Ryder System, Inc. Reports Fourth Quarter and Full Year 2001 Results; Earnings Per Share of $0.45, Excluding Restructuring and Other Charges, Exceed Consensus Estimates of $0.40
MIAMI--Feb. 7, 2002---- Cost Management Measures Help Offset Revenue Decline --
Ryder System, Inc. , a global leader in logistics and transportation management solutions, today reported that for the three months ending on December 31, 2001, its earnings per diluted share, before restructuring and other charges, were $0.45, compared with $0.51 in the fourth quarter of 2000 and above current Wall Street consensus estimates of $0.40 per diluted share. The Company's fourth quarter revenue was $1.19 billion, down from $1.36 billion in the comparable period last year.
Ryder concluded its year-long strategic restructuring initiatives, better positioning itself for long-term, sustainable and profitable growth. The Company recorded restructuring and other charges of $32.8 million, or $0.45 per diluted share in the fourth quarter of 2001, compared with $4.7 million, or $0.05 per diluted share in the year-earlier period. The charges principally relate to the write-off of goodwill related to operations in South America of $12.8 million, contract termination costs of $11.2 million and employee severance costs of $3.9 million. The charges do not include any impairment of revenue-earning equipment associated with the Company's leasing and rental business. As a result, net earnings were breakeven in the fourth quarter, compared with $27.4 million, or $0.46 per diluted share, in the year-earlier period.
Full Year 2001 Results
For 2001, Ryder's revenue was $5.01 billion, down from $5.34 billion in 2000. Pre-tax earnings before unusual items were $147.2 million compared with $183.3 million last year. Earnings per share, before unusual items, were also lower, at $1.65 per diluted share in 2001 compared with $1.93 in 2000. Net earnings were $18.7 million, or $0.31 per diluted share in 2001, compared with $89.0 million, or $1.49 per diluted share in 2000.
Unusual items, primarily restructuring and other charges, totaled $116.5 million, or $1.34 per diluted share in 2001, compared with $42.0 million, or $0.44 per diluted share, in 2000.
Gregory T. Swienton, Ryder's President and Chief Executive Officer, stated, "The global recession had a serious impact on many of Ryder's customers and on the Company itself. Nonetheless, our employees worked diligently throughout the year to provide outstanding customer service while reducing costs and expenses whenever and wherever possible."
C.J. Nelson, Ryder's Senior Executive Vice President and Chief Financial Officer, said, "Ryder weathered a difficult year. However, we are encouraged that our team recognized the financial challenges early and implemented the necessary cost management and process improvement initiatives that lessened the impact of the economic downturn."
He stated further, "We were also able to decrease Ryder's debt to equity, total obligations to equity, long-term debt and liabilities during 2001, while increasing the Company's free cash flow. We're justifiably proud of these accomplishments during a difficult year."
Fourth Quarter Business Segment Operating Results
Fleet Management Solutions
Ryder's Fleet Management Solutions (FMS) combine 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 specific or short-term capacity needs.
In the FMS business segment, dry revenue (revenue excluding fuel) in the fourth quarter of 2001 was $655.3 million, down 5.0 percent compared with $689.5 million in the fourth quarter of 2000. Driving the decrease was a year-over-year decline in commercial rental.
Contribution margin dollars decreased 15.6 percent, to $82.0 million in the fourth quarter of 2001, compared with $97.1 million in the same period of 2000. The decrease was partially offset by reductions in FMS field overhead costs. Contribution margin as a percentage of dry revenue was 12.5 percent in the fourth quarter of 2001 compared with 14.1 percent in the same quarter a year ago. Contribution margin dollars were primarily impacted by lower rental margin.
Supply Chain Solutions
Supply Chain Solutions (SCS) enable Ryder 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 raw material supply 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, fourth quarter 2001 revenue totaled $339.1 million, down 19.1 percent from $419.3 million in the comparable period in 2000. Fourth quarter 2001 operating revenue was $242.9 million, down 15.9 percent from $288.7 million in the comparable period a year ago. The decreases were due primarily to volume reductions resulting from recession-related slowdowns in many industrial categories Ryder serves in the U.S., Latin America and Europe.
The SCS contribution margin improved in the fourth quarter of 2001. Contribution margin dollars were $19.1 million in the fourth quarter of 2001, compared with $18.7 million in the same quarter of 2000. The contribution margin as a percentage of operating revenue was 7.9 percent in the fourth quarter of 2001, compared with 6.5 percent in the same quarter of 2000.
Dedicated Contract Carriage
Ryder's Dedicated Contract Carriage (DCC) segment provides customers with vehicles, drivers, management and administrative support, with the assets committed to a specific customer for a specified contractual term. DCC supports customers with both basic and sophisticated logistics and transportation needs, including routing and scheduling, specialized driver services and extensive logistical engineering support.
In the Dedicated Contract Carriage business segment, fourth quarter revenue totaled $133.5 million, down 5.1 percent from $140.7 million in the fourth quarter of 2000. Operating revenue in the fourth quarter was $132.5 million, down 4.3 percent from $138.5 million in the comparable period a year ago. Contribution margin dollars decreased in the fourth quarter of 2001 to $15.8 million, compared with $16.8 million in the fourth quarter of 2000. Contribution margin as a percentage of operating revenue was 11.9 percent compared with 12.1 percent last year. The decreases were primarily caused by general economic conditions, which were reflected in decreases in the amount of freight moved and miles driven.
Corporate Financial Information
Central Support Services
Central support services are overhead costs incurred to support all business segments and product lines.
In the fourth quarter of 2001, central support services costs were reduced again, down 13.7 percent to $63.7 million, compared with $73.8 million in the fourth quarter of 2000.
For the full year, central support services costs were $264.0 million, down 7.0 percent from $284.0 million in full year 2000.
The quarterly and year-over-year declines were attributable primarily to various strategic cost management initiatives undertaken across all departments over the past year.
Capital Expenditures
Improved processes, controls and cost management initiatives were utilized in the ongoing effort to reduce gross capital expenditures. Capital expenditures, excluding acquisitions, were $114.6 million in the fourth quarter of 2001, down 54.0 percent when compared with $249.3 million in the same quarter of 2000.
For the full year, cost management processes and controls contributed to a continuing reduction in capital expenditures, excluding acquisitions, of 49.1 percent, from $1.29 billion in 2000 to $656.6 million in 2001.
The reduction in capital spending is directly related to: 1) the Company's revamped processes and controls; 2) its commitment to investing new capital in projects that will provide attractive returns to the Company; 3) an emphasis on re-deploying existing capital; and 4) the slowing economy.
Outlook for 2002
According to Swienton, "Ryder's operating environment in 2002 continues to be challenging, with the U.S. and global recession negatively impacting the industry segments we serve. In addition, our commercial rental business remains soft, and the depressed used truck market is not expected to improve during 2002."
Commenting further, he said, "Nonetheless, some customers are motivated to increase outsourcing in periods of economic slowdown, and Ryder is ready and able to serve them. Therefore, while we expect revenue growth to be modest in 2002, profit margins and earnings should be better than in 2001. We are also positioned for further improvement as the economy regains momentum. Our focus will continue to be on bottom-line returns and not just on top-line growth."
Swienton concluded by stating, "We continue to improve our business processes and reduce costs throughout the Company. The Ryder team continues to provide superior customer service, and the initiatives we have underway will improve Ryder's execution, lower expenses and generate long-term profitability."
About Ryder
Ryder provides leading-edge logistics, supply chain and transportation management solutions worldwide. Ryder's product offerings range from full-service leasing, commercial rental and programmed maintenance of vehicles to integrated services such as dedicated contract carriage and carrier management. Additionally, Ryder offers comprehensive supply chain solutions, consulting, lead logistics management services and e-Business solutions that support customers' entire supply chains, from inbound raw materials and parts through distribution and delivery of finished goods. Ryder serves customer needs throughout North America, in Latin America, Europe and Asia.
For the fifth consecutive year, Ryder was featured in the 2001 Fortune Most Admired Companies survey of corporate reputations and has ranked among the top five in its industry category since 1997. Forbes named Ryder to its "Magnetic 40" as "Best in Transportation and Logistics" for creating a "network of partnerships that can spur growth, innovation and most important, serve customers better." InternetWeek named Ryder as one of the top 100 U.S. companies for effectiveness in using the Internet to achieve tangible business benefits. For the fourth consecutive year, Inbound Logistics recognized Ryder in 2001 as the top third-party logistics provider. The National Safety Council selected Ryder to receive the 2002 Green Cross for Safety Medal - its highest honor - for exemplary commitment to workplace safety and corporate citizenship.
Ryder's stock is a component of the Dow Jones Transportation Average and the Standard & Poor's 500 Index. With 2001 revenue of $5.01 billion, Ryder ranks 333rd on the Fortune 500 list and 319th on the Forbes 500.
For more information on Ryder System, Inc., visit http://www.ryder.com.
Note: Certain statements and information included in this release are "forward-looking statements" under the Federal Private Securities Litigation Reform Act of 1995. Accordingly, we advise that these forward-looking statements be evaluated with consideration given to the many 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, the competitive pricing environment applicable to the Company's businesses, customer retention levels, changes in customers' business environments, changes in market conditions affecting the sale of used vehicles, greater than expected expenses associated with the Company's activities and changes in general economic conditions.
Note:
The fourth quarter/full year 2001 earnings webcast is scheduled for February 7, 2002 at 11:00 a.m. (EST). To access the call via the Internet, visit Ryder's home page at www.ryder.com. Speakers will be Gregory T. Swienton, President and Chief Executive Officer, and C.J. Nelson, Senior Executive Vice President and Chief Financial Officer.
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS - UNAUDITED
Periods ended December 31, 2001 and 2000
(In millions, except per share data)
Three Months Twelve Months
2001 2000 2001 2000
---- ---- ---- ----
Revenue $ 1,187.7 1,357.2 $ 5,006.1 5,336.8
----------- ----------- ----------- -----------
Operating expense 493.3 583.8 2,132.5 2,324.4
Salaries and
employee-related
costs 295.1 310.7 1,212.2 1,226.6
Freight under
management expense 97.2 132.8 436.4 506.7
Depreciation expense 140.1 146.1 545.5 580.4
Gains on vehicle
sales (2.3) (2.3) (11.9) (19.3)
Equipment rental 104.5 96.5 427.0 373.2
Interest expense 25.9 36.8 118.5 154.0
Miscellaneous
(income) expense,
net (9.3) 4.6 (1.3) 7.5
Unusual items -
restructuring and
other charges 32.8 4.7 116.5 42.0
----------- ----------- ----------- -----------
1,177.3 1,313.7 4,975.4 5,195.5
----------- ----------- ----------- -----------
Earnings before
income taxes 10.4 43.5 30.7 141.3
Provision for income
taxes 10.2 16.1 12.0 52.3
----------- ----------- ----------- -----------
Net earnings $ 0.2 27.4 $ 18.7 89.0
=========== =========== =========== ===========
Diluted earnings per
common share $ -- 0.46 $ 0.31 1.49
=========== =========== =========== ===========
Average common
shares - diluted 60.9 60.0 60.7 59.8
=========== =========== =========== ===========
Supplemental earnings per share
information:
Earnings prior to
unusual charges
and tax rate
changes $ 0.45 0.51 $ 1.54 1.93
Benefit of income
tax rate change
in Canada -- -- 0.11 --
----------- ----------- ----------- -----------
Earnings prior to
unusual charges $ 0.45 0.51 $ 1.65 1.93
Restructuring and
other charges (0.45) (0.05) (1.34) (0.44)
----------- ----------- ----------- -----------
Net earnings $ -- 0.46 $ 0.31 1.49
=========== =========== =========== ===========
NOTE: Earnings per share amounts are calculated independently for
each component and may not be additive due to rounding.
Certain amounts have been reclassified to conform to current
presentation.
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS - PRELIMINARY AND UNAUDITED
(In millions)
December 31, December 31,
2001 2000
---- ----
Assets:
Current assets $ 982.5 928.3
Revenue earning equipment 2,479.1 3,012.8
Operating property and equipment 566.9 612.6
Other assets 895.1 921.2
---------- ---------
$ 4,923.6 5,474.9
========== =========
Liabilities and Shareholders' Equity:
Current liabilities (including
current portion of long-term
debt) $ 1,013.6 1,302.3
Long-term debt 1,391.6 1,604.2
Other non-current liabilities
(including deferred income
taxes) 1,287.7 1,315.7
Shareholders' equity 1,230.7 1,252.7
---------- ---------
$ 4,923.6 5,474.9
========== =========
SELECTED KEY RATIOS
December 31, December 31,
2001 2000
---- ----
Debt to equity 139% 161%
Total obligations to equity (a) 199% 258%
Total obligations to equity,
including securitizations (a) 234% 275%
Twelve months ended
December 31,
2001 2000
---- ----
Return on average common equity 1.5% 7.3%
Return on average assets 0.4% 1.6%
Average asset turnover 97.1% 93.8%
Return on total capital 3.0% 5.3%
(a) - Total obligations represent debt plus off-balance sheet
equipment obligations.
RYDER SYSTEM, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
Periods ended December 31, 2001 and 2000
(In millions)
(unaudited)
Three Months Twelve Months
2001 2000 B(W) 2001 2000 B(W)
---- ---- ---- ---- ---- ----
Revenue:
Fleet Management Solutions:
Full service lease
and program
maintenance $ 456.7 469.6 (2.7%) $ 1,855.9 1,865.4 (0.5%)
Commercial
rental 113.0 129.5 (12.7%) 468.4 523.8 (10.6%)
Fuel 139.0 198.5 (30.0%) 658.3 773.3 (14.9%)
Other 85.6 90.4 (5.3%) 369.9 393.5 (6.0%)
----- ----- ----- ----- ----- -----
Total Fleet
Management
Solutions 794.3 888.0 (10.6%) 3,352.5 3,556.0 (5.7%)
Supply Chain
Solutions 339.1 419.3 (19.1%) 1,453.8 1,595.2 (8.9%)
Dedicated
Contract
Carriage 133.5 140.7 (5.1%) 535.0 551.7 (3.0%)
Eliminations (79.2) (90.8) 12.8% (335.2) (366.1) 8.4%
----- ----- ----- ----- ----- -----
Total
revenue $1,187.7 1,357.2 (12.5%) $ 5,006.1 5,336.8 (6.2%)
======= ======= ===== ======= ======= =====
Contribution margin:
Fleet Management
Solutions $ 82.0 97.1 (15.6%) $ 339.3 382.8 (11.4%)
Supply Chain
Solutions 19.1 18.7 2.1% 51.2 65.5 (21.8%)
Dedicated
Contract
Carriage 15.8 16.8 (6.0%) 57.7 60.8 (5.1%)
Eliminations (10.0) (10.6) 5.7% (37.0) (41.8) 11.5%
----- ----- ----- ----- ----- -----
106.9 122.0 (12.4%) 411.2 467.3 (12.0%)
Central support
services (63.7) (73.8) 13.7% (264.0) (284.0) 7.0%
----- ----- ----- ----- ----- -----
Earnings before
unusual items
and income taxes 43.2 48.2 (10.4%) 147.2 183.3 (19.7%)
Unusual items -
restructuring
and other
charges 32.8 4.7 (597.9%) 116.5 42.0 (177.4%)
----- ----- ------ ----- ----- ------
Earnings before
income taxes 10.4 43.5 (76.1%) 30.7 141.3 (78.3%)
Provision for
income taxes 10.2 16.1 36.6% 12.0 52.3 77.1%
----- ----- ----- ----- ----- -----
Net earnings $ 0.2 27.4 (99.3%) $ 18.7 89.0 (79.0%)
======= ======= ===== ======= ======= =====
RYDER SYSTEM, INC. AND SUBSIDIARIES
SEGMENT CONTRIBUTION MARGIN
Periods ended December 31, 2001 and 2000
(In millions)
(unaudited)
Three Months Twelve Months
2001 2000 B(W) 2001 2000 B(W)
---- ---- ----- ---- ---- -----
Fleet Management Solutions
Total revenue $ 794.3 888.0 (10.6%) $ 3,352.5 3,556.0 (5.7%)
Fuel revenue (139.0) (198.5) 30.0% (658.3) (773.3) 14.9%
-------- ------- ------- --------- --------- -------
Dry revenue $ 655.3 689.5 (5.0%) $ 2,694.2 2,782.7 (3.2%)
======== ======= ======= ========= ========= =======
Contribution
margin $ 82.0 97.1 (15.6%) $ 339.3 382.8 (11.4%)
======== ======= ======= ========= ========= =======
Contribution
margin as %
of total
revenue 10.3% 10.9% 10.1% 10.8%
======== ======= ========= =========
Contribution
margin as %
of dry revenue 12.5% 14.1% 12.6% 13.8%
======== ======= ========= =========
Supply Chain Solutions
Total revenue $ 339.1 419.3 (19.1%) $ 1,453.8 1,595.2 (8.9%)
Freight Under
Management
(FUM) expense (96.2) (130.6) 26.3% (431.5) (500.1) 13.7%
-------- ------- ------- --------- --------- -------
Operating
revenue $ 242.9 288.7 (15.9%) $ 1,022.3 1,095.1 (6.6%)
======== ======= ======= ========= ========= =======
Contribution
margin $ 19.1 18.7 2.1% $ 51.2 65.5 (21.8%)
======== ======= ======= ========= ========= =======
Contribution
margin as %
of total
revenue 5.6% 4.5% 3.5% 4.1%
======== ======= ========= =========
Contribution
margin as %
of operating
revenue 7.9% 6.5% 5.0% 6.0%
======== ======= ========= =========
Dedicated Contract Carriage
Total revenue $ 133.5 140.7 (5.1%) $ 535.0 551.7 (3.0%)
Freight Under
Management
(FUM) expense (1.0) (2.2) 54.5% (4.9) (6.6) 25.8%
-------- ------- ------- --------- --------- -------
Operating
revenue $ 132.5 138.5 (4.3%) $ 530.1 545.1 (2.8%)
======== ======= ======= ========= ========= =======
Contribution
margin $ 15.8 16.8 (6.0%) $ 57.7 60.8 (5.1%)
======== ======= ======= ========= ========= =======
Contribution
margin as %
of total
revenue 11.8% 11.9% 10.8% 11.0%
======== ======= ========= =========
Contribution
margin as %
of operating
revenue 11.9% 12.1% 10.9% 11.2%
======== ======= ========= =========