News Details

• Q4 Record Comparable EPS from Continuing Operations Up 7% to $1.35
• Q4 EPS from Continuing Operations Increase 16% to $1.24
• Q4 Record Operating Revenue of $1.3 Billion Grows 4%; Total Revenue Up 2% to $1.6 Billion
• Full-Year Record Comparable EPS from Continuing Operations Up 11% to $4.88
• Full-Year EPS from Continuing Operations Up 18% to $4.63
• Full-Year Record Operating Revenue of $5.3 Billion Up 4%; Total Revenue Grows 3% to $6.4 Billion
• 2014 Comparable EPS Forecast of $5.30 to $5.45 vs. $4.88 for 2013

MIAMI--(BUSINESS WIRE)-- Ryder System, Inc. (NYSE: R), a leader in transportation and supply chain management solutions, today reported record comparable earnings per diluted share from continuing operations for the three-month period ended December 31, 2013 of $1.35, up 7% from $1.26 in the year-earlier period. Comparable earnings from continuing operations for the fourth quarter of 2013 of $72.1 million increased 11% from $64.9 million in the year-earlier period. The increase in comparable earnings reflects strong performance in both business segments, Fleet Management Solutions (FMS) and Supply Chain Solutions (SCS). Comparable earnings from continuing operations in the fourth quarter of 2013 excluded non-operating pension costs of $0.10 per diluted share or $5.3 million. Comparable earnings from continuing operations for the year-earlier period excluded non-operating pension costs of $0.09 per diluted share or $4.8 million, and a charge of $0.10 per diluted share or $5.1 million associated with certain vehicle-related losses from Superstorm Sandy. Including these items and nominal restructuring and other charges, earnings per diluted share from continuing operations for the fourth quarter of 2013 were $1.24, up 16% from $1.07 in the year-earlier period, and earnings from continuing operations of $65.9 million increased from $54.9 million in the year-earlier period.

Record operating revenue (revenue excluding FMS fuel and all subcontracted transportation) for the fourth quarter of 2013 of $1.34 billion, was up 4% from $1.29 billion in the year-earlier period, reflecting new business and higher volumes in SCS, full service lease growth, and improved rental revenue. Total revenue was $1.62 billion, up 2% from $1.58 billion in the same period last year. FMS total and operating revenue increased 2% and 3%, respectively, due to higher full service lease revenue, as well as growth in commercial rental. SCS total and operating revenue increased 4% and 8%, respectively, reflecting new business and higher volumes.

Commenting on the Company’s fourth quarter and full-year 2013 performance, Ryder Chairman and CEO Robert Sanchez said, “We closed 2013 with a strong fourth quarter in which we delivered higher revenue and double-digit earnings growth. For full-year 2013, we grew operating revenue 4%, improved earnings by 13%, and achieved record earnings per share. In Fleet Management Solutions, we increased our full service lease fleet by over 2,600 vehicles during the second half of the year driven by significantly improved sales activity. Our commercial rental business also performed well last year, with higher pricing and increased U.S. demand. Additionally, solid used vehicle sales activity drove inventories to the lowest levels in two years. In Supply Chain Solutions, we had strong overall performance and continued growth in our dedicated services offering. Importantly, both business segments delivered revenue growth, while also posting double-digit increases in pre-tax earnings for the full year.”

Fourth Quarter Business Segment Operating Results

Fleet Management Solutions

In the FMS business segment, total revenue in the fourth quarter of 2013 was $1.14 billion, up 2% compared with the year-earlier period, due to higher operating revenue. Fuel services revenue in the fourth quarter of 2013 decreased 3%, due to lower fuel prices passed through to customers. Operating revenue (revenue excluding fuel) in the fourth quarter of 2013 was $875.7 million, up 3%. Full service lease revenue increased 3%, due primarily to higher prices on replacement vehicles. The quarter-end lease fleet grew by 2,100 vehicles, sequentially versus last quarter, reflecting stronger than expected sales activity. Commercial rental revenue increased 6%, reflecting improved global pricing and higher U.S. demand.

FMS earnings before tax were $98.2 million in the fourth quarter of 2013, up 14% from $86.0 million in the same period of 2012. Increased earnings reflect improved used vehicle sales results, strong commercial rental performance and better full service lease results, partially offset by higher compensation-related expenses. Used vehicle sales results improved due to higher volumes and increased pricing. Used vehicle inventories declined sequentially by 4% to 7,900 units, which is within Ryder’s target range of 6,000 to 8,000 vehicles. Strong commercial rental performance was driven by higher pricing and improved utilization on a smaller average fleet. Rental power fleet utilization was 78.9% for the fourth quarter of 2013, up from 78.2% in the year-earlier period. Full service lease results benefited from depreciation changes associated with increased residual values, as well as higher per-vehicle pricing reflecting new engine technology. Business segment earnings before tax (EBT) as a percentage of operating revenue were 11.2% in the fourth quarter of 2013, up 110 basis points compared with 10.1% in the same quarter a year ago.

Supply Chain Solutions

In the SCS business segment, fourth quarter 2013 total revenue was $598.7 million, up 4%, as higher operating revenue offset lower subcontracted transportation. Operating revenue (revenue excluding subcontracted transportation) was $525.9 million, an increase of 8% compared with the same quarter a year ago. SCS operating revenue grew as a result of new sales and higher volumes. The Company saw strong growth in the industrial, consumer packaged goods/retail, and high tech vertical industry groups.

SCS earnings before tax in the fourth quarter of 2013 were $32.9 million, up 6% from $31.0 million in the same quarter of 2012. Earnings benefited from new business and higher volumes, partially offset by $1 million in costs related to legal claims. Business segment earnings before tax as a percentage of operating revenue were 6.3%, flat compared with 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. Most CSS costs are allocated to the business segments. In the fourth quarter of 2013, CSS costs were $55.7 million, compared with $48.7 million in the year-earlier period, primarily driven by higher compensation-related expenses and planned higher investments in information technology.

Items Excluded from Comparable Earnings

Non-operating components of pension costs are excluded from both comparable earnings and segment earnings before tax in order to more accurately reflect the operating performance of the business. Non-operating pension costs totaled $9.0 million ($5.3 million after tax) or $0.10 per diluted share in the fourth quarter of 2013, up from $7.9 million ($4.8 million after tax) or $0.09 per diluted share in the year-earlier period. Non-operating pension costs in the fourth quarter of 2013 included a charge of $3.9 million for an understatement of pension obligations that pertains to prior years. Excluding this charge, non-operating pension costs improved this year as a result of higher pension asset returns in 2012 and contributions, partially offset by a lower discount rate.

Fourth quarter 2013 results also included other net charges of $1.4 million ($0.8 million after tax) or $0.01 per diluted share, primarily associated with a multi-employer pension settlement charge.

In the fourth quarter of 2012, the Company recorded a charge of $8.2 million ($5.1 million after-tax) for vehicles damaged in Superstorm Sandy.

Income Taxes

The Company’s effective income tax rate from continuing operations for the fourth quarter of 2013 was 32.5% of earnings before tax compared with 32.9% in the year-earlier period.

Capital Expenditures

Capital expenditures were $2.18 billion for 2013, compared with $2.16 billion in the same period of 2012. The increase in capital expenditures reflects increased vehicle purchases to fulfill full service lease contracts, offset by planned lower investments in the commercial rental fleet. Net capital expenditures (including proceeds from the sale of assets) were $1.73 billion for 2013, up from $1.62 billion in the same period of 2012, reflecting a $130 million vehicle sale-leaseback transaction in 2012.

Cash Flow

Operating cash flow from continuing operations in 2013 was $1.2 billion, up 8% from $1.13 billion in the same period of 2012, due to lower working capital needs and higher earnings. Total cash generated (including proceeds from used vehicle sales) from continuing operations in 2013 was $1.75 billion, unchanged from the same period of 2012. Free cash flow from continuing operations in 2013 was negative $386.2 million, compared with negative $384.2 million in the same period of 2012.

Leverage

Balance sheet debt as of December 31, 2013 increased by $368.6 million compared with year-end 2012, resulting from negative free cash flow. The leverage ratio for balance sheet debt as of December 31, 2013 was 221%, down from 260% at year-end 2012. Total obligations to equity as of December 31, 2013 were 226%, down from 270% at year-end 2012. Total obligations to equity are at the bottom end of Ryder’s long-term target range of 225% to 275%.

2014 Earnings Forecast

Commenting on the Company’s outlook, Mr. Sanchez said, “Looking ahead to 2014, we expect to build on our strong 2013 performance with accelerating revenue growth and double-digit earnings improvement. We anticipate revenue growth in all product lines. Based on recent sales results and trends, we anticipate continued growth in our lease fleet with a higher number of vehicles under long-term contracts with customers. We are forecasting another year of record earnings per share, driven by contractual full service lease and supply chain solutions, as well as commercial rental. We also expect increasing contributions from new products including our on-demand maintenance and natural gas vehicle offerings. In addition, we anticipate depreciation benefits associated with strong used vehicle pricing realized over the past few years. These earnings improvements will be partially offset by a higher tax rate due to increased earnings in higher tax rate jurisdictions. We’re pleased that our strong earnings growth will also allow us to make strategic investments in the business to drive future growth. Lastly, with our leverage ratio now at the low end of our target range, we will begin implementing our recently announced anti-dilutive share repurchase program to deliver additional value to our shareholders.”

Ryder forecasts full-year 2014 comparable earnings from continuing operations to be in the range of $5.30 to $5.45 per diluted share, up 9% to 12% from $4.88 per diluted share in 2013. Full-year earnings comparisons exclude non-operating pension costs of $0.15 per diluted share in 2014, and $0.28 per diluted share in 2013. The Company is also establishing a first quarter 2014 comparable earnings forecast of $0.83 to $0.88 per diluted share, up 2% to 9% from $0.81 in the first quarter of 2013. First quarter earnings comparisons exclude non-operating pension costs of $0.04 per diluted share in 2014, and $0.06 per diluted share in 2013. Total revenue for the full-year 2014 is forecast to be approximately $6.8 billion, up 5% from $6.4 billion in 2013. Operating revenue (revenue excluding FMS fuel and all subcontracted transportation) for the full-year 2014 is forecast to be approximately $5.6 billion, up 6% from $5.3 billion in 2013.

Supplemental Company Information

Fourth Quarter Net Earnings

Net earnings per diluted share (including discontinued operations) for the three-month period ended December 31, 2013 were $1.22 versus $1.05 in the year-earlier period. Earnings per diluted share from discontinued operations (previously announced in 2009) totaled a loss of $0.02 in both the fourth quarter of 2013 and the same period of 2012. Net earnings for the fourth quarter of 2013 were $64.6 million versus $53.8 million in the year-earlier period.

Full-Year 2013 Operating Results

Total revenue from continuing operations for the full-year 2013 was $6.42 billion, up 3% from $6.26 billion in 2012. Operating revenue from continuing operations for the full-year 2013 was a record $5.27 billion, up 4% from $5.07 billion in 2012.

Ryder’s full-year 2013 comparable earnings from continuing operations were $256.6 million, an improvement of 13% from $226.8 million in 2012. Record comparable 2013 earnings per diluted share from continuing operations of $4.88 rose 11% from $4.41 in 2012.

Earnings from continuing operations were $243.2 million in 2013, compared with $200.9 million in the year-earlier period. Earnings per diluted share from continuing operations were $4.63 for 2013, up 18% versus $3.91 in 2012.

Net earnings per diluted share (including discontinued operations) were $4.53 for 2013, an improvement of 11% from $4.09 in 2012. Earnings per diluted share from discontinued operations totaled a loss of $0.10 in 2013, compared with earnings of $0.18 in the prior year. Net earnings were $237.8 million in 2013, up 13% compared with $210.0 million in 2012.

Business Description

Ryder System, Inc. is a FORTUNE 500® commercial transportation, logistics 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 two, inter-related business segments:

• Fleet Management Solutions – Ryder’s FMS business segment provides one-stop outsourcing of a range of solutions for commercial truck fleet operators, including vehicle maintenance, leasing and rental, used vehicle sales, as well as services such as roadside assistance, fueling, safety and financing options.
• Supply Chain Solutions – Ryder’s SCS business segment offers a broad range of innovative solutions designed to optimize day-to-day logistics operations and synchronize the supply of parts and finished goods with customer demand. Solutions are strategically engineered to address customer requirements, and include lead logistics management, dedicated services, warehousing, transportation management, packaging, and other value-added services.

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 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.

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 regarding revenue and earnings growth, lease fleet growth, performance in our product lines, including full service lease, supply chain solutions and commercial rental, used vehicle pricing, benefits from new product offerings, tax impacts, our strategic investment plans and the anticipated use of our share repurchase program. 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, decreases in commercial rental demand and pricing, fluctuations in market demand for used vehicles impacting inventory levels, pricing and our anticipated proportion of retail versus wholesale sales, higher than expected maintenance costs, lower than expected benefits from maintenance initiatives and a newer fleet, setbacks in the economic recovery, decreases in freight demand or volumes, our ability to obtain adequate profit margins for our services, our inability to maintain current pricing levels due to soft economic conditions, further decline in economic and market conditions in the U.K., competition from other service providers, customer retention levels, loss of key customers, 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, 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 from continuing operations, 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 as required by Regulation G regarding non-GAAP financial measures can be found in the tables following this release, our investor presentation for the quarter, our most recent Form 10-K, Form 10-Q and our Form 8-K filed as of the date of this news release with the SEC, which are available in the Investors area of our website at http://investors.ryder.com.

Conference Call and Webcast Information:

Ryder’s earnings conference call and webcast is scheduled for Tuesday, February 4, 2014, 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 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: RG3433988 and Passcode: RYDER.
• To access audio replays of the conference and view a presentation of Ryder’s earnings results: Dial 1-800-337-5620 (outside U.S. dial 1-203-369-3253), 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.

* Non-GAAP financial measure.

Note: Amounts may not be additive due to rounding.

Source: Ryder System, Inc.