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

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

3. 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

4. Macroeconomic Overview

5. 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

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

7. 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

8. 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

9. Freight- Less than Truckload

10. Truckload

11. Logistics Services

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

13. 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

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

15. 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

16. 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
K Page 7
Marketline

17. Technical Analysis
Yahoo Finance

18. Financial Analysis Ratios For the Fiscal Period Ending
For the Fiscal Period Ending
12 months Dec
12 months Dec
12 months Dec
12 months Dec
12 months Dec
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

19. DuPont Analysis

20. 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)
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

21. 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
$ ,810.04
$ ,996.73
$ ,192.57
$ ,398.00
$ ,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
$ ,803.60
$ ,893.78
$ ,988.47
$ ,087.89
$ ,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 $ $ $ $ $
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

22. 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
beta
Date
CNW Returns
2014
23.85%
2013
42.74%
2012
-4.60%
2011
-20.26%
2010
4.76%
2009
31.24%
12.96%

23. 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%
Discount Period (t) 1 2 3 4 5
PV of FCF
231.68
191.00
192.54
192.73
192.67
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

24. Multiple Analysis

25. 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

26. 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
Growth

27. Insider Trading and %TRA (Management)

28. 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, )
12/09—Lehmkuhl Walter G files to sell 2,865 shares
09/15—Stotlar Douglas W files to sell $3M CNW shares