Slide 1: Fourth Quarter 2019 Earnings & 2020 Forecast Conference Call
Fourth Quarter 2019 Earnings & 2020 Forecast Conference Call February 13, 2020 Proprietary and Confidential
Slide 2: Safe Harbor and Non-GAAP Financial Measures
Safe Harbor and Non-GAAP Financial Measures Note Regarding Forward-Looking Statements: Certain statements and information included in this presentation are “forward-looking statements” under the Federal Private Securities Litigation Reform Act of 1995, including our forecast, outlook, expectations r
Slide 3: Contents
Contents • Fourth Quarter 2019 Results • 2020 Forecast • Action Plans and Financial Model • Q&A @ 2019 Ryder System, Inc. 3 All Rights Reserved
Slide 4: 4th Quarter Results Overview
4th Quarter Results Overview • Earnings (loss) per diluted share from continuing operations was $(1.02) vs. $2.12 in 4Q18 — 4Q19 included higher depreciation expense related to change in vehicle residual value estimates, as well as $0.59 in non-operating pension costs, which includes a one-time $0.4
Slide 5: Key Financial Statistics
Key Financial Statistics Fourth Quarter ($Millions, Except Per Share Amounts) 2019 2018 %B/(W) Total Revenue $ 2,277 $ 2,260 1% Fuel and Subcontracted Transportation $ (428) $ (464) (8)% Operating Revenue $ 1,848 $ 1,796 3% Earnings (Loss) Per Share from Continuing Operations $ (1.02)* $ 2.12 NM Com
Slide 6: 4th Quarter Results Overview – FMS
4th Quarter Results Overview – FMS • Fleet Management Solutions (FMS) total revenue up 4% and FMS operating revenue up 6% – ChoiceLease revenue up 9% – SelectCare revenue up 5% – Commercial rental revenue down 4% • FMS earnings declined reflecting an increase in depreciation expense – $118M in highe
Slide 7: 4th Quarter Used Vehicle Sales Update - FMS
4th Quarter Used Vehicle Sales Update - FMS • Sold 6,000 used vehicles during the fourth quarter, up 33% from the prior year and up 13% sequentially • Used vehicles inventory was 9,400 at quarter end, up from 6,900 in the prior year – Increased by 2,100 vehicles sequentially due to higher lease repl
Slide 8: 4th Quarter Results Overview – SCS
4th Quarter Results Overview – SCS • Supply Chain Solutions (SCS) total revenue down 3% and operating revenue down 5% – SCS total and operating revenue decreased due to previously announced lost business and customer labor strikes, partially offset by higher pricing • SCS earnings increased due to i
Slide 9: 4th Quarter Results Overview – DTS
4th Quarter Results Overview – DTS • Dedicated Transportation Solutions (DTS) total revenue down 5% and DTS operating revenue up 4% – DTS total revenue reflects lower subcontracted revenue and lower fuel costs passed through to customers – DTS operating revenue reflects higher pricing and new busine
Slide 10: Capital Expenditures
Capital Expenditures ($ Millions) Full Year 2019 $ 2019 2018 O/(U) 2018 ChoiceLease $ 2,871 $ 2,207 $ 665 Commercial Rental 557 797 (240) Operating Property and Equipment 193 162 31 Gross Capital Expenditures 3,620 3,165 455 Less: Proceeds from Sales (Primarily Revenue Earning Equipment)(1) (518) (3
Slide 11: Cash Flow and Leverage
Cash Flow and Leverage ($ Millions) Full Year 2019 2018 Earnings from Continuing Operations $ (23) $ 287 Depreciation 1,879 1,389 Used Vehicle Sales, Net 59 22 Amortization and Other Non-Cash Charges, Net 273 197 Pension Contributions (72) (28) Collections from Sales-type Leases 121 83 Changes in Wo
Slide 12: Contents
Contents • Fourth Quarter 2019 Results • 2020 Forecast • Action Plans and Financial Model • Q&A @ 2019 Ryder System, Inc. 12 All Rights Reserved
Slide 13: 2020 Forecast Assumptions
2020 Forecast Assumptions General • Moderate growth economic environment • Continued strong contractual sales activity in SCS and improved sales activity in DTS • Lower ChoiceLease sales from lower OEM production and pricing actions FMS • ChoiceLease active fleet up to 1k vehicles; ChoiceLease total
Slide 14: 2020 Forecast Assumptions
2020 Forecast Assumptions SCS • Revenue growth in 1H20 slowed by continued impact from prior year lost business; 2H20 growth rate improved • Earnings benefit from higher pricing and new business offset by strategic investments, prior year favorable insurance developments and residual value estimate
Slide 15: Key Financial Statistics
Key Financial Statistics ($Millions, Except Per Share Amounts) 2020 Forecast 2019 %B/(W) Revenue: Total Revenue $ 9,000 $ 8,926 1% Fuel and Subcontracted Transportation $ (1,800) $ (1,701) 6% Operating Revenue $ 7,200 $ 7,224 —% Earnings From Continuing Operations: Earnings Before Income Taxes $25 -
Slide 16: Business Segment Revenue
Business Segment Revenue 2020 Forecast Change % vs. 2019 Fleet Management Solutions: Total Revenue 1% Operating Revenue (1)(2) — ChoiceLease Revenue 2% Commercial Rental Revenue (7)% Supply Chain Solutions: Total Revenue 4% Operating Revenue (1)(2) 2% Dedicated Transportation Solutions: Total Revenu
Slide 17: 2020 Causes of Comparable EPS Change
2020 Causes of Comparable EPS Change (1) ($ Earnings Per Share) (1) Represents Comparable EPS from Continuing Operations. @ 2019 Ryder System, Inc. 17 All Rights Reserved
Slide 18: Capital Expenditures, Cash Flow & Leverage
Capital Expenditures, Cash Flow & Leverage ($ Millions) Full Year 2020 2020 $ Forecast 2019 O/(U) 2019 ChoiceLease Replacement $ 1,500 $ 1,686 $ (186) Growth 300 1,185 (885) Total ChoiceLease 1,800 2,871 (1,071) Commercial Rental Replacement 130 557 (427) Growth — — — Total Commercial Rental 130 557
Slide 19: EPS – Continuing Operations
EPS – Continuing Operations ($ Earnings Per Share) Full Year EPS 2020 Forecast 2019 GAAP $0.22 - $0.62 ($0.45) Comparable $1.10 - $1.50 $1.01 First Quarter EPS 2020 Forecast 2019 GAAP $(1.00) - $(1.15) $0.87 Comparable $(0.65) - $(0.80) $1.11 @ 2019 Ryder System, Inc. 19 All Rights Reserved
Slide 20: Contents
Contents • Fourth Quarter 2019 Results • 2020 Forecast • Action Plans and Financial Model • Q&A @ 2019 Ryder System, Inc. 20 All Rights Reserved
Slide 21: Actions to Increase Returns
Actions to Increase Returns • Further ChoiceLease price increases during 2020 • Pruning underperforming accounts upon renewal in order to improve returns • Increased expected savings from multi-year maintenance initiative to $100M • Closed underperforming FMS facilities in the US and Canada in 4Q19
Slide 22: Financial Model
Financial Model Our primary financial target relates to Return on Equity Adjusted Return on Equity 11 - 15% Component drivers to achieve ROE target include: Operating Revenue Growth Fleet Management Mid Single Digit Supply Chain & Dedicated High Single Digit EBT as % of Operating Revenue All Segment
Slide 23: Contents
Contents • Fourth Quarter 2019 Results • 2020 Forecast • Action Plans and Financial Model • Q&A @ 2019 Ryder System, Inc. 23 All Rights Reserved
Slide 24: Q&A
Q&A @ 2019 Ryder System, Inc. 24 All Rights Reserved
Slide 25: Appendix
Appendix Impact from Residual Value Estimate Change ChoiceLease Fleet Count - Active Fleet Key Financial Statistics Business Segment Detail Central Support Services Balance Sheet Adjusted Return on Equity Adjusted Return on Capital Growth Capital Expenditures Financial Indicators Forecast Asset Mana
Slide 26: Impact from Residual Value Estimate Change
Impact from Residual Value Estimate Change @ 2019 Ryder System, Inc. 26 All Rights Reserved
Slide 27: ChoiceLease Fleet Count - Active Fleet
ChoiceLease Fleet Count - Active Fleet 2019 2018 O/(U) O/(U) ChoiceLease 2019 2018 2018 2017 2019/2018 2017 2018/2017 Average Active Vehicles (1) 144,300 134,400 129,300 7% 4% Revenue per Average Active Vehicle $ 21,600 $ 21,300 $ 20,700 1% 3% End of Period Active Vehicles 147,400 139,200 131,000 6%
Slide 28: Key Financial Statistics
Key Financial Statistics Full Year ($ Millions, Except Per Share Amounts) 2019 2018 %B/(W) Total Revenue $ 8,926 $ 8,414 6% Fuel and Subcontracted Transportation $ (1,701) $ (1,716) (1)% Operating Revenue $ 7,224 $ 6,698 8% Earnings Per Share from Continuing Operations $ (0.45)* $ 5.43 NM Comparable
Slide 29: Business Segments
Business Segments ($ Millions) Fourth Quarter Memo: Operating Revenue 2019 2018 % B/(W) 2019 2018 % B/(W) Total Revenue: Fleet Management Solutions $1,431.5 $ 1,382.1 4 % $ 1,234.1 $ 1,168.1 6% Supply Chain Solutions 648.7 670.4 (3)% 466.4 489.6 (5)% Dedicated Transportation Solutions 346.4 363.1 (5
Slide 30: Business Segments
Business Segments ($ Millions) Full Year Memo: Operating Revenue 2019 2018 % B/(W) 2019 2018 % B/(W) Total Revenue: Fleet Management Solutions $5,571.4 $ 5,258.7 6% $ 4,755.0 $ 4,411.0 8% Supply Chain Solutions 2,551.3 2,398.1 6% 1,880.0 1,765.3 6% Dedicated Transportation Services 1,417.5 1,333.3 6
Slide 31: Fleet Management Solutions (FMS)
Fleet Management Solutions (FMS) ($ Millions) Fourth Quarter Revenue 2019 2018 % B/(W) ChoiceLease $ 818.6 $ 750.4 9% SelectCare 135.8 129.8 5% Commercial Rental 256.1 265.7 (4)% Other 23.6 22.1 7% FMS Operating Revenue 1,234.1 1,168.1 6% Fuel Services Revenue 197.5 214.1 (8)% FMS Total Revenue $ 1,
Slide 32: Fleet Management Solutions (FMS)
Fleet Management Solutions (FMS) ($ Millions) Full Year Revenue 2019 2018 % B/(W) ChoiceLease $ 3,112.3 $ 2,860.3 9% SelectCare 541.4 502.8 8% Commercial Rental 1,009.1 960.6 5% Other 92.3 87.3 6% FMS Operating Revenue 4,755.0 4,411.0 8% Fuel Services Revenue 816.4 847.7 (4)% FMS Total Revenue $ 5,5
Slide 33: Supply Chain Solutions (SCS)
Supply Chain Solutions (SCS) ($ Millions) Fourth Quarter Revenue 2019 2018 % B/(W) Automotive $ 164.4 $ 170.0 (3)% Technology & Healthcare 59.3 99.5 (40)% CPG & Retail 192.4 177.3 9% Industrial & Other 50.3 42.8 17 % SCS Operating Revenue 466.4 489.6 (5)% Subcontracted Transportation 154.3 149.4 3%
Slide 34: Supply Chain Solutions (SCS)
Supply Chain Solutions (SCS) ($ Millions) Full Year Revenue 2019 2018 % B/(W) Automotive $ 693.2 $ 628.8 10 % Technology & Healthcare 268.3 329.8 (19)% CPG & Retail 736.1 637.2 16 % Industrial & Other 182.4 169.5 8% SCS Operating Revenue 1,880.0 1,765.3 6% Subcontracted Transportation 554.7 521.0 6%
Slide 35: Dedicated Transportation Solutions (DTS)
Dedicated Transportation Solutions (DTS) ($ Millions) Fourth Quarter Revenue 2019 2018 % B/(W) DTS Operating Revenue $ 241.3 $ 233.1 4% Subcontracted Transportation 69.5 91.1 (24)% Fuel 35.6 38.9 (9)% DTS Total Revenue $ 346.4 $ 363.1 (5)% Earnings Before Tax DTS Earnings Before Tax (EBT) $ 18.1 * $
Slide 36: Dedicated Transportation Solutions (DTS)
Dedicated Transportation Solutions (DTS) ($ Millions) Full Year Revenue 2019 2018 % B/(W) DTS Operating Revenue $ 972.7 $ 870.5 12 % Subcontracted Transportation 299.5 316.0 (5)% Fuel 145.3 146.8 (1)% DTS Total Revenue $ 1,417.5 $ 1,333.3 6% Earnings Before Tax DTS Earnings Before Tax (EBT) $ 81.1 *
Slide 37: Central Support Services (CSS)
Central Support Services (CSS) ($ Millions) Fourth Quarter 2019 2018 % B/(W) Allocated CSS Costs $ 62.5 $ 60.8 (3)% Unallocated CSS Costs 14.7 14.7 1% Total CSS Costs $ 77.1 $ 75.6 (2)% Full Year 2019 2018 % B/(W) Allocated CSS Costs $ 242.4 $ 225.6 (7)% Unallocated CSS Costs 49.1 49.1 —% Total CSS
Slide 38: Balance Sheet
Balance Sheet ($ Millions) December 31, 2019 December 31, 2018 Current Assets $ 1,562 $ 1,568 Revenue Earning Equipment, Net 10,428 9,416 Operating Property and Equipment, Net 918 862 Other Assets 1,568 1,502 Total Assets $ 14,475 $ 13,348 Current Liabilities $ 1,471 $ 1,580 Total Debt 7,925 6,649 O
Slide 39: Adjusted Return on Equity
Adjusted Return on Equity (1) 20% 20 16.6% 14.4% 14.8% 14.9% 12.4% 13.2% 12.7% 11.1% 10 10% 2.7% 0.3% 0%0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Forecast Adj ROE (1) Periods prior to 2017 do not reflect the impact from the lease accounting standard. @ 2019 Ryder System, Inc. 39 All Rights
Slide 40: Adjusted Return on Capital
Adjusted Return on Capital 5.7% 5.7% 5.8% 5.8% 5.8% 5.2% 4.8% 4.2% 4.4% 5.5% 4.8% 4.8% 4.7% 4.8% 4.8% 4.4% 4.3% 4.1% 2.5% 1.9% (1) (1) (1) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Forecast Cost of Capital (COC) Adjusted Return on Capital (ROC) Adj ROC O/(U) COC 0.2 % 0.9 % 1.0 % 1.1 % 1.4 %
Slide 41: Growth Capital Expenditures
Growth Capital Expenditures ($ Millions) Free Cash Flow is impacted by growth capital in the period of Free Cash Flow $ (257) (488) (340) (315) (728) 194 197 (936) (1,077) 350 initial vehicle investment and by variability in the timing of replacement capital Total Cash Total Cash Generated and Gener
Slide 42: Financial Indicators Forecast
(1) Financial Indicators Forecast ($ Millions) Gross Capital Expenditures $3,620 $3,165 $2,701 $2,161 $2,184 $2,298 $2,120 $1,760 $1,763 $1,941 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Lease Commercial Rental PP&E/Other Forecast Free Cash (4) (4) Flow (257) (488) (340) (315) (728) 194 197 (
Slide 43: Asset Management (US Only)
Asset Management (US Only) (a)(b)(c) @ 2019 Ryder System, Inc. 43 All Rights Reserved
Slide 44: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes “non-GAAP financial measures” as defined by SEC rules. As required by SEC rules, we provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure. Non-GAAP financial measures should be considered in addition to,
Slide 45: Earnings (Loss) and EPS from Continuing Operations Reconciliation
(1) Earnings (Loss) and EPS from Continuing Operations Reconciliation ($ Millions, except Per Share Data) 4Q19 4Q19 4Q18 4Q18 Earnings EPS Earnings EPS GAAP $ (53.1) $ (1.02) $ 111.8 $ 2.12 Non-operating pension costs 30.6 0.59 3.2 0.06 ERP implementation costs 5.7 0.11 0.6 0.01 Restructuring and ot
Slide 46: Earnings (Loss) Before Income Tax and Tax Rate Reconciliation
Earnings (Loss) Before Income Tax and Tax Rate from Continuing Operations Reconciliation ($ Millions) 4Q19 4Q19 4Q19 YTD19 YTD19 YTD19 EBT Tax Tax Rate EBT Tax Tax Rate GAAP $ (122.2) $ 69.2 56.6 % $ (42.3) $ 19.0 44.9 % Non-operating pension costs 40.3 (9.8) 60.4 (15.6) ERP implementation costs 7.6
Slide 47: EPS Forecast - Continuing Operations
EPS Forecast - Continuing Operations ($ Millions or $ Earnings Per Share) First Quarter 2020 Full Year 2020 EPS forecast $(1.00) - $(1.15) $0.22 - $0.62 Non-operating pension costs, net of tax 0.03 0.12 ERP implementation costs 0.13 0.34 Restructuring and other, net 0.05 0.28 Tax adjustments 0.14 0.
Slide 48: Adjusted Return on Equity Reconciliation
(1) Adjusted Return on Equity Reconciliation ($ Millions) 2011 2012 2013 2014 2015 (2) Net earnings $ 170 $ 210 $ 238 $ 218 $ 305 (7) Other items impacting comparability 6 17 — 115 18 Income taxes (3) 108 91 126 118 164 Adjusted earnings before income taxes 284 317 363 451 486 (4) Adjusted income ta
Slide 49: Adjusted Return on Equity Reconciliation
(1) Adjusted Return on Equity Reconciliation ($ Millions) 2020 2016 2017 2018 2019 Forecast Net earnings (2) $ 263 $ 720 $ 285 $ (24) $ 30 (7) Other items impacting comparability 13 24 22 38 45 Income taxes (3) 142 (423) 103 (19) 30 Adjusted earnings before income taxes 418 321 409 (5) 105 Adjusted
Slide 50: Adjusted Return on Capital Reconciliation
(1) Adjusted Return on Capital Reconciliation ($ Millions) 2011 2012 2013 2014 2015 Net earnings (2) $ 170 $ 210 $ 238 $ 218 $ 305 Other items impacting comparability (9) 6 17 — 115 18 Income taxes (3) 108 91 126 118 164 Adjusted earnings before income taxes 284 317 363 451 486 Adjusted interest exp
Slide 51: Adjusted Return on Capital Reconciliation
(1) Adjusted Return on Capital Reconciliation ($ Millions) (9) (9) 2020 2016 2017 2018 2019 Forecast Net earnings (2) $ 263 $ 720 $ 285 $ (24) $ 30 Other items impacting comparability (10) 13 24 22 38 45 Income taxes (3) 142 (423) 103 (19) 30 Adjusted earnings before income taxes 418 321 409 (5) 105
Slide 52: Adjusted Return on Capital Reconciliation
(1) Adjusted Return on Capital Reconciliation ($ Millions) 2017 2018 2019 FMS SCS DTS FMS SCS DTS FMS SCS DTS (2) Net segment earnings $ 709 $ 65 $ 43 $ 258 $ 95 $ 45 $ (34) $ 103 $ 59 Non-operating pension costs (25) — — (5) — — (57) — — Income taxes (413) 34 13 82 35 16 (37) 42 22 Adjusted segment
Slide 53: Comparable EBITDA Reconciliation
(1) Comparable EBITDA Reconciliation ($ Millions) 2011 2012 2013 Earnings from continuing operations $ 171.4 $ 200.7 $ 243.3 Provision for income taxes 108.0 102.1 125.7 Earnings before income taxes from continuing operations 279.4 302.8 369.0 Non-operating pension costs 18.7 31.4 22.2 Restructuring
Slide 54: Comparable EBITDA Reconciliation
(1) Comparable EBITDA Reconciliation ($ Millions) 2014 2015 2016 2017 (2) Earnings from continuing operations $ 220.2 $ 306.0 $ 265.2 $ 720.1 Provision for income taxes 118.1 163.2 142.0 (423.7) Earnings before income taxes from continuing operations 338.3 469.2 407.3 296.4 Non-operating pension cos
Slide 55: Comparable EBITDA Reconciliation
(1) Comparable EBITDA Reconciliation ($ Millions) Three months ended December 31, Twelve month ended December 31, 2020 2019 2018 (2) Forecast 2019 2018 (2) Earnings (loss) from continuing operations $ (53.1) $ 111.8 $ 30.0 $ (23.3) $ 286.9 Provision for income taxes (69.2) 4.2 30.0 (19.0) 102.5 Earn
Slide 56: Cash Flow Reconciliation
Cash Flow Reconciliation ($ Millions) 2011 2012 2013 2014 2015 Cash Provided by Operating Activities from Continuing Operations $ 1,042 $ 1,160 $ 1,252 $ 1,383 $ 1,442 Proceeds from Sales (Primarily Revenue Earning Equipment) (1) 337 413 452 497 427 Collections of Direct Finance Leases (1) 62 72 71
Slide 57: Cash Flow Reconciliation
Cash Flow Reconciliation ($ Millions) 2020 2016 2017 (5) 2018 (5) 2019 Forecast Cash Provided by Operating Activities from Continuing Operations $ 1,601 $ 1,628 $ 1,718 $ 2,141 $ 2,130 Proceeds from Sales (Primarily Revenue Earning Equipment)(1) 421 429 396 518 430 Collections of Direct Finance Leas
Slide 58: Debt to Equity Reconciliation
Debt to Equity Reconciliation (1) ($ Millions) % to 2011 Equity Debt $ 3,382 257 % PV of minimum lease payments and guaranteed residual values under operating leases for vehicles 64 Total Obligations (2) $ 3,446 261 % (1) The debt to equity metric was not revised in years prior to 2012 to reflect th
Slide 59: @ 2019 Ryder System, Inc. All Rights Reserved
@ 2019 Ryder System, Inc. 59 All Rights Reserved