Market Overview

Ryder Reports First Quarter 2017 Results

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Ryder System, Inc. (NYSE:R), a leader in commercial fleet
management
, dedicated
transportation
, and supply
chain
solutions, today reported first quarter earnings and revenue.
Results for the three months ended March 31 were as follows:

       
(dollars in millions, except EPS) Earnings Before Taxes Earnings Diluted Earnings Per Share
2017   2016   Change 2017   2016   Change 2017   2016   Change
GAAP $ 60.0   88.7   (32)% $ 38.3   56.2   (32)% $ 0.71   1.05   (32)%
Non-operating pension costs 7.2 6.9 4.2 4.0 0.08 0.07
Operating tax adjustment 2.2           1.7           0.03          
Comparable (non-GAAP) $ 69.4     95.6     (27)% $ 44.2     60.1     (27)% $ 0.82     1.12     (27)%
 

The Company reported record first quarter total revenue and operating
revenue (a non-GAAP measure excluding all fuel and subcontracted
transportation). Total revenue increased due to higher operating revenue
and subcontracted transportation, reflecting new business and higher
volumes. Total revenue also grew due to higher fuel costs passed through
to customers, partially offset by negative impacts from foreign
exchange. Operating revenue increased due to higher contractual
ChoiceLease (lease) revenue and higher revenue in the supply chain
solutions and dedicated transportation business segments, partially
offset by lower transactional rental revenue and negative impacts from
foreign exchange. Total revenue and operating revenue for the three
months ended March 31 were as follows:

     
(in millions) Total Revenue Operating Revenue (non-GAAP)
2017   2016   % Change  

% Change
excl. FX
(non-
GAAP)

2017   2016   % Change  

% Change
excl. FX

Total $ 1,748.2   1,629.7   7% 8% $ 1,445.1   1,406.0   3%   4%
FMS $ 1,132.5 1,097.9 3% 4% $ 962.2 962.3 —% 1%
DTS $ 266.7 244.8 9% 9% $ 193.4 190.3 2% 2%
SCS $ 462.7 388.7 19% 20% $ 361.8 322.4 12% 13%
 

Commenting on the Company's first quarter results, Ryder Chairman and
CEO Robert Sanchez said, "Ryder's results came in at the bottom end of
our forecast range, driven by weaker than expected rental demand, which
is consistent with the soft freight environment. In addition, used
vehicle sales results were slightly below plan, due to modestly lower
pricing. Although our transactional business results were below
expectations, the solid growth in the contractual parts of our business
reflects ongoing secular trends favoring outsourcing, with 45% of our
growth now coming from customers who are outsourcing for the first time.
Supply Chain Solutions outperformed our expectations, showing solid
revenue and earnings growth, driven primarily by new business. Ryder's
financial position remains strong, as we delivered positive free cash
flow, and leverage is near the midpoint of our target range."

First Quarter Business Segment Operating Results

Fleet Management Solutions

In the Fleet Management Solutions (FMS) business segment, total revenue
was $1.13 billion, up 3% compared with $1.10 billion in the year-earlier
period. FMS operating revenue (a non-GAAP measure excluding fuel) was
$962 million, consistent with the year-earlier period. Lease revenue
increased 5% reflecting a larger average fleet size and higher prices on
replacement vehicles. The lease fleet (excluding U.K. trailers)
increased by 1,700 vehicles year-to-date, partly due to a higher number
of vehicles being prepared for sale. Adjusting for these units, the
lease fleet grew by 1,200 vehicles year-to-date. Commercial
rental
revenue decreased by 15% from the year-earlier period due to
lower demand.

FMS earnings before tax were $52.1 million, down 37% compared with $83.3
million in the same period of 2016. Decreased earnings reflect lower
used vehicle sales results and commercial rental performance. Results
benefited from lower overheads and improved results in lease and
SelectCare (maintenance), partially offset by $9 million of accelerated
depreciation on vehicles and higher maintenance costs on an older fleet.
Commercial rental performance declined due to lower demand. Rental power
fleet utilization was 67.2% for the first quarter, down from 70.4% in
the year-earlier period. Used
vehicle
results declined primarily due to a lower market pricing
environment. FMS earnings before tax as a percentage of FMS total
revenue and FMS operating revenue (a non-GAAP measure) were 4.6% and
5.4%, respectively, down 300 and 330 basis points, primarily reflecting
lower used vehicle sales and commercial rental results.

Dedicated Transportation Solutions

In the Dedicated Transportation Solutions (DTS) business segment, total
revenue was up 9% to $267 million and DTS operating revenue (a non-GAAP
measure excluding fuel and subcontracted transportation) was up 2% to
$193 million compared with the year-earlier period. DTS total revenue
growth reflects higher operating revenue and increased subcontracted
transportation resulting from new business, as well as higher fuel costs
passed through to customers. DTS operating revenue grew as a result of
higher pricing and increased volumes.

DTS earnings before tax of $11.3 million decreased 21% compared with
$14.3 million in 2016, primarily due to higher insurance costs and
increased operating costs on an older fleet. DTS earnings before tax as
a percentage of DTS total revenue and DTS operating revenue (a non-GAAP
measure) were 4.2% and 5.8%, respectively, down 160 and 170 basis points
from the year-earlier period.

Supply Chain Solutions

In the Supply Chain Solutions (SCS) business segment, total revenue was
up 19% to $463 million and SCS operating revenue (a non-GAAP measure
excluding fuel and subcontracted transportation) was up 12% to $362
million compared with the year-earlier period. SCS total revenue growth
reflects higher operating revenue and increased subcontracted
transportation resulting from new business. SCS operating revenue grew
across all industry verticals, primarily as a result of increased
volumes, new business, and higher pricing.

SCS earnings before tax of $27.4 million increased 39% from $19.8
million in 2016, primarily driven by revenue growth. SCS earnings before
tax as a percentage of SCS total revenue and SCS operating revenue (a
non-GAAP measure) were 5.9% and 7.6%, respectively, up 80 and 150 basis
points from the prior year.

Corporate Financial Information

Central Support Services

Central Support Services (CSS) are overhead costs incurred to support
all business segments and product lines. Most CSS costs are allocated to
the business segments. In the first quarter of 2017, unallocated CSS
costs were $10 million, consistent with the year-earlier period.

Items Excluded from Segment and Comparable Earnings

Non-operating components of pension costs are excluded from both segment
earnings before tax and comparable earnings (a non-GAAP measure) in
order to more accurately reflect the operating performance of the
business. Non-operating pension costs totaled $7.2 million ($4.2 million
after tax) or $0.08 per diluted share in the first quarter of 2017, up
from $6.9 million ($4.0 million after tax) or $0.07 per diluted share in
the year-earlier period.

During the first quarter of 2017, the Company identified certain
operating tax expenses that had not been recognized in prior period
earnings. Accordingly, the Company recognized a one-time charge of $2.2
million ($1.7 million after tax) or $0.03 per diluted share as a
cumulative correction in selling, general and administrative expenses.

Income Taxes

The Company's effective income tax rate and comparable income tax rate
(a non-GAAP measure) from continuing operations for the first quarter of
2017 decreased 50 and 70 basis points, respectively, to 36.2% and 36.4%.
The decrease in the effective and comparable income tax rates reflect a
reduction of the valuation allowance for foreign deferred taxes.

Capital Expenditures

Year-to-date capital expenditures decreased to $436 million, compared
with $498 million in 2016. The decrease in capital expenditures reflects
lower planned investments in the lease fleet, partially offset by higher
planned investments to refresh the commercial rental fleet. Proceeds,
primarily from used vehicle sales, of $97 million decreased 20% compared
with $121 million in 2016, primarily due to lower vehicle pricing. Net
capital expenditures (including proceeds from the sale of assets) were
$340 million in 2017, down from $377 million in 2016.

Cash Flow and Leverage

Year-to-date operating cash flow was $331 million, down 10% from $368
million in 2016. Total cash generated (a non-GAAP measure that includes
proceeds from used vehicle sales) was $444 million, compared with $514
million in 2016. Free cash flow (a non-GAAP measure) was $83 million,
compared with negative $61 million in 2016, reflecting lower net capital
spending. The Company's full-year 2017 forecast for operating cash flow
remains unchanged at $1.7 billion. The Company's full-year free cash
flow forecast remains unchanged at $250 million.

Debt decreased by $65 million compared with year-end 2016. Debt to
equity was 256% compared with 263% at year-end 2016, and within Ryder's
long-term target range of 225% to 275%. The year-end debt to equity
forecast remains unchanged at 240%.

2017 Earnings Forecast

Commenting on the Company's outlook, Mr. Sanchez said, "We are reducing
our full-year earnings forecast, driven by lowered expectations in our
transactional businesses, primarily in commercial rental. Although we
are seeing a seasonal uptick in commercial rental demand, the weaker
than expected demand that we saw in the first quarter is expected to
continue through the balance of the year. Based on our demonstrated
ability to quickly right size our fleet to shifts in market demand, we
expect improved rental utilization comparisons in the second half. Used
vehicle sales results are anticipated to be below original expectations
due to modestly lower pricing, reflecting continued high levels of
inventory in the used vehicle market. We expect Ryder's used vehicle
inventories to be near the midpoint of our target range by year end,
which better positions us as we enter 2018. We also anticipate
maintenance costs to be moderately above our prior forecast due to
increased costs on certain older model year vehicles. Supply Chain
Solutions is expected to perform generally in line with expectations for
the full year, as the first quarter out-performance is not expected to
continue in the remainder of the year. We expect Dedicated
Transportation Solutions to continue to be negatively impacted by the
items we saw in the first quarter but to a lesser degree. Lease sales
continue to be strong, especially growth from companies that are
outsourcing for the first time, and we expect to meet or exceed our full
year fleet growth forecast. The business is generating positive free
cash flow and leverage is expected to decline, which provides us with
increasing financial flexibility as we move into 2018."

In view of these factors, Ryder is revising its full-year 2017 GAAP EPS
forecast to a range of $3.90 to $4.20 from a prior forecast of $4.78 to
$5.08. Additionally, the Company's full-year 2017 comparable EPS
forecast has been revised to a range of $4.25 to $4.55 from a prior
range of $5.10 to $5.40. The Company is also establishing a second
quarter 2017 GAAP EPS forecast range of $0.79 to $0.89, and a comparable
EPS forecast range of $0.87 to $0.97, reflecting unfavorable
year-over-year comparisons in both commercial rental and used vehicle
sales, as well as from accelerated depreciation on vehicles.

Supplemental Company Information

First Quarter Net Earnings

     
(dollars in millions, except EPS) Earnings Diluted EPS
2017   2016 2017   2016
Earnings from continuing operations $ 38.3   56.2 $ 0.71   1.05
Discontinued operations (0.1 )   (0.4 )     (0.01 )
Net earnings $ 38.1     55.8   $ 0.71     1.04  
 

Business Description

Ryder System, Inc. is a FORTUNE 500® commercial fleet management,
dedicated transportation, and supply chain solutions company. Ryder's
stock (NYSE:R) is a component of the Dow Jones Transportation Average
and the Standard & Poor's 500 Index. The Company's financial performance
is reported in the following three, inter-related business segments:

  • Fleet
    Management Solutions
    - Ryder's FMS business segment
    provides a broad range of services to help businesses of all sizes,
    across virtually every industry, deliver for their customers. From
    leasing, maintenance, and fueling, to commercial rental and used
    vehicle sales, customers rely on Ryder's expertise to help them lower
    their costs, redirect capital to other parts of their business, and
    focus on what they do best - so they can grow.
  • Dedicated
    Transportation Solutions
    - Ryder's DTS business segment combines
    the best of Ryder's leasing and maintenance capability with the safest
    and most professional drivers in the industry. With a dedicated
    transportation solution, Ryder helps customers increase their
    competitive position, reduce risk, and integrate their transportation
    needs with their overall supply chain.
  • Supply
    Chain Solutions
    - Ryder's SCS business segment optimizes
    logistics networks to make them more responsive and able to be
    leveraged as a competitive advantage. Globally-recognized brands in
    the automotive, consumer goods, food and beverage, healthcare,
    industrial, oil and gas, technology, and retail industries rely on
    Ryder's leading-edge technologies and world-class logistics engineers
    to help them deliver the goods that consumers use every day.

Notations

Earnings Before Tax (EBT): Ryder's primary measurement of
business segment financial performance, earnings before tax (EBT),
allocates Central Support Services to each business segment and excludes
restructuring and other items, as well as non-operating pension costs.

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 FMS business segment. The level of capital
required to support the full service lease product line varies directly
with customer contract signings for growth and replacement vehicles.
These contracts are long-term agreements that result in ongoing 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.

For more information on Ryder System, Inc., visit http://investors.ryder.com/.

Note Regarding Forward-Looking Statements:

Certain statements and information included in this news release are
"forward-looking statements" under the Federal Private Securities
Litigation Reform Act of 1995, including our expectations regarding
market conditions, earnings performance, revenue in our business
segments, fleet size, demand and pricing trends in commercial rental and
used vehicle sales, cash flow measures, capital expenditures, debt,
adjusted ROC, and our 2017 outlook. 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, lower than expected lease sales,
further decreases in commercial rental demand or poor acceptance of
rental pricing, our ability to right-size our commercial rental fleet in
line with demand, availability of labor to maintain our fleet at
normalized levels, ability to redeploy and prepare for sale in a
cost-efficient manner, worsening of market demand for used vehicles or
greater than expected negative effects of excess inventory levels
impacting current pricing, residual values and our anticipated
proportion of retail versus wholesale sales, lack of customer demand for
on-demand maintenance, higher than expected maintenance costs from new
engine technology or due to lower than expected benefits from
maintenance initiatives, decreases in freight demand or volumes, poor
operational execution particularly with start-ups and new product
launches, our ability to obtain adequate profit margins for our
services, our inability to maintain current pricing levels due to soft
economic conditions, uncertainty and instability in the global economic
market, business interruptions or expenditures due to severe weather or
natural occurrences, competition from other service providers and new
entrants, customer retention levels, loss of key customers, driver and
technician shortages resulting in higher procurement costs and turnover
rates, unexpected bad debt reserves or write-offs, 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, depreciation, insurance and
revenue, sudden or unusual changes in fuel prices, unanticipated
currency exchange rate fluctuations, 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.

Note Regarding Non-GAAP Financial Measures: This news
release includes certain non-GAAP financial measures as defined under
SEC rules, including:

Comparable Earnings Measures, including comparable earnings
from continuing operations, comparable earnings per share from
continuing operations (as well as forecasts), comparable earnings before
income tax and comparable tax rate.
Additionally, our adjusted
return on average capital (ROC) and adjusted return on capital spread
(ROC spread) measures are calculated based on comparable earnings items.

Operating Revenue Measures, including operating revenue and
operating revenue growth excluding foreign exchange for Ryder and its
business segments, and segment EBT as a percentage of operating revenue.

Cash Flow Measures, including total cash generated and free
cash flow.

Refer to Appendix - Non-GAAP Financial Measure Reconciliations at the
end of the tables following this press release for reconciliations of
the non-GAAP financial measures contained in this release to the nearest
GAAP measure.
Additional information regarding non-GAAP financial
measures as required by Regulation G and Item 10(e) of Regulation S-K
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 release with the SEC, which are available
at
http://investors.ryder.com.

Conference Call and Webcast Information:

Ryder's earnings conference call and webcast is scheduled for Tuesday,
April 25, 2017, from 11:00 a.m. to 12:00 noon Eastern Time. Speakers
will be Chairman and Chief Executive Officer Robert Sanchez, and
Executive Vice President and Chief Financial Officer Art Garcia. To join
please click the below URL 5 minutes prior to the start of the webcast.
You will need to complete the registration page to gain access to the
webcast.

Ryder First Quarter Earnings Call Webcast URL: https://pgi.webcasts.com/starthere.jsp?ei=1139157

If you do not have computer speakers or headphones and/or would like to
dial-into the webcast, please dial into the phone bridge below. In
addition, please click the "listen by phone" option on the webcast
player for the optimal viewing experience.

LIVE AUDIO VIA PHONE

Please dial the audio phone number approximately ten minutes prior to
the start of the call.

    Toll Free Number:       877-419-6593
USA Toll Number: 719-325-4754
Audio Passcode: Ryder
Conference Leader: Bob Brunn

AUDIO REPLAY VIA PHONE

An audio replay of the call will be available one hour after call ends
for 30 days.

    Toll Free Number:       888-203-1112
USA Toll Number: 719-457-0820
Replay Passcode: 8485992

AUDIO REPLAY VIA MP3 DOWNLOAD

A podcast of the call will be available within 24 hours after the end of
the call at http://investors.ryder.com.
Interested listeners may download the audio file and either save or
listen to it on their computer or any portable MP3 player. Go to http://investors.ryder.com,
select Financials/Quarterly Reports and the date in order to access the
file.

AUDIO & SLIDE REPLAY VIA INTERNET

An audio replay including the slide presentation will be available on
the Internet within 2 hours following the call. Go to http://investors.ryder.com,
select Financials/Quarterly Reports and the date in order to access the
file.

 

RYDER SYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS - UNAUDITED

Periods ended March 31, 2017 and 2016

(In millions, except per share amounts)

 
Three Months
2017   2016
 
Lease and rental revenues $ 767.6 767.8
Services revenue 851.9 759.1
Fuel services revenue   128.7   102.8  
Total revenues   1,748.2   1,629.7  
 
Cost of lease and rental 578.8 552.5
Cost of services 714.1 631.7
Cost of fuel services 125.9 98.9
Other operating expenses 31.3 30.2
Selling, general and administrative expenses 201.8 204.4
Non-service retirement benefit costs 7.3 6.8
Used vehicle sales, net (0.8 ) (19.1 )
Interest expense 34.9 37.9
Miscellaneous income, net   (5.0 ) (2.3 )
  1,688.2   1,541.0  
 
Earnings from continuing operations before income taxes 60.0 88.7
Provision for income taxes   21.7   32.5  
Earnings from continuing operations 38.3 56.2
Loss from discontinued operations, net of tax   (0.1 ) (0.4 )
Net earnings $ 38.1   55.8  
 
Earnings (loss) per common share - Diluted
Continuing operations $ 0.71 1.05
Discontinued operations     (0.01 )
Net earnings $ 0.71   1.04  
 
Earnings per share information - Diluted
Earnings from continuing operations $ 38.3 56.2
Less: Distributed and undistributed earnings allocated to unvested
stock
  (0.1 ) (0.2 )
Earnings from continuing operations available to common stockholders $ 38.1   56.0  
 
Weighted-average shares outstanding - Diluted   53.4   53.4  
 
EPS from continuing operations $ 0.71 1.05
Non-operating pension costs 0.08 0.07
Operating tax adjustment   0.03    
Comparable EPS from continuing operations * $ 0.82   1.12  
* Non-GAAP financial measure. A reconciliation of GAAP EPS from
continuing operations to comparable EPS from continuing operations
is set forth in this table.
Note: Amounts may not be additive due to rounding.
   

RYDER SYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS - UNAUDITED

(Dollars in millions)

 

March 31,
2017

December 31,
2016

 
Assets:
Cash and cash equivalents $ 38.0 58.8
Other current assets 1,075.4 1,042.8
Revenue earning equipment, net 8,171.2 8,147.7
Operating property and equipment, net 754.3 745.9
Other assets   935.0 907.3
$ 10,973.8 10,902.5
 
Liabilities and shareholders' equity:
Current liabilities $ 1,004.7 952.7
Total debt 5,326.2 5,391.3
Other non-current liabilities (including deferred income taxes) 2,563.1 2,506.2
Shareholders' equity   2,079.8 2,052.3
$ 10,973.8 10,902.5
   

SELECTED KEY RATIOS AND METRICS

 
March 31,
2017

December 31,
2016

 
Debt to equity 256% 263%
Effective interest rate (average cost of debt) 2.6% 2.7%
 
 
Three months ended March 31,
2017   2016
 
Cash provided by operating activities from continuing operations $ 331.3 368.0
Free cash flow * 82.8 (60.8 )
Capital expenditures paid 361.3 575.0
 
Capital expenditures (accrual basis) $ 436.1 497.5
Less: Proceeds from sales (primarily revenue earning equipment) (96.5 ) (120.6 )
Net capital expenditures $ 339.6   376.9  
 
 
Three months ended March 31,
2017   2016
 
Return on average shareholders' equity 11.9% 15.8%
Return on average assets 2.2% 2.9%
Adjusted return on capital * 4.6% 5.7%
Weighted average cost of capital 4.3% 4.4%
Return on capital spread ** 0.3% 1.3%
 
* Non-GAAP financial measure. See reconciliation of the non-GAAP
elements of this calculation reconciled to the corresponding GAAP
measures included in the Appendix - Non-GAAP Financial Measures
section at the end of this release.
** Non-GAAP financial measure. Adjusted return on capital spread is
calculated as the difference of the adjusted return on capital and
the weighted average cost of capital.
Note: Amounts may not be additive due to rounding.
 

RYDER SYSTEM, INC. AND SUBSIDIARIES

BUSINESS SEGMENT REVENUE AND EARNINGS - UNAUDITED

Periods ended March 31, 2017 and 2016

(Dollars in millions)

 
Three Months
2017   2016   B(W)
 
Total Revenue:
Fleet Management Solutions:
ChoiceLease $ 656.3 622.9 5 %
SelectCare 113.6 114.4 (1 )%
Commercial rental 174.0 204.8 (15 )%
Other 18.3 20.2 (10 )%
Fuel services revenue   170.3   135.6   26 %
Total Fleet Management Solutions 1,132.5 1,097.9 3 %
Dedicated Transportation Solutions 266.7 244.8 9 %
Supply Chain Solutions 462.7 388.7 19 %
Eliminations   (113.7 ) (101.8 ) (12 )%
Total revenue $ 1,748.2   1,629.7   7 %
 
 
Operating Revenue: *
Fleet Management Solutions $ 962.2 962.3 %
Dedicated Transportation Solutions 193.4 190.3 2 %
Supply Chain Solutions 361.8 322.4 12 %
Eliminations   (72.2 ) (69.0 ) (5 )%
Operating revenue $ 1,445.1   1,406.0   3 %
 
 
Business segment earnings:
Earnings from continuing operations
before income taxes:
Fleet Management Solutions $ 52.1 83.3 (37 )%
Dedicated Transportation Solutions 11.3 14.3 (21 )%
Supply Chain Solutions 27.4 19.8 39 %
Eliminations   (11.2 ) (11.7 ) 4 %
79.6 105.6 (25 )%
Unallocated Central Support Services (10.2 ) (10.0 ) (2 )%
Non-operating pension costs (7.2 ) (6.9 ) (5 )%
Other items   (2.2 )   NM
Earnings from continuing operations before income taxes 60.0 88.7 (32 )%
Provision for income taxes   21.7   32.5   33 %
Earnings from continuing operations $ 38.3   56.2   (32 )%
* Non-GAAP financial measure. See reconciliation of GAAP total
revenue to operating revenue in the Appendix - Non-GAAP Financial
Measures section at the end of this release.
Note: Amounts may not be additive due to rounding.
 

RYDER SYSTEM, INC. AND SUBSIDIARIES

BUSINESS SEGMENT INFORMATION - UNAUDITED

Periods ended March 31, 2017 and 2016

(Dollars in millions)

 
Three Months
2017   2016   B(W)
 
Fleet Management Solutions
 
FMS total revenue $ 1,132.5 1,097.9 3 %
Fuel services revenue(a) (170.3 ) (135.6 ) 26 %
FMS operating revenue * $ 962.2   962.3   %
 
Segment earnings before income taxes $ 52.1   83.3   (37 )%
 
FMS earnings before income taxes as % of FMS total revenue 4.6 % 7.6 %
 
FMS earnings before income taxes as % of FMS operating revenue * 5.4 % 8.7 %
 
 
Dedicated Transportation Solutions
 
DTS total revenue $ 266.7 244.8 9 %
Subcontracted transportation (45.3 ) (31.2 ) 45 %
Fuel(a) (28.0 ) (23.3 ) 20 %
DTS operating revenue * $ 193.4   190.3   2 %
 
Segment earnings before income taxes $ 11.3   14.3   (21 )%
 
DTS earnings before income taxes as % of DTS total revenue 4.2 % 5.8 %
 
DTS earnings before income taxes as % of DTS operating revenue * 5.8 % 7.5 %
 
 
Supply Chain Solutions
 
SCS total revenue $ 462.7 388.7 19 %
Subcontracted transportation (82.5 ) (52.0 ) 59 %
Fuel(a) (18.5 )

(14.3

) 29 %
SCS operating revenue * $ 361.8   322.4   12 %
 
Segment earnings before income taxes $ 27.4   19.8   39 %
 
SCS earnings before income taxes as % of SCS total revenue 5.9 % 5.1 %
 
SCS earnings before income taxes as % of SCS operating revenue * 7.6 % 6.1 %
* Non-GAAP financial measure. A reconciliation of (1) GAAP total
revenue to operating revenue for each business segment (FMS, DTS and
SCS) and (2) segment earnings before taxes (EBT) as % of segment
total revenue to segment EBT as % of segment operating revenue for
each business segment is set forth in this table.
Note: Amounts may not be additive due to rounding.
 
(a) Includes intercompany fuel sales from FMS to DTS and SCS.
   

RYDER SYSTEM, INC. AND SUBSIDIARIES

BUSINESS SEGMENT INFORMATION - UNAUDITED

KEY PERFORMANCE INDICATORS

 
Three months ended March 31, Change
2017   2016 2017/2016
 
ChoiceLease
Average fleet count 137,100 132,600 3%
End of period fleet count 137,900 133,300 3%
Miles/unit per day change - % (a) 1.5 % 0.5 %
 
 
Commercial rental
Average fleet count 37,300 41,000 (9)%
End of period fleet count 37,300 40,100 (7)%
Rental utilization - power units 67.2 % 70.4 % (320) bps
Rental rate change - % (b) 1.1 % 0.1 %
 
 
Customer vehicles under
SelectCare contracts (c)
Average fleet count 50,100 48,200 4%
End of period fleet count 50,400 49,500 2%
 
 
Customer vehicles under
SelectCare on-demand (d)
Fleet serviced during the period 9,300 7,100 31%
 
 
DTS
Average fleet count (e) 8,200 8,000 3%
End of period fleet count (e) 8,300 8,200 1%
 
 
SCS
Average fleet count (e) 7,700 6,900 12%
End of period fleet count (e) 7,800 7,000 11%
 
 
Used vehicle sales (UVS)
Average UVS inventory 7,100 8,500 (16)%
End of period fleet count 6,700 8,600 (22)%
Used vehicles sold 4,500 4,700 (4)%
UVS pricing change - % (f)
Tractors (16 )% (8 )%
Trucks (20 )% 6 %

Notes:

(a)   Represents the percentage change compared to prior year period in
miles driven per vehicle per workday on US lease power units.
(b) Represents percentage change compared to prior year period in
average global rental rate per day on power units using constant
currency.
(c) Excludes customer vehicles under SelectCare on-demand contracts.
(d) Comprised of the number of vehicles serviced under on-demand
maintenance agreements. Vehicles included in the end of period count
may have been serviced more than one time during the respective
period.
(e) These vehicle counts are also included within the average fleet
counts for ChoiceLease, Commercial Rental and SelectCare.
(f) Represents percentage change compared to prior year period in
average sales proceeds on used vehicle sales using constant currency.
 
RYDER SYSTEM, INC. AND SUBSIDIARIES
APPENDIX - NON-GAAP FINANCIAL MEASURE RECONCILIATIONS - UNAUDITED
 
This press release and accompanying tables include "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 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:
 
Non-GAAP Financial Measure     Comparable GAAP Measure     Reconciliation in Section Entitled
Operating Revenue Measures:            
Operating Revenue     Total Revenue     Appendix - Non-GAAP Financial Measure Reconciliations
FMS Operating Revenue FMS Total Revenue

Business Segment Information - Unaudited

DTS Operating Revenue DTS Total Revenue
SCS Operating Revenue     SCS Total Revenue    
Operating Revenue Growth Total Revenue Appendix - Non-GAAP Financial
Excluding Foreign Exchange           Measure Reconciliations
FMS EBT as a % of FMS Operating Revenue FMS EBT as a % of FMS Total Revenue Business Segment Information - Unaudited
DTS EBT as a % of DTS Operating Revenue DTS EBT as a % of DTS Total Revenue
SCS EBT as a % of SCS Operating Revenue     SCS EBT as a % of SCS Total Revenue    
Comparable Earnings Measures:            
Comparable Earnings Before Earnings Before Income Tax and Appendix - Non-GAAP Financial
Income Tax and Comparable Tax Effective Tax Rate from Measure Reconciliations
Rate     Continuing Operations      
Comparable Earnings     Earnings from Continuing Operations     Appendix - Non-GAAP Financial Measure Reconciliations
Comparable EPS and Comparable EPS from Continuing Operations Consolidated Condensed Statements
EPS Forecast EPS Forecast from Continuing of Earnings - Unaudited
Operations Appendix - Non-GAAP Financial
Measure Reconciliations
            (Forecast)
Adjusted Return on Average Not Applicable. However, non-GAAP Appendix - Non-GAAP Financial
Capital (ROC) and Adjusted elements of the calculation have Measure Reconciliations
ROC Spread been reconciled to the
corresponding GAAP measures. A
numerical reconciliation of net
earnings to adjusted net
earnings and average total debt
and average shareholders' equity
to adjusted average total
      capital is provided.      
Cash Flow Measures:            
Total Cash Generated and Free Cash Provided by Operating Appendix - Non-GAAP Financial
Cash Flow     Activities     Measure Reconciliations
   
RYDER SYSTEM, INC. AND SUBSIDIARIES
APPENDIX - NON-GAAP FINANCIAL MEASURE RECONCILIATIONS - UNAUDITED
(Dollars in millions)
 

OPERATING REVENUE RECONCILIATION

 
Three months ended March 31,
2017 2016
 
Total revenue $ 1,748.2 1,629.7
Fuel (175.3 ) (140.5 )
Subcontracted transportation (127.8 ) (83.2 )
Operating revenue * $ 1,445.1   1,406.0  
 
   

OPERATING REVENUE GROWTH EXCLUDING
FOREIGN EXCHANGE RECONCILIATION

 

2017 vs 2016
Growth

Fx Impact (a)   Growth excl Fx*
 
RSI Total Revenue 7 % (1 )% 8 %
RSI Operating Revenue* 3 % (1 )% 4 %
FMS Total Revenue 3 % (1 )% 4 %
FMS Operating Revenue* % (1 )% 1 %
SCS Total Revenue 19 % (1 )% 20 %
SCS Operating Revenue* 12 % (1 )% 13 %
ChoiceLease Revenue 5 % (1 )% 6 %
Commercial Rental Revenue (15 )% (1 )% (14 )%
 
   

TOTAL CASH GENERATED/FREE CASH FLOW
RECONCILIATION

 
Three months ended March 31,
2017 2016
 
Net cash provided by operating activities from continuing operations $ 331.3 368.0
Proceeds from sales (primarily revenue earning equipment) (b) 96.5 120.6
Collections on direct finance leases and other items (b) 16.3   25.6  
Total cash generated * 444.1 514.2
Purchases of property and revenue earning equipment (b) (361.3 ) (575.0 )
Free cash flow ** $ 82.8   (60.8 )
 
Memo:
Net cash provided by (used in) financing activities $ (106.2 ) 60.5
Net cash used in investing activities $ (247.1 ) (429.0 )
 

Notes:

(a)  

FX impact was calculated by dividing the results for the current
and prior year periods by the exchange rates in effect on March
31, 2016, which was the last day of the prior year period, rather
than the actual exchange rates in effect as of March 31, 2017.

(b) Included in cash flows from investing activities.
 
*Non-GAAP financial measure.
** Non-GAAP financial measure. We refer to the net amount of cash
generated from operating activities and investing activities
(excluding changes in restricted cash and acquisitions) from
continuing operations as "free cash flow". We calculate free cash
flow as the sum of net cash provided by operating activities and net
cash provided by the sale of revenue earning equipment and operating
property and equipment, collections on direct finance leases and
other cash inflows from investing activities, less purchases of
property and revenue earning equipment.
Note: Amounts may not be additive due to rounding.
   

RYDER SYSTEM, INC. AND SUBSIDIARIES

APPENDIX - NON-GAAP FINANCIAL MEASURE RECONCILIATIONS -
UNAUDITED

(Dollars in millions)

 

ADJUSTED RETURN ON CAPITAL RECONCILIATION

 
Twelve months ended March 31,
2017 2016
 
Net earnings (12-month rolling period) $ 244.5 308.2
+ Restructuring and other items 14.7 15.8
+ Income taxes 130.8   165.3  
Adjusted earnings before income taxes 389.9 489.3
+ Adjusted interest expense (a) 145.1 151.7
- Adjusted income taxes (b) (186.5 ) (225.5 )
= Adjusted net earnings for ROC (numerator) [A] $ 348.5   415.5  
 
Average total debt $ 5,496.7 5,358.3
Average off-balance sheet debt 1.3 1.5
Average shareholders' equity 2,064.8 1,945.2
Adjustment to equity (c) 1.1   3.1  
Adjusted average total capital (denominator) [B] $ 7,563.9   7,308.1  
 
Adjusted ROC * [A]/[B] 4.6 % 5.7 %

Notes:

(a)   Represents reported interest expense plus imputed interest on
off-balance sheet obligations.
(b) Represents provision for income taxes plus income taxes on
restructuring and other items and adjusted interest expense.
(c) Represents the impact to equity of items to arrive at comparable
earnings.
* Non-GAAP financial measure. Non-GAAP elements of the calculation
have been reconciled to the corresponding GAAP measures. A numerical
reconciliation of net earnings to adjusted net earnings and average
total debt and average shareholders' equity to adjusted average
total capital set forth in this table.
 
Note: Amounts may not be additive due to rounding.
 

RYDER SYSTEM, INC. AND SUBSIDIARIES

APPENDIX - NON-GAAP FINANCIAL MEASURE RECONCILIATIONS -
UNAUDITED

(In millions, except per share amounts)

 

COMPARABLE EARNINGS/EARNINGS BEFORE
INCOME TAX/TAX RATE RECONCILIATION

   
2017

Consolidated Statements of
Earnings Line Item

Three Months
 
Earnings from continuing operations before income taxes $ 60.0
Non-operating pension costs SG&A 7.2
Operating tax adjustment 2.2  
Comparable earnings from continuing operations before income taxes* 69.4  
 
Provision for income taxes (21.7 )
Income tax effects of non-GAAP adjustments** (3.6 )
Comparable provision for income taxes** (25.2 )
 
Earnings from continuing operations 38.3
Non-operating pension costs SG&A 4.2
Operating tax adjustment 1.7  
Comparable earnings from continuing operations* $ 44.2  
 
Tax rate on continuing operations 36.2 %
Income tax effects of non-GAAP adjustments** 0.2 %
Comparable tax rate on continuing operations** 36.4 %
 
    2016

Consolidated Statements of
Earnings Line Item

Three Months
 
Earnings from continuing operations before income taxes $ 88.7
Non-operating pension costs SG&A 6.9  
Comparable earnings from continuing operations before income taxes* 95.6  
 
Provision for income taxes (32.5 )
Income tax effects of non-GAAP adjustments** (2.9 )
Comparable provision for income taxes** (35.4 )
 
Earnings from continuing operations 56.2
Non-operating pension costs SG&A 4.0  
Comparable earnings from continuing operations* $ 60.1  
 
Tax rate on continuing operations 36.7 %
Income tax effects of non-GAAP adjustments** 0.4 %
Comparable tax rate on continuing operations** 37.1 %
* Non-GAAP financial measure.
** The comparable provision for income taxes is computed using the
same methodology as the GAAP provision for income taxes. Income tax
effects of non-GAAP adjustments are calculated based on the
statutory tax rates of the jurisdictions to which the non-GAAP
adjustments relate.
 
Note: Amounts may not be additive due to rounding.
   

RYDER SYSTEM, INC. AND SUBSIDIARIES

APPENDIX - NON-GAAP FINANCIAL MEASURE RECONCILIATIONS -
UNAUDITED

 

COMPARABLE EARNINGS PER SHARE FORECAST
RECONCILIATION

 
Comparable earnings per share from continuing operations forecast:*

Second Quarter
2017

Full Year
2017

EPS from continuing operations $0.79 to $0.89 $3.90 to $4.20
Non-operating pension costs, net of tax 0.08 0.32
Operating tax adjustment 0.03
Comparable EPS from continuing operations forecast* $0.87 to $0.97 $4.25 to $4.55
 

Note: Amounts may not be additive due to rounding.

 

TOTAL CASH GENERATED/FREE CASH FLOW
FORECAST RECONCILIATION

 
2017 Forecast
Net Cash Provided by Operating Activities from Continuing Operations $ 1,700
Proceeds from sales (primarily revenue earning equipment) (1) 390
Collections of direct finance leases (1) 80  
Total cash generated* 2,170
 
Capital expenditures (1) (1,920 )
Free cash flow ** $ 250  
 
Memo:
Net cash used in financing activities $ 250
Net cash used in investing activities $ 1,450
 

(1) Included in cash flows from investing activities.

 
* Non-GAAP financial measure.
** Non-GAAP financial measure. We refer to the net amount of cash
generated from operating activities and investing activities
(excluding changes in restricted cash and acquisitions) from
continuing operations as "free cash flow". We calculate free cash
flow as the sum of net cash provided by operating activities and net
cash provided by the sale of revenue earning equipment and operating
property and equipment, collections on direct finance leases and
other cash inflows from investing activities, less purchases of
property and revenue earning equipment.

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