Add
R to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| R > SEC Filings for R > Form 10-Q on 22-Apr-2009 | All Recent SEC Filings |
22-Apr-2009
Quarterly Report
ITEMS AFFECTING COMPARABILITY BETWEEN PERIODS
Accounting Changes
See Note (B), "Accounting Changes," for a discussion of the impact of changes
in accounting standards.
ACQUISITIONS
We have completed various asset purchases in the past year, under which we
acquired a company's fleet of vehicles and contractual customers. The FMS
acquisitions operate under Ryder's name and complement our existing market
coverage and service network. The results of these acquisitions have been
included in our consolidated results since the dates of acquisition.
All acquisitions during 2009 and 2008 were as follows:
Contractual
Company Acquired Date Vehicles Customers Market
Edart Leasing LLC February 2, 2009 1,600 340 Northeast U.S.
Gordon Truck Leasing August 29, 2008 500 130 Pennsylvania
Gator Leasing, Inc. May 12, 2008 2,300 300 Florida
Lily Transportation Corp. January 11, 2008 1,600 200 Northeast U.S.
|
On December 19, 2008, we completed the acquisition of substantially all of the assets of Transpacific Container Terminal Ltd. and CRSA Logistics Ltd. (CRSA) in Canada, as well as CRSA operations in Hong Kong and Shanghai, China. This strategic acquisition adds complementary solutions to our SCS capabilities including consolidation services in key Asian hubs, as well as deconsolidation operations in Vancouver, Toronto and Montreal.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
CONSOLIDATED RESULTS
Three months ended March 31, Change
2009 2008 2009/2008
(In thousands, except per share amounts)
Earnings before income taxes $ 18,151 92,087 (80 )%
Provision for income taxes 11,313 36,005 (69 )
Net earnings $ 6,838 56,082 (88 )%
Per diluted common share (EPS) $ 0.12 0.96 (88 )%
Weighted-average shares outstanding - Diluted 55,281 57,973 (5 )%
|
Earnings before income taxes in the first three months of 2009 decreased
$73.9 million to $18.2 million compared with the same period in the prior year.
The continued deterioration in global economic conditions in the first quarter
of 2009 resulted in sharply lower earnings compared to the first quarter of
2008. Our results reflect continued declines in freight demand which has most
significantly impacted our FMS business segment. In addition, automotive
production volumes have reached significant lows, further impacting our SCS
business segment. Earnings in the first quarter were also negatively impacted by
a higher effective tax rate compared to the same period in 2008 due to
non-deductible foreign operating losses and charges.
See "Operating Results by Business Segment" for a further discussion of
operating results.
Three months ended March 31, Change
2009 2008 2009/2008
(In thousands)
Revenue:
Fleet Management Solutions $ 862,636 1,105,611 (22 )%
Supply Chain Solutions 297,477 414,177 (28 )
Dedicated Contract Carriage 115,026 137,178 (16 )
Eliminations (72,079 ) (113,384 ) 36
Total $ 1,203,060 1,543,582 (22 )%
Operating revenue (1) $ 1,008,064 1,171,707 (14 )%
|
(1) We use operating revenue, a non-GAAP financial measure, to evaluate the operating performance of our businesses and as a measure of sales activity. FMS fuel services revenue net of related intersegment billings, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating revenue computation as fuel is largely a pass-through to our customers for which we realize minimal changes in profitability during periods of steady market fuel prices. However, profitability may be positively or negatively impacted by rapid changes in market fuel prices during a short period of time as customer pricing for fuel services is established based on market fuel costs. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as subcontracted transportation is typically a pass-through to our customers. We realize minimal changes in profitability as a result of fluctuations in subcontracted transportation. Operating revenue is also a primary internal operating metric used to measure segment performance. Refer to the section titled "Non-GAAP Financial Measures" for a reconciliation of total revenue to operating revenue.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
Total revenue decreased 22% to $1.20 billion in the first quarter of 2009
compared with the same period in 2008. The decline in total revenue was
primarily due to lower fuel services revenue from lower fuel costs and gallons
sold and lower operating revenue. Operating revenue decreased 14% in the first
quarter of 2009 primarily due to lower automotive production volumes, an
unfavorable impact from foreign exchange, lower SCS and DCC fuel revenues and
lower commercial rental revenue. Operating revenue was negatively impacted by
lower miles driven by existing customers and an increase in customers downsizing
their lease fleets. Total revenue and operating revenue in the first quarter of
2009 both included an unfavorable foreign exchange impact of 4%, due primarily
to the weakening of the Canadian dollar and British pound.
Three months ended March 31, Change
2009 2008 2009/2008
(Dollars in thousands)
Operating expense (exclusive of items shown separately) $ 544,466 763,767 (29)%
Percentage of revenue 45% 49%
|
Operating expense and operating expense as a percentage of revenue decreased in 2009 primarily as a result of lower average fuel costs. The reduction in fuel costs over the prior year was driven by the decline in fuel prices as well as a lower number of gallons purchased.
Three months ended March 31, Change
2009 2008 2009/2008
(Dollars in thousands)
Salaries and employee-related costs $ 310,258 358,370 (13)%
Percentage of revenue 26% 23%
Percentage of operating revenue 31% 31%
|
Salaries and employee-related costs decreased in the first quarter of 2009 compared with the same period in 2008 because of lower headcount and foreign exchange impact. The lower headcount was driven by lower volumes in our SCS and DCC business segments and workforce reductions made as part of the restructuring initiatives announced in the fourth quarter of 2008. In addition, salaries and employee-related costs decreased because of lower incentive-based compensation, commissions and discretionary match into the 401(k) savings plan based on company performance. The decrease in salaries and employee-related costs was partially offset by a $14.7 million increase in pension expense caused by significant negative pension asset returns in 2008.
Three months ended March 31, Change
2009 2008 2009/2008
(Dollars in thousands)
Subcontracted transportation $ 52,620 75,331 (30)%
Percentage of revenue 4% 5%
|
Subcontracted transportation expense represents freight management costs on logistics contracts for which we purchase transportation from third parties. Subcontracted transportation expense is directly impacted by whether we are acting as an agent or principal in our transportation management contracts. To the extent that we are acting as a principal, revenue is reported on a gross basis and carriage costs to third parties are recorded as subcontracted transportation expense. The impact to net earnings is the same whether we are acting as an agent or principal in the arrangement. Subcontracted transportation expense decreased in 2009 compared with the same period in 2008 as a result of decreased freight volumes in the current economic environment.
Three months ended March 31, Change
2009 2008 2009/2008
(In thousands)
Depreciation expense $ 222,521 205,960 8 %
Gains on vehicle sales, net (3,973 ) (12,426 ) (68 )
Equipment rental 15,607 21,526 (27 )
|
Depreciation expense relates primarily to FMS revenue earning equipment. Depreciation expense increased in the first quarter of 2009 compared with the same period in 2008, because of $5.5 million of increased write-downs in the carrying value of vehicles
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
held for sale, the impact of recent acquisitions and an impairment charge of
$3.9 million on a Singapore facility partially offset by the impact of foreign
exchange rates. Revenue earning equipment held for sale is recorded at the lower
of fair value less cost to sell or net carrying value. We stratify our fleet by
vehicle type (tractors, trucks, trailers), weight class, age and other relevant
characteristics and create classes of similar assets for analysis purposes. Fair
value is determined based upon recent market prices obtained from our own sales
experience for sales of each class of similar assets and vehicle condition.
Gains on vehicle sales, net decreased in the first quarter of 2009 compared
with the same period in 2008 because of lower average pricing on vehicles sold
and, to a lesser extent, a decline in the number of vehicles sold.
Equipment rental consists primarily of rent expense for FMS revenue earning
equipment under lease. The decrease in equipment rental in the first quarter of
2009 compared with the same period in 2008 reflects a reduction in the average
number of leased vehicles.
Three months ended March 31, Change
2009 2008 2009/2008
(Dollars in thousands)
Interest expense $ 38,807 37,428 4%
Effective interest rate 5.4% 5.4%
|
Interest expense increased in the first quarter of 2009 compared with the same period in 2008 because of higher average debt balances.
Three months ended March 31,
2009 2008
Miscellaneous expense, net $ 418 1,617
Miscellaneous expense, net consists of investment losses (income) on
securities used to fund certain benefit plans, interest income, losses
(gains) from sales of operating property, foreign currency transaction losses
(gains), and other non-operating items. Miscellaneous expense, net decreased in
the first quarter of 2009 compared with the same period in 2008, primarily due
to lower losses in our investment securities over the prior year and lower
foreign exchange losses.
Three months ended March 31,
2009 2008
(In thousands)
Restructuring and other charges (recoveries), net $ 4,185 (78 )
|
Restructuring and other charges (recoveries), net in the first three months of 2009 were primarily due to ongoing costs related to the restructuring plan initiatives announced in the fourth quarter of 2008. During the first quarter of 2009, we recorded $1.8 million related to exiting SCS operations in South America and Europe. These charges included $0.6 million of employee severance and benefit costs related to retention bonuses and refinements in estimates recorded in the prior year. The charges also included $0.3 million of contract termination costs and $0.9 million related to plan implementation costs, mostly professional service fees. We expect to exit our supply chain operations in South America and Europe by the latter half of 2009. During the first quarter of 2009, we also recorded $2.4 million related to workforce reductions and refinements in estimates of prior year charges. We eliminated approximately 30 positions in 2009 as part of our continued cost containment initiatives. The workforce reductions were substantially completed during the first quarter of 2009. We expect to realize annual savings of approximately $5 million from the 2009 workforce reductions in addition to the annual savings of approximately $38 million from the 2008 actions.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
Three months ended March 31, Change
2009 2008 2009/2008
(Dollars in thousands)
Provision for income taxes $ 11,313 36,005 (69)%
Effective tax rate 62.3% 39.1%
|
Our effective income tax rate for the first quarter of 2009 increased
compared with the same period in 2008 due to non-deductible foreign operating
losses and charges in the current year.
OPERATING RESULTS BY BUSINESS SEGMENT
Three months ended March 31, Change
2009 2008 2009/2008
(In thousands)
Revenue:
Fleet Management Solutions $ 862,636 1,105,611 (22 )%
Supply Chain Solutions 297,477 414,177 (28 )
Dedicated Contract Carriage 115,026 137,178 (16 )
Eliminations (72,079 ) (113,384 ) 36
Total $ 1,203,060 1,543,582 (22 )%
Operating Revenue:
Fleet Management Solutions $ 692,318 746,987 (7 )%
Supply Chain Solutions 247,147 341,999 (28 )
Dedicated Contract Carriage 112,736 134,025 (16 )
Eliminations (44,137 ) (51,304 ) 14
Total $ 1,008,064 1,171,707 (14 )%
|
NBT:
Fleet Management Solutions $ 30,406 91,438 (67 )%
Supply Chain Solutions (1,878 ) 8,313 NM
Dedicated Contract Carriage 10,267 11,316 (9 )
Eliminations (5,789 ) (7,518 ) 23
33,006 103,549 (68 )
Unallocated Central Support Services (6,927 ) (11,540 ) 40
Restructuring and other (charges) recoveries, net
and other items (7,928 ) 78 NM
Earnings before income taxes $ 18,151 92,087 (80 )%
|
As part of management's evaluation of segment operating performance, we define the primary measurement of our segment financial performance as "Net Before Taxes" (NBT), which includes an allocation of Central Support Services (CSS), excludes restructuring and other charges, net, described in Note (F), "Restructuring and Other Charges (Recoveries)," and excludes the items discussed in Note (Q), "Other Items Impacting Comparability." CSS represents those costs incurred to support all business segments, including human resources, finance, corporate services and public affairs, information technology, health and safety, legal and corporate communications. The objective of the NBT measurement is to provide clarity on the profitability of each business segment and, ultimately, to hold leadership of each business segment and each operating segment within each business segment accountable for their allocated share of CSS costs. Segment results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented. Certain costs are considered to be overhead not attributable to any segment and remain unallocated in CSS. Included within the unallocated overhead remaining within CSS are the costs for investor relations, public affairs and certain executive compensation. See Note (R), "Segment Reporting," in the Notes to Consolidated Condensed Financial Statements for a description of how the remainder of CSS costs are allocated to the business segments.
|
|