Slide 1: Third Quarter 2020 Earnings Conference Call
Third Quarter 2020 Earnings Conference Call October 28, 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 • Third Quarter 2020 Results Overview • Outlook • Actions to Achieve ROE Target • Q&A © 2020 Ryder System, Inc. 3 All Rights Reserved
Slide 4: 3rd Quarter Results Overview
3rd Quarter Results Overview • Total revenue decreased 3% and operating revenue was unchanged vs. prior year • Earnings per diluted share from continuing operations was $0.85 vs. a loss of $(1.75) in 3Q19 • Comparable earnings per share from continuing operations was $1.21 vs. a loss of $(1.49) in 3
Slide 5: Key Financial Statistics
Key Financial Statistics © 2020 Ryder System, Inc. 5 All Rights Reserved
Slide 6: 3rd Quarter Results Overview – FMS
3rd Quarter Results Overview – FMS • Fleet Management Solutions (FMS) total revenue down 7% and FMS operating revenue down 3% – Lower commercial rental revenue (down 16%) partially offset by higher ChoiceLease revenue (up 2%) • FMS earnings before tax (EBT) increased to $16M from a loss of $(109)M i
Slide 7: 3rd Quarter Used Vehicle Sales Update – FMS
3rd Quarter Used Vehicle Sales Update – FMS • Sold a record 8,800 used vehicles during the third quarter, up 66% from the prior year and up 40% sequentially • Used vehicle inventory was 10,700 at quarter end, up from 7,300 in the prior year and down by 3,300 vehicles sequentially – Expect year-end i
Slide 8: 3rd Quarter Results Overview – SCS
3rd Quarter Results Overview – SCS • Supply Chain Solutions (SCS) total revenue up 11% and operating revenue up 9% – SCS total and operating revenue increased primarily due to new business, higher volumes and increased pricing – Higher volumes partly due to increased automotive production support fo
Slide 9: 3rd Quarter Results Overview – DTS
3rd Quarter Results Overview – DTS • Dedicated Transportation Solutions (DTS) total revenue down 17% and DTS operating revenue down 6% – DTS total and operating revenue decreased due to non-renewed business and lower volumes • DTS earnings before tax (EBT) increased 34% to $25M due to declining impa
Slide 10: Capital Expenditures
Capital Expenditures ($ Millions) Year-to-Date Expected range for FY20 gross capital expenditures is $1.0 - $1.1B, below prior forecast of $1.0 to $1.3B, resulting in expected free cash flow of $1.4 to $1.5B in 2020, above prior year negative free cash flow of ($1.1B) Note: Amounts may not be additi
Slide 11: Cash Flow and Leverage
Cash Flow and Leverage ($ Millions) Year-to-Date A higher than normal cash balance and a pension equity charge increased the debt to equity ratio by approximately 25 percentage points and 10 percentage points, respectively (1) Capital expenditures presented net of changes in accounts payable related
Slide 12: Contents
Contents • Third Quarter 2020 Results Overview • Outlook • Actions to Achieve ROE Target • Q&A © 2020 Ryder System, Inc. 12 All Rights Reserved
Slide 13: Fourth Quarter Outlook
Fourth Quarter Outlook • Anticipate SCS and DTS returns to moderate from 3Q reflecting seasonality and lower COVID-related activity; EBT as % of operating revenue for SCS and DTS expected to be within long-term target range for full year • Special recognition and retention bonus for front-line emplo
Slide 14: Contents
Contents • Third Quarter 2020 Results Overview • Outlook • Actions to Achieve ROE Target • Q&A © 2020 Ryder System, Inc. 14 All Rights Reserved
Slide 15: 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 16: Key Drivers To Reach ROE Target
Key Drivers To Reach ROE Target 1 5 4 3 Maintenance/ SCS/DTS Growth Leverage 2 ChoiceLease Cost Initiatives secular growth Pricing Driven by trends Target 15% 1 Rental Initiatives to strategic cost initiatives improve lease returns Cyclical Impact of 2019 & improvement in 2020 demand and ROE Depreci
Slide 17: Progress on Actions to Achieve ROE Target
Progress on Actions to Achieve ROE Target 1 Impact of Depreciation Changes / Cyclical Upturn in Used Vehicle Sales • Declining impact from residual value estimate changes, assuming no additional residual value changes • Improving used vehicle market conditions • Continuing to expand retail sales cap
Slide 18: Progress on Actions to Achieve ROE Target
Progress on Actions to Achieve ROE Target 4 Maintenance Cost Initiative & Other Cost Actions • On target for 2020 expected annual savings from $100M multi-year maintenance cost savings initiative o $30M savings expected in 2020; $50M+ savings achieved program to date • Implemented costs reductions i
Slide 19: Contents
Contents • Third Quarter 2020 Results Overview • Outlook • Actions to Achieve ROE Target • Q&A © 2020 Ryder System, Inc. 19 All Rights Reserved
Slide 20: Q&A
Q&A © 2020 Ryder System, Inc. 20 All Rights Reserved
Slide 21: Appendix
Appendix Segment Comparable EBITDA ChoiceLease Fleet Count - Active Fleet Key Financial Statistics - YTD Business Segment Detail Central Support Services Balance Sheet Asset Management Non-GAAP Financial Measures & Reconciliations © 2020 Ryder System, Inc. 21 All Rights Reserved
Slide 22: Comparable Segment EBITDA
Comparable Segment EBITDA Third Quarter ($ Millions) 3Q20 FMS SCS DTS CSS/ELIMS Net segment earnings $ 18 $ 43 $ 20 $ (36) Income taxes (2) 15 4 (8) Non-operating pension costs (1) — — — 7 Other items impacting comparability (1) — — — 16 EBT 16 58 25 (21) Interest expense / (income) 63 — (1) — Depre
Slide 23: Comparable Segment EBITDA
Comparable Segment EBITDA Year-to-Date ($ Millions) 2020 YTD FMS SCS DTS CSS/ELIMS Net segment earnings $ (165) $ 94 $ 47 $ (113) Income taxes (37) 32 11 (22) Non-operating pension costs (1) — — — 9 Other items impacting comparability (1) — — — 67 EBT (202) 126 58 (59) Interest expense / (income) 19
Slide 24: ChoiceLease Fleet Count - Active Fleet
ChoiceLease Fleet Count - Active Fleet Change September September ChoiceLease 30, 2020 30, 2019 2020 / 2019 Average Active Vehicles (1) 144,100 145,200 (1)% Revenue per Average Active Vehicle (2) $ 5,500 $ 5,300 4% End of Period Active Vehicles 143,400 146,000 (2)% (1) Active ChoiceLease vehicles ar
Slide 25: 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 26: Business Segments
Business Segments NM - Not meaningful Note: Amounts may not be additive due to rounding. (1) Our primary measure of segment financial performance excludes unallocated CSS, non-operating pension costs and other items impacting comparability. © 2020 Ryder System, Inc. 26 All Rights Reserved
Slide 27: Business Segments
Business Segments NM - Not meaningful Note: Amounts may not be additive due to rounding. (1) Our primary measure of segment financial performance excludes unallocated CSS, non-operating pension costs and other items impacting comparability © 2020 Ryder System, Inc. 27 All Rights Reserved
Slide 28: Fleet Management Solutions (FMS)
Fleet Management Solutions (FMS) NM - Not meaningful Note: Amounts may not be additive due to rounding. (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 i
Slide 29: Fleet Management Solutions (FMS)
Fleet Management Solutions (FMS) NM - Not meaningful Note: Amounts may not be additive due to rounding. (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 i
Slide 30: Supply Chain Solutions (SCS)
Supply Chain Solutions (SCS) * Note: Amounts may not be additive due to rounding. * 3Q20 SCS EBT includes $1M positive year-over-year impact due to a declining impact associated with prior residual value changes on vehicles used by SCS. © 2020 Ryder System, Inc. 30 All Rights Reserved
Slide 31: Supply Chain Solutions (SCS)
Supply Chain Solutions (SCS) * 2020 SCS EBT includes $7M negative year-over-year impact due to additional depreciation expense from prior residual values estimate changes on vehicles used by SCS. © 2020 Ryder System, Inc. 31 All Rights Reserved
Slide 32: Dedicated Transportation Solutions (DTS)
Dedicated Transportation Solutions (DTS) * DTS EBT includes $5M positive year-over-year impact due to a declining impact associated with prior residual value changes on vehicles used by DTS and a one-time benefit from a contract termination. © 2020 Ryder System, Inc. 32 All Rights Reserved
Slide 33: Dedicated Transportation Solutions (DTS)
Dedicated Transportation Solutions (DTS) * DTS EBT includes $5M negative year-over-year impact due to additional depreciation expense from prior residual values estimate changes on vehicles used by DTS. © 2020 Ryder System, Inc. 33 All Rights Reserved
Slide 34: Central Support Services (CSS)
Central Support Services (CSS) Note: Amounts may not be additive due to rounding. © 2020 Ryder System, Inc. 34 All Rights Reserved
Slide 35: Balance Sheet
Balance Sheet Note: Amounts may not be additive due to rounding. © 2020 Ryder System, Inc. 35 All Rights Reserved
Slide 36: Asset Management (US Only)
Asset Management (US Only) Asset Management (US Only) © 2020 Ryder System, Inc. 36 All Rights Reserved
Slide 37: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes “non-GAAP financial measures” as defined by SEC rules. As required by SEC rules, we provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure. Non-GAAP financial measures should be considered in addition to,
Slide 38: Earnings (Loss) and EPS from Continuing Operations Reconciliation
(1) Earnings (Loss) and EPS from Continuing Operations Reconciliation Note: Amounts may not be additive due to rounding. 1. The reconciliation of the EBT and Tax Rate for these items are included on next slide. © 2020 Ryder System, Inc. 38 All Rights Reserved
Slide 39: Earnings (Loss) Before Income Tax and Tax Rate Reconciliation
Earnings (Loss) Before Income Tax and Tax Rate from Continuing Operations Reconciliation (1) YTD 2020 tax rates reflect a benefit for the period. (2) The comparable provision for income taxes is computed using the same methodology as the GAAP provision for income taxes. Income tax effects of non-GAA
Slide 40: Adjusted Return on Equity Reconciliation
(1) Adjusted Return on Equity Reconciliation ($ Millions) 3Q20 3Q19 Net earnings (2) $ (201) $ 141 Other items impacting comparability (7) 96 13 Income taxes (3) (85) 54 Adjusted earnings before income taxes (190) 209 Adjusted income taxes (4) 86 (74) Adjusted net earnings [A] $ (104) $ 135 Average
Slide 41: Adjusted Return on Capital Reconciliation
(1) Adjusted Return on Capital Reconciliation ($ Millions) 3Q20 3Q19 Net earnings / (loss) (2) $ (201) $ 141 Other items impacting comparability (3) 96 13 Income taxes (4) (85) 54 Adjusted earnings before income taxes (190) 209 Adjusted interest expense (5) 255 230 Adjusted income taxes (6) 36 (131)
Slide 42: Comparable EBITDA Reconciliation
(1) Comparable EBITDA Reconciliation ($ Millions) Three months ended September 30, Nine months ended September 30, 2020 2019 2020 2019 Earnings (loss) from continuing operations $ 45.1 $ (91.5) $ (137.7) $ 29.8 Provision for income taxes 9.7 0.3 (15.9) 50.2 Earnings (loss) before income taxes from c
Slide 43: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation © 2020 Ryder System, Inc. 43 All Rights Reserved
Slide 44: © 2020 Ryder System, Inc.
© 2020 Ryder System, Inc. 44 All Rights Reserved