Ryder System, Inc. · NYSE:R
Ryder System — Q4 2012 Earnings Presentation
52 slides from Ryder System's earnings presentation, Jan 31, 2013
Slide 1: Fourth Quarter 2012 & 2013 Forecast Earnings Conference Call
Fourth Quarter 2012 & 2013 Forecast Earnings Conference Call January 31, 2013
Slide 2: Safe Harbor and Non-GAAP Financial Measures
Safe Harbor and Non-GAAP Financial Measures Certain statements and information included in this presentation are "forward-looking statements" under the Federal Private Securities Litigation Reform Act of 1995, including our assumptions regarding general economic conditions and market conditions in e
Slide 3: Contents
Contents ► Fourth Quarter 2012 Results Overview ► Asset Management Update ► 2013 Forecast ►Q & A 01/31/13 Proprietary and Confidential 3
Slide 4: 4th Quarter Results Overview
4th Quarter Results Overview ► Earnings per diluted share from continuing operations were $1.07 in 4Q12 vs. $0.92 in 4Q11 – 4Q12 included a $0.10 charge for certain vehicle-related losses from Superstorm Sandy – 4Q11 included a $0.05 charge for acquisition-related restructuring costs ► Therefore, co
Slide 5: Key Financial Statistics
Key Financial Statistics ($ Millions, Except Per Share Amounts) Fourth Quarter 2012 2011 % B/(W) Operating Revenue $ 1,287.6 $ 1,237.0 4% Fuel Services and Subcontracted Transportation Revenue 296.0 304.1 (3)% Total Revenue $ 1,583.5 $ 1,541.1 3% Earnings Per Share from Continuing Operations $ 1.07
Slide 6: Key Financial Statistics
Key Financial Statistics ($ Millions, Except Per Share Amounts) Full Year 2012 2011 % B/(W) Operating Revenue $ 5,066.3 $ 4,814.6 5% Fuel Services and Subcontracted Transportation Revenue 1,190.6 1,236.0 (4)% Total Revenue $ 6,257.0 $ 6,050.5 3% Earnings Per Share from Continuing Operations $ 3.91 $
Slide 7: 4th Quarter Results Overview - FMS
4th Quarter Results Overview - FMS ► Fleet Management Solutions (FMS) total and operating revenue up 4% vs. prior year – Contractual revenue up 5% – Full service lease revenue up 6% – Contract maintenance revenue up 2% – Commercial rental revenue down 1% – Fuel revenue up 3% ► FMS earnings increased
Slide 8: 4th Quarter Results Overview – SCS
4th Quarter Results Overview – SCS ► Supply Chain Solutions (SCS) total revenue was up 2% (and operating revenue up 4%) vs. prior year due to higher operating revenue, partially offset by lower subcontracted transportation ─ Operating revenue was up 4% vs. prior year due to higher freight volumes an
Slide 9: Business Segments
Business Segments ($ Millions) Fourth Quarter Memo: Total Revenue 2012 2011 % B/(W) 2012 2011 % B/(W) Operating Revenue: Fleet Management Solutions $ 849.5 $ 813.3 4% $ 1,117.7 $ 1,074.7 4% Supply Chain Solutions 489.1 471.8 4% 575.3 565.3 2% Eliminations (51.0) (48.1) (6)% (109.4) (98.9) (11)% Tota
Slide 10: Business Segments
Business Segments Full Year ($ Millions) Memo: Total Revenue 2012 2011 % B/(W) 2012 2011 % B/(W) Operating Revenue: Fleet Management Solutions $ 3,321.2 $ 3,135.9 6% $ 4,405.3 $ 4,218.3 4% Supply Chain Solutions 1,944.5 1,857.5 5% 2,280.6 2,206.0 3% Eliminations (199.3) (178.8) (11)% (428.9) (373.8)
Slide 11: Capital Expenditures
Capital Expenditures ($ Millions) Full Year 2012 $ 2012 2011 O/(U) 2011 Full Service Lease $ 1,548 $ 1,067 $ 481 Commercial Rental 542 622 (80) Operating Property and Equipment 70 71 (1) Gross Capital Expenditures 2,161 1,760 401 Less: Proceeds from Sales (Primarily Revenue Earning Equipment) 413 30
Slide 12: Cash Flow from Continuing Operations
Cash Flow from Continuing Operations ($ Millions) Full Year 2012 2011 Earnings from Continuing Operations $ 201 $ 171 Depreciation 940 872 Gains on Vehicle Sales, Net (89) (63) Amortization and Other Non-Cash Charges, Net 68 57 Pension Contributions (81) (65) Changes in Working Capital and Deferred
Slide 13: Debt to Equity Ratio
Debt to Equity Ratio ($ Millions) 300% 275% 261% 270% 275% 250% 234% 225% 201% 183% 203% Pension 200% 168% 151% 157% Impact (1) 146% 150% 129% Total 100% Obligations 50% to Equity 0% 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12
Slide 14: Contents
Contents ► Fourth Quarter 2012 Results Overview ► Asset Management Update ► 2013 Forecast ►Q & A 01/31/13 Proprietary and Confidential 14
Slide 15: Global Asset Management Update
(1) Global Asset Management Update ► Units held for sale were 9,200 at quarter end, up from 6,300 units held for sale in the prior year ─ Sequentially from the third quarter, units held for sale increased by 100 units ► The number of used vehicles sold in the fourth quarter was 5,400, up 29% from th
Slide 16: Contents
Contents ► Fourth Quarter 2012 Results Overview ► Asset Management Update ► 2013 Forecast ►Q & A 01/31/13 Proprietary and Confidential 16
Slide 17: 2013 Forecast Assumptions
2013 Forecast Assumptions General ► Continuation of low/modest economic growth in an uncertain environment ► Continued benefits from 2012 cost reductions FMS ► Continued lease and contract maintenance fleet growth resulting from solid sales and better retention rates in current external environment
Slide 18: 2013 Forecast Assumptions
2013 Forecast Assumptions SCS ► Revenue growth due to new business and improved business retention ► Customer volumes in High-Tech and CPG projected to decline slightly ► Margin improvement driven by growth and overhead leverage Other ► Temporary pause of anti-dilutive share repurchase program 01/31
Slide 19: Key Financial Statistics
Key Financial Statistics ($ Millions, Except Per Share Amounts) 2013 Forecast 2012 % B / (W) Revenue: Operating Revenue $ 5,290 $ 5,066 4% Fuel Services and Subcontracted Transportation 1,210 1,191 2% Total Revenue $ 6,500 $ 6,257 4% Earnings From Continuing Operations: Earnings Before Income Taxes
Slide 20: Business Segment Revenue
Business Segment Revenue 2013 Forecast Change % vs. 2012 Fleet Management Solutions: Total Revenue (1) 3% Contractual Revenue (2) 4% Commercial Rental Revenue (2)% Operating Revenue 3% Supply Chain Solutions: (3) Total Revenue 5% Operating Revenue 6% (1) Includes fuel revenue. (2) Includes full serv
Slide 21: 2013 Causes of EPS Change
2013 Causes of EPS Change ($ Earnings Per Share) $5.0 $4.70-$4.85 $0.38-$0.41 $4.41 $4.5 $0.29-$0.31 $0.21-0.24 $4.0 ($0.23-0.27) $0.18 ($0.20-0.23) $0.00 $3.5 ($0.21) ($0.06) $3.0 $2.5 $2.0 2012 Strategic & Compensation Insurance & Anti-Dilutive Commercial Carryover of SCS Residual FMS 2013 Forecas
Slide 22: Capital Expenditures, Cash Flow & Leverage
Capital Expenditures, Cash Flow & Leverage ($ Millions) Full Year 2013 Forecast 2012 Full Service Lease - Replacement $ 1,075 - 1,125 Full Service Lease - Growth 450 - 500 Full Service Lease 1,525 - 1,625 $ 1,548 Commercial Rental 150 542 Operating Property and Equipment 90 70 Gross Capital Expendit
Slide 23: Adjusted Return on Capital History
Adjusted Return on Capital History 7.8% 7.9% 7.4% 7.3% Adjusted Return on 6.3% 6.1% 5.6% 5.8% 5.7% Capital (ROC) 6.8% 6.7% 6.6% 6.5% 5.5% Cost of 4.8% 4.1% 4.8% 4.8% Capital (COC) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013 Forecast Forecast ROC O/(U) COC 1.0% 1.2% 0.8% 0.8% (2.2)% (1.3)% 0.2%
Slide 24: Financial Reporting Enhancement
Financial Reporting Enhancement ► As discussed during our third quarter earnings call, comparable earnings and comparable EPS will exclude non-operating pension costs beginning in 2013 ─ Non-operating pension costs consist primarily of interest cost, expected return on plan assets and recognized net
Slide 25: EPS Forecast – Continuing Operations
EPS Forecast – Continuing Operations ($ Earnings Per Share) First Quarter Full Year 2013 Comparable EPS Forecast(1) $ 0.75 - 0.80 $ 4.70 - 4.85 2012 Comparable EPS(1) $ 0.69 $ 4.41 (1) 2013 Comparable EPS Forecast, a non-GAAP financial measure, calculated using our new method excludes from EPS forec
Slide 26: Financial Reporting Enhancement
Financial Reporting Enhancement ► Comparable EPS under the new methodology: ($ Earnings Per Share) $4.78 $4.43 $4.41 Comparable Earnings Per Share $3.71 $2.53 $2.20 2008 2009 2010 2011 2012 20132013 Forecast Midpoint Forecast Midpoint 2008 2009 2010 2011 2012 2013 Forecast % B/(W) Comparable EPS (Pr
Slide 27: Q&A
Q&A 01/31/13 Proprietary and Confidential 27
Slide 28: Appendix
Appendix Business Segment Detail Central Support Services Balance Sheet Financial Indicators Forecast Asset Management Quarterly History of Comparable EPS Quarterly History of Non-Operating Pension Cost Non-GAAP Financial Measures & Reconciliations 01/31/13 Proprietary and Confidential 28
Slide 29: Fleet Management Solutions (FMS)
Fleet Management Solutions (FMS) ($ Millions) Fourth Quarter 2012 2011 % B/(W) Full Service Lease $ 536.7 $ 508.4 6% Contract Maintenance 46.9 46.0 2% Contractual Revenue 583.7 554.4 5% Contract-related Maintenance 49.3 41.8 18% Commercial Rental 197.4 200.3 (1)% Other 19.1 16.7 14% Operating Revenu
Slide 30: Fleet Management Solutions (FMS)
Fleet Management Solutions (FMS) ($ Millions) Full Year 2012 2011 % B/(W) Full Service Lease $ 2,102.2 $ 1,996.3 5% Contract Maintenance 187.2 182.3 3% Contractual Revenue 2,289.4 2,178.6 5% Contract-related Maintenance 187.0 165.6 13% Commercial Rental 772.8 722.6 7% Other 72.0 69.1 4% Operating Re
Slide 31: Supply Chain Solutions (SCS)
Supply Chain Solutions (SCS) ($ Millions) Fourth Quarter 2012 2011 % B/(W) Automotive $ 141.7 $ 123.4 15% High-Tech 81.7 83.8 (2)% Retail & CPG 176.7 180.3 (2)% Industrial & Other 89.0 84.3 6% Operating Revenue 489.1 471.8 4% Subcontracted Transportation 86.1 93.5 (8)% Total Revenue $ 575.3 $ 565.3
Slide 32: Supply Chain Solutions (SCS)
Supply Chain Solutions (SCS) ($ Millions) Full Year 2012 2011 % B/(W) Automotive $ 563.5 $ 469.2 20% High-Tech 317.5 333.6 (5)% Retail & CPG 711.2 711.0 - Industrial & Other 352.4 343.7 3% Operating Revenue 1,944.5 1,857.5 5% Subcontracted Transportation 336.1 348.5 (4)% Total Revenue $ 2,280.6 $ 2,
Slide 33: Central Support Services (CSS)
Central Support Services (CSS) ($ Millions) Fourth Quarter 2012 2011 % B/(W) Allocated CSS Costs $ 38.2 $ 40.6 6% Unallocated CSS Costs 10.5 11.1 6% Total CSS Costs $ 48.7 $ 51.7 6% 01/31/13 Proprietary and Confidential 33
Slide 34: Central Support Services (CSS)
Central Support Services (CSS) ($ Millions) Full Year 2012 2011 % B/(W) Allocated CSS Costs $ 151.7 $ 160.1 5% Unallocated CSS Costs 42.3 42.5 - Total CSS Costs $ 194.0 $ 202.7 4% 01/31/13 Proprietary and Confidential 34
Slide 35: Balance Sheet
Balance Sheet ($ Millions) December 31, December 31, 2012 2011 Cash and Cash Equivalents $ 66 $ 105 Other Current Assets 974 984 Revenue Earning Equipment, Net 5,755 5,050 Operating Property and Equipment, Net 625 624 Other Assets 899 856 Total Assets $ 8,319 $ 7,618 Short-Term Debt / Current Portio
Slide 36: Financial Indicators Forecast
Financial Indicators Forecast (1) ($ Millions) Gross Capital Expenditures (2) $2,161 Full Service Lease $1,815 $1,757 $1,760 Commercial Rental PP&E/Other $1,399 $1,289 $1,265 $1,165 $1,182 $1,088 $657 $725 $600 $611 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Forecast Memo:
Slide 37: U.S. Asset Management Update
U.S. Asset Management Update (a) Number of YTD 07 YTD 08 YTD 09 YTD 10 YTD 11 YTD 12 Units 10,000 9,060 Redeployments – Vehicles 9,000 coming off-lease with useful life remaining are redeployed 7,784 8,125 8,000 in the Ryder fleet (Commercial 7,537 Rental, SCS, or with another Lease customer). 7,000
Slide 38: Comparable EPS Quarterly History
Comparable EPS Quarterly History ($ Millions) 1Q12 - 2Q12 - 3Q12 - 4Q12 - FY12- 1Q12 - 2Q12 - 3Q12 - 4Q12 - FY12 - Earnings Earnings Earnings Earnings Earnings EPS EPS EPS EPS EPS Reported $ 34.9 $ 46.8 $ 64.3 $ 54.9 $ 200.9 $ 0.68 $ 0.91 $ 1.26 $ 1.07 $ 3.91 Superstorm Sandy Vehicle-Related Losses
Slide 39: Comparable EPS Quarterly History
Comparable EPS Quarterly History ($ Millions) 1Q11 - 2Q11 - 3Q11 - 4Q11 - FY11 - 1Q11 - 2Q11 - 3Q11 - 4Q11 - FY11 - Earnings Earnings Earnings Earnings Earnings EPS EPS EPS EPS EPS Reported $ 25.9 $ 40.9 $ 56.9 $ 47.7 $ 171.4 $ 0.50 $ 0.79 $ 1.10 $ 0.92 $ 3.31 Tax Law Changes / (Benefits) - 5.4 (0.6
Slide 40: Comparable EPS Quarterly History
Comparable EPS Quarterly History ($ Millions) 1Q09 - 2Q09 - 3Q09 - 4Q09 - FY09 - 1Q09 - 2Q09 - 3Q09 - 4Q09 - FY09 - Earnings Earnings Earnings Earnings Earnings EPS EPS EPS EPS EPS Reported $ 10.9 $ 27.1 $ 28.4 $ 23.7 $ 90.1 $ 0.20 $ 0.48 $ 0.51 $ 0.43 $ 1.62 Int'l Asset Impairment 3.9 - 0.2 2.4 6.7
Slide 41: History of Non-Operating Pension Costs
History of Non-Operating Pension Costs ($ Thousands except After Tax EPS Impact of After Tax EPS Impact of per share amount) Non-Operating Non-Operating Non-Operating Non-Operating Pension Costs Pension Costs Pension Costs Pension Costs 2012 2007 Q1 2012 4,938 $ 0.10 Q1 2007 (1,200) $ (0.02) Q2 2012
Slide 42: Non-GAAP Financial Measures
Non-GAAP Financial Measures ► This presentation includes “non-GAAP financial measures” as defined by SEC rules. As required by SEC rules, we provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure. Non-GAAP financial measures should be considered in addition t
Slide 43: Earnings and EPS from Continuing Operations Reconciliation
Earnings and EPS from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) 4Q12 - 4Q12 - 4Q11 - 4Q11 - Earnings EPS Earnings EPS Reported $ 54.9 $ 1.07 $ 47.7 $ 0.92 Superstorm Sandy Vehicle-Related Losses 5.1 0.10 - - Restructuring Charges - - 2.0 0.04 Acquisition Related Trans
Slide 44: EBT and Tax Rate from Continuing Operations Reconciliation
EBT and Tax Rate from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) 4Q12 - 4Q12 - 4Q12 - EBT Tax Tax Rate Reported $ 81.8 $ 26.9 32.9% Superstorm Sandy Vehicle-Related Losses 8.2 3.1 Comparable (1) $ 90.1 $ 30.0 33.3% FY12 - FY12 - FY12 - EBT Tax Tax Rate Reported $ 303.1
Slide 45: EBT and Tax Rate from Continuing Operations Reconciliation
EBT and Tax Rate from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) 4Q11 - 4Q11 - 4Q11 - EBT Tax Tax Rate Reported $ 73.1 $ 25.4 34.8% Acquisition Transaction Costs 0.4 - Restructuring Charges 2.9 0.9 (1) Comparable $ 76.4 $ 26.3 34.4% FY11 - FY11 - FY11 - EBT Tax Tax Rat
Slide 46: Adjusted Return on Capital Reconciliation
Adjusted Return on Capital Reconciliation ($ Millions) 2004 2005 2006 2007 2008 2009 2010 2011 2012 (1) Net earnings $ 216 $ 227 $ 249 $ 254 $ 200 $ 62 $ 118 $ 170 $ 210 Cumulative effect of change in accounting principle - 2 - - - - - - - Restructuring and other charges, net and other items (24) (2
Slide 47: Segment Adjusted Return on Capital Reconciliation
Segment Adjusted Return on Capital Reconciliation ($ Millions) 2011 2012 FMS SCS FMS SCS Net Earnings (1) $ 161 $ 65 $ 192 $ 70 Restructuring and Other Charges, Net and Other Items 6 - 16 1 Income Taxes 99 40 100 45 Adjusted Earnings Before Income Taxes 266 105 308 115 (2) Adjusted Interest Expense
Slide 48: Debt to Equity Reconciliation
Debt to Equity Reconciliation ($ Millions) % to % to % to % to % to % to % to % to 12/31/00 Equity 12/31/01 Equity 12/31/02 Equity 12/31/03 Equity 12/31/04 Equity 12/31/05 Equity 12/31/06 Equity 12/31/07 Equity Balance Sheet Debt $2,017 161% $1,709 139% $1,552 140% $1,816 135% $1,783 118% $2,185 143
Slide 49: Debt to Equity Reconciliation
Debt to Equity Reconciliation ($ Millions) % to % to % to % to % to 12/31/08 Equity 12/31/09 Equity 12/31/10 Equity 12/31/11 Equity 12/31/12 Equity Balance Sheet Debt $2,863 213% $2,498 175% $2,747 196% $3,382 257% $3,821 260% Receivables Sold - - - - - PV of minimum lease payments and guaranteed re
Slide 50: Cash Flow Reconciliation
Cash Flow Reconciliation ($ Millions) 12/31/00 (1) 12/31/01 (1) 12/31/02 (1) 12/31/03 (1) 12/31/04 (1) 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 Cash Provided by Operating Activities $ 1,023 $ 365 $ 617 $ 803 $ 867 $ 776 $ 852 $ 1,097 $ 1,248 $ 985 Less: Changes in Bal. of Trade Rec. Sold (270) 2
Slide 51: Cash Flow Reconciliation
Cash Flow Reconciliation ($ Millions) 12/31/10 12/31/11 12/31/12 Cash Provided by Operating Activities from Continuing Operations $ 1,028 $ 1,042 $ 1,134 Proceeds from Sales (Primarily Revenue Earning Equipment) 235 300 413 Proceeds from Sale and Leaseback of Assets - 37 130 Collections of Direct Fi
Slide 52: Slide 52