Slide 1: First Quarter 2016 Earnings Conference Call
First Quarter 2016 Earnings Conference Call April 26, 2016
Slide 2: Safe Harbor and Non-GAAP Financial Measures
Proprietary and Confidential 2 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 regarding market conditions, ear
Slide 3: Contents
Proprietary and Confidential Contents 3 ► First Quarter 2016 Results Overview ►Asset Management Update ► Earnings Forecast ► Q & A
Slide 4: 1st Quarter Results Overview
Proprietary and Confidential 1st Quarter Results Overview 4 ► Comparable earnings per share from continuing operations were $1.12 vs. $1.08 in 1Q15 ► Earnings per diluted share from continuing operations were $1.05 in 1Q16 vs. $1.00 in 1Q15 – Included non-operating pension costs of $0.07 in 1Q16 and
Slide 5: Key Financial Statistics
Proprietary and Confidential Key Financial Statistics 5 First Quarter ($ Millions, Except Per Share Amounts) Note: Amounts throughout presentation may not be additive due to rounding. 2016 2015 % B/(W) Operating Revenue 1,406.0$ 1,300.3$ 8% Fuel and Subcontracted Transportation 223.7 266.9 (16)% Tot
Slide 6: 1st Quarter Results Overview – FMS
Proprietary and Confidential 1st Quarter Results Overview – FMS 6 ► Fleet Management Solutions (FMS) operating revenue up 7% (up 8% excluding foreign exchange) and total revenue up 1% – Full service lease revenue up 8% – Contract maintenance revenue up 9% – Commercial rental revenue was unchanged –
Slide 7: 1st Quarter Results Overview – DTS
Proprietary and Confidential 1st Quarter Results Overview – DTS 7 ► Dedicated Transportation Solutions (DTS) operating and total revenue up 15% vs. prior year due to new business and higher volumes and pricing ► DTS earnings increased due to higher operating revenue and lower insurance costs ► DTS e
Slide 8: 1st Quarter Results Overview – SCS
Proprietary and Confidential 1st Quarter Results Overview – SCS 8 ► Supply Chain Solutions (SCS) operating revenue up 9% (up 11% excluding foreign exchange) and total revenue up 5% vs. prior year – Operating revenue increased due to new business, increased volumes and higher pricing – Total revenue
Slide 9: Business Segments
Proprietary and Confidential Business Segments 9 2016 2015 % B/(W) 2016 2015 % B/(W) Operating Revenue: Fleet Management Solutions 962.3$ 899.2$ 7% 1,097.9$ 1,087.2$ 1% Dedicated Transportation Solutions 190.3 165.8 15% 244.8 212.7 15% Supply Chain Solutions 322.4 295.4 9% 388.7 371.1 5% Elimination
Slide 10: Capital Expenditures
Proprietary and Confidential Capital Expenditures 10 2016 $ 2016 2015 O/(U) 2015 Full Service Lease 441$ 436$ 5$ Commercial Rental 33 190 (157) Operating Property and Equipment 23 27 (4) Gross Capital Expenditures 498 653 (155) Less: Proceeds from Sales (Primarily Revenue Earning Equipment) 121 97 2
Slide 11: Cash Flow from Continuing Operations
Proprietary and Confidential Cash Flow from Continuing Operations 11 First Quarter ($ Millions) (1) Reflects revised reporting of vehicle gains on sale, net of vehicle valuation adjustments. Quarterly history may be found in the Appendix (page 19). (2) Capital expenditures presented net of changes i
Slide 12: Debt to Equity Ratio
Proprietary and Confidential 227% 260% 277% 274% 245% 0% 50% 100% 150% 200% 250% 300% 12/31/13 12/31/14 12/31/15 3/31/16 Target Midpoint Pension Impact Debt to Equity Debt to Equity Ratio 12 (1) (2) (1) Illustrates impact of accumulated net pension related equity charge on leverage. (2) Represents d
Slide 13: Contents
Proprietary and Confidential Contents 13 ► First Quarter 2016 Results Overview ►Asset Management Update ► Earnings Forecast ► Q & A
Slide 14: Global Asset Management Update
Proprietary and Confidential ► Units held for sale were 8,600 at quarter end, up from 5,800 units held for sale in the prior year ─ Units held for sale increased by 600 units sequentially ► The number of used vehicles sold in the first quarter was 4,700, up 9% from the prior year ─ Units sold were u
Slide 15: Contents
Proprietary and Confidential Contents 15 ► First Quarter 2016 Results Overview ►Asset Management Update ► Earnings Forecast ► Q & A
Slide 16: EPS Forecast – Continuing Operations
Proprietary and Confidential EPS Forecast – Continuing Operations 16 2016 Comparable EPS Forecast(1) $ 1.50 - 1.55 $ 6.10 - 6.30 2015 Comparable EPS(2) $ 1.65 $ 6.13 Second Quarter Full Year ($ Earnings Per Share) (1) Comparable EPS Forecast, a non-GAAP financial measure, excludes $0.08 of non-opera
Slide 17: Q&A
Proprietary and Confidential Q&A 17
Slide 18: Appendix
Proprietary and Confidential Appendix 18 Gains on Used Vehicles, Net – Quarterly History Full Service Lease Vehicle Count Business Segment Detail Central Support Services Balance Sheet Adjusted Return on Capital History Financial Indicators Forecast Asset Management Non-GAAP Financial Measures & Rec
Slide 19: Gains on Used Vehicles, Net
Proprietary and Confidential 1Q15 2Q15 3Q15 4Q15 FY15 1Q14 2Q14 3Q14 4Q14 FY14 Gains on vehicle sales (1) 29,579$ 33,237 29,294 25,699 117,809 28,818$ 34,365 33,691 29,950 126,824 Less: Valuation adjustments (2,371) (3,252) (4,329) (8,004) (17,956) (3,675) (2,515) (2,377) (2,197) (10,764) Gains on u
Slide 20: Full Service Lease (FSL) Fleet Count
Proprietary and Confidential End of Period 1Q15 2Q15 3Q15 4Q15 1Q16 FSL Fleet (as reported) 127,500 128,700 130,600 131,800 133,300 5,800 UK FSL Trailers 4,400 4,300 4,300 3,900 3,700 (700) FSL Fleet - excluding UK 123,100 124,400 126,300 127,900 129,600 6,500 Sequential Change 2Q15 O/(U) 1Q15 3Q15
Slide 21: Fleet Management Solutions (FMS) Revenue
Proprietary and Confidential Fleet Management Solutions (FMS) 21 Revenue 2016 2015 % B/(W) Full Service Lease 622.9$ 577.1$ 8% Contract Maintenance 50.1 46.0 9% Contractual Revenue 673.0 623.1 8% Commercial Rental 204.8 205.1 - Contract-related Maintenance 64.3 53.1 21% Other 20.2 17.9 13% Operating
Slide 22: Dedicated Transportation Solutions (DTS)
Proprietary and Confidential Dedicated Transportation Solutions (DTS) 22 ($ Millions) Revenue 2016 2015 % B/(W) Operating Revenue 190.3$ 165.8$ 15% Subcontracted Transportation 31.2 14.6 114% Fuel 23.3 32.2 (28)% Total Revenue 244.8$ 212.7$ 15% Earnings Before Tax Segment Earnings Before Tax (EBT) 1
Slide 23: Supply Chain Solutions (SCS)
Proprietary and Confidential Supply Chain Solutions (SCS) 23 ($ Millions) Revenue 2016 2015 % B/(W) Automotive 129.1$ 109.2$ 18% Technology & Healthcare 57.4 59.3 (3)% CPG & Retail 108.6 102.7 6% Industrial & Other 27.3 24.3 12% Operating Revenue 322.4 295.4 9% Subcontracted Transportation 52.0 58.2
Slide 24: Central Support Services (CSS)
Proprietary and Confidential Central Support Services (CSS) 24 First Quarter ($ Millions) 2016 2015 % B/(W) Allocated CSS Costs 48.7$ 50.3$ 3% Unallocated CSS Costs 9.7 11.9 19% Total CSS Costs 58.4$ 62.2$ 6%
Slide 25: Balance Sheet
Proprietary and Confidential Balance Sheet 25 March 31, December 31, 2016 2015 Current Assets 1,095$ 1,098$ Revenue Earning Equipment, Net 8,275 8,185 Operating Property and Equipment, Net 717 715 Other Assets 967 955 Total Assets 11,055$ 10,953$ Current Liabilities 981$ 1,046$ Total Debt 5,599 5,50
Slide 26: Adjusted Return on Capital History
Proprietary and Confidential Adjusted Return on Capital History Adjusted Return on Capital (ROC) 6.7% 6.6% 6.5% 6.3% 6.1% 5.5% 4.8% 4.8% 4.7% 4.4% 4.4% 7.9% 7.4% 7.3% 4.1% 4.8% 5.7% 5.7% 5.8% 5.8% 5.8% 5.5% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Forecast Cost of Capital (COC) Return
Slide 27: Financial Indicators Forecast
Proprietary and Confidential Financial Indicators Forecast (1) 27 161% 139% 140% 135% 118% 143% 164% 147% 213% 175% 196% 257% 272% 227% 260% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Forecast Midpoint Long Term Target Midpoint Gross Capital Expenditures ($ Millions) Free Cash Flow (2) 2008 $1,265
Slide 28: Asset Management Update (US Only)
Proprietary and Confidential Asset Management Update (US Only) (a) Current year statistics may exclude some units due to a lag in reporting (b) Excludes early terminations where customer purchases vehicle (a)(b) Redeployments – Vehicles coming off-lease or in Rental with useful life remaining are re
Slide 29: Non-GAAP Financial Measures
Proprietary and Confidential Non-GAAP Financial Measures 29 ► This presentation includes “non-GAAP financial measures” as defined by SEC rules. As required by SEC rules, we provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure. Non-GAAP financial measures sh
Slide 30: Foreign Exchange Impact on Operating Revenue Growth
Proprietary and Confidential 30 Foreign Exchange Impact on Operating Revenue Growth First Quarter YOY Growth Fx Impact (1) YOY Growth excl Fx Operating Revenue 8% (1)% 9% FMS Operating Revenue 7% (1)% 8% Full Service Lease Revenue 8% (1)% 9% Commercial Rental Revenue - (1)% 1% SCS Operating Revenue
Slide 31: Earnings and EPS from Continuing Operations Reconciliation
Proprietary and Confidential Earnings and EPS from Continuing Operations Reconciliation 31 ($ Millions or $ Earnings Per Share) 1Q16 1Q16 1Q15 1Q15 Earnings EPS Earnings EPS Reported $ 56.2 $ 1.05 $ 53.3 $ 1.00 Non-operating pension costs 4.0 0.07 2.8 0.06 Professional fees - - 1.2 0.02 Comparable $
Slide 32: EBT and Tax Rate from Continuing Operations Reconciliation
Proprietary and Confidential 1Q16 - 1Q16 - 1Q16 - EBT Tax Tax Rate Reported 88.7$ 32.5$ 36.7% Non-operating pension costs 6.9 2.9 Comparable 95.6$ 35.4$ 37.1% 1Q15 - 1Q15 - 1Q15 - EBT Tax Tax Rate Reported 84.2$ 30.9$ 36.7% Non-operating pension costs 4.9 2.1 Professional fees 1.8 0.7 Comparable 90.
Slide 33: Adjusted Return on Capital Reconciliation
Proprietary and Confidential 33 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 comparabl
Slide 34: Adjusted Return on Capital Reconciliation
Proprietary and Confidential 34 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 comparabl
Slide 35: Appendix: Non-GAAP Financial Measures
Proprietary and Confidential Appendix: Non-GAAP Financial Measures 35 (1) Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment. (2) Free Cash Flow excludes acquisitions and changes in restricted cash. (3) Includes adjustment to reclassif
Slide 36: Appendix: Non-GAAP Financial Measures
Proprietary and Confidential Appendix: Non-GAAP Financial Measures 36 Cash Flow Reconciliation ($ Millions) 12/31/2013 12/31/2014 12/31/2015 3/31/2016 3/31/2015 1,252$ 1,383$ 1,383$ 365$ 284$ Proceeds from Sales (Primarily Revenue Earning Equipment) 452 497 497 121 97 Collections of Direct Finance L
Slide 37: Appendix: Non-GAAP Financial Measures
Proprietary and Confidential Appendix: Non-GAAP Financial Measures 37 Note: Amounts may not recalculate due to rounding. Debt to Equity Reconciliation (1) ($ Millions) (1) The debt to equity metric was not revised in years prior to 2012 to reflect the change in accounting treatment of certain sale-l
Slide 38: Proprietary and Confidential
Proprietary and Confidential