Ryder System, Inc. · NYSE:R

Ryder System — Q2 2020 Earnings Presentation

51 slides from Ryder System's earnings presentation, Jul 29, 2020

Slide 1: Second Quarter 2020 Earnings Conference Call
Second Quarter 2020 Earnings Conference Call July 29, 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 4: 2nd Quarter Results Overview
2nd Quarter Results Overview • Total revenue decreased 16% and operating revenue decreased 10% vs. prior year • Earnings (loss) per diluted share from continuing operations was $(1.41) vs. $1.43 in 2Q19 • Comparable earnings (loss) per share from continuing operations was $(0.95) vs. $1.40 in 2Q19 –
Slide 5: Key Financial Statistics
Key Financial Statistics NM - Not Meaningful (1) In the first quarter of 2020, we announced our plan to exit the extension of our liability insurance coverage for ChoiceLease customers. The exit of this program is estimated to be completed in the second quarter of 2021. We have revised our definitio
Slide 6: 2nd Quarter Results Overview – FMS
2nd Quarter Results Overview – FMS • Fleet Management Solutions (FMS) total revenue down 14% and FMS operating revenue down 8% – Lower commercial rental revenue (down 33%) partially offset by slightly higher ChoiceLease revenue (up 1%) • FMS earnings before tax (EBT) declined to a loss of $(104)M fr
Slide 7: Estimated Residuals Reduced to Reflect Lowered Outlook Impacted By COVID-19
Estimated Residuals Reduced to Reflect Lowered Outlook Impacted By COVID-19 Policy Depreciation Accelerated Depreciation • 2Q20 Change: reduced residual value estimates for trucks, and to a lesser extent tractors, • 1Q20 Change: reduced residual value expected to be sold after mid-2022, resulting in
Slide 8: Residual Value Estimates Reduced to Align With Updated Outlook
Residual Value Estimates Reduced to Align With Updated Outlook 2Q20 Change - Accelerated Depreciation2 Earnings Impact from Residual Value Estimate Changes1 2Q20 Change - Policy Depreciation 2019 + 1Q20 Changes - Accelerated Depreciation3 Quarterly$250 $208 2019 Changes - Policy Depreciation $200 $1
Slide 9: 2nd Quarter Used Vehicle Sales Update - FMS
2nd Quarter Used Vehicle Sales Update - FMS • Sold 6,300 used vehicles during the second quarter, up 24% from the prior year and up 15% sequentially • Used vehicles inventory was 14,000 at quarter end, up from 8,300 in the prior year – Increased by 2,400 vehicles sequentially due to higher outservic
Slide 10: 2nd Quarter Results Overview – SCS
2nd Quarter Results Overview – SCS • Supply Chain Solutions (SCS) total revenue down 20% and operating revenue down 16% – SCS total and operating revenue decreased primarily reflecting lower automotive customer volumes due to COVID-19 • SCS earnings before tax (EBT) decreased by $9M to $37M primaril
Slide 11: 2nd Quarter Results Overview – DTS
2nd Quarter Results Overview – DTS • Dedicated Transportation Solutions (DTS) total revenue down 19% and DTS operating revenue down by 8% – DTS total revenue reflects lower subcontracted revenue and lower fuel costs passed through to customers – DTS operating revenue primarily reflects lower sales a
Slide 12: Capital Expenditures
Capital Expenditures ($ Millions) Year-to-Date Expected range for FY20 gross capital expenditures is $1.0 to $1.3B, below pre-COVID forecast of $2.1B, resulting in expected free cash flow of $1.0 to $1.2B in 2020, above prior year negative free cash flow of ($1.1B) Note: Amounts may not be additive
Slide 13: Cash Flow and Leverage
Cash Flow and Leverage Year-to-Date ($ Millions) Note: Amounts may not be additive due to rounding. (1) Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment. (2) Target debt to equity range is 250 - 300%. © 2020 Ryder System, Inc. 13 All
Slide 15: Outlook
Outlook Given the uncertainty relating to the ongoing impacts of COVID-19, the company is not providing financial guidance at this time but expects to resume guidance when business conditions stabilize • Used vehicle inventory expected to decline to ~10K units at year-end as a result of our initiati
Slide 17: Long Term Financial Model
Long Term Financial Model Our primary financial target relates to Return on Equity Adjusted Return on Equity Interim target 11% Long-term target over the cycle 15% Component drivers to achieve ROE target include: Operating Revenue Growth Fleet Management Mid Single Digit Supply Chain & Dedicated Hig
Slide 18: Key Drivers To Reach ROE Target
Key Drivers To Reach ROE Target 1 Expected Increase 7 -10 pts 2 Expected increase 15 -18 pts SCS/DTS Growth Maintenance/ Cost Initiatives Leverage ChoiceLease secular growth Pricing Driven by trends Target 15% strategic cost Rental Initiatives to initiatives improve lease returns Cyclical Impact of
Slide 19: Progress on Actions to Increase Returns
Progress on Actions to Increase Returns • Accelerating growth in supply chain and dedicated supported by launch of national advertising campaign to increase awareness of capabilities, launch of RyderShare platform and profitable performance of Ryder Last Mile • Continue to implement ChoiceLease pric
Slide 22: Appendix
Appendix Segment Comparable EBITDA Selected Segment Balance Sheet Items 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
Slide 23: Background on Additional Segment Disclosures
Background on Additional Segment Disclosures • In order to provide additional transparency to segment performance and further insights into management's evaluation of such performance, we are providing: – Segment Comparable EBITDA - provided quarterly in our earnings presentation – Select Segment Ba
Slide 24: Comparable Segment EBITDA
Comparable Segment EBITDA Note: Amounts may not be additive due to rounding. (1) We do not allocate non-operating pension costs and other items impacting comparability to our segments. See our Non-GAAP reconciliations in this earnings presentation for further discussion on these items. © 2020 Ryder
Slide 25: Comparable Segment EBITDA
Comparable Segment EBITDA (1) We do not allocate non-operating pension costs and other items impacting comparability to our segments. See our Non-GAAP reconciliations in this earnings presentation for further discussion on these items. © 2020 Ryder System, Inc. 25 All Rights Reserved
Slide 26: Comparable Segment EBITDA History
Comparable Segment EBITDA History (1) We do not allocate non-operating pension costs and other items impacting comparability to our segments. See our Non-GAAP reconciliations in this earnings presentation for further discussion on these items. © 2020 Ryder System, Inc. 26 All Rights Reserved
Slide 27: Comparable Segment EBITDA History
Comparable Segment EBITDA History (1) We do not allocate non-operating pension costs and other items impacting comparability to our segments. See our Non-GAAP reconciliations in this earnings presentation for further discussion on these items. © 2020 Ryder System, Inc. 27 All Rights Reserved
Slide 28: Selected Segment Balance Sheet Items (December 1, 2019)
Selected Segment Balance Sheet Items ($ Millions) December 31, 2019 FMS (1) SCS DTS Total Assets Excluding Goodwill & Intangibles $ 12,650 $ 1,016 $ 283 $ 13,949 Goodwill and Intangibles 261 221 44 526 Total Assets $ 12,911 $ 1,237 $ 327 $ 14,475 Debt (2) $ 7,811 $ 114 $ — $ 7,925 Equity (3) $ 1,787
Slide 29: Selected Segment Balance Sheet Items (December 1, 2018)
Selected Segment Balance Sheet Items ($ Millions) December 31, 2018 FMS (1) SCS DTS Total Assets Excluding Goodwill & Intangibles $ 11,635 $ 898 $ 280 $ 12,814 Goodwill and Intangibles 264 226 45 534 Total Assets $ 11,899 $ 1,124 $ 325 $ 13,348 Debt (2) $ 6,509 $ 140 $ — $ 6,649 Equity (3) $ 1,892 $
Slide 30: Selected Segment Balance Sheet Items (December 1, 2017)
Selected Segment Balance Sheet Items ($ Millions) December 31, 2017 FMS (1) SCS DTS Total Assets Excluding Goodwill & Intangibles $ 10,289 $ 765 $ 234 $ 11,287 Goodwill and Intangibles 250 143 45 438 Total Assets 10,539 908 279 11,726 Debt (2) $ 5,399 $ 41 $ — $ 5,440 Equity (3) $ 1,888 $ 460 $ 105
Slide 31: ChoiceLease Fleet Count - Active Fleet
ChoiceLease Fleet Count - Active Fleet Change June 30, June 30, ChoiceLease 2020 2019 2020 / 2019 Average Active Vehicles (1) 146,600 144,000 2% Revenue per Average Active Vehicle (2) $ 5,200 $ 5,300 (2)% End of Period Active Vehicles 144,900 144,600 —% (1) Active ChoiceLease vehicles are those unit
Slide 32: Key Financial Statistics
Key Financial Statistics Note: Amounts may not be additive due to rounding. NM - Not Meaningful (1) In the first quarter of 2020, we announced our plan to exit the extension of our liability insurance coverage for ChoiceLease customers. The exit of this program is estimated to be completed in the se
Slide 35: Fleet Management Solutions (FMS)
Fleet Management Solutions (FMS) (1) In the first quarter of 2020, we announced our plan to exit the extension of our liability insurance coverage for ChoiceLease customers. The exit of this program is estimated to be completed in the second quarter of 2021. We have revised our definition of operati
Slide 37: Supply Chain Solutions (SCS)
Supply Chain Solutions (SCS) ($ Millions) * 2Q20 SCS EBT includes $5M negative impact from change in residual value estimates for vehicles used by SCS. © 2020 Ryder System, Inc. 37 All Rights Reserved
Slide 38: Supply Chain Solutions (SCS)
Supply Chain Solutions (SCS) * 2020 SCS EBT includes $8M negative impact from change in residual value estimates for vehicles used by SCS. © 2020 Ryder System, Inc. 38 All Rights Reserved
Slide 45: Earnings (Loss) and EPS from Continuing Operations Reconciliation
(1) Earnings (Loss) and EPS from Continuing Operations Reconciliation Note: Amounts may not be additive due to rounding. (1) The reconciliation of the EBT and Tax Rate for these items are included on next slide. © 2020 Ryder System, Inc. 45 All Rights Reserved
Slide 46: Earnings (Loss) Before Income Tax and Tax Rate Reconciliation
Earnings (Loss) Before Income Tax and Tax Rate from Continuing Operations Reconciliation Note: Amounts may not be additive due to rounding. (1) Q2 and YTD 2020 tax rates reflect a benefit for the period. (2) The comparable provision for income taxes is computed using the same methodology as the GAAP
Slide 48: Adjusted Return on Capital Reconciliation
Adjusted Return on Capital Reconciliation (1) (1) Non-GAAP elements of this calculation have been reconciled to the corresponding GAAP measures. A numerical reconciliation of net earnings to adjusted net earnings and average total debt and average shareholders' equity to adjusted average total capit
Slide 50: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Note: Amounts may not be additive due to rounding. (1) Included in cash flows from investing activities. (2) Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment. (3) Non-GAAP financial measure. We refer to

Ryder System — Q2 2020 Earnings Presentation on 6ix

Ryder System — Q2 2020 Earnings Presentation

Slide 1: Second Quarter 2020 Earnings Conference Call

Slide 2: Safe Harbor and Non-GAAP Financial Measures

Slide 3: Contents

Slide 4: 2nd Quarter Results Overview

Slide 5: Key Financial Statistics

Slide 6: 2nd Quarter Results Overview – FMS

Slide 7: Estimated Residuals Reduced to Reflect Lowered Outlook Impacted By COVID-19

Slide 8: Residual Value Estimates Reduced to Align With Updated Outlook

Slide 9: 2nd Quarter Used Vehicle Sales Update - FMS

Slide 10: 2nd Quarter Results Overview – SCS

Slide 11: 2nd Quarter Results Overview – DTS

Slide 12: Capital Expenditures

Slide 13: Cash Flow and Leverage

Slide 14: Contents

Slide 15: Outlook

Slide 16: Capital Allocation Strategy

Slide 17: Long Term Financial Model

Slide 18: Key Drivers To Reach ROE Target

Slide 19: Progress on Actions to Increase Returns

Slide 20: Contents

Slide 21: Q&A

Slide 22: Appendix

Slide 23: Background on Additional Segment Disclosures

Slide 24: Comparable Segment EBITDA

Slide 25: Comparable Segment EBITDA

Slide 26: Comparable Segment EBITDA History

Slide 27: Comparable Segment EBITDA History

Slide 28: Selected Segment Balance Sheet Items (December 1, 2019)

Slide 29: Selected Segment Balance Sheet Items (December 1, 2018)

Slide 30: Selected Segment Balance Sheet Items (December 1, 2017)

Slide 31: ChoiceLease Fleet Count - Active Fleet

Slide 32: Key Financial Statistics

Slide 33: Business Segments

Slide 34: Business Segments

Slide 35: Fleet Management Solutions (FMS)

Slide 36: © 2020 Ryder System, Inc. 36 All Rights Reserved

Slide 37: Supply Chain Solutions (SCS)

Slide 38: Supply Chain Solutions (SCS)

Slide 39: Dedicated Transportation Solutions (DTS)

Slide 40: Dedicated Transportation Solutions (DTS)

Slide 41: Central Support Services (CSS)

Slide 42: Balance Sheet

Slide 43: Asset Management (US Only)

Slide 44: Non-GAAP Financial Measures

Slide 45: Earnings (Loss) and EPS from Continuing Operations Reconciliation

Slide 46: Earnings (Loss) Before Income Tax and Tax Rate Reconciliation

Slide 47: Adjusted Return on Equity Reconciliation

Slide 48: Adjusted Return on Capital Reconciliation

Slide 49: Comparable EBITDA Reconciliation

Slide 50: Free Cash Flow Reconciliation

Slide 51: © 2020 Ryder System, Inc. 51 All Rights Reserved