ryder system, inc. wolfe trahan & co presentation
TRANSCRIPT
RYDER SYSTEM, INC.
Presented to: Wolfe Trahan Global Transportation Conference
May 25, 2011
Art GarciaEVP & CFO
05/11/11
Safe Harbor
Certain statements and information included in this presentation
are "forward-looking statements" under the Federal Private Securities Litigation Reform Act of 1995. 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.
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Ryder Profile
Revenue (1)
$5.1 BillionOperating Revenue (1)
$4.2 BillionComparable Earnings Before Income Taxes (1)
$189 MillionComparable Earnings (1)
$117 MillionFree Cash Flow (1)
$258 MillionAssets $6.7 BillionAssets Under Customer Leases
$3.6 BillionVehicles Maintained
182,100Employees 25,900
Full Year 2010
Dedicated Contract Carriage
Fleet Management Solutions
Supply Chain Solutions
(1) These amounts result from continuing operations.
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Custom vehicle specifications
State-of-the-art preventive maintenance
Comprehensive package of fleet support services
Fleet Management Solutions:
Product and Services Overview
Fleet Management Fleet Management SolutionsSolutions
Thousands of clean, mechanically-sound commercial vehicles for short-term customer needs
Lease support
CommercialRental
Full Service Lease
Insurance
Fuel
Safety
Regulatory reporting
Fleet Support Services
Ancillary maintenance work on Ryder or customer owned vehicles not included in base contract
Contract-Related Maintenance
Flexible package of maintenance and fleet support services
Vehicles are owned by our clients or under third-party finance lease contract
Contract Maintenance
Supply Chain Solutions
13,200 Lease/Maintenance Customers (U.S., Canada, U.K.)
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Dedicated Contract Dedicated Contract CarriageCarriage
Turnkey transportation service with drivers, vehicles, maintenance, routing & scheduling, management & administrative support
Dedicated Contract Carriage:
Product and Services Overview
150 Customers (North America, U.K.)
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Supply Chain SolutionsSupply Chain Solutions
Strategic consulting & decision support
Solutions engineering
Network modeling & optimization
Total landed cost
Lean Six Sigma
Professional Services
Order fulfillment
Warehouse and distribution center operations
Inbound materials management
Outbound product support
Reverse logistics
Vendor managed inventory
Kitting, packaging & assembly
Distribution Management
Freight procurement & contract management
Shipment planning and execution
Freight brokerage
Freight bill audit and payment
Origin/destination services
Transportation Management
Supported by: IT Solutions
Transportation & warehouse management systems
Network optimization tools
Inventory & shipment visibility tools
Supply Chain Solutions:
Product and Services Overview
470 Customers (North America, Asia)
Dedicated
Dedicated Contract Carriage
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Market Overview
The transportation and logistics markets present significant growth opportunities. Current estimated market sizes are as follows:
Note: Vehicle market shown is class 3-8Sources: Truck Rental and Leasing Association, R.L. Polk, Monitor Group, A.T. Kearney
Market Segment Market SizeLease and rental market (outsourced) –
U.S., Canada, U.K. 0.8 million vehiclesPrivate fleet market (non-outsourced) –
U.S., Canada 4.2 million vehiclesDedicated contract carriage market (outsourced) –
U.S. $13 billionSupply chain logistics market (outsourced) –
North America and Asia $260 billion
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Fleet Management Solutions:
Macro Trends Favoring FMS
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Deferred replacements have lead to record fleet aging which should lead to increases in truck sales and leasing in the coming years
Source: ACT Research Source: Global Insight
actual forecast11.3% CAGR
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Fleet Management Solutions:
Macro Trends Favoring FMS
Bank Capital Requirements
Access to Capital
Customers likely to utilize alternative financing sources (e.g., OEM captive finance, Full Service Lease and Fleet Management)
Capital
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Fleet Management Solutions:
Macro Trends Favoring FMS
Increasing complexity and costs are expected to favor outsourcing vehicle financing and maintenance
$
EPA 2007
EPA 2010
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Key Leading Indicators
The key leading indicators for Ryder’s business are improving. First quarter results included:
(a)
Global power units(b)
U.S. power units(c)
U.S.
Commercial Rental:
Utilization (a)
72.5%, up 390 bps vs. prior year
Pricing (a)
up 12% from prior year
Fleet Count (Average)
up 11% over prior year
Used Vehicle Pricing:
Tractors
up 42% over prior year; up 9% over 4Q10
Trucks
up 44% over prior year; up 7% over 4Q10
Lease:
Miles per Unit (b)
up 3% from prior year
Early Lease Terminations (c)
down 33% from prior year
Dedicated/Supply Chain Solutions:
Volumes
overall volumes improving
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Summary
►Benefiting from upturn in transactional businesses and acquisitions
►Lease fleet stabilizing - managing through impact of fleet aging
►Focus on driving long-term contractual revenue growth in all segments through strong customer retention and new business development, growth initiatives and strategic investments
►Ongoing process improvements and cost savings available
►Each of Ryder’s businesses operate in very large markets
►Market trends play favorably into long-term outsourcing decisions (increasing complexity/cost of vehicle technology, emissions standards, credit availability, complex and changing global supply chains, etc.)
►Strong balance sheet, cash flow and liquidity position
Ryder is well positioned for success coming out of severe downturn with a lower cost structure, well-aligned fleet, strong balance sheet,
strong market position and competitive posture, solid value proposition and significant growth opportunities
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