Slide 1: Fourth Quarter 2012 & 2013 Forecast Earnings Conference Call
Fourth Quarter 2012 & 2013 Forecast Earnings Conference Call January 31, 2013
Slide 2: Safe Harbor and Non-GAAP Financial Measures
01/31/13 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 assumptions regarding general economic conditions and market condit
Slide 3: Contents
Contents ► Fourth Quarter 2012 Results Overview ►Asset Management Update ► 2013 Forecast ► Q & A 01/31/13 3 Proprietary and Confidential
Slide 4: 4th Quarter Results Overview
01/31/13 4th Quarter Results Overview ► Earnings per diluted share from continuing operations were $1.07 in 4Q12 vs. $0.92 in 4Q11 – 4Q12 included a $0.10 charge for certain vehicle-related losses from Superstorm Sandy – 4Q11 included a $0.05 charge for acquisition-related restructuring costs ► Ther
Slide 5: Key Financial Statistics Fourth Quarter
Key Financial Statistics Fourth Quarter ($ Millions, Except Per Share Amounts) 2012 2011 % B/(W) Operating Revenue 1,287.6$ 1,237.0$ 4% Fuel Services and Subcontracted Transportation Revenue 296.0 304.1 (3)% Total Revenue 1,583.5$ 1,541.1$ 3% Earnings Per Share from Continuing Operations 1.07$ 0.92$
Slide 6: Key Financial Statistics Full Year
2012 2011 % B/(W) Operating Revenue 5,066.3$ 4,814.6$ 5% Fuel Services and Subcontracted Transportation Revenue 1,190.6 1,236.0 (4)% Total Revenue 6,257.0$ 6,050.5$ 3% Earnings Per Share from Continuing Operations 3.91$ 3.31$ 18% Comparable Earnings Per Share from Continuing Operations 4.04$ 3.49$ 1
Slide 7: 4th Quarter Results Overview - FMS
01/31/13 4th Quarter Results Overview - FMS ► Fleet Management Solutions (FMS) total and operating revenue up 4% vs. prior year – Contractual revenue up 5% – Full service lease revenue up 6% – Contract maintenance revenue up 2% – Commercial rental revenue down 1% – Fuel revenue up 3% ► FMS earnings
Slide 8: 4th Quarter Results Overview - SCS
01/31/13 4th Quarter Results Overview – SCS ► Supply Chain Solutions (SCS) total revenue was up 2% (and operating revenue up 4%) vs. prior year due to higher operating revenue, partially offset by lower subcontracted transportation ─ Operating revenue was up 4% vs. prior year due to higher freight v
Slide 9: Business Segments Fourth Quarter
01/31/13 Business Segments 2012 2011 % B/(W) 2012 2011 % B/(W) Operating Revenue: Fleet Management Solutions 849.5$ 813.3$ 4% 1,117.7$ 1,074.7$ 4% Supply Chain Solutions 489.1 471.8 4% 575.3 565.3 2% Eliminations (51.0) (48.1) (6)% (109.4) (98.9) (11)% Total 1,287.6$ 1,237.0$ 4% 1,583.5$ 1,541.1$ 3%
Slide 10: Business Segments Full Year
01/31/13 Business Segments 2012 2011 % B/(W) 2012 2011 % B/(W) Operating Revenue: Fleet Management Solutions 3,321.2$ 3,135.9$ 6% 4,405.3$ 4,218.3$ 4% Supply Chain Solutions 1,944.5 1,857.5 5% 2,280.6 2,206.0 3% Eliminations (199.3) (178.8) (11)% (428.9) (373.8) (15)% Total 5,066.3$ 4,814.6$ 5% 6,25
Slide 11: Capital Expenditures
01/31/13 Capital Expenditures 2012 $ 2012 2011 O/(U) 2011 Full Service Lease 1,548$ 1,067$ 481$ Commercial Rental 542 622 (80) Operating Property and Equipment 70 71 (1) Gross Capital Expenditures 2,161 1,760 401 Less: Proceeds from Sales (Primarily Revenue Earning Equipment) 413 300 113 Less: Sale
Slide 12: Cash Flow from Continuing Operations
01/31/13 Cash Flow from Continuing Operations Full Year ($ Millions) 2012 2011 Earnings from Continuing Operations 201$ 171$ Depreciation 940 872 Gains on Vehicle Sales, Net (89) (63) Amortization and Other Non-Cash Charges, Net 68 57 Pension Contributions (81) (65) Changes in Working Capital and De
Slide 13: Debt to Equity Ratio
275% 234% 201% 146% 129% 151% 168% 157% 225% 183% 203% 261% 270% 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 12/31/12 Long Term Target Midpoint Pension Impact Total Obligations to Equity 01/31/13 Pro
Slide 14: Contents
Contents ► Fourth Quarter 2012 Results Overview ►Asset Management Update ► 2013 Forecast ► Q & A 01/31/13 14 Proprietary and Confidential
Slide 15: Asset Management Update: Used Vehicles
01/31/13 ► Units held for sale were 9,200 at quarter end, up from 6,300 units held for sale in the prior year ─ Sequentially from the third quarter, units held for sale increased by 100 units ► The number of used vehicles sold in the fourth quarter was 5,400, up 29% from the prior year ► Proceeds pe
Slide 16: Contents
Contents ► Fourth Quarter 2012 Results Overview ►Asset Management Update ► 2013 Forecast ► Q & A 01/31/13 16 Proprietary and Confidential
Slide 17: 2013 Forecast Assumptions: FMS
01/31/13 Proprietary and Confidential 17 2013 Forecast Assumptions General ► Continuation of low/modest economic growth in an uncertain environment ► Continued benefits from 2012 cost reductions ► Continued lease and contract maintenance fleet growth resulting from solid sales and better retention r
Slide 18: 2013 Forecast Assumptions: SCS and Other
01/31/13 Proprietary and Confidential 18 SCS ► Revenue growth due to new business and improved business retention ► Customer volumes in High-Tech and CPG projected to decline slightly ► Margin improvement driven by growth and overhead leverage 2013 Forecast Assumptions Other ► Temporary pause of ant
Slide 19: 2013 Forecast Key Financial Statistics
2012 % B / (W) Revenue: Operating Revenue $ 5,290 5,066$ 4% Fuel Services and Subcontracted Transportation 1,210 1,191 2% Total Revenue $ 6,500 6,257$ 4% Earnings From Continuing Operations: Earnings Before Income Taxes $ 356 - 368 303$ 17 - 21% Earnings $ 232 - 239 201$ 15 - 19% Comparable Earnings
Slide 20: Business Segment Revenue 2013 Forecast
01/31/13 Proprietary and Confidential 20 Business Segment Revenue Fleet Management Solutions: Total Revenue (1) 3% Contractual Revenue (2) 4% Commercial Rental Revenue (2)% Operating Revenue 3% Supply Chain Solutions: Total Revenue (3) 5% Operating Revenue 6% 2013 Forecast Change % vs. 2012 (1) Incl
Slide 21: 2013 Causes of EPS Change
$4.41 $0.18 $0.21-0.24 $0.29-$0.31 $0.38-$0.41 $4.70-$4.85 ($0.23-0.27) ($0.20-0.23) ($0.21) ($0.06) $0.00 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 $5.0 2012 Strategic & Discretionary Investments & Other Compensation Insurance & Medical Anti-Dilutive Share Repo Suspension Commercial Rental Carryover of 2012 Co
Slide 22: Capital Expenditures, Cash Flow & Leverage
01/31/13 Proprietary and Confidential 22 Capital Expenditures, Cash Flow & Leverage 2013 Forecast 2012 Full Service Lease - Replacement $ 1,075 - 1,125 Full Service Lease - Growth 450 - 500 Full Service Lease 1,525 - 1,625 1,548$ Commercial Rental 150 542 Operating Property and Equipment 90 70 Gross
Slide 23: Adjusted Return on Capital History
Adjusted Return on Capital History Proprietary and Confidential 23 Adjusted Return on Capital (ROC) 6.8% 6.7% 6.6% 6.5% 6.3% 6.1% 5.5% 4.8% 4.8% 7.8% 7.9% 7.4% 7.3% 4.1% 4.8% 5.7% 5.6% 5.8% 2005 2006 2007 2008 2009 2010 2011 2012 2013 Forecast Cost of Capital (COC) Return on Equity 14.6% 15.5% 14.2%
Slide 24: Financial Reporting Enhancement
Financial Reporting Enhancement 01/31/13 24 Proprietary and Confidential ► As discussed during our third quarter earnings call, comparable earnings and comparable EPS will exclude non-operating pension costs beginning in 2013 ─ Non-operating pension costs consist primarily of interest cost, expected
Slide 25: EPS Forecast – Continuing Operations
01/31/13 25 EPS Forecast – Continuing Operations 2013 Comparable EPS Forecast(1) $ 0.75 - 0.80 $ 4.70 - 4.85 2012 Comparable EPS(1) $ 0.69 $ 4.41 First Quarter Full Year ($ Earnings Per Share) Proprietary and Confidential (1) 2013 Comparable EPS Forecast, a non-GAAP financial measure, calculated usi
Slide 26: Financial Reporting Enhancement
Financial Reporting Enhancement 01/31/13 26 Proprietary and Confidential ► Comparable EPS under the new methodology: $4.43 $2.20 $2.53 $3.71 $4.41 $4.78 2008 2009 2010 2011 2012 2013 Forecast Midpoint Comparable Earnings Per Share 2013 Forecast Midpoint ($ Earnings Per Share) 2008 2009 2010 2011 201
Slide 27: Q&A
Q&A 01/31/13 27 Proprietary and Confidential
Slide 28: Appendix
Appendix Business Segment Detail Central Support Services Balance Sheet Financial Indicators Forecast Asset Management Quarterly History of Comparable EPS Quarterly History of Non-Operating Pension Cost Non-GAAP Financial Measures & Reconciliations 01/31/13 28 Proprietary and Confidential
Slide 29: Fleet Management Solutions (FMS) Fourth Quarter
01/31/13 Fleet Management Solutions (FMS) 2012 2011 % B/(W) Full Service Lease 536.7$ 508.4$ 6% Contract Maintenance 46.9 46.0 2% Contractual Revenue 583.7 554.4 5% Contract-related Maintenance 49.3 41.8 18% Commercial Rental 197.4 200.3 (1)% Other 19.1 16.7 14% Operating Revenue 849.5 813.3 4% Fuel
Slide 30: Fleet Management Solutions (FMS) Full Year
01/31/13 Fleet Management Solutions (FMS) 2012 2011 % B/(W) Full Service Lease 2,102.2$ 1,996.3$ 5% Contract Maintenance 187.2 182.3 3% Contractual Revenue 2,289.4 2,178.6 5% Contract-related Maintenance 187.0 165.6 13% Commercial Rental 772.8 722.6 7% Other 72.0 69.1 4% Operating Revenue 3,321.2 3,
Slide 31: Supply Chain Solutions (SCS) Fourth Quarter
01/31/13 Supply Chain Solutions (SCS) Fourth Quarter ($ Millions) 2012 2011 % B/(W) Automotive 141.7$ 123.4$ 15% High-Tech 81.7 83.8 (2)% Retail & CPG 176.7 180.3 (2)% Industrial & Other 89.0 84.3 6% Operating Revenue 489.1 471.8 4% Subcontracted Transportation 86.1 93.5 (8)% Total Revenue 575.3$ 56
Slide 32: Supply Chain Solutions (SCS) Full Year
01/31/13 Supply Chain Solutions (SCS) Full Year ($ Millions) 2012 2011 % B/(W) Automotive 563.5$ 469.2$ 20% High-Tech 317.5 333.6 (5)% Retail & CPG 711.2 711.0 - Industrial & Other 352.4 343.7 3% Operating Revenue 1,944.5 1,857.5 5% Subcontracted Transportation 336.1 348.5 (4)% Total Revenue 2,280.6
Slide 33: Central Support Services (CSS) Fourth Quarter
01/31/13 Central Support Services (CSS) 2012 2011 % B/(W) Allocated CSS Costs 38.2$ 40.6$ 6% Unallocated CSS Costs 10.5 11.1 6 Total CSS Costs 48.7$ 51.7$ 6% Fourth Quarter ($ Millions) 33 Proprietary and Confidential
Slide 34: Central Support Services (CSS) Full Year
01/31/13 Central Support Services (CSS) 2012 2011 % B/(W) Allocated CSS Costs 151.7$ 160.1$ 5% Unallocated CSS Costs 42.3 42.5 - Total CSS Costs 194.0$ 202.7$ 4% Full Year ($ Millions) 34 Proprietary and Confidential
Slide 35: Balance Sheet
Balance Sheet December 31, December 31, 2012 2011 Cash and Cash Equivalents 66$ 105$ Other Current Assets 974 984 Revenue Earning Equipment, Net 5,755 5,050 Operating Property and Equipment, Net 625 624 Other Assets 899 856 Total Assets 8,319$ 7,618$ Short-Term Debt / Current Portion Long-Term Debt
Slide 36: Financial Indicators Forecast
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Forecast Midpoint Long Term Target Midpoint Financial Indicators Forecast (1) (1) Total Obligations to Equity includes acquisitions. Free Cash Flow and Gross Capital Expenditures exclude acquisitions. (2) 2000-2004 not restated fo
Slide 37: U.S. Asset Management Update
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 4,103 4,243 4,793 3,824 5,168 4,698 4,363 7,537 6,096 4,698 9,060 3,636 4,190 7,784 3,012 4
Slide 38: Comparable EPS Quarterly History 2012
01/31/13 Proprietary and Confidential 38 ($ Millions) Comparable EPS Quarterly History 1Q12 - 2Q12 - 3Q12 - 4Q12 - FY12- 1Q12 - 2Q12 - 3Q12 - 4Q12 - FY12 - Earnings Earnings Earnings Earnings Earnings EPS EPS EPS EPS EPS Reported 34.9$ 46.8$ 64.3$ 54.9$ 200.9$ 0.68$ 0.91$ 1.26$ 1.07$ 3.91$ Superstor
Slide 39: Comparable EPS Quarterly History 2011 and 2010
01/31/13 Proprietary and Confidential 39 ($ Millions) Comparable EPS Quarterly History 1Q11 - 2Q11 - 3Q11 - 4Q11 - FY11 - 1Q11 - 2Q11 - 3Q11 - 4Q11 - FY11 - Earnings Earnings Earnings Earnings Earnings EPS EPS EPS EPS EPS Reported 25.9$ 40.9$ 56.9$ 47.7$ 171.4$ 0.50$ 0.79$ 1.10$ 0.92$ 3.31$ Tax Law
Slide 40: Comparable EPS Quarterly History 2009 and 2008
01/31/13 Proprietary and Confidential 40 ($ Millions) Comparable EPS Quarterly History 1Q09 - 2Q09 - 3Q09 - 4Q09 - FY09 - 1Q09 - 2Q09 - 3Q09 - 4Q09 - FY09 - Earnings Earnings Earnings Earnings Earnings EPS EPS EPS EPS EPS Reported 10.9$ 27.1$ 28.4$ 23.7$ 90.1$ 0.20$ 0.48$ 0.51$ 0.43$ 1.62$ Int'l Ass
Slide 41: History of Non-Operating Pension Costs
01/31/13 Proprietary and Confidential 41 ($ Thousands except per share amount) History of Non-Operating Pension Costs 2012 2007 Q1 2012 4,938 0.10$ Q1 2007 (1,200) (0.02)$ Q2 2012 4,748 0.09$ Q2 2007 (1,510) (0.02)$ Q3 2012 4,846 0.09$ Q3 2007 (1,507) (0.03)$ Q4 2012 4,838 0.09$ Q4 2007 (1,531) (0.0
Slide 42: Non-GAAP Financial Measures
01/31/13 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 43: Earnings and EPS from Continuing Operations Reconciliation
Earnings and EPS from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) 4Q12 - 4Q12 - 4Q11 - 4Q11 - Earnings EPS Earnings EPS Reported 54.9$ 1.07$ 47.7$ 0.92$ Superstorm Sandy Vehicle-Related Losses 5.1 0.10 - - Restructuring Charges - - 2.0 0.04 Acquisition Related Transacti
Slide 44: EBT and Tax Rate Reconciliation 2012
44 EBT and Tax Rate from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) 4Q12 - 4Q12 - 4Q12 - EBT Tax Tax Rate Reported 81.8$ 26.9$ 32.9% Superstorm Sandy Vehicle-Related Losses 8.2 3.1 Comparable (1) 90.1$ 30.0$ 33.3% FY12 - FY12 - FY12 - EBT Tax Tax Rate Reported 303.1$ 1
Slide 45: EBT and Tax Rate Reconciliation 2011
45 EBT and Tax Rate from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) 4Q11 - 4Q11 - 4Q11 - EBT Tax Tax Rate Reported 73.1$ 25.4$ 34.8% Acquisition Transaction Costs 0.4 - Restructuring Charges 2.9 0.9 Comparable (1) 76.4$ 26.3$ 34.4% FY11 - FY11 - FY11 - EBT Tax Tax Rate
Slide 46: Adjusted Return on Capital Reconciliation
Adjusted Return on Capital Reconciliation ($ Millions) 2004 2005 2006 2007 2008 2009 2010 2011 2012 Net earnings (1) 216$ 227$ 249$ 254$ 200$ 62$ 118$ 170$ 210$ Cumulative effect of change in accounting principle - 2 - - - - - - - Restructuring and other charges, net and other items (24) (2) - 1 70
Slide 47: Segment Adjusted Return on Capital Reconciliation
($ Millions) Segment Adjusted Return on Capital Reconciliation FMS SCS FMS SCS Net Earnings (1) 161$ 65$ 192$ 70$ Restructuring and Other Charges, Net and Other Items 6 - 16 1 Income Taxes 99 40 100 45 Adjusted Earnings Before Income Taxes 266 105 308 115 Adjusted Interest Expense (2) 135 8 143 9 Ad
Slide 48: Debt to Equity Reconciliation
01/31/13 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% $2
Slide 49: Debt to Equity Reconciliation
01/31/13 Debt to Equity Reconciliation ($ Millions) Note: Amounts may not recalculate due to rounding. % to % to % to % to % to 12/31/08 Equity 12/31/09 Equity 12/31/10 Equity 12/31/11 Equity 12/31/12 Equity Balance Sheet Debt $2,863 213% $2,498 175% $2,747 196% $3,382 257% $3,821 260% Receivables S
Slide 50: Cash Flow Reconciliation
01/31/13 ($ 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 51: Cash Flow Reconciliation
12/31/10 12/31/11 12/31/12 Cash Provided by Operating Activities from Continuing Operations 1,028$ 1,042$ 1,134$ Proceeds from Sales (Primarily Revenue Earning Equipment) 235 300 413 Proceeds from Sale and Leaseback of Assets - 37 130 Collections of Direct Finance Leases 62 62 72 Other, net 3 - - To
Slide 52: CAyder
CAyder