- First Quarter Net Earnings of $41.5 Million, Up 18% on 9% Revenue Increase -
- Full Year EPS Forecast Raised to $3.30 to $3.40 -
MIAMI, April 28 /PRNewswire-FirstCall/ -- Ryder System, Inc. (NYSE: R), a
global leader in transportation and supply chain management solutions, today
reported net earnings of $41.5 million for the three-month period ended March
31, 2005, up 18% compared with $35.0 million in the same period of 2004.
Earnings per diluted share (EPS) were $0.64 for the first quarter of 2005, up
21% compared with $0.53 in the year-earlier period. Improved performance was
driven primarily by continuing leverage from revenue growth and improved
vehicle sales in the Fleet Management Solutions (FMS) business segment.
Revenue for the first quarter of 2005 was $1.3 billion, up 9% from
$1.2 billion in the comparable period last year. The revenue increase for the
quarter was led primarily by the FMS business segment reflecting higher fuel
revenue due to higher fuel prices, the impact of acquisitions, continued
growth in the rental product line and favorable foreign exchange rates.
Commercial rental revenue for the quarter increased 12% compared with the
year-earlier period. Revenue in the Supply Chain Solutions (SCS) business
segment in the first quarter of 2005 increased by 8% compared with the year-
earlier period. The SCS revenue increase was driven by new and expanded
business in all U.S. industry groups, favorable exchange rates and pricing
increases associated with higher fuel costs.
EPS for the first quarter of 2005 included a one-time recovery of $0.02
associated with the reimbursement of project costs incurred in prior years.
Net earnings in the year-earlier period included a $0.01 credit from the gain
on sale of a portion of the Company's headquarters complex.
"We exceeded our first quarter forecast by delivering 18% higher earnings
on a 9% revenue increase and a 4% operating revenue increase," said Ryder
Chairman, President and Chief Executive Officer Greg Swienton. "This
demonstrates solid progress in our commitment to grow operating revenue in all
business segments. We remain focused on improving our cost of delivering
products and competing for profitable business to further leverage our
operating 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.
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 2005 was
$924.6 million, up 10% compared with $841.5 million in the year-earlier
period. Operating revenue (revenue excluding fuel) in the first quarter of
2005 was $693.4 million, up 5% compared with $663.1 million in the year-
earlier period. Fuel revenue for the first quarter of 2005 increased 30%
compared with the same period in 2004 due primarily to higher fuel pricing as
a result of market cost increases. Revenue comparisons also benefited from
acquisitions and favorable foreign currency exchange rates.
Full service lease revenue for the first quarter of 2005 was 3% higher
than the same period last year due primarily to the impact of the acquisition
completed on March 1, 2004. Ryder's first quarter 2005 commercial rental
revenue grew 12% from the year-earlier period, reflecting increased activity
levels and higher pricing. Contract-related maintenance revenue, which
generally represents ancillary services supporting core product lines,
increased 10% in the first quarter of 2005 compared with the same period last
year due primarily to the implementation of initiatives aimed at growing these
types of services.
The FMS business segment's NBT increased to $70.9 million in the first
quarter of 2005, up 28% compared with $55.4 million in the same period of
2004. This improvement was related primarily to higher vehicle sales gains
resulting from stronger volume and pricing, improved commercial rental
results, and lease growth from acquisitions. First quarter 2005 NBT benefited
from the 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 10.2% in the first quarter of 2005, up 180 basis points
compared with 8.4% 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 2005 revenue totaled $346.8
million, up 8% from $321.1 million in the comparable period in 2004. Revenue
increased because of new and expanded business in all U.S. industry groups,
favorable exchange rates and pricing increases associated with higher fuel
costs. First quarter 2005 operating revenue (revenue excluding freight under
management) was $237.4 million, up 3% compared with $231.4 million in the
comparable period a year ago.
The SCS business segment's NBT was $6.5 million in the first quarter 2005,
down 10% from $7.2 million in the same quarter of 2004. Business segment
earnings benefited from new and expanded business in all U.S. industry groups,
but were more than offset by lower margins from certain automotive accounts
including the impact of plant shutdowns and launch costs associated with new
business. First quarter 2005 NBT for the entire business segment as a
percentage of operating revenue was 2.7%, compared with 3.1% in the same
quarter of 2004.
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 2005 revenue totaled $128.0
million, up 1% compared with $126.4 million in the first quarter of 2004.
Operating revenue (revenue excluding freight under management) in the first
quarter of 2005 was flat at $124.8 million, compared with $125.0 million in
the year-earlier period. Reported revenue includes pricing increases
associated with higher fuel costs, which more than offset the non-renewal of
certain customer contracts.
The DCC business segment's NBT in the first quarter of 2005 was $5.9
million, down 13% compared with $6.8 million in the first quarter of 2004.
Business segment NBT was impacted by investments made to expand the Company's
logistics engineering capabilities and the non-renewal of certain customer
contracts. Business segment NBT as a percentage of operating revenue was 4.7%
in the first quarter of 2005, compared with 5.4% 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 2005, CSS costs were $50.9 million, compared with
$48.3 million in the year-earlier period. The first quarter 2005 increase was
due to technology initiatives and costs related to the relocation to the
Company's smaller headquarters building.
Capital Expenditures
Capital expenditures were $506 million for the first quarter of 2005,
compared with $272 million in the same period of 2004. Net capital
expenditures were $427 million for the first quarter of 2005, up from $207
million in the year-earlier period. The increase in capital expenditures
reflects the timing of the delivery of new rental vehicle orders in 2005,
which occurred earlier than in the previous year, as well as increased lease
vehicle spending for replacement and expansion of customer fleets.
Leverage and Free Cash Flow
Balance sheet debt as of March 31, 2005 increased by $382 million compared
with year-end 2004, primarily due to the funding requirements associated with
higher capital spending and income tax payments, which included a $176 million
payment related to the previously disclosed resolution of the 1998 to 2000
federal tax audit. The leverage ratio for balance sheet debt as of March 31,
2005 was 142%, compared with 118% at year-end 2004. Total obligations to
equity as of March 31, 2005 were 152%, up from 129% at year-end 2004. Free
cash flow in the first quarter of 2005 was negative $383 million compared with
negative $3 million for the year-earlier period.
Commenting on the Company's corporate financial performance, Ryder
Executive Vice President and Chief Financial Officer Tracy Leinbach stated,
"We have established a solid financial position to build on for the future.
Our substantial leasing business is capable of supporting higher levels of
leverage and we have ample capacity for future growth in all business
segments. The recent upgrade of Ryder's credit rating is another reflection of
the continuing confidence in our financial strength."
Outlook
Commenting on Ryder's outlook, Mr. Swienton said, "We have a Company-wide
focus on retention, sales and growth to increase revenue and profitability.
Our better than expected first quarter gives our team positive momentum for
delivering profitable revenue growth in all business segments in 2005."
He continued, "We are increasing our full-year 2005 forecast by $0.10 to a
range of $3.30 to $3.40 per share. We are forecasting second quarter EPS to
be in the range of $0.83 to $0.86." Last year, in the second quarter, the
Company earned $0.76 per share, excluding a $0.21 gain from the sale of the
Company's corporate headquarters facility.
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, in Latin America, Europe and Asia.
The National Safety Council selected Ryder to receive the 2002 Green Cross
for Safety Medal -- its highest honor -- for exemplary commitment to workplace
safety and corporate citizenship. For the ninth consecutive year, Ryder was
featured in the 2004 Fortune Most Admired Companies survey of corporate
reputations. InternetWeek named Ryder as one of the top 100 U.S. companies
for effectiveness in using the Internet to achieve tangible business benefits.
For the seventh consecutive year, Ryder has been named a top three 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. With 2004 revenue of more than $5 billion,
Ryder ranks 381st on the Fortune 500.
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 segment,
the possibility that changes in customers' business environments 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, increased competition from vehicle manufacturers and large service
providers, higher borrowing costs and possible decreases in available funding
sources caused by adverse changes in debt ratings, changes in accounting
assumptions, adequacy of accounting accruals, changes in general economic
conditions, availability of heavy- and medium-duty vehicles, increases in fuel
prices, availability of qualified drivers, the Company's ability to create
operating synergies in connection with its acquisitions, our ability to manage
our cost structure and changes in government regulations, including
regulations regarding vehicle emissions, drivers' hours of service and
security regulations issued by the Department of Homeland Security. 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 the Company's business. Accordingly, the Company
undertakes 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 webcast is scheduled for Thursday, April 28, 2005, from
11:00 a.m. to 12:00 noon Eastern Time. Speakers will be Chairman, President
and Chief Executive Officer Greg Swienton and Executive Vice President and
Chief Financial Officer Tracy Leinbach.
* 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: RG5470018 and
Passcode: RYDER.
* To access audio replays of the conference and view a presentation of
Ryder's earnings results: Dial 1-800-645-7398 (outside U.S. dial
1-402-220-0249) and use the Passcode: 4285, 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, 2005 and 2004
(In millions, except per share amounts)
Three Months
2005 2004
Revenue $1,315.6 1,212.3
Operating expense 610.5 542.8
Salaries and employee-related costs 307.6 307.0
Freight under management expense 112.6 91.1
Depreciation expense 181.4 175.0
Gains on vehicle sales, net (12.8) (6.7)
Equipment rental 27.3 25.7
Interest expense 27.0 24.4
Miscellaneous income, net (5.1) (1.9)
Restructuring and other recoveries,
net (0.1) (1.1)
1,248.4 1,156.3
Earnings before income taxes 67.2 56.0
Provision for income taxes 25.7 21.0
Net earnings $41.5 35.0
Earnings per common share - Diluted:
Net earnings $0.64 0.53
Weighted-average shares outstanding -
Diluted 65.1 66.1
Memo: EPS Impact of restructuring
and other recoveries, net $ -- 0.01
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in millions)
(unaudited)
March 31, December 31,
2005 2004
Assets:
Cash and cash equivalents $84.2 101.0
Other current assets 1,078.7 1,126.7
Revenue earning equipment, net 3,552.1 3,331.7
Operating property and equipment,
net 484.8 479.6
Other assets 597.3 598.9
$5,797.1 5,637.9
Liabilities and shareholders'
equity:
Current liabilities (including
current portion of long-term debt) $1,265.8 1,454.8
Long-term debt 1,743.0 1,393.7
Other non-current liabilities
(including deferred income taxes) 1,262.1 1,279.2
Shareholders' equity 1,526.2 1,510.2
$5,797.1 5,637.9
SELECTED KEY RATIOS
March 31, December 31,
2005 2004
Debt to equity 142% 118%
Total obligations to equity (a) * 152% 129%
Twelve months ended March 31,
2005 2004
Return on average shareholders'
equity (b) 15.3% 11.7%
Return on average assets (b) 4.0% 2.9%
Average asset turnover 94.8% 94.2%
Return on capital* 7.8% 6.8%
(a) Total obligations represent debt plus off-balance sheet equipment
obligations.
(b) Includes the effect of accounting changes.
* Non-GAAP financial measure; see reconciliation to closest GAAP
financial measure included within this release.
RYDER SYSTEM, INC. AND SUBSIDIARIES
BUSINESS SEGMENT REVENUE AND EARNINGS - UNAUDITED
Periods ended March 31, 2005 and 2004
(Dollars in millions)
Three Months
2005 2004 B(W)
Revenue:
Fleet Management Solutions:
Full service lease $441.7 429.8 2.8%
Contract maintenance 33.4 33.3 0.2%
Contract-related maintenance 49.0 44.5 10.3%
Commercial rental 152.7 135.9 12.3%
Other 16.5 19.6 (15.8%)
Fuel 231.3 178.4 29.7%
Total Fleet Management Solutions 924.6 841.5 9.9%
Supply Chain Solutions 346.8 321.1 8.0%
Dedicated Contract Carriage 128.0 126.4 1.3%
Eliminations (83.8) (76.7) (9.2%)
Total revenue $1,315.6 1,212.3 8.5%
Business segment earnings:
Earnings before income taxes:
Fleet Management Solutions $70.9 55.4 27.8%
Supply Chain Solutions 6.5 7.2 (9.8%)
Dedicated Contract Carriage 5.9 6.8 (12.9%)
Eliminations (7.6) (7.3) (3.4%)
75.7 62.1 21.9%
Unallocated Central Support Services (8.6) (7.2) (19.6%)
Earnings before restructuring and
other recoveries, net and income
taxes 67.1 54.9 22.2%
Restructuring and other recoveries,
net 0.1 1.1 (94.0%)
Earnings before income taxes 67.2 56.0 19.9%
Provision for income taxes 25.7 21.0 (22.5%)
Net earnings $41.5 35.0 18.4%
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, 2005 and 2004
(Dollars in millions)
Three Months
2005 2004 B(W)
Fleet Management Solutions
Total revenue $924.6 841.5 9.9%
Fuel revenue (231.3) (178.4) 29.7%
Operating revenue * $693.3 663.1 4.6%
Segment net before tax earnings $70.9 55.4 27.8%
Earnings before income taxes as % of
total revenue 7.7% 6.6%
Earnings before income taxes as % of
operating revenue * 10.2% 8.4%
Supply Chain Solutions
Total revenue $346.8 321.1 8.0%
Freight Under Management (FUM)
expense (109.4) (89.7) 21.9%
Operating revenue * $237.4 231.4 2.6%
Segment net before tax earnings $6.5 7.2 (9.8%)
Earnings before income taxes as % of
total revenue 1.9% 2.2%
Earnings before income taxes as % of
operating revenue * 2.7% 3.1%
Dedicated Contract Carriage
Total revenue $128.0 126.4 1.3%
Freight Under Management (FUM)
expense (3.2) (1.4) 135.5%
Operating revenue * $124.8 125.0 (0.2%)
Segment net before tax earnings $5.9 6.8 (12.9%)
Earnings before income taxes as % of
total revenue 4.6% 5.3%
Earnings before income taxes as % of
operating revenue * 4.7% 5.4%
* 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 - UNAUDITED
Periods ended March 31, 2005 and 2004
(In millions, except per share amounts)
FREE CASH FLOW RECONCILIATION
Three Months
2005 2004
Net cash (used in) provided by
operating activities $(21.5) 196.1
Net cash used in investing
activities (361.2) (199.5)
Free cash flow * $(382.7) (3.4)
DEBT TO EQUITY RECONCILIATION
March 31, % to December 31, % to
2005 Equity 2004 Equity
On-balance sheet debt $2,165.3 142% $1,783.2 118%
PV of minimum lease payments
and guaranteed residual values
under operating leases for
vehicles (a) 161.3 161.1
Total obligations * $2,326.6 152% $1,944.3 129%
NET EARNINGS AND EPS RECONCILIATION
Three Months 2004
Earnings EPS
Net Earnings $35.0 0.53
Less: Gain on Sale of
Headquarters, Net of Tax 0.6 0.01
Net Earnings Excluding
Headquarters Complex Sale* $34.4 0.52
RETURN ON CAPITAL RECONCILIATION
Twelve months ended March 31, 2005 2004
Earnings before cumulative effect
of changes in accounting
principles [as reported] (b) $222.1 149.7
Restructuring (recoveries), net (16.6) (1.1)
Income taxes 120.2 86.2
Earnings before net restructuring
(recoveries), income taxes and
accounting changes 325.7 234.8
Interest expense 102.6 98.6
Implied interest expense from
off-balance sheet debt 6.6 16.7
Adjusted earnings before income
taxes 434.9 350.1
Adjusted income taxes (164.6) (127.9)
Adjusted net earnings* (b) $270.3 $222.2
Average total debt $1,847.3 1,691.1
Average shareholders' equity 1,450.4 1,255.5
Total capital [as reported] 3,297.7 2,946.6
Average off-balance sheet debt 157.2 318.3
Adjusted total capital * $3,454.9 $3,264.9
Return on capital [as reported] 6.7% 5.1%
Return on capital * 7.8% 6.8%
(a) Discounted at the incremental borrowing rate at lease inception.
(b) Adjusted earnings calculated based on a 12-month rolling period.
* Non-GAAP financial measure
SOURCE Ryder System, Inc.
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Related links:
http://www.ryder.com
Audio:http://www.mymeetings.com/nc/join
CONTACT:
Media, David Bruce, +1-305-500-4999, or
Investor Relations, Bob Brunn, +1-305-500-4053, both of Ryder
System, Inc.
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