Slide 1: Fourth Quarter 2008 & 2009 Forecast Earnings Conference Call
Fourth Quarter 2008 & 2009 Forecast Earnings Conference Call February 4, 2009
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 2008 Results Overview Asset Management Update 2009 Forecast Q & A
Slide 4: 4th Quarter Results Overview
4th Quarter Results Overview Earnings per diluted share were $0.19 versus $1.24 in 4Q07 4Q08 included a $0.90 charge related to restructuring and other items 4Q07 included a $0.06 benefit related primarily to Canada tax law changes Comparable earnings per share were $1.09 versus $1.18 in 4Q07 Revenu
Slide 5: 4th Quarter Results Overview: Fleet Management Solutions
4th Quarter Results Overview Fleet Management Solutions (FMS) total revenue down 10% (and operating revenue down 4%) vs. prior year Contractual revenue remained flat; up 4% excluding foreign exchange Full service lease revenue including acquisitions flat; up 4% excluding foreign exchange Contract ma
Slide 6: 4th Quarter Results Overview: Supply Chain Solutions
4th Quarter Results Overview Supply Chain Solutions (SCS) total revenue down 35% vs. prior year due largely to change from gross to net revenue reporting for a supply chain subcontracted transportation customer SCS operating revenue down 13% vs. prior year due to lower automotive volumes and an unfa
Slide 7: Key Financial Statistics Fourth Quarter
Key Financial Statistics Fourth Quarter Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation. The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activ
Slide 8: Key Financial Statistics Full Year
Key Financial Statistics Full Year Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation. The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity.
Slide 9: Business Segment Fourth Quarter
Business Segment Fourth Quarter Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation Includes impact of net revenue reporting for certain subcontracted transportation revenue previously reported on a gross basis. Our primary measure of segment f
Slide 10: Business Segment Full Year
Business Segment Full Year Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation. Includes impact of net revenue reporting for certain subcontracted transportation revenue previously reported on a gross basis. Our primary measure of segment finan
Slide 11: Capital Expenditures Full Year
Capital Expenditures Full Year ($ Millions)
Slide 12: Cash Flow
Cash Flow (1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures (2) Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment (3) Free Cash Flow excludes acquisitions and changes in restricted cash Full Year ($ Milli
Slide 13: Debt to Equity Ratio
Debt to Equity Ratio Note: Includes impact of accumulated net pension related equity charge of $480 million as of 12/31/08 and $148 million as of 12/31/07. (1) Non-GAAP financial measure. Total obligations include the present value of minimum lease payments and guaranteed residual values under opera
Slide 14: Contents
Contents Fourth Quarter 2008 Results Overview Asset Management Update 2009 Forecast Q & A
Slide 15: Asset Management Update
Asset Management Update (1) (1) All information presented on this page only is for the U.S. fleet and excludes Canadian and U.K. operations (units rounded to nearest hundred). (2) Vehicles no longer earning revenue definition revised in 1Q08 to include all units held for sale and all units that have
Slide 16: Contents
Contents Fourth Quarter 2008 Results Overview Asset Management Update 2009 Forecast Q & A
Slide 17: 2009 Overall Environment
2009 Overall Environment Baseline Assumptions Opportunities (+) / Risks (-) No 2009 economic recovery anticipated Continuing very weak economy - - additional contraction - - unfavorable comparisons vs. prior year Deeper economic decline Interest rates remain at current level Long term rates decline
Slide 18: FMS Assumptions
Baseline Assumptions Opportunities (+) / Risks (-) Slowing contractual net sales Further fleet downsizing Additional acquisitions Lower rental demand with additional pricing decline Further price and demand weakening Stable volume of used vehicle sales with lower pricing Inventory levels modestly up
Slide 19: SCS / DCC Assumptions
Baseline Assumptions Opportunities (+) / Risks (-) Lower volumes with existing customers, especially in automotive Potential for further volume declines and automotive plant shutdowns Focus on customer retention and business development Potential for customer contraction and lost business Weak econo
Slide 20: Key Financial Statistics (2009 Forecast)
Key Financial Statistics (1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for 2008 reconciliation. 2009 comparable earnings, comparable earnings before income taxes, and EPS excludes $5.5 million, $7 million, and $0.10 restructuring charges related to 2008
Slide 21: Business Segment Revenue
Business Segment Revenue (1) Includes fuel revenue. (2) Includes full service lease and contract maintenance. (3) Includes subcontracted transportation revenue.
Slide 22: 2009 Causes of EPS Change
(0.50 - 0.60) 0.40 (0.50 - 0.60) (0.25 - 0.35) (0.11) $4.49 (1) (0.69) 0.08 2009 Causes of EPS Change (1) 2008 Comparable EPS is a non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation. 2009 Comparable EPS excludes $0.10 restructuring charges rel
Slide 23: Pension Expense
Pension Expense ($ Millions) Drivers of the Change in 2009 Consolidated Pension Expense
Slide 24: Business Segment Earnings Full Year
Business Segment Earnings Full Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 Forecast Midpoint Segment NBT as % of Operating Revenue 5.9 6.7 6 8.7 9 9 9 9 7.3 Segment NBT as % of Total Revenue 7.3 8.2 7.5 11.2 12.4 12.6 12.5 13.1 9.7 EBIT Fleet Management Solutions Supply Chain Solutions Dedicat
Slide 25: Capital Expenditures
Capital Expenditures Full Service Lease: Capital for lease vehicles is committed after contracts are signed with customers 2009 lease capital expenditures include: Replacement spending of $780 - $855 million Growth spending of $20 million Growth capital represents an investment which results in $8 m
Slide 26: Capital Expenditures, Cash Flow & Leverage
Capital Expenditures, Cash Flow & Leverage Full Year (1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. (2) Free Cash Flow excludes acquisitions. Acquisitions totaled $247 million in full year 2008 and $81 million in 2009 year-to-date. ($ Millions)
Slide 27: EPS Forecast
EPS Forecast (1) Non-GAAP financial measure. Refer to page 43 for 2008 reconciliation. First quarter and full year 2009 comparable EPS excludes $0.03 and $0.10 restructuring charges related to 2008 initiatives. ($ Earnings Per Share) (1) (1)
Slide 28: Summary
Summary Manage through adverse impacts of pension plan performance and cyclical impacts in commercial rental and used vehicle sales Utilize cost management and restructuring opportunities Focus on strong customer retention, new business development and sales/marketing initiatives Continue growth (ex
Slide 29: Q&A
Q&A
Slide 30: Appendix
Appendix Business Segment Detail Central Support Services Balance Sheet Asset Management Financial Indicators Forecast Non-GAAP Financial Measures & Reconciliations
Slide 31: Fleet Management Solutions (FMS) Fourth Quarter
Fleet Management Solutions (FMS) Fourth Quarter ($ Millions) (a) The Company uses operating 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 by fluctuations i
Slide 32: Fleet Management Solutions (FMS) Full Year
Fleet Management Solutions (FMS) Full Year ($ Millions) (a) The Company uses operating 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 by fluctuations in mar
Slide 33: Supply Chain Solutions (SCS) Fourth Quarter
Supply Chain Solutions (SCS) Fourth Quarter (a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the SCS business segment and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating r
Slide 34: Supply Chain Solutions (SCS) Full Year
Supply Chain Solutions (SCS) Full Year (a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the SCS business segment and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenu
Slide 35: Dedicated Contract Carriage (DCC) Fourth Quarter
Dedicated Contract Carriage (DCC) Fourth Quarter (a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the DCC business segment and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operat
Slide 36: Dedicated Contract Carriage (DCC) Full Year
Dedicated Contract Carriage (DCC) Full Year (a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the DCC business segment and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating r
Slide 37: Central Support Services (CSS) Fourth Quarter
Central Support Services (CSS) Fourth Quarter ($ Millions)
Slide 38: Central Support Services (CSS) Full Year
Central Support Services (CSS) Full Year ($ Millions)
Slide 39: Balance Sheet
a Cider (S Mitions) Balance Sheet December 31, December 31, 2008 2007 Cash and Cash Equivalents $ 120 § 116 Other Current Assets 831 4,106 Revenue Earning Equipment, Net 4,565 4,501 Operating Property and Equipment, Net 547 519 Other Assets 627 613 Total Assets $ 6690 $ 6,855 Short-Term Debt/ Curren
Slide 40: Asset Management Update
Asset Management Update (a) (a) U.S. only (b) Excludes early terminations where customer purchases vehicle (b) Redeployments Extensions Early Terminations Early Replacements FY03 4750 4167 4938 967 FY04 4596 3042 5008 1584 FY05 4104 3996 4539 1646 FY06 3572 4360 3839 1890 FY07 4195 4261 4843 1938 FY
Slide 41: Financial Indicators Forecast
Free Cash Flow Total Obligations 3450 2885 2233 1969 1944 2302 2895 2954 3121 2757 Equity 1253 1231 1108 1344 1510 1527 1721 1888 1832 1506 2000 2001 2002 2003 2004 2006 2009 Forecast Midpoint 275% 201% 146% 129% 234% 151% 157% Total Obligations (2) 2005 168% 2007 225% 2008 Financial Indicators Fore
Slide 42: 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 t
Slide 43: EPS and Net Earnings Reconciliation
EPS and Net Earnings Reconciliation ($ Millions or $ Earnings Per Share) Note: Amounts may not recalculate due to rounding.
Slide 44: Tax Rate Reconciliation
Tax Rate Reconciliation Note: NBT represents net before tax earnings Amounts are calculated independently for each component and may not be additive due to rounding.
Slide 45: Adjusted Return on Capital Reconciliation
Adjusted Return on Capital Reconciliation (1) Earnings calculated based on a 12-month rolling period excluding comparable earnings items during the period. (2) Interest expense includes implied interest on off-balance sheet vehicle obligations. (3) Income taxes were calculated using the effective in
Slide 46: Cash Flow Reconciliation
Cash Flow Reconciliation (1) The Company uses total cash generated, a non-GAAP financial measure, because management considers it to be an important measure of comparative operating performance. Management believes total cash generated provides investors with an important measure of total cash inflo
Slide 47: Cash Flow Reconciliation
Cash Flow Reconciliation (1) The Company uses total cash generated, a non-GAAP financial measure, because management considers it to be an important measure of comparative operating performance. Management believes total cash generated provides investors with an important measure of total cash inflo
Slide 48: Debt to Equity Reconciliation
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. (1) The Company uses total obligations and total obligations to equity, non-GAAP financial measure
Slide 49: Debt to Equity Reconciliation
Debt to Equity Reconciliation (1) The Company uses total obligations and total obligations to equity, non-GAAP financial measures, which include certain off-balance sheet financial obligations relating to revenue earning equipment. Management believes these non-GAAP financial measures are useful to
Slide 50: CAyder
CAyder