Slide 1: 2005 Business Plan Earnings Forecast Conference Call
2005 Business Plan Earnings Forecast Conference Call December 20, 2004
Slide 2: Safe Harbor
Safe Harbor Certain statements and information included in this presentation are "forward-looking statements" under the Federal Private Securities Litigation Reform Act of 1995. Accordingly, these forward-looking statements should be evaluated with consideration given to the many risks and uncertain
Slide 3: Contents
Contents Fourth Quarter 2004 Update Building Upon Successes 2005 Business Plan Themes & Key Drivers 2005 Business Plan Summary Q & A
Slide 4: Fourth Quarter 2004 Update
Fourth Quarter 2004 Update Previously announced EPS forecast was $0.75 - $0.78 for 4Q04 and $3.08 - $3.11 for FY04 FY04 EPS forecast is $2.85 - $2.88 excluding $0.23 gain on sale of headquarters complex We continue to expect earnings to be within this range Full year 2004 EPS is presented at $3.10 a
Slide 5: Contents
Contents Fourth Quarter 2004 Update Building Upon Successes 2005 Business Plan Themes & Key Drivers 2005 Business Plan Summary Q & A
Slide 6: Building on Successes and Creating Opportunities
Building on Successes and Creating Opportunities Building the Foundation F U T U R E G R O W T H Cost Management & Continuous Improvement ?Operating costs reduced $167M during 2001-2002 Positioning for Long-Term, Sustainable Profitable Growth ?Operating costs reduced $37M Accelerating Profitable Gro
Slide 7: Market Overview
Market Overview The transportation and logistics markets present significant growth opportunities. Current estimated market sizes are as follows: Market Segment Market Size U.S. lease and rental outsourced market $25 billion U.S. dedicated contract carriage market $8 billion U.S. private fleet marke
Slide 8: Contents
Contents Fourth Quarter 2004 Update Building Upon Successes 2005 Business Plan Themes & Key Drivers 2005 Business Plan Summary Q & A
Slide 9: Plan Themes
Plan Themes Focus on profitable revenue growth to realize earnings leverage Continue growth in transactional product lines Accelerate growth in contractual product lines Continue emphasis on prudent capital allocation Maintain strong balance sheet while replenishing fleet and enabling growth Sustain
Slide 10: Key Drivers: Fleet Management Solutions
Key Drivers We anticipate moderate economic growth conditions during 2005 Fleet Management Solutions Continuing improvement in rental demand with increasing margins due to asset management initiatives Modest growth of rental fleet while continuing to increase pricing and utilization levels As expect
Slide 11: Key Drivers: Supply Chain Solutions/Dedicated Contract Carriage
Key Drivers Supply Chain Solutions/Dedicated Contract Carriage Conversion of strong sales pipeline Strong level of customer retention Stabilization of existing customer volumes Increased leverage of Transportation Management capabilities Complete operational integration of DCC with SCS organization
Slide 12: Contents
Contents Fourth Quarter 2004 Update Building Upon Successes 2005 Business Plan Themes & Key Drivers 2005 Business Plan Summary Q & A
Slide 13: Key Financial Statistics
Key Financial Statistics ($ Millions, Except Per Share Amounts) (1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. (2) 2004 Forecast presented as midpoint of the EPS range of $3.08 - $3.11 or $2.85 - $2.88 excluding headquarters complex gain. Note: Totals and EPS amount
Slide 14: 2005 Causes of Change (Earnings Per Share)
2005 Causes of Change ($ Earnings Per Share) * Excludes $0.23 gain on sale of headquarters complex. Interest Rates Other Initiative Impact Revenue Improvement 2005 Plan Increase in Tax Rate Organizational Investments 2004 Forecast
Slide 15: Business Segment Revenue
Business Segment Revenue Full Year ($ Millions) Note: Totals may not foot due to rounding differences.
Slide 16: Business Segment Earnings
Business Segment Earnings Full Year ($ Millions) (1) 2004 net before tax earnings for FMS, SCS and DCC restated for change in cost allocations. Refer to Appendix - Business Segment NBT Reconciliation. (2) 2005 Plan is $209M to $215M. $213M is presented as the midpoint within the range. 2004 Forecast
Slide 17: Business Segment Earnings (Percent)
Business Segment Earnings (Percent) Full Year ($ Millions) (1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures.
Slide 18: EPS Forecast
EPS Forecast ($ Earnings Per Share) Note: EPS projections assume no impact from expensing of stock options. (1) Non-GAAP financial measure.
Slide 19: Capital Expenditures
Capital Expenditures ($ Millions) Full Year Full Service Lease Commercial Rental Property, Plant & Equipment Acquisitions East 74 18 8 0 Full Year 2005
Slide 20: Capital Expenditures
Capital Expenditures Full Service Lease: Capital for lease vehicles is only committed after contracts are signed with customers 2005 lease capital expenditures include: Replacement spending of $864 million Growth spending of $204 million Growth capital represents an investment which results in $26 m
Slide 21: Financial Indicators: Free Cash Flow and Debt to Equity
Debt to Equity Ratio (2) Financial Indicators (1) Free Cash Flow (2) ($ Millions) Actual 2000 Actual 2001 Actual 2002 Actual 2003 Forecast 2004 Plan 2005 Actual 2000 Actual 2001 Actual 2002 Actual 2003 Forecast 2004 Plan 2005 Lease 974 399 452 459 813 1063 Rental 190 131 19 220 223 258 Other 23 51 8
Slide 22: Return on Capital
Return on Capital Full Year ($ Millions) (1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures.
Slide 23: Summary
Summary Drive revenue growth in all segments while continuing to deliver earnings leverage Focus on strong customer retention and new business development Accelerate growth initiatives to capitalize on economic environment and market opportunities Leverage and build on strategic process improvements
Slide 24: Q & A
Q & A
Slide 25: Appendix
• Business Segment NBT Reconciliation • Non-GAAP Financial Measures Appendix
Slide 26: Business Segment NBT Reconciliation
Business Segment NBT Reconciliation ($ Millions) Notes: - In Q4 2004, the Company changed its methodology of allocating insurance related costs between the FMS, SCS and DCC segments. Accordingly, 2003 and 2004 segment NBT measures have been adjusted to provide the retroactive effect of this change.
Slide 27: 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 and an explanation why management believes that presentation of
Slide 28: Free Cash Flow Reconciliation
Non - GAAP Financial Measures ($ Millions) Free Cash Flow Reconciliation (1) Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment. (2) The Company uses free cash flow, a non-GAAP financial measure, because management considers it to be a
Slide 29: Debt to Equity Reconciliation
Non - GAAP Financial Measures Debt to Equity Reconciliation Note: In connection with adopting FIN 46 effective July 1, 2003, the Company consolidated the vehicle securitization trusts previously disclosed as off-balance sheet debt. ($ Millions) The Company uses total obligations and total obligation
Slide 30: Business Segment Earnings Reconciliation
Non - GAAP Financial Measures Business Segment Earnings Reconciliation ($ Millions) (1) The Company uses dry revenue, a non-GAAP financial measure, to evaluate the operating performance of the FMS business segment and as a measure of sales activity. Fuel services revenue, which is directly impacted
Slide 31: Return on Capital Reconciliation
Non-GAAP Financial Measures Return on Capital Reconciliation ($ Millions) (1) Average shareholders' equity and average debt are calculated quarterly using a weighted average. (2) Shareholders' equity reflects impact of accumulated pension related equity charge of $229 million as of 4Q2002 and $187 m
Slide 32: Net Earnings and EPS Reconciliation
Non-GAAP Financial Measures Net Earnings and EPS Reconciliation ($ Millions)
Slide 33: Cityder
Cityder