Ryder System Inc. (R)
Q1 2010 Earnings Call
April 21, 2010 11:00 am ET
Bob Brunn - VP of IR and Public Affairs
Greg Swienton - Chairman and CEO
Robert Sanchez - EVP and CFO
David Ross - Stifel Nicholas
Jon Langenfeld - Robert W. Baird
Scott Group - Wolfe Trahan
Alex Brand - Stephens, Inc.
Art Hatfield - Morgan Keegan
Todd Fowler - KeyBanc Capital Markets
Previous Statements by R
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Thanks very much. Good morning and welcome to Ryder's first quarter 2010 earnings conference call. I would like to begin with a reminder, that in this presentation you will hear some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are made on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economics, business competitive market political and regulatory factors. More detailed information about these factors is contained in this morning's earnings release and in Ryder's filings with the Securities and Exchange Commission.
Presenting on today's call are Greg Swienton, Chairman and Chief Executive Officer and Robert Sanchez, Executive Vice President and Chief Financial Officer. Additionally Tony Tegnelia, President of Global Fleet Management Solutions and John Williford, President of Global Supply Chain Solutions, are on the call today and available for questions following the presentation. With that let me turn it over to Greg.
Thanks Bob and good morning everyone. Today we will recap our first quarter 2010 results, review the asset management area and then discuss our outlook and forecast for the year and after our remarks we will open up the call for questions. So let me get right into an overview of our first quarter results and for those of you following along in the PowerPoint presentation we are on page 4.
Net earnings per diluted shares from continuing operations were $0.24 for the first quarter 2010 as compared to $0.20 in the prior year period. In 2009 the first quarter included a $0.10 charge related to restructuring and other items.
Excluding these items in the prior year comparable EPS from continuing operations were $0.24 in the first quarter 2010, as compared to $0.30 in 2009. While earnings were down versus the prior year they were above our forecast range of $0.17 to $0.22. As a reminder we discontinued all supply chain operations in Europe and South America by the end of last year and have now restated our historical EPS to reflect the exclusion of these discontinued operations.
The comparable EPS we originally reported in the first quarter 2009 including these operations were $0.25. So our restated results excluding these operations for the first quarter 2009 were $0.30. Total revenue for the company was up by 4% from the prior year.
Total revenue reflects higher fuel prices and favorable foreign exchange rate movement partially offset by lower fuel volumes. Operating revenue which excludes FMS fuel and all subcontracted transportation revenue was unchanged from the prior year. The impact of favorable foreign exchange rates was offset by lower FMS contractual revenue.
On page 5, in fleet management, total revenue increased 2% versus the prior year. Total FMS revenue includes the 21% increase in fuel services revenue reflecting higher fuel prices partially offset by lower fuel volumes.
FMS operating revenue which excludes fuel declined by 2% due to lower contractual revenue. Contractual revenue which includes both full service lease and contract maintenance was down 3% or down 4% excluding foreign exchange due to fewer contract at units in the fleet. Commercial rental revenue was up by 2% but was unchanged from the prior year when excluding the impact of foreign exchange rate. Rental revenue benefited from improved utilization, offset by a significantly smaller fleet size.
Net before tax earning and fleet management were lower by 28%. Fleet management earning as a percent of operating revenue decreased by 110 basis points to 3.2%. FMS earning were negatively impacted by lower full service lease performance due to fewer vehicles in the fleet and higher maintenance cost on an older fleet as well as higher depreciation expense per unit. These negative impacts were partially offset by better used vehicle results, improved commercial rental performance and lower expenses in our retirement plan.
Turning to the supply chain solution segment on page six, total revenue was up 10%, reflecting higher automotive volumes and favorable foreign exchange rate movement. Operating revenue grew by 4% due to favorable foreign exchange rate movement and higher automotive volumes, partially offset by some locations we closed in the latter part of last year as we rationalized underperforming account. SCS net before tax earning were $7 million for the quarter, up over 360% compared to a very weak first quarter last year.
Supply Chain's net before tax earning as a percent of operating revenue increased by 220 basis points to 2.9%. Higher SCS earning were driven largely by improved automotive volumes. In Dedicated Contract Carriage, total revenue was up 1%, reflecting higher fuel cost pass through. Operating revenue was down 1% due to contract non-renewals. Net before tax earnings and DCC decreased by 28%. DCC's net before tax earnings as a percent of operating revenue declined by 250 basis points to 6.6%. The decline reflects higher self-insurance cost, accrued compensation expense and costs related to investments in new technology initiatives. Page seven highlights key financial statistics for the quarter.