Slide 1: Third Quarter 2012 Earnings Conference Call
Third Quarter 2012 Earnings Conference Call October 23, 2012
Slide 2: Safe Harbor and Non-GAAP Financial Measures
10/23/12 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 expectations for future earnings and other financial performance. A
Slide 3: Contents
Contents ► Third Quarter 2012 Results Overview ►Asset Management Update ► Earnings Outlook ► Future Financial Reporting Enhancement ►Q & A 10/23/12 3 Proprietary and Confidential
Slide 4: 3rd Quarter Results Overview
10/23/12 3rd Quarter Results Overview ► Earnings per diluted share from continuing operations were $1.26 in 3Q12 vs. $1.10 in 3Q11 – 3Q12 included a $0.02 charge from a tax law change – 3Q11 included a $0.01 tax benefit from acquisition-related transaction costs ► Comparable earnings per share from
Slide 5: Key Financial Statistics Third Quarter
Key Financial Statistics Third Quarter ($ Millions, Except Per Share Amounts) 2012 2011 % B/(W) Operating Revenue 1,283.2$ 1,256.5$ 2% Fuel Services and Subcontracted Transportation Revenue 290.1 314.2 (8)% Total Revenue 1,573.3$ 1,570.7$ - % Earnings Per Share From Continuing Operations 1.26$ 1.10$
Slide 6: Key Financial Statistics Year-to-Date
Key Financial Statistics Year-to-Date ($ Millions, Except Per Share Amounts) Note: Amounts throughout presentation may not be additive due to rounding. 2012 2011 % B/(W) Operating Revenue 3,778.8$ 3,577.6$ 6% Fuel Services and Subcontracted Transportation Revenue 894.7 931.9 (4)% Total Revenue 4,673
Slide 7: 3rd Quarter Results Overview - FMS
10/23/12 3rd Quarter Results Overview - FMS ► Fleet Management Solutions (FMS) total revenue up 1% (and operating revenue up 3%) vs. prior year – Contractual revenue up 4% – Full service lease revenue up 5% – Contract maintenance revenue up 1% – Commercial rental revenue down 1% – Fuel revenue down
Slide 8: 3rd Quarter Results Overview – SCS
10/23/12 3rd Quarter Results Overview – SCS ► Supply Chain Solutions (SCS) total revenue was unchanged vs. prior year due to higher operating revenue offset by lower subcontracted transportation ─ Operating revenue was up 2% vs. prior year due to higher fuel cost pass-throughs and both higher freigh
Slide 9: Business Segments (Third Quarter)
10/23/12 Business Segments 2012 2011 % B/(W) 2012 2011 % B/(W) Operating Revenue: Fleet Management Solutions 848.1$ 824.7$ 3% 1,115.4$ 1,099.0$ 1% Supply Chain Solutions 485.1 476.3 2% 563.2 565.0 - % Eliminations (49.9) (44.4) (12)% (105.2) (93.3) (13)% Total 1,283.2$ 1,256.5$ 2% 1,573.3$ 1,570.7$
Slide 10: Business Segments (Year-to-Date)
10/23/12 Business Segments 2012 2011 % B/(W) 2012 2011 % B/(W) Operating Revenue: Fleet Management Solutions 2,471.7$ 2,322.5$ 6% 3,287.6$ 3,143.7$ 5% Supply Chain Solutions 1,455.4 1,385.7 5% 1,705.3 1,640.7 4% Eliminations (148.3) (130.7) (13)% (319.5) (275.0) (16)% Total 3,778.8$ 3,577.6$ 6% 4,67
Slide 11: Capital Expenditures
10/23/12 Capital Expenditures 2012 $ 2012 2011 O/(U) 2011 Full Service Lease 1,144$ 614$ 530$ Commercial Rental 526 580 (53) Operating Property and Equipment 47 55 (9) Gross Capital Expenditures 1,717 1,249 468 Less: Proceeds from Sales (Primarily Revenue Earning Equipment) 310 224 86 Le s: Sale and
Slide 12: Cash Flow from Continuing Operations
10/23/12 Cash Flow from Continuing Operations Year-To-Date ($ Millions) 2012 2011 Earnings from Continuing Operations 146$ 124$ Depreciation 699 645 Gains on Vehicle Sales, Net (68) (46) Amortization and Other Non-Cash Charges, Net 51 41 Pension Contributions (77) (12) Changes in Working Capital and
Slide 13: Debt to Equity Ratio
275% 234% 201% 146% 129% 151% 168% 157% 225% 183% 203% 261% 274% 275% 0% 50% 100% 150% 200% 250% 300% 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 9/30/12 Long Term Target Midpoint Balance Sheet Debt to Equity Total Obligations to Equity
Slide 14: Contents
Contents ► Third Quarter 2012 Results Overview ►Asset Management Update ► Earnings Outlook ► Future Financial Reporting Enhancement ►Q & A 10/23/12 14 Proprietary and Confidential
Slide 15: Asset Management Update
10/23/12 ► Units held for sale were 9,100 at quarter end, up from 5,100 units held for sale in the prior year ─ Sequentially from the second quarter, units held for sale decreased by 100 units ► The number of used vehicles sold in the third quarter was 6,200, up 35% from the prior year ► Proceeds pe
Slide 16: Contents
Contents ► Third Quarter 2012 Results Overview ►Asset Management Update ► Earnings Forecast ► Future Financial Reporting Enhancement ►Q & A 10/23/12 16 Proprietary and Confidential
Slide 17: EPS Forecast – Continuing Operations
10/23/12 EPS Forecast – Continuing Operations Fourth Quarter Full Year 2012 Comparable EPS Forecast(1) $ 1.06 - 1.11 $ 3.93 - 3.98 2011 Comparable EPS(1) $0.97 $3.49 ($ Earnings Per Share) (1) Full year 2012 Comparable EPS Forecast excludes an $0.08 net tax benefit and an $0.11 restructuring charge.
Slide 18: Contents
Contents ► Third Quarter 2012 Results Overview ►Asset Management Update ► Earnings Forecast ► Future Financial Reporting Enhancement ►Q & A 10/23/12 18 Proprietary and Confidential
Slide 19: Future Financial Reporting Enhancement
Future Financial Reporting Enhancement 10/23/12 19 Proprietary and Confidential ► Beginning in 2013, comparable earnings and comparable EPS will exclude non-operating pension costs ─ Non-operating pension costs consist primarily of interest cost, expected return on plan assets and recognized net act
Slide 20: Future Financial Reporting Enhancement
Future Financial Reporting Enhancement 10/23/12 20 Proprietary and Confidential ► Comparable EPS will reflect the following under the new methodology: 2008 2009 2010 2011 Comparable EPS (Current Method) 4.68$ 1.70$ 2.22$ 3.49$ 3.93$ - 3.98$ Non-Operating Pension Costs (0.25) 0.50 0.31 0.22 0.38 - 0.
Slide 21: Q&A
Q&A 10/23/12 21 Proprietary and Confidential
Slide 22: Appendix
Appendix Business Segment Detail Central Support Services Balance Sheet Financial Indicators Forecast Asset Management Adjusted Return on Capital History Non-GAAP Financial Measures & Reconciliations 10/23/12 22 Proprietary and Confidential
Slide 23: Fleet Management Solutions (FMS) Third Quarter
10/23/12 Fleet Management Solutions (FMS) 2012 2011 % B/(W) Full Service Lease 533.4$ 509.9$ 5% Contract Maintenance 47.1 46.8 1% Contractual Revenue 580.5 556.6 4% Contract-related Maintenance 44.4 44.0 1% Commercial Rental 205.4 206.5 (1)% Other 17.8 17.5 2% Operating Revenue 848.1 824.7 3% Fuel S
Slide 24: Fleet Management Solutions (FMS) Year-to-Date
10/23/12 Fleet Management Solutions (FMS) 2012 2011 % B/(W) Full Service Lease 1,565.5$ 1,487.9$ 5% Contract Maintenance 140.6 136.2 3% Contractual Revenue 1,706.1 1,624.1 5% Contract-related Maintenance 137.4 123.8 11% Commercial Rental 575.4 522.2 10% Other 52.9 52.4 1% Operating Revenue 2,471.7 2
Slide 25: Supply Chain Solutions (SCS) Third Quarter
10/23/12 Supply Chain Solutions (SCS) Third Quarter ($ Millions) 2012 2011 % B/(W) Automotive 140.2$ 115.4$ 21% High-Tech 77.5 84.0 (8)% Retail & CPG 178.2 187.6 (5)% Industrial & Other 89.3 89.3 - % Operating Revenue 485.1 476.3 2% Subcontracted Transportation 78.1 88.7 (12)% Total Revenue 563.2$ 5
Slide 26: Supply Chain Solutions (SCS) Year-to-Date
10/23/12 Supply Chain Solutions (SCS) Year-To-Date ($ Millions) 2012 2011 % B/(W) Automotive 421.8$ 345.9$ 22% High-Tech 235.8 249.8 (6)% Retail & CPG 534.5 530.7 1% Industrial & Other 263.3 259.3 2% Operating Revenue 1,455.4 1,385.7 5% Subcontracted Transportation 249.9 255.0 (2)% Total Revenue 1,7
Slide 27: Central Support Services (CSS) Third Quarter
10/23/12 Central Support Services (CSS) 2012 2011 % B/(W) Allocated CSS Costs 37.3$ 42.7$ 13% Unallocated CSS Costs 11.1 11.5 3 Total CSS Costs 48.4$ 54.3$ 11% Third Quarter ($ Millions) 27 Proprietary and Confidential
Slide 28: Central Support Services (CSS) Year-to-Date
10/23/12 Central Support Services (CSS) 2012 2011 % B/(W) Allocated CSS Costs 113.5$ 119.6$ 5% Unallocated CSS Costs 31.8 31.4 (1)% Total CSS Costs 145.3$ 151.0$ 4 Year-To-Date ($ Millions) 28 Proprietary and Confidential
Slide 29: Balance Sheet
10/23/12 Balance Sheet Sept 30, December 31, 2012 2011 Cash and Cash Equivalents 96$ 105$ Other Current Assets 983 984 Revenue Earning Equipment, Net 5,669 5,050 Operating Property and Equipment, Net 621 624 Other Assets 890 856 Total Assets 8,260$ 7,618$ Short-Term Debt / Current Portion Long-Term
Slide 30: Financial Indicators Forecast
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Forecast Midpoint Long Term Target Mispoint 10/23/12 $1,054 $835 $949 $1,091 $1,381 $1,179 $1,252 $1,684 $1,571 $1,266 $1,328 $1,442 $1,820 2000 2001 2002 2003 2004 2005 2006 2007 2008 Financial Indicators Forecast (1) (1) Total Obliga
Slide 31: U.S. Asset Management Update
10/23/12 Proprietary and Confidential 31 U.S. Asset Management Update (a) (a) U.S. only (b) Excludes early terminations where customer purchases vehicle (c) Current year statistics may exclude some units due to a lag in reporting (b) Number of Units 3,138 2,910 3,756 3,023 3,959 3,670 3,138 5,255 4,
Slide 32: Adjusted Return on Capital History
Adjusted Return on Capital History Adjusted Return on Capital (ROC) 6.9% 6.8% 6.7% 6.6% 6.5% 6.3% 6.1% 5.5% 4.8% 7.7% 7.8% 7.9% 7.4% 7.3% 4.1% 4.8% 5.7% 5.6% 2004 2005 2006 2007 2008 2009 2010 2011 2012 Forecast Cost of Capital (COC) Return on Equity 15.3% 14.6% 15.5% 14.2% 11.2% 4.4% 8.4% 11.9% 14.
Slide 33: Non-GAAP Financial Measures
10/23/12 Non-GAAP Financial Measures ► This presentation includes “non-GAAP financial measures” as defined by SEC rules. As required by SEC rules, we provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure. Non-GAAP financial measures should be considered in a
Slide 34: Earnings and EPS from Continuing Operations Reconciliation
Earnings and EPS from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) 3Q12 - 3Q12 - 3Q11 - 3Q11 - Earnings EPS Earnings EPS Reported 64.3$ 1.26$ 56.9$ 1.10$ Tax Law Changes (Benefits) 0.9 0.02 (0.6) (0.01) Restructuring Charges 0.1 - - - Acquisition Related Transaction Cost
Slide 35: EBT and Tax Rate from Continuing Operations Reconciliation
35 EBT and Tax Rate from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) 3Q12 - 3Q12 - 3Q12 - EBT Tax Tax Rate Reported 99.8$ 35.5$ 35.6% Tax Law Change - (0.9) Restructuring Charges 0.1 - Acquisition Related Transaction Costs 0.4 0.1 Comparable (1) 100.3$ 34.7$ 34.7% YTD12
Slide 36: EBT and Tax Rate from Continuing Operations Reconciliation
36 EBT and Tax Rate from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) 3Q11 - 3Q11 - 3Q11 - EBT Tax Tax Rate Reported 87.7$ 30.7$ 35.0% Tax Benefit - 0.6 Comparable (1) 87.7$ 31.3$ 35.7% YTD11 - YTD11 - YTD11 - EBT Tax Tax Rate Reported 206.3$ 82.6$ 40.0% Tax Law Changes
Slide 37: Adjusted Return on Capital Reconciliation
10/23/12 Adjusted Return on Capital Reconciliation ($ Millions) (1) Earnings calculated based on a 12-month rolling period. (2) Interest expense includes interest on off-balance sheet vehicle obligations. (3) Income taxes were calculated by excluding taxes related to comparable earnings items and in
Slide 38: Debt to Equity Reconciliation
10/23/12 Debt to Equity Reconciliation % 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% $2
Slide 39: Debt to Equity Reconciliation
10/23/12 Debt to Equity Reconciliation ($ Millions) Note: Amounts may not recalculate due to rounding. % to % to % to % to % to % to 12/31/08 Equity 12/31/09 Equity 12/31/10 Equity 12/31/11 Equity 9/30/12 Equity 9/30/11 Equity Balance Sheet Debt $2,863 213% $2,498 175% $2,747 196% $3,382 257% $3,888
Slide 40: Cash Flow Reconciliation
10/23/12 ($ Millions) Cash Flow Reconciliation 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) 23
Slide 41: Cash Flow Reconciliation
12/31/10 12/31/11 9/30/12 9/30/11 Cash Provided by Operating Activities from Continuing Operations 1,028$ 1,042$ 768$ 782$ Proceeds from Sales (Primarily Revenue Earning Equipment) 235 300 310 224 Proceeds from Sale and Leaseback of Assets - 37 130 - Collections of Direct Finance Leases 62 62 51 46
Slide 42: Comparable EPS – Excluding Non-Operating Pension Costs
2012 2009 2010 2011 Forecast (1) GAAP EPS $ 4.51 1.62 2.37 3.31 3.91 - 3.96 Acquisition Related Transaction Costs - - 0.08 0.04 Asset Impairment/Gain on Sale of Property 0.03 0.12 (0.02) - Restructuring Charges 0.31 0.07 - 0.05 Tax (Benefits)/Law Changes (0.17) (0.11) (0.21) 0.09 Comparable EPS (Cur
Slide 43: CAyder
CAyder