Market Overview

Ryder Reports First Quarter 2018 Results

Share:
  • Q1 GAAP EPS from Continuing Operations Down $0.08 or 11% to $0.64,
    Includes $0.29 UK Goodwill Impairment Charge
  • Q1 Comparable EPS (non-GAAP) from Continuing Operations Up $0.08 or
    10% to $0.91, Reflects Lower Tax Rate from Tax Reform
  • Record Q1 Total Revenue Grows 10% to $1.9 Billion; Record Q1
    Operating Revenue (non-GAAP) Up 7% to $1.5 Billion
  • Revised Full-Year 2018 GAAP EPS Forecast Range of $4.55 to $4.80
    vs. Prior Forecast of $5.34 to $5.64, Driven by a Tax Reform-Related
    Adjustment and UK Goodwill Impairment Charge
  • Revised Full-Year 2018 Comparable EPS Forecast Range (non-GAAP) of
    $5.45 to $5.70 vs. Prior Forecast of $5.40 to $5.70

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
2018   2017   Change 2018   2017   Change 2018   2017   Change
GAAP $ 48.1   60.6   (21 )% $ 33.9   38.5   (12 )% $ 0.64   0.72   (11 )%
Non-operating pension costs 1.2 7.3 0.6 4.2 0.01 0.08
UK goodwill impairment charge 15.5 15.5 0.29
Uncertain tax position adjustment (3.3 ) (0.06 )
Other 0.3     2.2       1.7     1.7       0.03     0.03      
Comparable (non-GAAP) $ 65.1     70.2     (7 )% $ 48.4     44.4     9 % $ 0.91     0.83     10 %

In the first quarter, the Company reported record total revenue and
record operating revenue (a non-GAAP measure excluding all fuel and
subcontracted transportation). Total revenue and operating revenue grew
across all three business segments reflecting new business and higher
volumes. Total revenue also grew due to higher fuel costs passed through
to customers. Total and operating revenue for the three months ended
March 31 were as follows:

(in millions)   Total Revenue     Operating Revenue (non-GAAP)
2018   2017   % Change   2018   2017   % Change
Total $ 1,903.5   1,737.0   10% $ 1,542.9   1,445.1   7%
FMS $ 1,242.6 1,132.5 10% $ 1,038.8 962.2 8%
DTS $ 299.0 266.6 12% $ 201.4 193.4 4%
SCS $ 494.7 451.6 10% $ 382.8 361.8 6%

Commenting on the Company's first quarter results, Ryder Chairman and
CEO Robert Sanchez said, "Our results were at the high-end of our
expectations in the first quarter, driven by stronger than expected
results in our rental, supply chain, and dedicated businesses. Rental
demand continued at a very robust level, with first quarter utilization
at the highest level in a decade. These improvements were partially
offset by lower than expected results in used vehicle sales.

"Continuing our momentum from record sales in 2017, we again achieved
record sales in the first quarter, driven by ChoiceLease and Dedicated
Transportation Solutions. We are pleased with our revenue growth across
the Company and growth in the ChoiceLease fleet, which increased by
1,700 vehicles this quarter. We continue to successfully penetrate the
non-outsourced market and are now also seeing fleet expansion with
current customers driven by a strong freight market.

"We recently announced several strategic initiatives to further
capitalize on the disruption we are seeing in the market and to drive
long-term growth for the business. We acquired MXD Group earlier this
month to leverage significant growth opportunities in e-commerce and
expand Ryder's omni-channel fulfillment capabilities, including final
mile services. Additionally, in the Atlanta market we launched COOP by
Ryder™, the first asset sharing platform of its kind for commercial
vehicles, which enables fleet owners to generate revenue from their
underutilized vehicles and provides a future asset-light earnings source
for Ryder.

"Finally, due to the recent tax reform, we raised Ryder's quarterly cash
dividend to $0.52 per share of common stock, an increase of 13% from the
amount Ryder had been paying quarterly since July of 2017."

First Quarter Business Segment Operating Results

Fleet Management Solutions

In the Fleet Management Solutions (FMS) business segment, total revenue
was $1.24 billion, up 10% compared with $1.13 billion in the
year-earlier period. FMS operating revenue (a non-GAAP measure excluding
fuel) was $1.04 billion, up 8% from the year-earlier period. Ryder
ChoiceLeaseTM (lease) revenue increased 5% reflecting a
larger average fleet size and higher prices on replacement vehicles. The
lease fleet increased by 1,700 vehicles year-to-date. Commercial
rental
revenue increased 18% from the year-earlier period due to
higher demand and higher pricing. Fuel services revenue increased 20%,
primarily reflecting higher fuel costs passed through to customers.

FMS earnings before tax were $49.8 million, down 5% compared with $52.3
million in the same period of 2017. Higher commercial rental and
ChoiceLease performance was more than offset by higher depreciation of
$10 million due to vehicle residual value changes implemented January 1,
2018, used vehicle sales results, and overhead spending. Used vehicle
sales comparisons reflect higher inventory valuation adjustments and
lower units sold. Commercial rental performance improved due to
increased utilization reflecting stronger demand and higher pricing.
Rental power fleet utilization was 74.8% for the first quarter, up 760
basis points from the year-earlier period. Lease results benefited from
fleet growth but were partially offset by higher maintenance costs on
certain older model year vehicles and weather-related expenses. Overhead
comparisons reflect the timing of spending, including commissions and
investments in sales, marketing, and technology to fund growth. FMS
earnings before tax as a percentage of FMS total revenue and FMS
operating revenue (a non-GAAP measure) were 4.0% and 4.8%, respectively,
both down 60 basis points from the prior year, primarily reflecting
higher depreciation due to vehicle residual value policy changes and
lower used vehicle sales results.

Dedicated Transportation Solutions

In the Dedicated Transportation Solutions (DTS) business segment, total
revenue was up 12% to $299 million and DTS operating revenue (a non-GAAP
measure excluding fuel and subcontracted transportation) was up 4% to
$201 million compared with the year-earlier period. DTS total revenue
growth reflects higher subcontracted transportation revenue and
operating revenue. DTS operating revenue growth reflects increased
volumes and new business.

DTS earnings before tax of $13.1 million increased 16% compared with
$11.3 million in 2017, due to revenue growth and operating performance,
as well as favorable developments related to self-insurance claims from
prior years. DTS earnings before tax as a percentage of DTS total
revenue and DTS operating revenue (a non-GAAP measure) were 4.4% and
6.5%, respectively, up 20 and 70 basis points from the year-earlier
period.

Supply Chain Solutions

In the Supply Chain Solutions (SCS) business segment, total revenue was
up 10% to $495 million and SCS operating revenue (a non-GAAP measure
excluding fuel and subcontracted transportation) was up 6% to $383
million compared with the year-earlier period. SCS total revenue growth
reflects higher operating revenue and subcontracted transportation
revenue. SCS operating revenue growth largely reflects new business.

SCS earnings before tax of $26.2 million decreased 7% in the first
quarter of 2018 compared with $28.0 million in 2017, reflecting an
unusually strong quarter in the prior year. First quarter results were
driven by lower volumes primarily in the automotive business, as well as
ongoing lower performance in one customer account. These impacts were
partially offset by earnings on operating revenue growth in CPG/Retail
and Technology/Healthcare and lower insurance costs. SCS earnings before
tax as a percentage of SCS total revenue and SCS operating revenue (a
non-GAAP measure) were 5.3% and 6.8%, respectively, both down 90 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 2018, unallocated CSS
costs were $11 million, consistent with the year-earlier period.

Income Taxes

The Company's effective income tax rate and comparable effective income
tax rate (a non-GAAP measure) from continuing operations for the first
quarter of 2018 decreased to 29.5% and 25.6%, reflecting a lower federal
tax rate related to the 2017 Tax Cuts and Jobs Act (Tax Reform). The
decrease in the effective income tax rate was offset by the impact of a
non-deductible UK goodwill impairment charge, as well as a deferred tax
liability adjustment of $1.4 million or $0.02 per diluted share related
to the prior provisional estimate from Tax Reform. During the first
quarter, we also determined that certain uncertain tax positions should
have been reversed in prior periods when the statutes of limitations
expired. We recognized a $3.3 million benefit to the tax provision
related to this reversal.

On April 2, 2018, the Internal Revenue Service issued Notice 2018-26,
which will require the Company to increase the provisional estimate
related to the one-time transition tax associated with Tax Reform. The
Company currently estimates the additional tax provision to be
approximately $30 million or $0.57 per diluted share in the second
quarter. This charge will be excluded from comparable earnings for the
second quarter.

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) to more
accurately reflect the operating performance of the business.
Non-operating pension costs totaled $1.2 million ($0.6 million after
tax) or $0.01 per diluted share in the first quarter of 2018, down from
$7.3 million ($4.2 million after tax) or $0.08 per diluted share in the
year-earlier period.

First quarter 2018 results reflect a non-cash, pre-tax charge of $15.5
million ($15.5 million after tax) or $0.29 per diluted share, related to
the impairment of goodwill in our FMS Europe reporting unit, which
predominantly operates in the UK. In connection with a downturn in
market conditions impacting these operations, the Company performed an
impairment analysis of goodwill in this reporting unit and concluded
that a charge was required. The UK business represents approximately 5%
of total revenue.

First quarter 2018 results also reflect acquisition transaction costs of
$0.6 million ($0.4 million after tax) or $0.01 per diluted share, and
restructuring and other charges, net of $0.5 million ($0.4 million after
tax) or $0.01 per diluted share. These impacts were partially offset by
Tax Reform-related adjustments, net of $0.8 million ($0.6 million after
tax) or $0.01 per diluted share related to a one-time employee bonus
previously announced.

Capital Expenditures

Capital expenditures increased to $711 million in the first quarter of
2018, compared with $436 million in the first quarter of 2017. The
increase in capital expenditures reflects higher planned investments to
grow and refresh the lease and rental fleets. Proceeds of $90 million,
primarily from used vehicle sales, decreased 7% compared with $97
million in 2017, reflecting fewer units sold. Net capital expenditures
(including proceeds from the sale of assets) were $621 million in 2018,
up from $340 million in 2017. The Company is increasing its forecast for
gross capital expenditures from $2.9 billion to $3.0 billion, primarily
reflecting increased contractual lease sales activity. The Company is
also revising its forecast for net capital expenditures to go from $2.5
billion to $2.6 billion.

Cash Flow and Leverage

Operating cash flow was $315 million in the first quarter of 2018,
compared with $331 million in the first quarter of 2017. Total cash
generated (a non-GAAP measure that includes proceeds from used vehicle
sales) was $425 million, compared with $444 million in 2017. Free cash
flow (a non-GAAP measure) was negative $238 million, compared with $83
million in 2017, reflecting increased net capital spending. The
Company's full-year 2018 forecast for operating cash flow remains
unchanged at approximately $1.8 billion. The Company is revising its
full-year free cash flow forecast from negative $600 million to negative
$750 million, primarily reflecting increased growth-related capital
spending.

Total debt as of March 31, 2018 was $5.7 billion, up from $5.4 billion
in 2017. Debt to equity for the first quarter of 2018 was 199% compared
with 191% at year-end 2017, and just below Ryder's long-term target
range of 200% to 250%. The Company is revising its year-end debt to
equity forecast from 199% to 210%, reflecting increased growth capital
spending and a recent acquisition.

2018 Earnings Forecast

Commenting on the Company's outlook, Mr. Sanchez said, "We expect
year-over-year pre-tax earnings to be higher for the balance of the
year. The improved earnings reflect continued strong rental and
contractual sales results, driven by the healthy freight environment and
our sales and marketing initiatives, as well as cost reductions. These
improvements will more than offset the impact from used vehicle sales
and higher depreciation. Our overall earnings expectation for the
balance of the year remains in-line with our prior forecast.

"We are pleased with our contractual sales performance across all three
business segments. We now expect record full-year ChoiceLease fleet
growth of 7,500 vehicles, up by 1,000 units from our prior forecast.
Based on our robust sales pipeline, we anticipate potential upside to
this forecast. Due to longer manufacturer lead times, most of the
additional fleet growth above our original forecast is expected to occur
later in the year, positioning us well for revenue and earnings growth
in 2019. In addition to organic growth opportunities, we are excited
about the opportunity to cross-sell the capabilities acquired through
the MXD purchase. We now anticipate double-digit revenue growth in both
DTS and SCS in the second half of the year.

"We expect the first quarter used vehicle pricing challenges to continue
throughout the year. We also expect continued solid used vehicle sales
volumes, and are forecasting used vehicle inventory to be around the
midpoint of our target range."

In view of these factors, Ryder is revising its full-year 2018 GAAP EPS
forecast to a range of $4.55 to $4.80, as compared to the prior forecast
of $5.34 to $5.64, primarily reflecting an increase to the provisional
estimate of the transition tax related to Tax Reform. In 2017, full-year
GAAP EPS was $14.88 and included a benefit from tax reform. The Company
is also revising its forecast for full-year 2018 comparable EPS from
continuing operations to $5.45 to $5.70, from the prior forecast of
$5.40 to $5.70, and compared with $4.53 in 2017.

Ryder is establishing a second quarter 2018 GAAP EPS forecast of $0.62
to $0.72, compared with $0.97 in the second quarter 2017. The 2018 GAAP
EPS forecast includes a one-time transition tax adjustment of $0.57. The
Company is also establishing a second quarter 2018 forecast for
comparable EPS from continuing operations of $1.20 to $1.30, compared
with $1.00 in the second quarter 2017.

Supplemental Company Information

First Quarter Net Earnings

   
 
(dollars in millions, except EPS) Earnings Diluted EPS
2018   2017 2018   2017
Earnings from continuing operations $ 33.9   38.5 $ 0.64   0.72
Discontinued operations (0.4 )   (0.1 ) (0.01 )  
Net earnings $ 33.5     38.4   $ 0.63     0.72

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 ChoiceLease
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 ChoiceLease 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 trends, earnings performance, revenue in our business segments,
fleet growth, performance in our product lines and segments, the
strength of our sales pipeline, demand and pricing trends in commercial
rental and used vehicle sales, used vehicle inventory levels, residual
values, return on capital spread, operating cash flow, free cash flow,
capital expenditures, our ability to make investments in sales,
marketing, IT and new product initiatives, the impact from tax reform on
our earnings and demand for our services,
and the impact and
adequacy of steps we have taken to address our cost structure.
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 adapt
to changing market conditions, lower than expected contractual sales,
decreases in commercial rental demand or poor acceptance of rental
pricing, our ability to return out of service vehicles to the fleet,
availability of rental vehicles to meet demand and availability of labor
to maintain our fleet at normalized levels, worsening of market demand
for used vehicles impacting current pricing and our anticipated
proportion of retail versus wholesale sales, lack of customer demand for
our services, higher than expected maintenance costs due to, among other
things, lower than expected benefits from maintenance initiatives and a
newer fleet, setbacks or uncertainty in the economic market,
implementation or enforcement of regulations, decreases in freight
demand or volumes, poor operational execution particularly with new
accounts and
product launches, our ability to obtain adequate
profit margins for our services, our inability to maintain current
pricing levels due to soft economic conditions, 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 effective income 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 24, 2018, 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 five 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=1186438&tp_key=07f06e843e

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 VIAPHONE

Please dial the audio phone number approximately 10 minutes prior to
the start of the call.
Toll Free Number   888-352-6803
USA Toll Number: 323-701-0225
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: 1420126
 

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 two 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, 2018 and 2017

(In millions, except per share amounts)

 
  Three Months
2018   2017
 
Lease and rental revenues $ 824.3 $ 767.6
Services revenue 928.1 840.7
Fuel services revenue 151.1   128.7  
Total revenues $ 1,903.5   $ 1,737.0  
 
Cost of lease and rental $ 619.2 $ 578.8
Cost of services 787.2 702.9
Cost of fuel services 146.9 125.9
Other operating expenses 33.5 31.3
Selling, general and administrative expenses 208.6 201.1
Non-operating pension costs 1.2 7.3
Used vehicle sales, net 7.4 (0.8 )
Interest expense 37.8 34.9
Miscellaneous income, net (2.5 ) (5.0 )
Restructuring and other charges, net 16.0    
$ 1,855.4   $ 1,676.4  
 
Earnings from continuing operations before income taxes $ 48.1 $ 60.6
Provision for income taxes 14.2   22.1  
Earnings from continuing operations 33.9 38.5
Loss from discontinued operations, net of tax (0.4 ) (0.1 )
Net earnings $ 33.5   $ 38.4  
 
Earnings (loss) per common share - Diluted
Continuing operations $ 0.64 $ 0.72
Discontinued operations (0.01 )  
Net earnings $ 0.63   $ 0.72  
 
Earnings per share information - Diluted
Earnings from continuing operations $ 33.9 $ 38.5
Less: Distributed and undistributed earnings allocated to unvested
stock
(0.1 ) (0.1 )
Earnings from continuing operations available to common stockholders $ 33.8   $ 38.4  
   
Weighted-average shares outstanding - Diluted $ 53.0   $ 53.4  
 
EPS from continuing operations $ 0.64 $ 0.72
Non-operating pension costs 0.01 0.08
Goodwill impairment 0.29
Uncertain tax position adjustment (0.06 )
Acquisition transaction costs 0.01
Tax Reform-related adjustments, net 0.01
Restructuring and other, net 0.01
Operating tax adjustment   0.03  
Comparable EPS from continuing operations * $ 0.91   $ 0.83  
* 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,
2018
 

December 31,
2017

 
Assets:
Cash and cash equivalents $ 73.9 78.3
Other current assets 1,237.7 1,244.5
Revenue earning equipment, net 8,595.6 8,355.3
Operating property and equipment, net 790.5 776.7
Other assets 1,038.6   1,009.1
$ 11,736.2   11,464.0
 
Liabilities and shareholders' equity:
Current liabilities $ 1,131.4 1,188.9
Total debt 5,677.7 5,409.7
Other non-current liabilities (including deferred income taxes) 2,068.3 2,023.8
Shareholders' equity 2,858.8   2,841.7
$ 11,736.2   11,464.0
 

SELECTED KEY RATIOS AND METRICS

 
  March 31,
2018
 

December 31,
2017

 
Debt to equity 199 % 191 %
Effective interest rate (average cost of debt) 2.7 % 2.6 %
 
  Three months ended March 31,
2018   2017
 
Cash provided by operating activities from continuing operations $ 314.9 331.3
Free cash flow * (238.2 ) 82.8
Capital expenditures paid 662.7 361.3
 
Capital expenditures (accrual basis) $ 710.9 436.1
Less: Proceeds from sales (primarily revenue earning equipment) (90.0 ) (96.5 )
Net capital expenditures $ 621.0   339.6  
 
Three months ended March 31,
2018   2017
 
Return on average shareholders' equity*** 32.8 % 11.9 %
Return on average assets*** 7.0 % 2.2 %
Adjusted return on capital * 4.3 % 4.6 %
Weighted average cost of capital 4.3 % 4.3 %
Return on capital spread ** % 0.3 %
 
* 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.
*** 2018 calculations include the benefit from Tax Reform recorded
in the fourth quarter of 2017.
Note: Amounts may not be additive due to rounding.
 

RYDER SYSTEM, INC. AND SUBSIDIARIES

BUSINESS SEGMENT REVENUE AND EARNINGS - UNAUDITED

Periods ended March 31, 2018 and 2017

(Dollars in millions)

 
  Three Months
2018   2017   B(W)
 
Total Revenue:
Fleet Management Solutions:
ChoiceLease $ 690.4 656.3 5 %
SelectCare 121.9 113.6 7 %
Commercial rental 204.5 174.0 18 %
Other 21.9 18.3 20 %
Fuel services revenue 203.8   170.3   20 %
Total Fleet Management Solutions 1,242.6 1,132.5 10 %
Dedicated Transportation Solutions 299.0 266.6 12 %
Supply Chain Solutions 494.7 451.6 10 %
Eliminations (132.8 ) (113.7 ) (17 )%
Total revenue $ 1,903.5   1,737.0   10 %
 
 
Operating Revenue: *
Fleet Management Solutions $ 1,038.8 962.2 8 %
Dedicated Transportation Solutions 201.4 193.4 4 %
Supply Chain Solutions 382.8 361.8 6 %
Eliminations (80.1 ) (72.2 ) (11 )%
Operating revenue $ 1,542.9   1,445.1   7 %
 
 
Business segment earnings:

Earnings from continuing operations before income taxes:

Fleet Management Solutions $ 49.8 52.3 (5 )%
Dedicated Transportation Solutions 13.1 11.3 16 %
Supply Chain Solutions 26.2 28.0 (7 )%
Eliminations (13.3 ) (11.2 ) (18 )%
75.8 80.4 (6 )%
Unallocated Central Support Services (10.7 ) (10.2 ) (5 )%
Non-operating pension costs (1.2 ) (7.3 ) NM
Other items (15.8 ) (2.2 ) NM
Earnings from continuing operations before income taxes 48.1 60.6 (21 )%
Provision for income taxes 14.2   22.1   36 %
Earnings from continuing operations $ 33.9   38.5   (12 )%
 
* 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, 2018 and 2017

(Dollars in millions)

 
Three Months
2018   2017   B(W)
 
Fleet Management Solutions
 
FMS total revenue $ 1,242.6 1,132.5 10 %
Fuel services revenue(a) (203.8 ) (170.3 ) 20 %
FMS operating revenue * $ 1,038.8   962.2   8 %
 
Segment earnings before income taxes $ 49.8   52.3   (5 )%
 
FMS earnings before income taxes as % of FMS total revenue 4.0 % 4.6 %
 
FMS earnings before income taxes as % of FMS operating revenue * 4.8 % 5.4 %
 
 
Dedicated Transportation Solutions
 
DTS total revenue $ 299.0 266.6 12 %
Subcontracted transportation (63.7 ) (45.3 ) 41 %
Fuel (33.8 ) (28.0 ) 21 %
DTS operating revenue * $ 201.4   193.4   4 %
 
Segment earnings before income taxes $ 13.1   11.3   16 %
 
DTS earnings before income taxes as % of DTS total revenue 4.4 % 4.2 %
 
DTS earnings before income taxes as % of DTS operating revenue * 6.5 % 5.8 %
 
 
Supply Chain Solutions
 
SCS total revenue $ 494.7 451.6 10 %
Subcontracted transportation (86.9 ) (71.3 ) 22 %
Fuel (25.0 ) (18.5 ) 35 %
SCS operating revenue * $ 382.8   361.8   6 %
 
Segment earnings before income taxes $ 26.2   28.0   (7 )%
 
SCS earnings before income taxes as % of SCS total revenue 5.3 % 6.2 %
 
SCS earnings before income taxes as % of SCS operating revenue * 6.8 % 7.7 %
 
* 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.
 
RYDER SYSTEM, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION - UNAUDITED

KEY PERFORMANCE INDICATORS

 
Three months ended March 31,   Change
2018   2017 2018/2017
 
ChoiceLease
Average fleet count 140,100 137,100 2 %
End of period fleet count 140,800 137,900 2 %
Miles/unit per day change - % (a) (1.1 )% 1.5 %
 
Commercial rental
Average fleet count 38,600 37,300 3 %
End of period fleet count 39,300 37,300 5 %
Rental utilization - power units 74.8 % 67.2 % 760 bps
Rental rate change - % (b) 2.7 % 1.1 %
 

Customer vehicles under SelectCare contracts

Average fleet count 54,200 50,100 8 %
End of period fleet count 54,500 50,400 8 %
 

Customer vehicles under SelectCare on-demand (c)

Fleet serviced during the period 8,100 9,300 (13 )%
 
DTS
Average fleet count (d) 8,500 8,200 4 %
End of period fleet count (d) 8,700 8,300 5 %
 
SCS

Average fleet count (d)

8,400 7,700 9 %
End of period fleet count (d) 8,400 7,800 8 %
 
Used vehicle sales (UVS)
Average UVS inventory 6,000 7,100 (15 )%
End of period fleet count 6,000 6,700 (10 )%
Used vehicles sold 4,200 4,500 (7 )%
UVS pricing change - % (e)
Tractors 5 % (16 )%
Trucks 2 % (20 )%
 

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) 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.
(d) These vehicle counts are also included within the average fleet
counts for ChoiceLease, Commercial Rental and SelectCare.
(e) 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 Excluding Foreign Exchange   Total Revenue   Appendix - Non-GAAP Financial 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 Income Tax and Comparable Tax Rate   Earnings Before Income Tax and Effective Tax Rate from Continuing
Operations
  Appendix - Non-GAAP Financial Measure Reconciliations
Comparable Earnings   Earnings from Continuing Operations   Appendix - Non-GAAP Financial Measure Reconciliations
Comparable EPS and Comparable EPS Forecast   EPS from Continuing Operations
EPS Forecast from Continuing
Operations
  Consolidated Condensed Statements of Earnings - Unaudited
Appendix
- Non-GAAP Financial Measure Reconciliations (Forecast)
Adjusted Return on Average Capital (ROC) and Adjusted ROC Spread   Not Applicable. However, 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 is provided.
  Appendix - Non-GAAP Financial Measure Reconciliations
Cash Flow Measures:        
Total Cash Generated and Free Cash Flow   Cash Provided by Operating Activities   Appendix - Non-GAAP Financial 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,
2018 2017
 
Total revenue $ 1,903.5 1,737.0
Fuel (210.0 ) (175.3 )
Subcontracted transportation (150.6 ) (116.6 )
Operating revenue * $ 1,542.9   1,445.1  
 

TOTAL CASH GENERATED/FREE CASH FLOW
RECONCILIATION

   
 
Three months ended March 31,
2018 2017
 
Net cash provided by operating activities from continuing operations $ 314.9 331.3

Proceeds from sales (primarily revenue earning equipment) (a)

90.0 96.5

Collections on direct finance leases and other items (a)

19.7   16.3  
Total cash generated * 424.6 444.1

Purchases of property and revenue earning equipment (a)

(662.7 ) (361.3 )
Free cash flow ** $ (238.2 ) 82.8  
 
Memo:
Net cash provided by (used in) financing activities $ 231.8 (106.2 )
Net cash used in investing activities $ (553.0 ) (248.6 )
 

Notes:

 

(a) 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,
2018 2017
 
Net earnings (12-month rolling period) $ 785.9 244.5
+ Restructuring and other items 41.8 14.7
+ Income taxes 484.1   130.8  
Adjusted earnings before income taxes 343.6 389.9
+ Adjusted interest expense (a) 143.5 145.1
- Adjusted income taxes (b) (158.0 ) (186.5 )
= Adjusted net earnings for ROC (numerator) [A] $ 329.1   348.5  
 
Average total debt $ 5,400.2 5,496.7
Average off-balance sheet debt 2.6 1.3
Average shareholders' equity 2,401.6 2,064.8
Adjustment to equity (c) (140.0 ) 1.1  
Adjusted average total capital (denominator) [B] $ 7,664.4   7,563.9  
 
Adjusted ROC * [A]/[B] 4.3 % 4.6 %
 

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

   
2018
Consolidated Statements of Earnings Line Item Three Months
 
Earnings from continuing operations before income taxes $ 48.1
Non-operating pension costs Non-operating pension costs $ 1.2
Restructuring and other, net Restructuring and other charges, net $ 0.5
Goodwill impairment Restructuring and other charges, net $ 15.5
Acquisition transaction costs SG&A $ 0.6
Tax Reform-related adjustments, net SG&A $ (0.8 )
Comparable earnings from continuing operations before income taxes* 65.1  
 
Provision for income taxes (14.2 )
Income tax effects of non-GAAP adjustments** (2.5 )
Comparable provision for income taxes** (16.7 )
 
Earnings from continuing operations $ 33.9
Non-operating pension costs Non-operating pension costs $ 0.6
Restructuring and other, net Restructuring and other charges, net $ 0.4
Goodwill impairment Restructuring and other charges, net $ 15.5
Uncertain tax position adjustment Provision for income taxes $ (3.3 )
Acquisition transaction costs SG&A $ 0.4
Tax Reform-related adjustments, net SG&A $ 0.8  
Comparable earnings from continuing operations* $ 48.4  
 
Tax rate on continuing operations 29.5 %
Income tax effects of non-GAAP adjustments** (3.9 )%
Comparable tax rate on continuing operations** 25.6 %
 
    2017
Consolidated Statements of Earnings Line Item Three Months
 
Earnings from continuing operations before income taxes $ 60.6
Non-operating pension costs Non-operating pension costs 7.3
Operating tax adjustment SG&A 2.2  
Comparable earnings from continuing operations before income taxes* 70.2  
 
Provision for income taxes (22.1 )
Income tax effects of non-GAAP adjustments** (3.7 )
Comparable provision for income taxes** (25.7 )
 
Earnings from continuing operations 38.5
Non-operating pension costs Non-operating pension costs 4.2
Operating tax adjustment SG&A 1.7  
Comparable earnings from continuing operations* $ 44.4  
 
Tax rate on continuing operations 36.4 %
Income tax effects of non-GAAP adjustments** 0.2 %
Comparable tax rate on continuing operations** 36.6 %
 
* 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 2018 Full Year 2018
EPS from continuing operations $0.62 to $0.72 $4.55 to $4.80
Non-operating pension costs, net of tax 0.01 0.06
UK goodwill impairment charge 0.29
Uncertain tax position adjustment (0.06 )
Acquisition transaction costs 0.01
Restructuring and other 0.02
Tax Reform-related adjustments 0.57   0.58  
Comparable EPS from continuing operations forecast* $1.20 to $1.30 $5.45 to $5.70
 

Note: Amounts may not be additive due to rounding.

 

TOTAL CASH GENERATED/FREE CASH FLOW
FORECAST RECONCILIATION

 
 
2018 Forecast
Net Cash Provided by Operating Activities from Continuing Operations $ 1,805
Proceeds from sales (primarily revenue earning equipment) (1) 400
Collections of direct finance leases (1) 80  
Total cash generated* 2,285
 
Capital expenditures (1) (3,035 )
Free cash flow ** $ (750 )
 
Memo:
Net cash used in financing activities $ (850 )
Net cash used in investing activities $ (2,700 )
 

(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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