MIAMI, FL, Oct. 22, 2009 (Marketwire) --

MIAMI, FL -- (Marketwire) -- 10/22/09 -- Ryder System, Inc. (NYSE: R)

--  Q3 Continuing Operations EPS of $0.51 vs. $1.29 in 2008
--  Q3 Comparable Continuing Operations EPS of $0.50 vs. $1.26 in 2008
--  Q3 Total Revenue 20% Lower; Operating Revenue Declines 13%
--  Company Plans to Resume Share Repurchase Programs
    

Ryder System, Inc. (NYSE: R), a global leader in transportation and supply chain management solutions, today reported earnings per diluted share (EPS) from continuing operations for the three-month period ended September 30, 2009 were $0.51, compared with $1.29 in the year-earlier period. Earnings from continuing operations for the third quarter of 2009 were $28.5 million, compared with $72.8 million in the year-earlier period. EPS and earnings from continuing operations in the current period included a net benefit of $0.01 and $0.3 million, respectively, for the reversal of contingent income tax accruals, partially offset by restructuring and other items. EPS and earnings from continuing operations in the year-earlier period included an income tax benefit of $0.03 and $1.6 million, respectively, related primarily to changes in Massachusetts state income tax laws. Excluding these items, comparable EPS from continuing operations for the third quarter of 2009 were $0.50, down 60% from $1.26 in the year-earlier period, and comparable earnings from continuing operations of $28.2 million for the third quarter of 2009 were down 60% from $71.2 million in the year-earlier period. Results reflect significantly lower pre-tax earnings in the Fleet Management Solutions (FMS) business segment. This was driven by decreased global results in commercial rental, full service lease, and used vehicle sales. In addition, higher pension expense reduced EPS by $0.19, mostly impacting the FMS business segment.

The Company previously announced a plan to discontinue Supply Chain Solutions (SCS) operations in South America and Europe. During the third quarter of 2009, the Company ceased customer operations in all South American markets and part of Europe. Accordingly, results of these operations are reported as discontinued operations for all periods presented.

Net earnings per diluted share (including discontinued operations) for the three-month period ended September 30, 2009 were $0.43, versus $1.24 in the year-earlier period. Net earnings for the third quarter of 2009 were $24.0 million, versus $70.2 million in the year-earlier period. Comparable net earnings per diluted share (excluding restructuring and other items) were $0.46 for the third quarter of 2009 versus $1.21 in the year-earlier period.

Total revenue from continuing operations for the third quarter of 2009 was $1.26 billion, down 20% from $1.58 billion in the same period last year. Total revenue comparisons were adversely impacted by lower fuel prices and fuel volumes, as well as unfavorable foreign exchange rate movements. Operating revenue (revenue excluding FMS fuel and all subcontracted transportation) from continuing operations was $1.04 billion, down 13% compared with $1.19 billion in the year-earlier period. Operating revenue included the impact of unfavorable foreign exchange rates. FMS business segment total revenue decreased 22% due primarily to lower fuel services revenue. FMS operating revenue decreased 8% due to lower revenue in commercial rental and full service lease, as well as unfavorable foreign exchange rate movements. Full service lease revenue was negatively impacted by fleet downsizing and lower miles driven by customers with their fleets. SCS business segment total revenue and operating revenue from continuing operations decreased 22% due to lower automotive volumes, lower fuel volumes and fuel prices, and unfavorable foreign exchange rate movements. Dedicated Contract Carriage (DCC) business segment total revenue decreased 14% and operating revenue decreased 15% due to the pass through of lower fuel costs, and reduced freight volumes.

Commenting on the Company's third quarter performance, Ryder Chairman and CEO Greg Swienton said, "Our performance for the quarter was somewhat stronger than expected, particularly in our Supply Chain Solutions automotive industry business, and Fleet Management Solutions used vehicle sales business. Continuing the trends of the second quarter, we saw stable freight volumes with some seasonal improvement. However, we have not yet seen sustained growth in the economy, freight volumes, or customer activity levels. Throughout the quarter, we effectively managed the factors we can control, and achieved success in several areas. We successfully implemented most of our previously announced plan to disengage Supply Chain Solutions operations in South America and part of Europe without any significant customer impacts. Importantly, we reduced used vehicle sales inventories from second quarter levels, approaching our target levels despite tough market conditions. Additionally, our free cash flow and our liquidity position remained very strong, which enables us to advance strategic objectives related to operations, and financial initiatives, such as resuming our stock repurchase plans."

                         Year-to-Date Operating Results

Total revenue from continuing operations for the nine months ended September 30, 2009 was $3.65 billion, down 22% from $4.70 billion in the same period of 2008. Operating revenue from continuing operations for the first nine months of 2009 was $3.05 billion, down 14% from $3.54 billion in the first nine months of 2008.

Ryder's 2009 year-to-date earnings from continuing operations were $67.5 million, compared with $209.5 million in the year-earlier period. EPS from continuing operations were $1.21 for the first nine months of 2009, compared with $3.64 for the same period of 2008. Comparable year-to-date earnings from continuing operations were $71.6 million, compared with $207.9 million in the comparable period of 2008. Comparable EPS from continuing operations were $1.28, compared with $3.62 in the year-earlier period. Comparable year-to-date earnings and EPS from continuing operations exclude restructuring and other items in 2009 and benefits from certain tax items in 2009 and 2008.

Ryder's 2009 year-to-date net earnings (including discontinued operations) were $53.7 million, compared with $189.2 million in the year-earlier period. EPS were $0.96 for the first nine months of 2009, compared with $3.29 for the same period of 2008. Comparable EPS for the first nine months of 2009 were $1.13 versus $3.38 in the same period of 2008, excluding restructuring and other items. Net earnings include the impact of discontinued SCS operations in South America and part of Europe.

Operating cash flow from continuing operations through the first three quarters of 2009 was $758.8 million, down 15% from $895.1 million in the comparable period of 2008. Free cash flow from continuing operations through September 30, 2009 was $452.1 million, up 70% from $266.2 million in the same period in 2008, primarily due to lower net cash paid for capital expenditures.

                    Third Quarter Business Segment Operating Results

Ryder's primary measurement of business segment financial performance, Net Before Tax (NBT) from continuing operations, allocates Central Support Services to each business segment and excludes restructuring and other items.

Fleet Management Solutions

Ryder's Fleet Management Solutions (FMS) business segment combines several capabilities into a comprehensive package that provides one-stop outsourcing of the acquisition, maintenance, management, and disposal of vehicles. Ryder's commercial rental service offers customers a method to expand their fleets in order to address short-term capacity needs.

In the FMS business segment, total revenue in the third quarter of 2009 was $911.9 million, down 22% compared with $1.17 billion in the year-earlier period. Fuel services revenue in the third quarter of 2009 decreased 49%, compared with the same period in 2008 due primarily to lower fuel prices, as well as reduced gallons pumped at Ryder's fuel service centers. Operating revenue (revenue excluding fuel) in the third quarter of 2009 was $711.6 million, down 8% compared with $777.1 million in the year-earlier period. Both FMS total revenue and operating revenue included an unfavorable foreign exchange impact of 1%. Contractual revenue, which includes full service lease and contract maintenance, decreased 3% in the third quarter of 2009 because of fleet downsizing, lower miles driven by customers with their fleets, and unfavorable foreign exchange rate movements. Commercial rental revenue decreased 25% reflecting weak global market demand and lower pricing.

The FMS business segment's NBT was $37.4 million in the third quarter of 2009, down 64% from $104.8 million in the same period of 2008. NBT results were related primarily to a decline in global commercial rental performance, reduced global full service lease results, higher pension expense, and lower used vehicle sales results. These items were partially offset by cost reduction initiatives, including workforce reductions in early 2009. Commercial rental results were impacted by weak global demand, which drove lower utilization and reduced pricing. Full service lease results were adversely impacted by the protracted length and severity of the current freight recession, which has resulted in reduced customer demand for new leases and downsizing of customer fleets. Customers are also driving fewer miles with their existing fleets, which lowers Ryder's variable revenue and fuel gallons sold. While customers drove fewer miles with their existing fleets in the third quarter of 2009 versus the same period of 2008, mileage comparisons showed sequential improvement compared with the second quarter 2009 and continued to improve throughout the third quarter. As previously announced, pension expense significantly increased in 2009 primarily because of poor performance in the overall stock market in 2008. Used vehicle sales results were also impacted by weak demand which drove lower pricing, as well as higher inventory levels compared with the prior-year period. Business segment NBT as a percentage of operating revenue was 5.3% in the third quarter of 2009, down 820 basis points compared with 13.5% 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 materials and components 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, third quarter 2009 total revenue was $298.7 million, down 22% from $381.0 million in the comparable period in 2008. Third quarter 2009 operating revenue (revenue excluding subcontracted transportation) was $249.6 million, down 22% compared with $319.1 million in the comparable period a year ago. Both total revenue and operating revenue declined primarily due to lower automotive and other freight volumes. Revenue comparisons were also impacted by lower fuel volumes and fuel prices, as well as unfavorable foreign exchange rate movements.

The SCS business segment's NBT was $15.1 million in the third quarter of 2009, down 4% from $15.8 million in the same quarter of 2008. Comparative business segment earnings were negatively impacted by operating losses of $1.1 million in 2009 related to European markets that the Company expects to exit by the end of the year. Business segment earnings were also impacted by a Canadian pension curtailment gain in 2008, partially offset by start-up costs of a U.S.-based operation incurred in 2008. Third quarter 2009 NBT for the business segment as a percentage of operating revenue was 6.0%, compared with 4.9% in the same quarter of 2008.

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, third quarter 2009 total revenue was $120.6 million, down 14% compared with $140.6 million in the third quarter of 2008. Operating revenue (revenue excluding subcontracted transportation) in the third quarter of 2009 was $116.9 million, down 15% from $137.8 million in the year-earlier period. Total revenue and operating revenue decreased due to the pass through of lower fuel costs, and reduced freight volumes.

The DCC business segment's NBT in the third quarter of 2009 was $9.8 million, down 26% compared with $13.2 million in the third quarter of 2008, due to an increase in safety and insurance costs and the decline in revenue. Business segment NBT as a percentage of operating revenue was 8.4% in the third quarter of 2009, down 120 basis points from 9.6% 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 third quarter of 2009, CSS costs were $43.5 million, compared with $48.3 million in the year-earlier period, reflecting lower spending across all functional areas due to the benefit of cost reduction actions, lower incentive-based compensation, and prior-year professional fees associated with strategic initiatives.

Restructuring and Other Items

Pre-tax restructuring and other items from continuing operations in the third quarter of 2009 totaled $3.2 million ($2.0 million after tax), or $0.03 per diluted share. In the quarter, the Company recognized a pre-tax debt extinguishment charge of $3.9 million as part of a debt tender offer completed in September 2009, partially offset by net recoveries of $0.7 million related to refinements of prior restructuring accruals.

Income Taxes

The Company's effective income tax rate from continuing operations for the third quarter of 2009 was 35.6% of related pre-tax earnings, compared with 36.8% in the year-earlier period. The current period income tax rate reflects an income tax benefit of $2.2 million (5.1% of pre-tax earnings) associated with the reversal of reserves for uncertain tax positions primarily as a result of a favorable audit settlement. In the third quarter of 2008, the Company recognized an income tax benefit of $1.6 million (1.4% of pre-tax earnings) primarily from the impact of income tax changes in Massachusetts.

Discontinued Operations

The Company previously announced a plan to discontinue SCS operations in South America and Europe. During the third quarter of 2009, the Company ceased customer operations in all South American markets and part of Europe. Accordingly, results of these operations are reported as discontinued operations for all periods presented. Pre-tax earnings from discontinued operations totaled a loss of $4.6 million ($4.5 million after-tax or $0.08 per diluted share) for the three months ended September 30, 2009, compared with a loss of $3.1 million ($2.6 million after-tax or $0.05 per diluted share) in the year-earlier period. Results for 2009 include pre-tax exit-related restructuring and other charges of $2.2 million ($1.9 million after-tax or $0.03 per diluted share) associated with severance and other termination benefits, and contract termination 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 replacement vehicles and growth. 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.

Capital expenditures from continuing operations were $468.3 million for the first nine months of 2009, reduced from $946.2 million in the same period of 2008. The decrease in capital expenditures reflects reduced full service lease vehicle spending due to lower new and replacement sales in the current global economic environment, as well as increased use of term extensions and used vehicle redeployments. Additionally, the decrease reflects planned lower spending on transactional commercial rental vehicles. Net capital expenditures (including proceeds from the sale of assets) were $317.7 million for the first nine months of 2009, down 57% from $734.0 million in the same period of 2008.

Cash Flow

Operating cash flow from continuing operations through September 30, 2009 was $758.8 million, down 15% from $895.1 million in the same period of 2008, primarily due to lower cash-based earnings. Total cash generated (including proceeds from used vehicle sales) from continuing operations through September 30, 2009, was $960.7 million, down 17% from $1.15 billion in the same period of 2008.