Exhibit 99.1
News Release
FOR IMMEDIATE RELEASE
Contacts: Media: Investor Relations:
David Bruce Bob Brunn
(305) 500-4999 (305) 500-4053
RYDER ANNOUNCES SECOND QUARTER 2003 RESULTS
-Second Quarter 2003 Earnings Increase 18% from Year-Earlier Period-
-Supply Chain Operations Drive Earnings Improvement for Second
Consecutive Quarter-
MIAMI, July 23, 2003 - Ryder System, Inc. (NYSE:R), a global leader in
transportation and supply chain management solutions, today announced earnings
of $34.7 million for the three months ended June 30, 2003, up 18% compared with
$29.5 million in the year-earlier period. Revenue for the second quarter of 2003
was $1.20 billion, down 1% from $1.21 billion in the comparable period last
year.
Earnings per diluted share (EPS) were $0.55 in the second quarter of
2003, up 17% compared with $0.47 in the year-earlier period. EPS for the period
included a $0.01 benefit related to recovery of restructuring and other items.
"Ryder increased earnings in the second quarter while also absorbing
more than $13 million of additional pension expense," said Ryder Chairman,
President and Chief Executive Officer Gregory T. Swienton. "Most notably, the
continuous improvement programs introduced last year within our Supply Chain
Solutions operations helped deliver a second consecutive quarter of
significantly higher earnings. Improved operating performance within Fleet
Management Solutions, however, was offset by the impact of that business segment
absorbing the majority of this quarter's increased pension expense."
Second quarter 2003 revenue was impacted by continuing soft economic
conditions in the U.S., which led to reduced transportation miles run within all
business segments, and volume reductions within some sectors of the Supply Chain
Solutions (SCS) business segment. These conditions in the U.S. were partially
offset by higher fuel prices, as well as improvement in the commercial rental
product line and the performance of the Company's Canadian, Latin American and
Asian operations. Commercial rental revenue for the second quarter of 2003 grew
1
5% compared with the year-earlier period, marking the third consecutive quarter
of year-over-year rental revenue improvement.
YEAR-TO-DATE OPERATING RESULTS
Revenue for the first half of 2003 was $2.39 billion, up 1% from $2.36
billion for 2002. Ryder's earnings before accounting changes for the six months
ended June 30, 2003 were $55.6 million, up 20% from $46.3 million for the
comparable period of the prior year. EPS, before accounting changes, were $0.88
for the first six months of 2003, up 19% from $0.74 for the same period of 2002.
Net earnings for the first half of 2003 were $54.5 million, up 99% from $27.4
million for the year-earlier period. EPS were $0.86 for the first six months of
2003, up 95% from $0.44 for the same period last year.
EPS in the first half of 2003 included a $0.02 non-cash charge related
to the cumulative effect of a change in accounting for costs associated with the
eventual retirement of long-lived assets (primarily related to components of
revenue earning equipment), as required by the adoption of Statement of
Financial Accounting Standards (SFAS) No. 143. EPS in the year-earlier period
included a $0.30 non-cash charge related to the cumulative effect of a change in
accounting for goodwill, as required by the adoption of SFAS No. 142.
SECOND QUARTER BUSINESS SEGMENT OPERATING RESULTS
Ryder's primary measurement of business segment financial performance,
Net Before Tax (NBT), allocates Central Support Services to each business
segment.
FLEET MANAGEMENT SOLUTIONS
Ryder's Fleet Management Solutions (FMS) business segment combines
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 second quarter of 2003 was $645.7 million, down 2% compared with $657.0
2
million in the year-earlier period. Dry revenue was affected by favorable
foreign currency exchange rates and the impact of ancillary business not
renewed. Fuel revenue for the second quarter of 2003 increased 5% compared with
the same period in 2002 due to higher fuel prices.
Full service lease and programmed maintenance revenue for the second
quarter of 2003 was 1% lower than the same period last year because of continued
softness in the U.S. economy. However, Ryder's second quarter 2003 commercial
rental revenue grew 5% from the year-earlier period. Also in the second quarter
2003, leasing demand showed signs of modest improvement.
The FMS business segment's NBT decreased 6% to $52.1 million in the
second quarter of 2003, compared with $55.4 million in the same period of 2002.
This decrease was related primarily to the second quarter 2003 pension expense
increase of nearly $12 million compared with the same period last year, as well
as lower U.S. leasing demand. The impact of these items was partially offset by
better rental pricing, improvement in used truck sales and carrying costs, lower
interest costs, and improvement in operating expenses stemming from Ryder's cost
management and process improvement actions. Business segment NBT as a percentage
of dry revenue was 8.1% in the second quarter of 2003 compared with 8.4% in the
same quarter a year ago.
SUPPLY CHAIN SOLUTIONS
Ryder's Supply Chain Solutions (SCS) business segment enables 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, second quarter 2003 revenue totaled $345.7
million, down 4% from $358.3 million in the comparable period in 2002. Second
quarter 2003 operating revenue (revenue excluding freight under management) was
$239.5 million, down 5% from $251.3 million in the comparable period a year ago.
The decreases were due primarily to volume reductions resulting from slow
3
economic conditions and the non-renewal of certain customer contracts that were
not expected to provide adequate future returns.
The SCS business segment's NBT was $7.4 million in the second quarter
of 2003, an improvement of almost $9.6 million from the loss of $2.2 million in
the same quarter of 2002. Business segment NBT as a percentage of operating
revenue was 3.1% in the second quarter of 2003 compared with a negative 0.9% in
the same quarter of 2002. Consistent with the first quarter 2003, these
increases were driven by reduced overhead spending on a global basis and
improved operational performance.
DEDICATED CONTRACT CARRIAGE
Ryder's Dedicated Contract Carriage (DCC) business segment provides
customers with vehicles, drivers, management and administrative support, with
the assets committed to a specific customer for a contractual term. DCC supports
customers with both basic and sophisticated logistics and transportation needs,
including routing and scheduling, specialized driver services, and logistical
engineering support.
In the DCC business segment, second quarter 2003 revenue totaled $128.0
million, essentially flat compared with $127.7 million in the second quarter of
2002. Operating revenue (revenue excluding freight under management) in the
second quarter was $127.1 million, also flat compared with $126.7 million in the
year-earlier period.
The DCC business segment's NBT decreased in the second quarter of 2003
to $8.3 million compared with $8.4 million in the second quarter of 2002.
Business segment NBT as a percentage of operating revenue was 6.5% compared with
6.6% in 2002.
CORPORATE FINANCIAL INFORMATION
CENTRAL SUPPORT SERVICES
Central Support Services (CSS) are overhead costs incurred to support
all business segments and product lines. Substantially all CSS costs are
allocated to the various business segments.
4
In the second quarter of 2003, total CSS costs decreased to $55.4
million, from $58.3 million in the year-earlier period. This marked the tenth
consecutive quarter of reduced CSS costs. The decreases were attributable to
reduced spending across all functional areas.
CAPITAL EXPENDITURES
Capital expenditures were $413 million for the six months ended June
30, 2003, up 48% compared with $280 million for the same period of 2002. The
increase in capital expenditures reflects planned higher vehicle replacements,
primarily related to the rental product line. On a full-year basis, capital
expenditures are forecasted to total approximately $750 million; this is reduced
from an original 2003 plan of $890 million. Capital expenditures for the full
year 2002 were $600 million. The decrease in capital spending from planned
levels reflects lower leasing demand, and higher than anticipated re-deployments
and lease extensions.
LEVERAGE AND FREE CASH FLOW
On-balance-sheet debt as of June 30, 2003 was reduced by $55.4 million
compared with year end. The leverage ratio for on-balance-sheet debt as of June
30, 2003 was 126% compared with 140% at year end. Total obligations including
securitization to equity as of June 30, 2003 were 173%, down from 201% at year
end. Free cash flow for the first half of 2003 is estimated to be $126.3 million
compared with $198.4 million for the year-earlier period.
Commenting on Ryder's corporate financial performance, Ryder Chief
Financial Officer Tracy A. Leinbach stated, "The financial strategies and
disciplines that Ryder put in place have allowed us to realize positive cash
flow, strengthen the balance sheet, and ensure efficient access to capital in a
difficult economic environment. This financial strength positions us well to
capitalize on future opportunities for profitable growth."
OUTLOOK
Commenting on the Company's outlook, Swienton stated, "Ryder's Supply
Chain Solutions business delivered strong earnings performance for the second
5
consecutive quarter. We do, however, expect some third quarter impact from
reduced automotive production in that business segment. In Fleet Management
Solutions, our commercial rental business was up and leasing demand also showed
slight improvement this quarter. In view of the economy, we don't expect a
significant increase in leasing demand until there is a better sense among
customers that a recovery is underway. Balancing this combination of factors, we
are forecasting third quarter EPS to be in the range of $0.59 to $0.62."
He continued, "Based on our results for the first half of the year, we
are increasing our previous $1.95 to $2.00 full-year EPS forecast to the range
of $2.04 to $2.10. Even without significant improvement in the overall economy,
there are remaining cost management and process improvement opportunities,
particularly in the Fleet Management Solutions segment, that should enable us to
achieve this forecast."
ABOUT RYDER
Ryder provides leading-edge transportation, logistics, and supply chain
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.
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. For the seventh consecutive year,
Ryder was featured in the 2002 Fortune Most Admired Companies survey of
corporate reputations. 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
6
in using the Internet to achieve tangible business benefits. For the fifth
consecutive year, Inbound Logistics recognized Ryder in 2002 as the top
third-party logistics provider.
Ryder's stock is a component of the Dow Jones Transportation Average
and the Standard & Poor's 500 Index. With 2002 revenue of $4.78 billion, Ryder
ranks 345th on the Fortune 500.
For more information on Ryder System, Inc., visit www.ryder.com.
# # #
NOTE: CERTAIN STATEMENTS AND INFORMATION INCLUDED IN THIS PRESENTATION 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, ADVERSE CHANGES IN DEBT RATINGS, CHANGES IN ACCOUNTING
ASSUMPTIONS, GREATER THAN EXPECTED EXPENSES ASSOCIATED WITH THE COMPANY'S
ACTIVITIES AND CHANGES IN GENERAL ECONOMIC CONDITIONS. THIS NEWS RELEASE AND THE
RELATED INVESTOR PRESENTATION INCLUDE CERTAIN NON-GAAP FINANCIAL MEASURES AS
DEFINED UNDER SEC RULES. AS REQUIRED BY SEC RULES, WE HAVE PROVIDED A
RECONCILIATION OF THOSE MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES
IN THE APPENDICES TO THIS NEWS RELEASE AND PRESENTATION WHICH ARE AVAILABLE ON
THE INVESTORS AREA OF OUR WEBSITE AT WWW.RYDER.COM.
CONFERENCE CALL AND WEBCAST INFORMATION:
Ryder's second quarter 2003 earnings Webcast is scheduled for Wednesday, July
23, 2003 from 11:00 a.m. to 12:00 noon (Eastern Time). Speakers will be
Chairman, President and Chief Executive Officer Gregory T. Swienton and Chief
Financial Officer Tracy A. Leinbach.
TO JOIN THE CONFERENCE CALL LIVE: Begin 10 minutes prior to the conference
by dialing the audio phone number 1-888-398-5319 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: RH5174272 and PASSCODE: RYDER.
TO ACCESS AUDIO REPLAYS OF THE CONFERENCE AND VIEW A PRESENTATION OF
RYDER'S EARNINGS RESULTS: Dial 1-800-468-0316 and use the PASSCODE: 72303,
then view the presentation by visiting the investors area of Ryder's
Website at www.ryder.com.
7
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS - UNAUDITED
Periods ended June 30, 2003 and 2002
(In millions, except per share data)
Three Months Six Months
------------------------- -------------------------
2003 2002 2003 2002
----------- -------- ----------- --------
Revenue $ 1,197.4 1,209.3 $ 2,391.8 2,359.2
----------- -------- ----------- --------
Operating expense 494.8 489.6 1,009.9 963.2
Salaries and employee-related costs 315.1 319.1 627.8 630.9
Freight under management expense 107.1 108.0 212.0 200.2
Depreciation expense 145.5 139.4 286.8 272.4
Gains on vehicle sales, net (4.2) (4.3) (8.3) (6.2)
Equipment rental 67.6 87.5 141.3 181.8
Interest expense 21.0 23.9 41.8 48.1
Miscellaneous income, net (3.2) (0.4) (5.6) (2.8)
Restructuring and other recoveries, net (0.8) -- (1.1) (1.2)
----------- -------- ----------- --------
1,142.9 1,162.8 2,304.6 2,286.4
Earnings before income taxes 54.5 46.5 87.2 72.8
Provision for income taxes (19.8) (17.0) (31.6) (26.5)
----------- -------- ----------- --------
Earnings before cumulative effect of changes in accounting principles 34.7 29.5 55.6 46.3
Cumulative effect of changes in accounting principles -- -- (1.1) (18.9)
----------- -------- ----------- --------
Net earnings $ 34.7 29.5 $ 54.5 27.4
=========== ======== =========== ========
Diluted earnings per common share $ 0.55 0.47 $ 0.86 0.44
=========== ======== =========== ========
Weighted average common shares - diluted 63.3 63.0 63.1 62.4
=========== ======== =========== ========
........
Supplemental earnings per share information:
Earnings before recoveries, net and changes in accounting principles $ 0.54 0.47 $ 0.87 0.73
Restructuring and other recoveries, net 0.01 -- 0.01 0.01
----------- -------- ----------- --------
Earnings before cumulative effect of changes in accounting principles 0.55 0.47 0.88 0.74
Cumulative effect of changes in accounting principles -- -- (0.02) (0.30)
----------- -------- ----------- --------
Net earnings $ 0.55 0.47 $ 0.86 0.44
=========== ======== =========== ========
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS - PRELIMINARY AND UNAUDITED
(In millions)
June 30, December 31,
2003 2002
--------- ------------
Assets:
Current assets $ 1,044.1 1,024.2
Revenue earning equipment 2,618.7 2,497.6
Operating property and equipment 515.7 530.9
Other assets 678.4 714.3
--------- ---------
$ 4,856.9 4,767.0
========= =========
Liabilities and Shareholders' Equity:
Current liabilities (including current portion of long-term debt) $ 950.0 862.1
Long-term debt 1,252.6 1,389.1
Other non-current liabilities (including deferred income taxes) 1,465.9 1,407.6
Shareholders' equity 1,188.4 1,108.2
--------- ---------
$ 4,856.9 4,767.0
========= =========
SELECTED KEY RATIOS
June 30, December 31,
2003 2002
--------- ------------
Debt to equity 126% 140%
Total obligations to equity (a) 151% 173%
Total obligations to equity, including securitizations (a) 173% 201%
Twelve months ended
June 30,
------------------------------
2003 2002
--------- ------------
Return on average common equity (b) 10.1% 3.3%
Return on average assets (b) 2.5% 0.8%
Average asset turnover 99.6% 96.6%
Return on total capital (b) 6.4% 3.6%
(a) - Total obligations represent debt plus off-balance sheet equipment
obligations.
(b) - Excludes the effect of accounting changes.
RYDER SYSTEM, INC. AND SUBSIDIARIES
BUSINESS SEGMENT REVENUE AND EARNINGS - UNAUDITED
Periods ended June 30, 2003 and 2002
(In millions)
Three Months Six Months
------------------------------ -----------------------------
2003 2002 B(W) 2003 2002 B(W)
-------- -------- ------- -------- -------- ------
Revenue:
Fleet Management Solutions:
Full service lease and programmed maintenance $ 449.6 452.1 (0.6%) $ 892.8 899.6 (0.8%)
Commercial rental 122.7 116.8 5.1% 229.4 215.8 6.3%
Fuel 154.4 146.4 5.5% 330.5 281.1 17.6%
Other 73.4 88.1 (16.7%) 158.4 172.0 (7.9%)
-------- -------- ------- -------- -------- ------
Total Fleet Management Solutions 800.1 803.4 (0.4%) 1,611.1 1,568.5 2.7%
Supply Chain Solutions 345.7 358.3 (3.5%) 679.9 695.4 (2.2%)
Dedicated Contract Carriage 128.0 127.7 0.2% 257.3 253.3 1.6%
Eliminations (76.4) (80.1) 4.6% (156.5) (158.0) 0.9%
-------- -------- ------- -------- -------- ------
Total revenue $1,197.4 1,209.3 (1.0%) $2,391.8 2,359.2 1.4%
======== ======== ======= ======== ======== ======
Business segment earnings:
Earnings before income taxes:
Fleet Management Solutions $ 52.1 55.4 (6.0%) $ 85.3 92.0 (7.3%)
Supply Chain Solutions 7.4 (2.2) NA 14.7 (4.4) NA
Dedicated Contract Carriage 8.3 8.4 (1.2%) 15.2 13.4 13.4%
Eliminations (8.2) (8.3) 1.2% (16.7) (16.6) (0.6%)
-------- -------- ------- -------- -------- ------
59.6 53.3 11.8% 98.5 84.4 16.7%
Unallocated Central Support Services (5.9) (6.8) 13.2% (12.4) (12.8) 3.1%
-------- -------- ------- -------- -------- ------
Earnings before restructuring and other recoveries, net
and income taxes 53.7 46.5 15.5% 86.1 71.6 20.3%
Restructuring and other recoveries, net 0.8 -- NA 1.1 1.2 (8.3%)
-------- -------- ------- -------- -------- ------
Earnings before income taxes 54.5 46.5 17.2% 87.2 72.8 19.8%
Provision for income taxes (19.8) (17.0) (16.5%) (31.6) (26.5) (19.2%)
-------- -------- ------- -------- -------- ------
Earnings before cumulative effect of changes in
accounting principles 34.7 29.5 17.6% 55.6 46.3 20.1%
Cumulative effect of changes in accounting principles -- -- NA (1.1) (18.9) 94.2%
-------- -------- ------- -------- -------- ------
Net earnings $ 34.7 29.5 17.6% $ 54.5 27.4 98.9%
======== ======== ======= ======== ======== ======
RYDER SYSTEM, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION - UNAUDITED
Periods ended June 30, 2003 and 2002
(In millions)
Three Months Six Months
------------------------------- --------------------------------
2003 2002 B(W) 2003 2002 B(W)
------- ------- ------- -------- -------- -----
Fleet Management Solutions
Total revenue $ 800.1 803.4 (0.4%) $1,611.1 1,568.5 2.7%
Fuel revenue (154.4) (146.4) (5.5%) (330.5) (281.1) 17.6%
------- ------- ------- -------- -------- -----
Dry revenue $ 645.7 657.0 (1.7%) $1,280.6 1,287.4 (0.5%)
======= ======= ====== ======== ======== =====
Earnings before income taxes $ 52.1 55.4 (6.0%) $ 85.3 92.0 (7.3%)
======= ======= ====== ======== ======== =====
Earnings before income taxes as % of total revenue 6.5% 6.9% 5.3% 5.9%
======= ======= ======== ========
Earnings before income taxes as % of dry revenue 8.1% 8.4% 6.7% 7.1%
======= ======= ======== ========
Supply Chain Solutions
Total revenue $ 345.7 358.3 (3.5%) $ 679.9 695.4 (2.2%)
Freight Under Management (FUM) expense (106.2) (107.0) 0.7% (210.1) (198.2) (6.0%)
------- ------- ------- -------- -------- -----
Operating revenue $ 239.5 251.3 (4.7%) $ 469.8 497.2 (5.5%)
======= ======= ====== ======== ======== =====
Earnings before income taxes $ 7.4 (2.2) NA $ 14.7 (4.4) NA
======= ======= ====== ======== ======== =====
Earnings before income taxes as % of total revenue 2.1% (0.6%) 2.2% (0.6%)
======= ======= ======== ========
Earnings before income taxes as % of operating
revenue 3.1% (0.9%) 3.1% (0.9%)
======= ======= ======== ========
Dedicated Contract Carriage
Total revenue $ 128.0 127.7 0.2% $ 257.3 253.3 1.6%
Freight Under Management (FUM) expense (0.9) (1.0) 10.0% (1.9) (2.0) 5.0%
------- ------- ------- -------- -------- -----
Operating revenue $ 127.1 126.7 0.3% $ 255.4 251.3 1.6%
======= ======= ====== ======== ======== =====
Earnings before income taxes $ 8.3 8.4 (1.2%) $ 15.2 13.4 13.4%
======= ======= ====== ======== ======== =====
Earnings before income taxes as % of total revenue 6.5% 6.6% 5.9% 5.3%
======= ======= ======== ========
Earnings before income taxes as % of operating
revenue 6.5% 6.6% 6.0% 5.3%
======= ======= ======== ========
RYDER SYSTEM, INC. AND SUBSIDIARIES
FREE CASH FLOW RECONCILIATION - PRELIMINARY AND UNAUDITED
Periods ended June 30, 2003 and 2002
(In millions)
Six Months
---------------------
2003 2002
------- -------
Cash provided by operating activities $ 408.4 329.0
Changes in the aggregate balance of trade receivables sold - 40.0
Collections on direct finance leases 31.5 32.3
Sales of property and revenue earning equipment 99.3 77.1
Purchases of property and revenue earning equipment (412.9) (280.0)
------- -------
Net free cash flow $ 126.3 198.4
======= =======