Ryder System, Inc. (NYSE: R) today revised its earnings guidance for the
second quarter and full year 2012 primarily due to lower than expected
results in its Fleet Management Solutions (FMS) business segment. The
lower FMS results reflect a reduced demand environment primarily for the
commercial rental product line, and actions taken to reduce used vehicle
inventories. Additionally, unusually high company-wide medical benefit
costs are expected to reduce earnings by approximately $0.05 per diluted
share in the quarter. Performance in Ryder’s contractual full service
lease product line and Supply Chain Solutions operations is expected to
be improved year-over-year and in line with the Company’s previous
forecast. Based on these factors, the Company has revised its comparable
second quarter 2012 earnings forecast to a range of $0.90 to $0.95 per
diluted share, down from the previous forecast of $1.07 to $1.12.
Although commercial rental revenue has improved both year-over-year and
seasonally, May results reflected lower rental growth than previously
discussed in Ryder’s most recent forecast. This was caused by lower than
expected demand and, to a lesser extent, pricing. The Company expects a
slower demand environment to continue through 2012. As a result, the
Company is reducing the size of its commercial rental fleet through the
balance of the year, resulting in higher used vehicle inventories.
Retail sales of used vehicles (including pricing) has remained stable;
however, the Company has increased used vehicle wholesaling activity,
resulting in lower used vehicle sales results. The Company expects
higher levels of wholesale activity over the balance of the year, and
anticipates used vehicle inventories to remain somewhat elevated during
that period. The Company anticipates continued stable pricing for retail
sales of used vehicles.
Ryder’s contractual full service lease product line is expected to
perform generally in line with the Company’s previous forecast for the
second quarter. The Company’s year-to-date lease fleet growth has
remained in line with expectations. However, in view of recent reports
of lowered expectations for the broader economy, the Company has reduced
its forecast for lease fleet growth in the second half of 2012.
Ryder’s Supply Chain Solutions operations are expected to continue to
perform in line with the Company’s previous forecast.
The Company expects to implement cost reduction initiatives to align
Company resources with the current business outlook. These actions will
result in an estimated second quarter pre-tax restructuring charge of
approximately $0.10 per diluted share. Cost savings actions are expected
to benefit earnings in the second half of the year by an estimated $0.18
per diluted share.
Commenting on the Company’s announcement, Ryder Chairman and Chief
Executive Officer Greg Swienton said: “We are responding with timely and
appropriate business adjustments and cost management initiatives to
address economic headwinds that are expected to continue through the
remainder of the year. These actions will not dilute our focus on
delivering excellent customer service and pursuing significant new
In view of these factors, the Company is revising its full year 2012
comparable earnings forecast to a range of $3.65 to $3.85 per diluted
share, down from a prior range of $4.02 to $4.12. Ryder’s revised
comparable full year 2012 forecast range is up 5% to 10% from the
Company’s comparable 2011 earnings of $3.49 per diluted share. The
revised 2012 comparable earnings forecast excludes the second quarter
$0.10 restructuring charge from the expected cost savings actions, as
well as a $0.10 tax benefit and $0.01 of other restructuring charges,
both from the first quarter. Ryder will provide additional details on
its 2012 business outlook during its second quarter earnings conference
call scheduled for Tuesday, July 24th.
Ryder System, Inc. is a FORTUNE 500® commercial
transportation, logistics and supply chain management solutions company.
Ryder’s stock (NYSE: R) is a component of the Dow Jones Transportation
Average and the Standard & Poor’s 500 Index. For more information on
Ryder System, Inc., visit www.ryder.com.
Note Regarding Forward-Looking Statements: Certain statements and
information included in this presentation are "forward-looking
statements" under the Federal Private Securities Litigation Reform Act
of 1995, including our expectations for future earnings and about the
economic trends that may affect our future operations. 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, a slowdown of the economic
recovery and decreases in freight demand, our ability to obtain adequate
profit margins for our services, our inability to maintain current
pricing levels due to soft economic conditions, uncertainty or decline
in economic and market conditions affecting contractual lease demand,
decreases in market demand in the commercial rental market and the sale
of used vehicles, competition from other service providers, customer
retention levels, unexpected volume declines, loss of key customers in
the Supply Chain Solutions (SCS) business segment, unexpected reserves
or write-offs due to the deterioration of the credit worthiness or
bankruptcy of customers, changes in financial, tax or regulatory
requirements or changes in customers’ business environments that will
limit their ability to commit to long-term vehicle leases, a decrease in
credit ratings, increased debt costs resulting from volatile financial
markets, inability to achieve planned synergies and customer retention
levels from acquisitions, labor strikes or work stoppages affecting our
or our customers’ business operations, driver shortages and increasing
driver costs, adequacy of accounting estimates, reserves and accruals
particularly with respect to pension, taxes, insurance and revenue, a
decline in pension plan returns, changes in obligations relating to
multi-employer plans, sudden or unusual changes in fuel prices, our
ability to manage our cost structure, new accounting pronouncements,
rules or interpretations, changes in government regulations, adverse
impacts of recently enacted regulations regarding vehicle emissions, any
unanticipated or unrealized effects of the recent Japan earthquake and
tsunami on our operations, customers, and vehicle suppliers, 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 from continuing operations, 2012
comparable EPS forecasts, operating revenue, total cash generated, free
cash flow, total obligations, and the ratios based on these financial
measures, as well as the other financial measures identified in the
tables following this release. Additional information regarding
non-GAAP financial measures can be found in our investor presentation
for the quarter and in our reports filed with the SEC, which are
available in the Investors area of our website at www.ryder.com.
Conference Call and Webcast Information:
Ryder’s earnings conference call and webcast is scheduled for Tuesday,
July 24, 2012, from 11:00 a.m. to 12:00 noon Eastern Time. Speakers will
be Chairman and Chief Executive Officer Greg Swienton and Executive Vice
President and Chief Financial Officer Art Garcia.
To join the conference call live:
Begin 10 minutes prior to the conference by dialing the audio phone
number 1-888-398-5319 (outside U.S. dial 1-773-681-5795)
using the Passcode: Ryder and Conference Leader: Bob Brunn.
Then, access the presentation via the Net Conference website at www.mymeetings.com/nc/join/
using the Conference Number: RG8085087 and Passcode: RYDER.
To access audio replays of the conference and
view a presentation of Ryder’s earnings results: Dial 1-800-947-6314
(outside U.S. dial 1-203-369-3981), then view the
presentation by visiting the Investors area of Ryder’s website at http://investors.ryder.com.
A podcast of the call will also be available online within 24 hours
after the end of the call at http://investors.ryder.com.