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Proprietary and Confidential | Robert Sanchez Chairman & CEO RYDER SYSTEM, INC. Jefferies Global Industrials Conference August 13, 2013 1.

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Presentation on theme: "Proprietary and Confidential | Robert Sanchez Chairman & CEO RYDER SYSTEM, INC. Jefferies Global Industrials Conference August 13, 2013 1."— Presentation transcript:

1 Proprietary and Confidential | Robert Sanchez Chairman & CEO RYDER SYSTEM, INC. Jefferies Global Industrials Conference August 13,

2 Proprietary and Confidential | 2 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 market trends impacting our business, future earnings and other financial performance. Accordingly, these forward-looking statements should be evaluated with consideration given to the many risks and uncertainties inherent in our business that could cause actual results and events to differ materially from those in the forward-looking statements. Important factors that could cause such differences include, among others, increases or decreases in market demand in the commercial rental market, lower than expected lease sales, fluctuations in market demand on the sale of used vehicles impacting inventory levels, pricing and our anticipated proportion of retail versus wholesale sales, higher than expected maintenance costs, lower than expected benefits from maintenance initiatives, a slowdown of the economic recovery and decreases in freight demand or volumes, our ability to obtain adequate profit margins for our services, our inability to maintain current pricing levels due to soft economic conditions, uncertainty or decline in economic and market conditions in the U.K., competition from other service providers, customer retention levels, unexpected volume declines, loss of key customers in the Supply Chain Solutions (SCS) business segment, unexpected reserves or write-offs due to the deterioration of the credit worthiness or bankruptcy of customers, changes in customers’ business environments that will limit their ability to commit to long-term vehicle leases, a decrease in credit ratings, increased debt costs, adequacy of accounting estimates, reserves and accruals particularly with respect to pension, taxes, insurance and revenue, sudden or unusual changes in fuel prices, our ability to manage our cost structure, and the risks described in our filings with the Securities and Exchange Commission. The risks included here are not exhaustive. New risks emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risks on our business. Accordingly, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. This presentation includes certain non-GAAP financial measures as defined under SEC rules, including operating revenue, comparable earnings, comparable earnings before income tax, comparable tax rate, adjusted return on capital, total cash generated, free cash flow, total obligations and the ratios based on these financial measures. Refer to Appendix – Non-GAAP Financial Measures for more information about the non-GAAP financial measures contained in this presentation. Additional information as required by Regulation G regarding non-GAAP financial measures can be found in our most recent Form 10-K, Form 10-Q and our Form 8-K filed as of the date of this presentation with the SEC, which are available at Beginning in 2013, comparable earnings and the other financial measures and ratios derived from comparable earnings will exclude non-operating pension costs. For more information on our new calculation method, see the Appendix. Safe Harbor and Non-GAAP Financial Measures

3 Proprietary and Confidential | 3 Ryder Profile Total Revenue (1) $6.3 Billion Comparable Earnings Before Income Tax (1) (2) $320 Million Comparable Earnings (1) (3) $207 Million Assets $8.3 Billion Vehicles Maintained 210,300 Employees 27,700 Full Year 2012 Fleet Management Solutions Supply Chain Solutions (1)These amounts result from continuing operations. (2)Earnings Before Income Tax are $303 million. (3)Net Earnings are $210 million.

4 Proprietary and Confidential |  Comprehensive, preventive maintenance services  Vehicles are owned by our clients or under third-party finance lease contracts 4 Fleet Management Solutions: Product and Services Overview Fleet Management Solutions  Commercial vehicles for short-term customer needs  Used by both lease and non-lease customers Commercial Rental (23% FMS revenue) Contract Maintenance (6% FMS revenue)  Ancillary maintenance work on Ryder or customer owned vehicles not included in base contract  On-demand maintenance for large customer owned fleets Contract-Related Maintenance (6% FMS revenue)  Fuel  Insurance  Safety  Regulatory reporting  Technology Fleet Support Services (2% FMS revenue)  Long-term contractual agreement  Includes vehicle procurement, maintenance services and used vehicle disposition  Comprehensive package of fleet support services available Full Service Lease (63% FMS revenue) Supply Chain Solutions 13,500 Lease/Maintenance Customers (U.S., Canada, U.K.) Note: Revenue percents based on segment operating revenue (excludes fuel).

5 Proprietary and Confidential | Supply Chain Solutions  Strategic consulting & decision support  Solutions engineering  Network modeling & optimization  Total landed cost  Lean Six Sigma Professional Services (4% SCS revenue)  Order fulfillment  Warehouse and distribution center operations  Inbound materials management  Outbound product support  Reverse logistics  Vendor managed inventory  Kitting, packaging & assembly Distribution Management (30% SCS revenue)  Freight procurement & contract management  Shipment planning and execution  Freight brokerage  Freight bill audit and payment  Origin/destination services Transportation Management (9% SCS revenue) Supported by: IT Solutions  Transportation & warehouse management systems  Network optimization tools  Inventory & shipment visibility tools 5 Supply Chain Solutions: Product and Services Overview 600+ Customers (North America & Asia) : Dedicated (57% SCS revenue)  Turnkey transportation service  Drivers  Vehicles  Routing & scheduling  Management & administrative support Note: Revenue percents based on segment operating revenue (excludes subcontracted transportation).

6 Proprietary and Confidential | 6 Market Overview The transportation and logistics markets present significant growth opportunities. Current estimated market sizes are as follows: Note: Vehicle market shown is class 3-8; Supply chain logistics market represents Ryder’s targeted countries within North America and Asia. Sources: Truck Rental and Leasing Association, R.L. Polk, Monitor Group, A.T. Kearney Market SegmentMarket Size Lease and rental market (outsourced) – U.S., Canada, U.K. 0.9 million vehicles Private fleet market (addressable, non-outsourced) – U.S., Canada 4.2 million vehicles Dedicated contract carriage market (outsourced) – U.S. $15 billion Supply chain logistics market (outsourced) – North America and Asia $250 billion

7 Proprietary and Confidential | Increased complexity, cost and regulations create opportunities for Ryder to further penetrate the private fleet and logistics markets 7 Higher equipment costs Increased engine complexity CSA requirements Driver shortages Residual value risks Rising fuel costs Aging fleet Supply chain disruptions EPA emissions standards Macro Trends Support Outsourcing Decision Nearshoring

8 Proprietary and Confidential | 8 Key Financial Statistics June Year-To-Date ($ Millions, Except Per Share Amounts) Note: Amounts throughout presentation may not be additive due to rounding.

9 Proprietary and Confidential | 9 Key Leading Indicators Second quarter results for Ryder’s key leading indicators included: (a)Global power units (b)U.S. power units (c)U.S. Commercial Rental: Utilization (a) 80.5%, up 550 bps from prior year Pricing (a) up 2% from prior year Fleet Count (Average)down 10% from prior year Used Vehicle Pricing: Tractorsdown 1% from prior year; down 3% from 1Q13 Trucksup 2% from prior year; up 1% from 1Q13 Lease: Miles per Unit (b) up 2% from prior year Early Lease Terminations (c) 29% below 6-year average Supply Chain Solutions: Volumesoverall volumes up

10 Proprietary and Confidential | 10 Financial Indicators Forecast (1) (1)Total Obligations to Equity includes acquisitions. Free Cash Flow and Gross Capital Expenditures exclude acquisitions. (2) not restated for operations discontinued in (3)Includes $176 million payment to the IRS related to full resolution of tax period matters. (4)Illustrates impact of accumulated net pension related equity charge on leverage. (5)Forecast issued on 7/23/13 and has not been subsequently confirmed or revised. (6)Represents long term obligations to equity target of % while maintaining a strong investment grade credit rating. Gross Capital Expenditures (2) ($ Millions) $1,289 $600 $725 $1,165 $657 $1,399 $1, Memo: Free Cash Flow (2) $1, $1, $ (208) (3) 380(242) (439) $1,088 (384) 2013 Forecast Midpoint (5) 258 $1,760 Full Service Lease PP&E/Other Commercial Rental $2, (257) 2012 Total Obligations to Equity Pension Impact (4) % 146% 129% 234% 151% 157% 168% 225% 183% 203%201% 270% Long Term Target Midpoint (6) % Forecast Midpoint (5) % 2013 Total Obligations to Equity 243% $1,815 Memo: Balance Sheet Debt to Equity 161%139%140%135%118%143%164%147%213%175%196%257%260%237% (160)

11 Proprietary and Confidential | 11 Adjusted Return on Capital History Adjusted Return on Capital (ROC) Cost of Capital (COC) Return on Equity14.6%15.5%14.2%11.2%4.4%8.4%11.9%14.9%15.2% Adjusted Total Capital (2) $3,846$4,184$4,789$4,841$4,244$4,030$4,588$5,237$5,620 ROC O/(U) COC1.0%1.2%0.8% (2.2)%(1.3)%0.2%0.8%1.1% (1)Forecast provided on 7/23/13 and has not subsequently been confirmed or revised. (2)Adjusted Total Capital represents Adjusted Average Total Capital in millions Forecast (1) 150 bp spread targeted

12 Proprietary and Confidential | Questions & Answers Robert Sanchez Chairman & CEO 12

13 Proprietary and Confidential | Contact Information Bob Brunn VP – Corporate Strategy & Investor Relations Calene Candela Group Director – Investor Relations

14 Proprietary and Confidential | Non-GAAP Financial Measures 14

15 Proprietary and Confidential | ► 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. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. ► Specifically, the following non-GAAP financial measures are included in this presentation: 15 Appendix: Non-GAAP Financial Measures

16 Proprietary and Confidential | 16 Appendix: Non-GAAP Financial Measures ($ Millions or $ Earnings Per Share) (1)The company uses Comparable Earnings and Comparable Earnings per Share (EPS) from Continuing Operations, both non-GAAP financial measures, which provide useful information to investors and allow for better year over year comparison of operating performance because they exclude from Earnings and EPS from Continuing Operations non-operating pension costs, as we consider non-operating pension costs to be those impacted by the financial market performance and outside of the operational performance of the business and can significantly change from year to year. Comparable Earnings and Comparable EPS also exclude other significant items that are not representative of our ongoing business operations and allow for better year over year comparison. Earnings and EPS from Continuing Operations Reconciliation

17 Proprietary and Confidential | 17 Appendix: Non-GAAP Financial Measures ($ Millions or $ Earnings Per Share) (1)The company uses Comparable Earnings Before Income Tax (EBT) and Comparable Tax Rate from Continuing Operations, both non-GAAP financial measures, which provide useful information to investors and allow for better year over year comparison of operating performance because they exclude from EBT and Tax Rate from Continuing Operations non-operating pension costs, as we consider non-operating pension costs to be those impacted by financial market performance and outside of the operational performance of the business and can significantly change from year to year. Comparable Earnings and Comparable EPS also exclude other significant items that are not representative of our ongoing business operations and allow for better year over year comparison. EBT and Tax Rate from Continuing Operations Reconciliation

18 Proprietary and Confidential | 18 Appendix: Non-GAAP Financial Measures ($ Millions) (1)Earnings calculated based on a 12-month rolling period. (2)Interest expense includes interest for on and off-balance sheet vehicle obligations. (3)Income taxes were calculated by excluding taxes related to comparable earnings items and interest expense. (4)The average is calculated based on the average GAAP balances. (5)Represents comparable earnings items for those periods. Adjusted Return on Capital Reconciliation

19 Proprietary and Confidential | 19 Appendix: Non-GAAP Financial Measures ($ Millions) (1)Earnings calculated based on a 12-month rolling period. (2)Interest expense includes interest for on and off-balance sheet vehicle obligations. (3)Income taxes were calculated by excluding taxes related to comparable earnings items and interest expense. (4)The average is calculated based on the average GAAP balances. (5)Represents comparable earnings items for those periods. Adjusted Return on Capital Reconciliation

20 Proprietary and Confidential | Appendix: Non-GAAP Financial Measures ($ Millions) Cash Flow Reconciliation (3) (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) Amounts have not been restated for operations discontinued in

21 Proprietary and Confidential | Cash Flow Reconciliation 21 Appendix: Non-GAAP Financial Measures (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) Amounts have not been restated for operations discontinued in ($ Millions)

22 Proprietary and Confidential | 22 Appendix: Non-GAAP Financial Measures ($ Millions) (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. Cash Flow Reconciliation

23 Proprietary and Confidential | Debt to Equity Reconciliation 23 Appendix: Non-GAAP Financial Measures 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. ($ Millions)

24 Proprietary and Confidential | 24 Debt to Equity Reconciliation ($ Millions) Note: Amounts may not recalculate due to rounding. Appendix: Non-GAAP Financial Measures

25 Proprietary and Confidential |


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