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Ryder System, Inc. (R)
Q3 2010 Earnings Call
October 21, 2010 11:00 pm ET
Bob Brunn - IR
Greg Swienton - Chairman & CEO
Art Garcia - EVP and CFO
John Williford - President of Global Supply Chain Solutions
Kevin Sterling - BB&T Capital Markets
Todd Fowler - Keybanc Capital Market
David Ross - Stifel Nicolaus
Jon Langenfeld - Baird
Alex Brand - Stephens Inc.
Ed Wolfe - Wolfe Trahan
Art Hatfield - Morgan Keegan
Matt Brooklier - Piper Jaffray
David Campbell – Thompson, Davis & Company
Previous Statements by R
» Ryder System, Inc. Q2 2010 Earnings Call Transcript
» Ryder System Inc. Q1 2010 Earnings Call Transcript
» Ryder System Inc. Q4 2009 Earnings Call Transcript
I would like to introduce Mr. Bob Brunn, Vice President of Investor Relations and Public Affairs for Ryder. Mr. Brunn you may begin.
Thanks very much. Good morning and welcome to Ryder’s third quarter 2010 earnings conference call. I 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 based on management’s current expectation and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, 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 Art Garcia, Executive Vice President and Chief Financial Officer. Additionally, Robert Sanchez 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’ll recap our third quarter 2010 results, we’ll review the asset management area, and discuss our outlook and forecast for the year. After our initial remarks, we’ll open up the call for questions. Before we get into the results I would like to make a brief comment related to some recent management changes here at Ryder.
Tony Tegnelia will be retiring from Ryder early next year after a 33 year career with out company. Tony’s contributions have been invaluable to the organization, having had key leadership roles in finance, supply chain and more recently leading FMS. While Tony will be with the company for several more months working on acquisitions and other strategic initiatives. I wanted to take this opportunity to publicly thank in personally for his outstanding service to our company and to our shareholder over the years.
Most of you on the call already know Tony’s successor as president of Global Fleet Management Solutions, Robert Sanchez who was formerly our Chief Financial Officer. The combination of Robert’s prior experience in running fleet management’s operations and as our corporate CFO will enable him to continue to lead the FMS business to new levels of performance in the future.
Replacing Robert is Chief Financial Officer, is our former controller Art Garcia and some of you have met him already and if you haven’t met him, you will be seeing much more of him at investor events in the near future and I am particularly pleased that we have had such a strong internal members of our team in order to step up and fill these key leadership positions in the company and look forward to all of their contributions and there new roles.
So now let me get into an overview of our third quarter result which begins on Page 4, for those of you following along on the PowerPoint presentation.
Net earnings per diluted share from continuing operations were $0.76 for the third quarter 2010 up 49% from $0.51 in the prior year period. Third quarter EPS were also above our forecast range is $0.62 to $0.67 total revenue for the company was up by 5% from the prior year reflecting a 4% increase in operating revenue. Operating revenue which excludes MFS fuel at all subcontracted transportation revenue increased due to higher commercial rental and supply chain solutions revenue partially offset by lower full service lease revenue.
Turning to page five, in fleet management total revenue increased 4% versus the prior year. Total FMS revenue includes a 7% increase in fuel services revenue reflecting higher fuel cost past through. FMS operating revenue which excludes yield increased by 3% due to higher commercial rental revenue. Contractual revenue which includes both full service lease and contract maintenance was down 3% due to fewer contracted units in the fleet as compared to the prior year. Lease revenue was down 2% a sequential improvement from the 4% decline we saw in the second quarter.
Commercial rental revenue was up by 32% accelerating sequentially from the 20% growth we saw in the second quarter. Rental revenue benefited from improving global demand, higher pricing and an increase in the fleet size. Net before tax earnings in fleet management were up 48%, fleet management earnings is a percent of operating revenue increased by 230 basis points to 7.5%. FMS earnings were positively impacted by improved commercial rental performance better used vehicle results and lower expenses in our retirement plans. These improvements were partially offset by higher maintenance cost on an older fleet as well as fewer revenue earning vehicles in the fleet. Turning to the supply chain solution segment on page 6 total revenue was up 10% due to higher sub contract of transportation and increased operating revenue. Operating revenue grew by 5% due to higher automotive and high tech volumes as well as favorable foreign exchange rate movement.