- First Quarter EPS of $0.77, Up 20% on 14% Revenue Increase -
- Full Year EPS Forecast Raised to $3.82 to $3.97 -
MIAMI, April 27 /PRNewswire-FirstCall/ -- Ryder System, Inc. (NYSE: R),
a global leader in transportation and supply chain management solutions,
today reported net earnings of $47.6 million for the three-month period
ended March 31, 2006, up 15% compared with $41.5 million in the same period
of 2005. Earnings per diluted share (EPS) were $0.77 for the first quarter
of 2006, up 20% compared with $0.64 in the year-earlier period. All
business segments reported improved results reflecting better operating
performance and continuing leverage from revenue growth. EPS improvement
also reflects the impact of a stock repurchase program completed in
February of 2006.
Revenue for the first quarter of 2006 was $1.50 billion, up 14% from
$1.32 billion in the comparable period last year with all business segments
reporting revenue growth. Operating revenue (revenue excluding fuel and
subcontracted transportation) in the first quarter of 2006 was $1.06
billion, up 5% compared with $1.01 billion in the year-earlier period.
Fleet Management Solutions (FMS) business segment revenue grew 6% driven by
higher fuel services revenue and full service lease contract growth. Supply
Chain Solutions (SCS) business segment revenue grew 35% in the first
quarter of 2006 driven by increased volume of managed subcontracted
transportation as well as higher volumes and new and expanded business in
all industry groups. Dedicated Contract Carriage (DCC) business segment
revenue increased 8% due to new and expanded business and pricing increases
associated with higher fuel costs.
EPS for the first quarter of 2006 included a one-time recovery of $0.02
associated with the recognition of common stock received from mutual
insurance companies in a prior year. EPS for the year-earlier quarter
included a one-time recovery of $0.02 associated with the reimbursement of
project costs incurred in prior years.
"Our continued focus in the first quarter enabled us to exceed our
forecast and again deliver higher earnings and organic operating revenue
growth in every segment," said Ryder Chairman and Chief Executive Officer
Greg Swienton. "This consistent performance points to the strength and
stability of our largely contract-based business model."
First Quarter Business Segment Operating Results
Ryder's primary measurement of business segment financial performance,
Net Before Tax (NBT), allocates Central Support Services to each business
segment and excludes restructuring items.
Fleet Management Solutions
Ryder's Fleet Management Solutions (FMS) business segment combines
several capabilities into a comprehensive package that provides one-stop
outsourcing of the acquisition, maintenance, management and disposal of
vehicles. Ryder's commercial rental service offers customers a method to
expand their fleets in order to address specific or short-term capacity
needs.
In the FMS business segment, revenue in the first quarter of 2006 was
$981.2 million, up 6% compared with $924.6 million in the year-earlier
period. Fuel services revenue for the first quarter of 2006 increased 22%
compared with the same period in 2005 due primarily to higher fuel pricing
as a result of market cost increases. Operating revenue (revenue excluding
fuel) in the first quarter of 2006 was $699.4 million, up 1% compared with
$693.4 million in the year-earlier period. Full service lease revenue for
the first quarter of 2006 was up 2% from the same period last year due
primarily to growth in the U.S. business. Commercial rental revenue
decreased 2% from the year- earlier period, reflecting an 8% smaller
average fleet partially offset by higher pricing. Contract maintenance and
contract-related maintenance revenue decreased 3% in the first quarter of
2006 compared with the same period last year, due primarily to lower
transactional maintenance services.
The FMS business segment's NBT increased to $74.9 million in the first
quarter of 2006, up 6% compared with $70.9 million in the same period of
2005. This improvement was related primarily to better North American lease
and commercial rental performance and lower maintenance and depreciation
costs. Those results were partially offset by higher interest due to
planned higher debt levels and increased overhead costs, as well as lower
margins in the Company's U.K. operations. First quarter 2005 NBT included a
one-time reimbursement of approximately $2 million in costs related to a
project in prior years. Business segment NBT as a percentage of operating
revenue was 10.7% in the first quarter of 2006, up 50 basis points compared
with 10.2% in the same quarter a year ago.
Supply Chain Solutions
Ryder's Supply Chain Solutions (SCS) business segment enables customers
to improve shareholder value and their customers' satisfaction by enhancing
supply chain performance and reducing costs. The solutions involve
management of the logistics pipeline as a synchronized, integrated process
-- from raw material supply to finished goods distribution. By improving
business processes and employing new technologies, the flow of goods and
cash is made faster and consumes less capital.
In the SCS business segment, first quarter 2006 revenue totaled $469.5
million, up 35% from $346.8 million in the comparable period in 2005.
Revenue grew primarily due to increased volume of managed subcontracted
transportation, as well as higher volumes and new and expanded business in
all industry groups. First quarter 2006 operating revenue (revenue
excluding subcontracted transportation) was $272.4 million, up 14% compared
with $238.1 million in the comparable period a year ago.
The SCS business segment's NBT was $10.7 million in the first quarter
of 2006, up 64% from $6.5 million in the same quarter of 2005. Comparative
business segment earnings benefited from higher volumes (including reduced
automotive plant shutdowns) and new and expanded business in all U.S.
industry groups in 2006. First quarter 2006 NBT for the business segment as
a percentage of operating revenue was 3.9%, compared with 2.7% in the same
quarter of 2005.
Dedicated Contract Carriage
Ryder's Dedicated Contract Carriage (DCC) business segment provides
customers with vehicles, drivers, management, and administrative support,
with the assets committed to a specific customer for a contractual term.
DCC supports customers with both basic and sophisticated logistics and
transportation needs including routing and scheduling, specialized driver
services, and logistical engineering support.
In the DCC business segment, first quarter 2006 revenue totaled $138.7
million, up 8% compared with $128.0 million in the first quarter of 2005.
Operating revenue (revenue excluding subcontracted transportation) in the
first quarter of 2006 was $133.6 million, up 7% compared with $124.8
million in the year-earlier period. Revenue grew due to new and expanded
business and pricing increases associated with higher fuel costs.
The DCC business segment's NBT in the first quarter of 2006 was $8.5
million, up 44% compared with $5.9 million in the first quarter of 2005.
Business segment NBT was positively impacted by new and expanded business,
as well as lower safety costs. Business segment NBT as a percentage of
operating revenue was 6.3% in the first quarter of 2006, compared with 4.7%
in the year- earlier period.
Corporate Financial Information
Central Support Services
Central Support Services (CSS) are overhead costs incurred to support
all business segments and product lines. Substantially all CSS costs are
allocated to the various business segments.
In the first quarter of 2006, CSS costs were $44.6 million, compared
with $49.0 million in the year-earlier period. The first quarter 2006
decrease reflects lower information technology spending from ongoing cost
containment initiatives and the one-time recovery of $1.9 million
associated with the recognition of common stock received from mutual
insurance companies in a prior year.
Capital Expenditures
In Ryder's business, capital expenditures are generally used to
purchase revenue-earning equipment (trucks, tractors, and trailers)
primarily to support the full service lease product line and secondarily to
support the commercial rental product line within Ryder's Fleet Management
Solutions business segment. The level of capital required to support the
full service lease product line varies directly with customer contract
signings for replacement vehicles and growth. These contracts are long-term
agreements that result in predictable revenues and cash flows to Ryder
typically over a three- to ten-year term. The commercial rental product
line utilizes capital for the purchase of vehicles to replenish and expand
the Company's fleet available for shorter-term use by contractual or
occasional customers.
Capital expenditures excluding acquisition costs were $368.9 million
for the first quarter of 2006, compared with $506.4 million in the same
period of 2005. Net capital expenditures (including proceeds from sale of
used vehicles) were $279.9 million for the first quarter of 2006, down from
$428.0 million in the year-earlier period. The decrease in capital
expenditures reflects the timing of the delivery of new rental vehicle
orders in 2005, which occurred earlier than in the current year, and was
partially offset by increased lease vehicle spending for replacement and
expansion of customer fleets. The Company anticipates full-year 2006
capital expenditures to be approximately $1.6 billion, up from $1.4 billion
in 2005, in order to support the planned replacement and expansion of
vehicles assigned to long- term lease customers. Net capital expenditures
for the full-year 2006 are expected to be approximately $1.2 billion, up
from $1.1 billion in 2005.
Free Cash Flow and Leverage
Free cash flow in the first quarter of 2006 was negative $107.8 million
and improved on a comparative basis from negative $381.8 million for the
year- earlier period, primarily due to lower capital spending and lower
income tax payments as the year-earlier period included a $176 million
payment related to the 1998 to 2000 tax years. Balance sheet debt as of
March 31, 2006 increased by $113.4 million compared with year-end 2005,
primarily due to negative free cash flow, and stock repurchases of $66
million under a $175 million share repurchase program completed in February
2006. The leverage ratio for balance sheet debt as of March 31, 2006 was
151%, compared with 143% at year-end 2005. Total obligations to equity as
of March 31, 2006 were 159%, up from 151% at year-end 2005. The Company's
long-term target range for total obligations to equity is 250% to 300%,
which largely reflects the liquidity of the Company's vehicle portfolio and
the substantial revenue component that is supported by long-term customer
contracts related to those assets.
Outlook
Commenting on Ryder's outlook, Mr. Swienton said, "Our sales and
operations professionals helped Ryder deliver better than expected revenue
and earnings for the first quarter and increased our momentum for
delivering profitable revenue growth in all business segments in 2006."
He continued, "We are increasing our full-year 2006 forecast by $0.07
to a range of $3.82 to $3.97 per share. We are forecasting second quarter
EPS to be in the range of $0.95 to $1.00." Last year, in the second
quarter, the Company earned $0.86 per share, excluding a $0.12 income tax
benefit related to a change in Ohio income tax law.
About Ryder
Ryder provides leading-edge transportation, logistics and supply chain
management solutions worldwide. Ryder's product offerings range from full
service leasing, commercial rental and programmed maintenance of vehicles
to integrated services such as dedicated contract carriage and carrier
management. Additionally, Ryder offers comprehensive supply chain
solutions, consulting, lead logistics management services and e-Business
solutions that support customers' entire supply chains, from inbound raw
materials and parts through distribution and delivery of finished goods.
Ryder serves customer needs throughout North America, Latin America, Europe
and Asia.
The National Safety Council selected Ryder as the first transportation
company to receive the Green Cross for Safety Medal -- its highest honor --
for exemplary commitment to workplace safety and corporate citizenship. For
the eighth consecutive year, Ryder has been named a top five third-party
logistics provider by Inbound Logistics.
Ryder's stock is a component of the Dow Jones Transportation Average
and the Standard & Poor's 500 Index. Ryder ranks 375th on the Fortune 500
and 1,433rd on the Forbes Global 2000.
For more information on Ryder System, Inc., visit http://www.ryder.com .
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.
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, our ability to obtain
adequate profit margins for our services, our inability to maintain current
pricing levels due to customer acceptance or competition, customer
retention levels, unexpected volume declines, loss of key customers in the
Supply Chain Solutions (SCS) business segment, our failure to successfully
implement new growth initiatives in our FMS business segment, unexpected
reserves or write-offs due to the deterioration of the credit worthiness or
bankruptcy of certain customers in our SCS business segment, changes in
financial, tax or regulatory requirements or changes in customers' business
environments that will limit their ability to commit to long-term vehicle
leases, changes in market conditions affecting the commercial rental market
or the sale of used vehicles, labor strikes or work stoppages affecting our
or our customers' business operations, adequacy of accounting estimates and
accruals, changes in general economic conditions, sudden changes in fuel
prices, availability of qualified drivers, our ability to manage our cost
structure, changes in government regulations including regulations
regarding vehicle emissions 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.
Note Regarding Non-GAAP Financial Measures: This news release and the
attached financial schedules include certain non-GAAP financial measures as
defined under SEC rules. We have denoted each non-GAAP financial measure in
the attached financial schedules and have provided a reconciliation of each
such measure to the most comparable GAAP measure. Additional information
regarding non-GAAP financial measures can be found in our investor
presentation for the quarter and in our reports filed with the SEC, which
are available in the investors area of our website at http://www.ryder.com .
Conference Call and Webcast Information:
Ryder's earnings conference call and webcast is scheduled for Thursday,
April 27, 2006, from 11:00 a.m. to 12:00 noon Eastern Time. Speakers will
be Chairman and Chief Executive Officer Greg Swienton and Executive Vice
President and Chief Financial Officer Mark Jamieson.
To join the conference call live: Begin 10 minutes prior to the
conference by dialing the audio phone number 1-888-398-5319 (outside U.S.
dial 1-773-681-5795) using the Passcode: RYDER and Conference Leader: Bob
Brunn. Then, access the presentation via the Net Conference website at
http://www.mymeetings.com/nc/join/ using the Conference Number: RH7588753 and
Passcode: RYDER.
To access audio replays of the conference and view a presentation of
Ryder's earnings results: Dial 1-888-566-0619 (outside U.S. dial
1-402-998-0719) and use the Passcode: 4427, then view the presentation by
visiting the Investors area of Ryder's website at http://www.ryder.com .
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS - UNAUDITED
Periods ended March 31, 2006 and 2005
(In millions, except per share amounts)
Three Months
2006 2005
Revenue $1,496.3 1,315.6
Operating expense 661.3 610.4
Salaries and employee-related costs 337.5 307.6
Subcontracted transportation 202.2 111.9
Depreciation expense 178.2 181.4
Gains on vehicle sales, net (12.8) (12.8)
Equipment rental 24.9 27.3
Interest expense 31.4 27.0
Miscellaneous income, net (5.4) (4.3)
Restructuring and other recoveries,
net (0.2) (0.1)
1,417.1 1,248.4
Earnings before income taxes 79.2 67.2
Provision for income taxes (31.6) (25.7)
Net earnings $47.6 41.5
Earnings per common share - Diluted:
Net earnings $0.77 0.64
Weighted-average shares outstanding -
Diluted 61.4 65.1
Note: Certain prior period amounts have been reclassified to conform to
current year presentation.
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS - UNAUDITED
PRELIMINARY AND SUBJECT TO RECLASSIFICATION
(Dollars in millions)
March 31, December 31,
2006 2005
Assets:
Cash and cash equivalents $75.6 128.7
Other current assets 1,080.9 1,035.1
Revenue earning equipment, net 3,909.1 3,794.4
Operating property and equipment, net 487.1 486.8
Other assets 572.6 588.3
$6,125.3 6,033.3
Liabilities and shareholders'
equity:
Short-term debt / Current portion
of long-term debt $263.0 269.4
Other current liabilities 951.3 984.0
Long-term debt 2,035.8 1,916.0
Other non-current liabilities
(including deferred income taxes) 1,351.6 1,336.4
Shareholders' equity 1,523.6 1,527.5
$6,125.3 6,033.3
SELECTED KEY RATIOS
March 31, December 31,
2006 2005
Debt to equity 151% 143%
Total obligations to equity (a) * 159% 151%
Twelve months ended March 31,
2006 2005
Return on average shareholders'
equity (b) 15.0% 15.3%
Return on average assets (b) 3.9% 4.0%
Return on capital* 7.9% 7.7%
(a) Total obligations represent debt plus off-balance sheet equipment
obligations.
(b) Includes discontinued operations and the effect of accounting
changes.
* Non-GAAP financial measure; see reconciliation to closest GAAP
financial measure included within this release.
Note: Certain prior period amounts have been reclassified to conform to
current year presentation.
RYDER SYSTEM, INC. AND SUBSIDIARIES
BUSINESS SEGMENT REVENUE AND EARNINGS - UNAUDITED
Periods ended March 31, 2006 and 2005
(Dollars in millions)
Three Months
2006 2005 B(W)
Revenue:
Fleet Management Solutions:
Full service lease $451.4 $441.7 2.2%
Contract maintenance 32.7 33.4 (2.0%)
Contract-related maintenance 47.3 49.0 (3.6%)
Commercial rental 149.9 152.7 (1.8%)
Other 18.1 16.6 9.3%
Fuel 281.8 231.2 21.8%
Total Fleet Management Solutions 981.2 924.6 6.1%
Supply Chain Solutions 469.5 346.8 35.4%
Dedicated Contract Carriage 138.7 128.0 8.4%
Eliminations (93.1) (83.8) (11.0%)
Total revenue $1,496.3 1,315.6 13.7%
Business segment earnings:
Earnings before income taxes:
Fleet Management Solutions $74.9 70.9 5.7%
Supply Chain Solutions 10.7 6.5 63.8%
Dedicated Contract Carriage 8.5 5.9 43.7%
Eliminations (7.9) (7.6) (3.2%)
86.2 75.7 13.9%
Unallocated Central Support Services (7.2) (8.6) 16.0%
Earnings before restructuring and
other recoveries, net and income
taxes 79.0 67.1 17.7%
Restructuring and other recoveries,
net 0.2 0.1 137.3%
Earnings before income taxes 79.2 67.2 17.8%
Provision for income taxes (31.6) (25.7) (22.9%)
Net earnings $47.6 41.5 14.7%
Note: Certain prior period amounts have been reclassified to conform to
current year presentation.
Amounts may not recalculate due to rounding.
RYDER SYSTEM, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION - UNAUDITED
Periods ended March 31, 2006 and 2005
(Dollars in millions)
Three Months
2006 2005 B(W)
Fleet Management Solutions
Total revenue $981.2 924.6 6.1%
Fuel revenue (281.8) (231.2) 21.8%
Operating revenue * $699.4 693.4 0.9%
Segment earnings before income taxes $74.9 70.9 5.7%
Earnings before income taxes as % of
total revenue 7.6% 7.7%
Earnings before income taxes as % of
operating revenue * 10.7% 10.2%
Supply Chain Solutions
Total revenue $469.5 346.8 35.4%
Subcontracted transportation (197.1) (108.7) 81.3%
Operating revenue * $272.4 238.1 14.4%
Segment earnings before income taxes $10.7 6.5 63.8%
Earnings before income taxes as % of
total revenue 2.3% 1.9%
Earnings before income taxes as % of
operating revenue * 3.9% 2.7%
Memo: Fuel costs $24.9 20.2 (23.1%)
Dedicated Contract Carriage
Total revenue $138.7 128.0 8.4%
Subcontracted transportation (5.1) (3.2) 60.4%
Operating revenue * $133.6 124.8 7.0%
Segment earnings before income taxes $8.5 5.9 43.7%
Earnings before income taxes as % of
total revenue 6.1% 4.6%
Earnings before income taxes as % of
operating revenue * 6.3% 4.7%
Memo: Fuel costs $25.0 20.6 (21.4%)
* Non-GAAP financial measure
Note: Certain prior period amounts have been reclassified to conform to
current year presentation.
Amounts may not recalculate due to rounding.
RYDER SYSTEM, INC. AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURE RECONCILIATIONS - PRELIMINARY AND UNAUDITED
(In millions, except per share amounts)
FREE CASH FLOW RECONCILIATION Three months ended March 31
2006 2005
Net cash provided by (used in)
operating activities $117.2 (22.6)
Net cash used in investing
activities (225.0) (359.2)
Free cash flow * $(107.8) (381.8)
DEBT TO EQUITY RECONCILIATION March 31, % to December 31, % to
2006 Equity 2005 Equity
On-balance sheet debt $2,298.8 151% $2,185.4 143%
Off-balance sheet debt - PV of
minimum lease payments and
guaranteed residual values
under operating leases for
vehicles (a) 117.1 117.0
Total obligations * $2,415.9 159% $2,302.4 151%
RETURN ON CAPITAL RECONCILIATION
Reconciliation of Return On
Capital (ROC) to the GAAP
measure net earnings is as
follows:
Twelve months ended March 31
2006 2005
Net earnings * (12-month
rolling period) $233.0 $222.1
- Discontinued operations (1.7) --
+ Cumulative effect of
changes in accounting
principles 2.4 --
+ Income taxes 135.3 120.2
Adjusted earnings
before income taxes 369.0 342.3
- Restructuring - gain on
sale of headquarters -- (23.4)
+ Adjusted interest expense (b) 131.5 109.2
- Adjusted income taxes (c) (194.0) (162.0)
= Adjusted net earnings for
ROC (numerator) $306.5 $266.1
Average total debt $2,214.8 $1,847.3
+ Average off-balance sheet
debt 136.8 157.2
+ Average adjusted total
shareholders' equity (d) 1,551.9 1,450.4
= Adjusted average total
capital (denominator) $3,903.5 $3,454.9
Adjusted ROC 7.9% 7.7%
EPS RECONCILIATION Three months
ended June 30
2005
Earnings per share $0.98
Less: Tax change 0.12
Earnings per share excluding tax
change * $0.86
Notes:
(a)Discounted at the incremental borrowing rate at lease inception.
(b)Interest expense includes implied interest on off-balance sheet vehicle
obligations.
(c)Income taxes was calculated using the effective income tax rate for the
period exclusive of Ohio tax benefit recognized June 2005.
(d)Represents shareholders' equity adjusted for discontinued operations,
accounting changes and Ohio tax benefit in those periods.
*Non-GAAP financial measure
Earnings per share amounts are calculated independently for each
component and may not be additive due to rounding.
Certain prior period amounts have been reclassified to conform to
current year presentation.
SOURCE Ryder System, Inc.
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Audio:http://www.mymeetings.com/nc/join
Related links:
http://www.ryder.com
CONTACT:
Media, David Bruce, +1-305-500-4999, or
investors, Bob Brunn, +1-305-500-4053, both of Ryder System
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