.87% 4.22% 4.18% 4.08% 4.38% 4.68% 4.98% 5.28% Other Operating Expense/(Income) 477.6 545.9 560.8 576.5 639.8 659.3 671.88 705.16 739.44 775.07 812.41 11.19% 11.02% 10.60% 10.33% 11.69% 11.36% 11.03% Other Operating Exp., Total 679.7 738.4 763.5 792.7 870.6 902.0 920.53 985.30 1,053.33 1,125.16 1,201.46 Operating Income 119.7 104.7 190.8 220.2 203.2 258.3 311.85 324.10 336.51 349.21 362.35

Discount Rate Beta Calculation CNW Market Date CNW Returns 2014 23.85% Discount Rate Calculation   PV of Operating Leases 269.7 Long term Debt 719.3 Capital lease 25.3 Total Debt 1014.2 # shares outstanding 57.7 current stock price 41.1 Total common stock 2373.2 CAPM Risk free rate (30 yrs) 2.50% Market Risk Premium 5.50% Beta(5 years) 1.50 Cost of Equity 10.8% Cost of Debt pre-tax cost of debt 6.70% Tax Rate 35% After Tax Cost of Debt 4.4% Real Rate of Return(5yr) 12.96% Weighted Average Cost of Equity 11.86% Weighted average cost of capital Weight of Debt 29.94% Weight of Equity 70.06% adjusted cost of equity WACC 9.61% Risk Premium 1% Adjusted Discount Rate 10.61% Beta Calculation CNW Market Std.Dev 4.75% 2.14% Covarance 0.00069059   beta 1.50148460 Date CNW Returns 2014 23.85% 2013 42.74% 2012 -4.60% 2011 -20.26% 2010 4.76% 2009 31.24%   12.96%

Financial Valuation Discounted Cash Flow Valuation Free Cash Flow   Free Cash Flow Terminal Value USD$mm 2014A 2015 E 2016 E 2017 E 2018 E 2019 E Perpetuity FCF Builder EBIT 311.9 324.1 336.5 349.2 362.3 Plus: D&A 248.7 280.1 313.9 350.1 389.0 Less: Taxes 91.0 95.7 100.5 106.7 113.2 Capex 266.2 279.4 292.9 307.1 321.9 Changes in NWC Current operating assets 820.4 820.3 854.4 890.5 928.8 969.4 Current operating liabilities 725.7 778.6 817.2 856.9 898.2 941.5 Net Working Capital 94.6 41.7 37.2 33.6 30.6 28.0 Change -53.0 -4.5 -3.6 -3.0 -2.6 Unlevered FCF 256.3 233.7 260.6 288.5 319.0 Terminal Value Assumptions 3.0% Discount Rate 10.6% 4317.31 Discount Period (t) 1 2 3 4 5 PV of FCF 231.68 191.00 192.54 192.73 192.67 2607.54 Implied Share Price Calculation Terminal Growth Rate PV of FCFs $1,000.6 42.5 2.2% 2.7% 3.3% 3.8% Plus Terminal Value $2,607.5 WACC 7.6% $71.13 $78.89 $84.36 $90.58 $103.13 Enterpise Value $3,608.2 8.6% $56.58 $61.82 $65.41 $69.41 $77.19 Less Debt $1,014.2 9.6% $45.96 $49.70 $52.21 $54.97 $60.19 Less Underfunded Pension Plan $138.8 $37.87 $40.65 $42.49 $44.48 $48.19 Less ESOP $3.4 11.6% $31.52 $33.64 $35.04 $36.53 $39.27 Implied Equity Value $2,451.7 12.6% $26.39 $28.06 $29.14 $30.29 $32.39 Shares Outstanding 57.7 13.6% $22.17 $23.50 $24.36 $25.27 $26.91 Implied Share Price 42.49

Multiple Analysis

Recommendation: Analysis Stock is currently near its DCF value Multiples show potential of growth Recent movement of CNW shows uncertainty Management’s holdings to be observed closely

Comparable Analysis Valuation $64.07 Recommendation DCF Valuation $42.49 Comparable Analysis Valuation $64.07 Current Stock Price $43.05 Add to Watchlist Below 20 & 200 D.M.A Above lower resistance level Momentum Low growth projections 2015-2020 Growth

Insider Trading and %TRA (Management)

Exhibit-1-Stock Movement 03/31- Menlo Expanding its presence in India 03/20—ITS demand index fall 5.3%(more truckers looking for loads) 01/01—Files form 4 (SEC) Statement of change of ownership of securities(Dec,15 2014) 12/09—Lehmkuhl Walter G files to sell 2,865 shares 09/15—Stotlar Douglas W files to sell $3M CNW shares