MIAMI--June 22, 2012: Ryder System, Inc. 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.
“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 business opportunities.”
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 business opportunities."
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.
About Ryder
Ryder System, Inc. is a FORTUNE 500® commercial transportation, logistics and supply chain management solutions company. Ryder's stock is a component of the Dow Jones Transportation Average and the Standard & Poor's 500 Index.
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 Ryder.
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 My Meetings 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 Ryder Investors.