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RYDERFINAL 881F2721-61D0-41D9-90DD-BC4D3287E1AB_newryder4Q08Earnings_final
 

RYDERFINAL 881F2721-61D0-41D9-90DD-BC4D3287E1AB_newryder4Q08Earnings_final

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    RYDERFINAL 881F2721-61D0-41D9-90DD-BC4D3287E1AB_newryder4Q08Earnings_final RYDERFINAL 881F2721-61D0-41D9-90DD-BC4D3287E1AB_newryder4Q08Earnings_final Presentation Transcript

    • Fourth Quarter 2008 & 2009 Forecast Earnings Conference Call February 4, 2009
    • Safe Harbor Certain statements and information included in this presentation are quot;forward-looking statementsquot; under the Federal Private Securities Litigation Reform Act of 1995. 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, our ability to obtain adequate profit margins for our services, our inability to maintain current pricing levels due to soft economic conditions, customer acceptance or competition, customer retention levels, unexpected volume declines, automotive plant shutdowns and shift eliminations, 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, the timing and impact of the restructuring activities announced in Q4 2008, 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, changes in economic and market conditions affecting the commercial rental market or the sale of used vehicles, a decrease in credit ratings, increased debt costs resulting from volatile financial markets, lack of accretive acquisition opportunities, inability to achieve planned synergies and customer retention levels from acquisitions, labor strikes or work stoppages affecting our or our customers’ business operations, adequacy of accounting estimates, reserves and accruals particularly with respect to pension, taxes, insurance and revenue, changes in general economic conditions, further decline in pension plan returns, sudden or unusual changes in fuel prices, availability of qualified drivers, our ability to manage our cost structure, new accounting pronouncements, rules or interpretations, changes in government regulations including regulations regarding vehicle emissions 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. 2
    • Contents ► Fourth Quarter 2008 Results Overview ► Asset Management Update ► 2009 Forecast ►Q & A 3
    • 4th Quarter Results Overview ► Earnings per diluted share were $0.19 versus $1.24 in 4Q07 – 4Q08 included a $0.90 charge related to restructuring and other items – 4Q07 included a $0.06 benefit related primarily to Canada tax law changes ► Comparable earnings per share were $1.09 versus $1.18 in 4Q07 ► Revenue declined 18% vs. prior year, reflecting a change from gross to net revenue reporting for a supply chain subcontracted transportation customer, lower fuel services revenue and unfavorable foreign exchange rate movements ► Operating revenue down 7% vs. prior year driven by unfavorable foreign exchange rates of 5%, lower commercial rental revenue, lower automotive volumes and lower fuel pass throughs, partially offset by contractual revenue growth including acquisitions 4
    • 4th Quarter Results Overview ► Fleet Management Solutions (FMS) total revenue down 10% (and operating revenue down 4%) vs. prior year – Contractual revenue remained flat; up 4% excluding foreign exchange – Full service lease revenue including acquisitions flat; up 4% excluding foreign exchange – Contract maintenance revenue grew 2% organically; up 4% excluding foreign exchange – Commercial rental revenue down 15%; down 11% excluding foreign exchange – Fuel revenue down 25% due to both price and volume declines ► FMS net before tax earnings (NBT) down 15% – FMS NBT down 12% excluding foreign exchange – FMS NBT percent of operating revenue down 170 basis points to 11.7% ► FMS earnings negatively impacted by commercial rental results and foreign exchange, partially offset by contractual business performance including accretive acquisitions 5
    • 4th Quarter Results Overview ► Supply Chain Solutions (SCS) total revenue down 35% vs. prior year due largely to change from gross to net revenue reporting for a supply chain subcontracted transportation customer ► SCS operating revenue down 13% vs. prior year due to lower automotive volumes and an unfavorable foreign exchange impact of 7% ► SCS net before tax earnings (NBT) down 21% – SCS NBT percent of operating revenue down 50 basis points to 5.1% ► SCS earnings negatively impacted by lower international operating results and, to a lesser extent, lower automotive revenue partially offset by lower compensation costs ► Dedicated Contract Carriage (DCC) total revenue down 13% (and operating revenue down 12%) vs. prior year due to non-renewed contracts, lower volumes and lower passed through fuel costs ► DCC net before tax earnings (NBT) up 4% – DCC NBT percent of operating revenue up 160 basis points to 10.3% ► DCC earnings positively impacted by improved operating margins and efficiencies 6
    • Key Financial Statistics ($ Millions, Except Per Share Amounts) Fourth Quarter 2008 2007 % B/(W) (1)(2) Operating Revenue $ 1,109.5 $ 1,189.6 (7%) (3) Fuel Services and Subcontracted Transportation Revenue 264.3 476.6 (45%) (3) Total Revenue $ 1,373.8 $ 1,666.2 (18%) Earnings Per Share $ 0.19 $ 1.24 (85%) (1) Comparable Earnings Per Share $ 1.09 $ 1.18 (8%) Memo: Average Shares (Millions) - Diluted 55.5 58.1 Tax Rate (4) 67.9% 35.6% Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation. (1) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity. Fuel services (2) 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 customers for which the Company realizes minimal changes in profitability during periods of steady market fuel prices. Subcontracted transportation revenue is excluded from the operating revenue computation as it is typically a pass through to customers and the Company realizes minimal changes in profitability as a result of fluctuations in subcontracted transportation. Operating revenue is also used to measure segment performance. Includes impact of net revenue reporting for certain subcontracted transportation revenue previously reported on a gross basis. (3) Tax rate includes the impact of non-deductible restructuring charges partially offset by reversal of tax reserves. Comparable tax rate would be 37.9% in 2008 vs. 38.7% in 2007, (4) excluding these items. See page 44 for reconciliation. 7
    • Key Financial Statistics ($ Millions, Except Per Share Amounts) Full Year 2008 2007 % B/(W) (1)(2) Operating Revenue $ 4,704.5 $ 4,636.6 1% (3) Fuel Services and Subcontracted Transportation Revenue 1,499.2 1,929.4 (22%) (3) Total Revenue $ 6,203.7 $ 6,566.0 (6%) Earnings Per Share $ 3.52 $ 4.24 (17%) (1) Comparable Earnings Per Share $ 4.49 $ 4.21 7% Memo: Average Shares (Millions) - Diluted 56.8 59.8 Tax Rate (4) 42.9% 37.4% (1) Adjusted Return on Capital (Trailing 12 Month) 7.3% 7.4% Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation. (1) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity. Fuel services (2) 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 customers for which the Company realizes minimal changes in profitability during periods of steady market fuel prices. Subcontracted transportation revenue is excluded from the operating revenue computation as it is typically a pass through to customers and the Company realizes minimal changes in profitability as a result of fluctuations in subcontracted transportation. Operating revenue is also used to measure segment performance. Includes impact of net revenue reporting for certain subcontracted transportation revenue previously reported on a gross basis. (3) Tax rate includes the impact of non-deductible restructuring charges, tax law changes and the reversal of tax reserves in 2008, and tax law changes in 2007. Comparable tax (4) rate would be 39.4% in 2008 vs. 38.1% in 2007. See page 44 for reconciliation. 8
    • Business Segment ($ Millions) Fourth Quarter Mem o: Total Revenue 2008 2007 % B/(W) 2008 2007 % B/(W) (1) Operating Revenue : Fleet Managem ent Solutions $ 736.7 $ 764.8 (4)% $ 976.3 $ 1,085.4 (10)% (2) Supply Chain Solutions 294.8 337.2 (13)% 357.2 545.8 (35)% Dedicated Contract Carriage 123.6 140.3 (12)% 126.2 144.3 (13)% Elim inations (45.6) (52.7) 13% (85.9) (109.3) 21% Total (2) $ 1,109.5 $ 1,189.6 (7)% $ 1,373.8 $ 1,666.2 (18)% Segm ent Net Before Tax Earnings: Fleet Managem ent Solutions $ 86.6 $ 102.3 (15)% Supply Chain Solutions 15.0 18.9 (21)% Dedicated Contract Carriage 12.7 12.3 4% Elim inations (8.4) (8.1) (5)% 105.9 125.4 (16)% Central Support Services (Unallocated Share) (8.7) (14.0) 38% (1) Earnings Before Restructuring and Incom e Taxes 97.2 111.4 (13)% (3) Restructuring and Other Charges, Net and Other Item s (64.0) 0.4 NM Earnings Before Incom e Taxes 33.2 111.8 (70)% Provision for Incom e Taxes (22.6) (39.9) 43% Net Earnings $ 10.6 $ 71.9 (85)% (1) Com parable Net Earnings $ 60.3 $ 68.3 (12)% Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation (1) Includes impact of net revenue reporting for certain subcontracted transportation revenue previously reported on a gross basis. (2) Our primary measure of segment financial performance excludes restructuring and other charges, net and other items. The applicable portion of the restructuring and (3) other charges, net that related to each segment was as follows: FMS – ($16.7), SCS – ($45.3), DCC – ($0.5) and CSS – ($1.5) in 2008; FMS – $0.3 and SCS –$0.1 in 2007. 9
    • Business Segment ($ Millions) Full Year Mem o: Total Revenue 2008 2007 % B/(W) 2008 2007 % B/(W) (1) Operating Revenue : Fleet Managem ent Solutions $ 3,034.7 $ 2,979.4 2% $ 4,450.0 $ 4,162.6 7% (2) Supply Chain Solutions 1,330.7 1,314.5 1% 1,643.1 2,250.3 (27)% Dedicated Contract Carriage 536.8 552.9 (3)% 547.8 567.6 (4)% Elim inations (197.7) (210.2) 6% (437.2) (414.5) (5)% Total (2) $ 4,704.5 $ 4,636.6 1% $ 6,203.7 $ 6,566.0 (6)% Segm ent Net Before Tax Earnings: Fleet Managem ent Solutions $ 398.5 $ 373.7 7% Supply Chain Solutions 42.7 63.2 (32)% Dedicated Contract Carriage 49.6 47.4 5% Elim inations (31.8) (31.2) (2)% 459.0 453.1 1% Central Support Services (Unallocated Share) (38.7) (44.4) 13% (1) Earnings Before Restructuring and Incom e Taxes 420.3 408.7 3% (3) Restructuring and Other Charges, Net and Other Item s (70.4) (3.2) NM Earnings Before Incom e Taxes 349.9 405.5 (14)% Provision for Incom e Taxes (150.0) (151.6) 1% Net Earnings $ 199.9 $ 253.9 (21)% (1) Com parable Net Earnings $ 254.8 $ 251.9 1% Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. See page 43 for reconciliation. (1) Includes impact of net revenue reporting for certain subcontracted transportation revenue previously reported on a gross basis. (2) Our primary measure of segment financial performance excludes restructuring and other charges, net and other items. The applicable portion of the restructuring and (3) other charges, net that related to each segment was as follows: FMS – ($16.7), SCS – ($51.7), DCC – ($0.5) and CSS – ($1.5) in 2008; FMS – $4.5, SCS – ($5.6), DCC –($1.1) and CSS –($1.0) in 2007. 10
    • Capital Expenditures ($ Millions) Full Year 2008 $ 2008 2007 O/(U) 2007 Full Service Lease $ 986 $ 900 $ 86 Commercial Rental 171 219 (48) Operating Property and Equipment 112 76 36 Gross Capital Expenditures 1,269 1,195 74 Less: Proceeds from Sales (Primarily Revenue Earning Equipment) 265 374 (109) Less: Proceeds from Sale and Leaseback of Revenue Earning Equipment - 150 (150) Net Capital Expenditures $ 1,004 $ 671 $ 333 Memo: Acquisitions $ 247 $ 75 $ 172 11
    • Cash Flow ($ Millions) Full Year 2008 2007 Net Earnings $ 200 $ 254 Depreciation 843 816 Gains on Vehicle Sales, Net (39) (44) Amortization and Other Non-Cash Charges, Net 63 32 Changes in Working Capital and Deferred Taxes 189 45 Cash Provided by Operating Activities 1,256 1,103 Proceeds from Sales (Primarily Revenue Earning Equipment) 265 374 Sale and Leaseback of Revenue Earning Equipment - 150 Collections of Direct Finance Leases 62 63 Other, Net - 2 (1) Total Cash Generated 1,583 1,692 (2) Capital Expenditures (1,234) (1,317) (1)(3) Free Cash Flow $ 349 $ 375 (1) Non-GAAP financial measure; refer to Appendix – Non-GAAP Financial Measures (2) Capitalexpenditures presented net of changes in accounts payable related to purchases of revenue earning equipment (3) Free Cash Flow excludes acquisitions and changes in restricted cash 12
    • Debt to Equity Ratio ($ Millions) 300% 275% 275% 234% Total 250% 225% Obligations 201% 200% to Equity (1) 168% 157% 129% 146% 151% 150% 100% Balance 50% Sheet Debt 0% to Equity 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 Long Term Target (2) Midpoint 12/31/08 12/31/07 Balance Sheet Debt $ 2,863 $ 2,776 213% 147% Percent To Equity (1) Total Obligations $ 3,026 $ 2,954 (1) 225% 157% Percent To Equity Total Equity $ 1,345 $ 1,888 Note: Includes impact of accumulated net pension related equity charge of $480 million as of 12/31/08 and $148 million as of 12/31/07. (1) Non-GAAP financial measure. Total obligations include the present value of minimum lease payments and guaranteed residual values under operating leases of $163 million as of 12/31/08 and $178 million at 12/31/07. (2) Represents long term total obligations to equity target of 250 - 300% while maintaining a strong investment grade rating. 13
    • Contents ► Fourth Quarter 2008 Results Overview ► Asset Management Update ► 2009 Forecast ►Q & A 14
    • (1) Asset Management Update ► Units held for sale were 6,300 at quarter end; down 2% from 6,400 units held for sale in the prior year – Units held for sale were up 35% from 4,600 at the end of prior quarter ► The number of used vehicles sold in the fourth quarter was 3,200, down 42% compared with prior year ► Proceeds per unit were up 5% for tractors and flat for trucks in the fourth quarter compared with prior year ► Vehicles no longer earning revenue were 7,600 at quarter end; up 200 from the prior year(2) – Vehicles no longer earning revenue were up 2,000 vs. the end of the prior quarter predominantly due to an increase in units held for sale ► Average fourth quarter total commercial rental fleet was down 5% year-over-year (1) All information presented on this page only is for the U.S. fleet and excludes Canadian and U.K. operations (units rounded to nearest hundred). (2) Vehicles no longer earning revenue definition revised in 1Q08 to include all units held for sale and all units that have not earned revenue in 30 days. 15
    • Contents ► Fourth Quarter 2008 Results Overview ► Asset Management Update ► 2009 Forecast ►Q & A 16
    • 2009 Overall Environment Baseline Assumptions Opportunities (+) / Risks (-) − Deeper economic decline ● No 2009 economic recovery anticipated ● Continuing very weak economy - additional contraction - unfavorable comparisons vs. prior year + Long term rates decline as credit ● Interest rates remain at current level crisis eases − Further rate volatility − U.S. dollar strengthening ● Assumes current unfavorable (primarily impacts revenue) FX rates + Pension and tax law revisions ● Positive free cash flow − Additional pension contribution + Resume share repurchase ● No share repurchase program 17
    • FMS Assumptions Baseline Assumptions Opportunities (+) / Risks (-) − Further fleet downsizing ● Slowing contractual net sales + Additional acquisitions − Further price and demand ● Lower rental demand with additional pricing decline weakening − Additional decline in used ● Stable volume of used vehicle vehicle pricing and/or volume sales with lower pricing ● Inventory levels modestly up + Additional cost initiatives ● Maintenance and overhead cost reduction initiatives 18
    • SCS / DCC Assumptions Baseline Assumptions Opportunities (+) / Risks (-) − Potential for further volume ● Lower volumes with existing customers, especially in declines and automotive plant automotive shutdowns − Potential for customer contraction ● Focus on customer retention and and lost business business development + Weak economy drives increased outsourcing ● Exit underperforming ● No significant risks or international markets and opportunities contracts + Acquisitions ● Increase penetration of non- automotive segments − Negative impacts of potential large ● Increased impact from customer bankruptcies customer bankruptcies 19
    • Key Financial Statistics ($ Millions, Except Per Share Amounts) 2009 Forecast 2008 % B / (W) Revenue: Operating (1) (2) $ 4,210 - 4,470 $ 4,705 (5 - 11)% Fuel Services and Subcontracted Transportation 1,020 - 1,090 1,499 (27 - 32)% Total Revenue $ 5,230 - 5,560 $ 6,204 (10 - 16)% Earnings: Earnings Before Income Taxes $ 246 - 312 $ 350 (11 - 30)% Earnings $ 145 - 184 $ 200 (8 - 28)% Comparable Earnings Before Income Taxes $ 253 - 319 $ 420 (24 - 40)% Comparable Earnings (1) $ 151 - 190 $ 255 (25 - 41)% Earnings Per Share (EPS): EPS $ 2.60 - 3.30 $ 3.52 (6 - 26)% (1) Comparable EPS $ 2.70 - 3.40 $ 4.49 (24 - 40)% (3) Memo: Average Shares (Millions) - Diluted 55.9 56.8 Tax Rate 41.0% 42.9% Adjusted Return on Capital (1) 5.8 - 6.8% 7.3% Non-GAAP financial measure; refer to Appendix – Non-GAAP Financial Measures. See page 43 for 2008 reconciliation. 2009 comparable earnings, comparable earnings (1) before income taxes, and EPS excludes $5.5 million, $7 million, and $0.10 restructuring charges related to 2008 initiatives. The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity. Fuel (2) services revenue net of related intersegment billings, which is directly impacted by fluctuations in market fuel prices, is excluded from the operating revenue computation as fuel is largely a pass through to customers for which the Company realizes minimal changes in profitability during periods of steady market fuel prices. Subcontracted transportation revenue is excluded from the operating revenue computation as prior to 2008 it was largely a pass through to customers and the Company realized minimal changes in profitability as a result of fluctuations in subcontracted transportation. 2008 tax rate includes the impact of non-deductible restructuring charges, tax law changes and the reversal of tax reserves. (3) Note: Earnings per share amounts are calculated independently for each component and may not be additive due to rounding. 20
    • Business Segment Revenue 2009 Forecast Midpoint Change % vs. 2008 As Reported w/o FX Fleet Management Solutions: Gross Revenue (1) (11)% (10)% (2) Contractual Revenue 1% 4% Commercial Rental Revenue (15)% (12)% Operating Revenue (2)% 1% As Reported w/o FX & Fuel Supply Chain Solutions: Gross Revenue (3) (22)% (15)% Operating Revenue (20)% (13)% Dedicated Contract Carriage: Gross Revenue (3) (8)% (2)% Operating Revenue (10)% (4)% (1) Includes fuel revenue. (2) Includes full service lease and contract maintenance. (3) Includes subcontracted transportation revenue. 21
    • 2009 Causes of EPS Change ($ Earnings Per Share) $4.49 (1) 0.13 - 0.53 $3.55 - $4.25 0.08 0.40 (0.50 – 0.60) $2.70 - $3.40 (0.69) (0.50 – 0.60) (0.11) (0.05) (0.25 – 0.35) 2008 Commercial Used Vehicle Automotive 2009 Headcount Share Revenue & 2009 2009 Pension 2009 FX Impact 2009 Tax Impact 2009 Comparable Rental Sales Reductions Repurchases & Operational Comparable Expense Comparable EPS Acquisitions to Improvements EPS Forecast Increase EPS Forecast Date before Pension, FX & Tax 2008 Comparable EPS is a non-GAAP financial measure; refer to Appendix – Non-GAAP Financial Measures. See page 43 for reconciliation. 2009 Comparable EPS excludes (1) $0.10 restructuring charges related to 2008 initiatives. 22
    • Pension Expense ($ Millions) Drivers of the Change in 2009 Consolidated Pension Expense 2008 Pension Expense $ 3 Lower than Assumed Return on Assets in 2008 71 Change in Discount Rate (15) Change in Expected Return Assumption 5 Benefit of Pension Contributions (4) 2008 Canadian Curtailment Benefit 4 Other 3 2009 Estimated Pension Expense Excluding FX Benefit 67 FX Benefit (2) 2009 Estimated Pension Expense $ 65 23
    • Business Segment Earnings Full Year Segment NBT as % of Operating Revenue (1) Segment NBT as % of Total Revenue 15 13.1 12.6 12.5 12.4 Fleet 13 11.2 9.7 Management 11 8.2 Solutions 7.5 9 7.3 9.0 9.0 9.0 9.0 7 8.7 5.9 7.3 6.7 6.0 5 2001 2002 2003 2004 2005 2006 2007 2008 2009 Forecast Midpoint 5.3 4.8 4.2 3.9 4.0 5 3.2 3.2 3 Supply Chain 3.1 2.9 2.8 2.6 2.4 2.7 2.7 1 Solutions (0.6) (0.8) -1 (0.6) (0.4) 2001 2002 2003 2004 2005 2006 2007 2008 2009 Forecast Midpoint 9.6 9.2 8.6 9 Dedicated 9.3 7.8 9.1 Contract 6.9 8.4 6.7 6.3 6.1 Carriage 7 5.9 7.5 6.8 6.5 6.0 6.2 5.8 5 2001 2002 2003 2004 2005 2006 2007 2008 2009 Forecast Midpoint The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the business and as a measure of sales activity. Fuel services revenue (1) 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 customers for which the Company realizes minimal changes in profitability during periods of steady market fuel prices. Subcontracted transportation revenue is excluded from the operating revenue computation as prior to 2008 it was largely a pass through to customers and the Company realized minimal changes in profitability as a result of fluctuations in subcontracted transportation. 24
    • Capital Expenditures Full Service Lease: ► Capital for lease vehicles is committed after contracts are signed with customers ► 2009 lease capital expenditures include: ● Replacement spending of $780 - $855 million ● Growth spending of $20 million Growth capital represents an investment which results in $8 million of annual revenue Commercial Rental: ► No 2009 rental capital expenditures 25
    • Capital Expenditures, Cash Flow & Leverage ($ Millions) Full Year 2009 Forecast 2008 Full Service Lease - Replacement $ 780 - 855 Full Service Lease - Growth 20 Full Service Lease 800 - 875 $ 986 Commercial Rental - 171 Operating Property and Equipment 100 112 Gross Capital Expenditures 900 - 975 1,269 Less: Proceeds from Sales 255 265 Net Capital Expenditures 645 - 720 $ 1,004 Cash Provided by Operating Activities $ 925 - 1,035 $ 1,256 Total Cash Generated (1) $ 1,245 - 1,355 $ 1,583 (1)(2) Free Cash Flow $ 325 - 400 $ 349 (1) Total Obligations to Equity 178 - 188% 225% (1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. (2) Free Cash Flow excludes acquisitions. Acquisitions totaled $247 million in full year 2008 and $81 million in 2009 year-to-date. 26
    • EPS Forecast ($ Earnings Per Share) First Quarter Full Year (1) 2009 Comparable EPS Forecast $ 0.40 - 0.50 $ 2.70 - 3.40 (1) 2008 Comparable EPS $ 0.96 $ 4.49 (1) Non-GAAP financial measure. Refer to page 43 for 2008 reconciliation. First quarter and full year 2009 comparable EPS excludes $0.03 and $0.10 restructuring charges related to 2008 initiatives. 27
    • Summary Manage through cyclical impacts of prolonged recession and market downturn, while driving growth from customer outsourcing in contractual product lines ► Manage through adverse impacts of pension plan performance and cyclical impacts in commercial rental and used vehicle sales ► Utilize cost management and restructuring opportunities ► Focus on strong customer retention, new business development and sales/marketing initiatives ► Continue growth (excluding FX) in full service lease and contract maintenance organically and through acquisitions ► Partially offset impact of lower automotive volumes on supply chain solutions through industry diversification ► Renew focus on dedicated contract carriage growth opportunities ► Appropriately manage capital spending and fleet size resulting in strong free cash flow 28
    • Q&A 29
    • Appendix Business Segment Detail Central Support Services Balance Sheet Asset Management Financial Indicators Forecast Non-GAAP Financial Measures & Reconciliations 30
    • Fleet Management Solutions (FMS) ($ Millions) Fourth Quarter 2008 2007 % B/(W) $ 505.4 $ 503.9 0% Full Service Lease 42.2 41.6 2% Contract Maintenance 547.6 545.5 0% Contractual Revenue 43.7 48.5 (10)% Contract-related Maintenance 128.7 152.0 (15)% Commercial Rental 16.7 18.8 (11)% Other (a) 736.7 764.8 (4)% Operating Revenue 239.6 320.6 (25)% Fuel Services Revenue $ 976.3 $ 1,085.4 (10)% Total Revenue $ 86.6 $ 102.3 (15)% Segment Net Before Tax Earnings (NBT) 8.9% 9.4% Segment NBT as % of Total Revenue (a) Segment NBT as % of Operating Revenue 11.7% 13.4% (a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the FMS business segment and as a measure of sales activity. Fuel services revenue, 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 customers for which the Company realizes 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. 31
    • Fleet Management Solutions (FMS) ($ Millions) Full Year 2008 2007 % B/(W) $ 2,042.1 $ 1,965.3 4% Full Service Lease 168.1 159.6 5% Contract Maintenance 2,210.2 2,124.9 4% Contractual Revenue 193.9 198.8 (2)% Contract-related Maintenance 557.5 583.3 (4)% Commercial Rental 73.1 72.4 1% Other (a) 3,034.7 2,979.4 2% Operating Revenue 1,415.3 1,183.2 20% Fuel Services Revenue $ 4,450.0 $ 4,162.6 7% Total Revenue $ 398.5 $ 373.7 7% Segment Net Before Tax Earnings (NBT) 9.0% 9.0% Segment NBT as % of Total Revenue (a) Segment NBT as % of Operating Revenue 13.1% 12.5% (a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the FMS business segment and as a measure of sales activity. Fuel services revenue, 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 customers for which the Company realizes 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. 32
    • Supply Chain Solutions (SCS) ($ Millions) Fourth Quarter 2008 2007 % B/(W) U.S. Operating Revenue $ 117.4 $ 141.3 (17)% Automotive & Industrial 78.2 69.4 13% High Tech & Consumer Industries 9.8 8.2 18% Transportation Management (a) 205.4 218.9 (6)% U.S. Operating Revenue (a) 89.4 118.3 (24)% International Operating Revenue (a) 294.8 337.2 (13)% Operating Revenue 62.4 208.6 (70)% Subcontracted Transportation $ 357.2 $ 545.8 (35)% Total Revenue $ 15.0 $ 18.9 (21)% Segment Net Before Tax Earnings (NBT) 4.2% 3.5% Segment NBT as % of Total Revenue (a) 5.1% 5.6% Segment NBT as % of Operating Revenue $ 22.7 $ 35.6 36% Memo: Fuel Costs (a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the SCS business segment and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as subcontracted transportation is typically a pass-through to customers, the Company realizes minimal changes in profitability as a result of fluctuations in subcontracted transportation. Operating revenue is also used to measure segment performance. 33
    • Supply Chain Solutions (SCS) ($ Millions) Full Year 2008 2007 % B/(W) U.S. Operating Revenue $ 547.8 $ 551.7 (1)% Automotive & Industrial 310.5 288.9 7% High Tech & Consumer Industries 38.5 32.6 18% Transportation Management (a) 896.8 873.2 3% U.S. Operating Revenue (a) 433.9 441.3 (2)% International Operating Revenue (a) 1,330.7 1,314.5 1% Operating Revenue 312.4 935.8 (67)% Subcontracted Transportation $ 1,643.1 $ 2,250.3 (27)% Total Revenue $ 42.7 $ 63.2 (32)% Segment Net Before Tax Earnings (NBT) 2.6% 2.8% Segment NBT as % of Total Revenue (a) 3.2% 4.8% Segment NBT as % of Operating Revenue $ 147.4 $ 124.5 (18)% Memo: Fuel Costs (a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the SCS business segment and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as subcontracted transportation is typically a pass-through to customers, the Company realizes minimal changes in profitability as a result of fluctuations in subcontracted transportation. Operating revenue is also used to measure segment performance. 34
    • Dedicated Contract Carriage (DCC) ($ Millions) Fourth Quarter 2008 2007 % B/(W) (a) Operating Revenue $ 123.6 $ 140.3 (12)% 2.6 4.0 (35)% Subcontracted Transportation $ 126.2 $ 144.3 (13)% Total Revenue $ 12.7 $ 12.3 4% Segment Net Before Tax Earnings (NBT) 10.1% 8.5% Segment NBT as % of Total Revenue (a) Segment NBT as % of Operating Revenue 10.3% 8.7% $ 22.4 $ 29.3 24% Memo: Fuel Costs (a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the DCC business segment and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as subcontracted transportation is typically a pass-through to customers, the Company realizes minimal changes in profitability as a result of fluctuations in subcontracted transportation. Operating revenue is also used to measure segment performance. 35
    • Dedicated Contract Carriage (DCC) ($ Millions) Full Year 2008 2007 % B/(W) (a) Operating Revenue $ 536.8 $ 552.9 (3)% 11.0 14.7 (25)% Subcontracted Transportation $ 547.8 $ 567.6 (4)% Total Revenue $ 49.6 $ 47.4 5% Segment Net Before Tax Earnings (NBT) 9.1% 8.4% Segment NBT as % of Total Revenue (a) Segment NBT as % of Operating Revenue 9.2% 8.6% $ 123.0 $ 107.1 (15)% Memo: Fuel Costs (a) The Company uses operating revenue, a non-GAAP financial measure, to evaluate the operating performance of the DCC business segment and as a measure of sales activity. Subcontracted transportation is deducted from total revenue to arrive at operating revenue as subcontracted transportation is typically a pass-through to customers, the Company realizes minimal changes in profitability as a result of fluctuations in subcontracted transportation. Operating revenue is also used to measure segment performance. 36
    • Central Support Services (CSS) ($ Millions) Fourth Quarter 2008 2007 % B/(W) $ 36.6 $ 37.3 2% Allocated CSS Costs 8.7 14.0 38% Unallocated CSS Costs $ 45.3 $ 51.3 12% Total CSS Costs 37
    • Central Support Services (CSS) ($ Millions) Full Year 2008 2007 % B/(W) $ 146.8 $ 146.1 0% Allocated CSS Costs 38.7 44.4 13% Unallocated CSS Costs $ 185.5 $ 190.5 3% Total CSS Costs 38
    • Balance Sheet ($ Millions) December 31, December 31, 2008 2007 Cash and Cash Equivalents $ 120 $ 116 Other Current Assets 831 1,106 Revenue Earning Equipment, Net 4,565 4,501 Operating Property and Equipment, Net 547 519 Other Assets 627 613 Total Assets $ 6,690 $ 6,855 Short-Term Debt / Current Portion Long-Term Debt $ 384 $ 223 Other Current Liabilities 727 797 Long-Term Debt 2,479 2,553 Other Non-Current Liabilities 1,755 1,394 Shareholders' Equity 1,345 1,888 Total Liabilities and Shareholders' Equity $ 6,690 $ 6,855 39
    • Asset Management Update (a) Number FY03 FY04 FY05 FY06 FY07 FY08 of Units 6,000 5,180 5,008 4,938 4,750 5,000 4,843 4,596 4,571 4,539 4,360 4,167 4,261 4,195 4,104 3,996 3,839 3,868 4,000 3,572 3,042 3,000 1,890 1,938 2,000 1,584 1,646 1,561 967 1,000 0 (b) Redeployments Extensions Early Terminations Early Replacements (a) U.S. only (b) Excludes early terminations where customer purchases vehicle 40
    • Financial Indicators Forecast (1) ($ Millions) Total Cash Generated (2) Gross Capital Expenditures $1,760 Revenue Earning Equipment $1,692 $1,583 $1,411 PP&E/Other $1,381 $1,289 $1,195 $1,269 $1,300 $1,183 $1,255 $1,165 $940 $1,091 $1,054 $949 $725 $835 $657 $600 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Forecast 2009 2000 2001 2002 2003 2004 2005 2006 2007 2008 Midpoint Forecast Memo: Free Cash Flow (2) Midpoint (3) (242) 131 367 357 289 (216) (440) 375 349 365 Total Obligations to Equity Ratio (2) Equity 275% Significant and predictable cash generation Total Obligations (2) 234% 225% 201% 183% 168% 157% Invest in growth (organic, acquisitions) 151% 146% 129% Increase financial leverage towards long term target of 250-300% Total Obligations 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Forecast to Equity Midpoint Obligations to Equity include acquisitions. Free Cash Flow and Gross Capital Expenditures exclude acquisitions. (1) Non-GAAP financial measure; refer to Appendix - Non-GAAP Financial Measures. (2) Includes $176 million payment to the IRS related to full resolution of 1998 - 2000 tax period matters. (3) 41
    • Non-GAAP Financial Measures ► This presentation includes “non-GAAP financial measures” as defined by SEC rules. As required by SEC rules, we provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure and an explanation why management believes that presentation of the non-GAAP financial measure provides useful information to investors. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. ► Specifically, the following non-GAAP financial measures are included in this presentation: Reconciliation & Additional Information Non-GAAP Financial Measure Comparable GAAP Measure Presented on Slide Titled Page Operating Revenue Total Revenue Key Financial Statistics 7-8 Operating Revenue Forecast Total Revenue Forecast Key Financial Statistics 20 Earnings Before Restructuring and Income Taxes Net Earnings Business Segment 9 - 10 Comparable / Earnings EPS Forecast EPS Forecast EPS Forecast 27 Comparable Net Earnings / EPS Net Earnings / EPS EPS and Net Earnings Reconciliation 43 Comparable NBT / Tax Rate NBT / Tax Rate Tax Rate Reconciliation 44 Adjusted Return on Capital / Forecast Net Earnings / Forecast Adjusted Return on Capital Reconciliation 45 Total Cash Generated / Free Cash Flow / Forecast Cash Provided by Operating Activities / Forecast Cash Flow Reconciliation 46 - 47 Total Obligations / Total Obligations to Equity Balance Sheet Debt / Debt to Equity Debt to Equity Ratio 13 Debt to Equity Reconciliation 48 - 49 FMS / SCS / DCC Operating Revenue and Segment FMS / SCS / DCC Total Revenue and Segment Fleet Management Solutions / Supply Chain 31 - 36 NBT as % of Operating Revenue NBT as % of Total Revenue Solutions / Dedicated Contract Carriage 42
    • EPS and Net Earnings Reconciliation ($ Millions or $ Earnings Per Share) 4Q08 - 4Q08 - FY08 - FY08 - Net Earnings EPS Net Earnings EPS Net Earnings / EPS $ 10.6 $ 0.19 $ 199.9 $ 3.52 Tax Law Changes - - (1.6) (0.03) Reversal of Tax Reserve (7.9) (0.14) (7.9) (0.14) Brazil Charges - - 6.8 0.12 4Q08 Restructuring Charges 53.2 0.96 53.2 0.94 International Asset Impairments/Write Offs 4.4 0.08 4.4 0.08 Comparable Net Earnings / EPS $ 60.3 $ 1.09 $ 254.8 $ 4.49 4Q07 - 4Q07 - FY07 - FY07 - Net Earnings EPS Net Earnings EPS Net Earnings $ 71.9 $ 1.24 $ 253.9 $ 4.24 3Q07 and 4Q07 Restructuring (Recoveries)/ Charges (0.3) - 7.5 0.13 Gain on Sale of Property - - (6.2) (0.10) Tax Law Changes (3.3) (0.06) (3.3) (0.06) Comparable Net Earnings $ 68.3 $ 1.18 $ 251.9 $ 4.21 Note: Amounts may not recalculate due to rounding. 43
    • Tax Rate Reconciliation 4Q08 - 4Q08 - 4Q08 - FY08 FY08 FY08 NBT Tax Tax Rate NBT Tax Tax Rate Reported $ 33.2 $ 22.6 67.9% $ 349.9 150.0 42.9% Tax Law Changes - - - 1.6 Reversal of Tax Reserve - 7.9 - 7.9 Brazil Charges - - 6.5 (0.3) 4Q08 Restructuring Charges 58.4 5.3 58.4 5.3 International Asset Impairments/Write Offs 5.5 1.1 5.5 1.1 Comparable NBT / Tax Rate $ 97.2 $ 36.9 37.9% $ 420.3 165.6 39.4% 4Q07 - 4Q07 - 4Q07 - FY07 - FY07 - FY07 - NBT Tax Tax Rate NBT Tax Tax Rate Reported $ 111.8 $ 39.9 35.6% $ 405.5 151.6 37.4% 3Q07 and 4Q07 Restructuring Charges (0.3) (0.1) 11.6 4.0 Gain on Sale of Property (0.1) - (10.1) (3.9) Tax Law Changes - 3.3 - 3.3 Comparable NBT / Tax Rate $ 111.4 43.1 38.7% $ 407.0 155.0 38.1% Note: NBT represents net before tax earnings Amounts are calculated independently for each component and may not be additive due to rounding. 44
    • Adjusted Return on Capital Reconciliation ($ Millions) Forecast Midpoint 12/31/09 12/31/08 12/31/07 (1) Net Earnings $ 165 $ 200 $ 254 Restructuring and Other Charges, Net and Other Items 7 70 1 Income Taxes 115 150 152 Adjusted Earnings Before Income Taxes 287 420 407 (2) Adjusted Interest Expense 170 165 169 (3) Adjusted Income Taxes (184) (230) (220) Adjusted Net Earnings $ 273 $ 355 $ 356 Average Total Debt $ 2,766 $ 2,882 $ 2,848 Average Off-Balance Sheet Debt 141 171 150 (4) Average Adjusted Total Shareholders' Equity 1,412 1,788 1,792 Adjusted Average Total Capital $ 4,319 $ 4,841 $ 4,790 (5) Adjusted Return on Capital 6.3% 7.3% 7.4% Earnings calculated based on a 12-month rolling period excluding comparable earnings items during the period. (1) Interest expense includes implied interest on off-balance sheet vehicle obligations. (2) Income taxes were calculated using the effective income tax rate for the period exclusive of comparable earnings items. (3) Represents shareholders’ equity excluding comparable earnings items for those periods. (4) The Company adopted adjusted return on capital, a non GAAP financial measure, as the Company believes that both debt (including off-balance sheet debt) and equity (5) should be included in evaluating how effectively capital is utilized across the business. 45
    • Cash Flow Reconciliation ($ Millions) (4) 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 Cash Provided by Operating Activities $ 1,023 $ 365 $ 617 $ 803 $ 867 $ 779 $ 854 $ 1,103 $ 1,256 Less: Changes in Balance of Trade Receivables Sold (270) 235 110 - - - - - - Collections of Direct Finance Leases 67 66 66 61 64 70 66 63 62 Proceeds from Sales (Primarily Revenue Earning Equipment) 230 173 152 210 331 334 333 374 265 Proceeds from Sale and Leaseback of Assets - - - 13 118 - - 150 - Other Investing, Net 4 (4) 4 4 1 - 2 2 - (1) Total Cash Generated 1,054 835 949 1,091 1,381 1,183 1,255 1,692 1,583 (2) Capital Expenditures (1,296) (704) (582) (734) (1,092) (1,399) (1,695) (1,317) (1,234) (3)(5) Free Cash Flow $ (242) $ 131 $ 367 $ 357 $ 289 $ (216) $ (440) $ 375 $ 349 Memo: Depreciation Expense $ 580 $ 545 $ 552 $ 625 $ 706 $ 740 $ 743 $ 816 $ 843 Gains on Vehicle Sales, Net $ 19 $ 12 $ 14 $ 16 $ 35 $ 47 $ 51 $ 44 $ 39 The Company uses total cash generated, a non-GAAP financial measure, because management considers it to be an important measure of comparative operating performance. (1) Management believes total cash generated provides investors with an important measure of total cash inflows generated from our on-going business activities which include sales of revenue earning equipment, sales of operating property and equipment, sale and leaseback of revenue earning equipment, collections on direct finance leases and other cash inflows. Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment. (2) The Company uses free cash flow, a non-GAAP financial measure, because management considers it to be an important measure of comparative operating performance. Management (3) believes free cash flow provides investors with an important perspective on the cash available for debt service and shareholders after making capital investments required to support ongoing business operations. The calculation of free cash flow may be different from the calculation used by other companies and therefore comparability may be limited. Amounts have not been recasted to give effect for the impact of foreign exchange movements on cash for which the impact is not expected to be significant. (4) Free Cash Flow excludes acquisitions and changes in restricted cash. (5) 46
    • Cash Flow Reconciliation ($ Millions) Forecast Midpoint 12/31/09 Cash Provided by Operating Activities $ 980 Collections of Direct Finance Leases 65 Proceeds from Sales (Primarily Revenue Earning Equipment) 255 (1) Total Cash Generated 1,300 (2) Capital Expenditures (935) (3)(4) Free Cash Flow $ 365 The Company uses total cash generated, a non-GAAP financial measure, because management considers it to be an important measure of comparative operating performance. (1) Management believes total cash generated provides investors with an important measure of total cash inflows generated from our on-going business activities which include sales of revenue earning equipment, sales of operating property and equipment, sale and leaseback of revenue earning equipment, collections on direct finance leases and other cash inflows. Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment. (2) The Company uses free cash flow, a non-GAAP financial measure, because management considers it to be an important measure of comparative operating performance. Management (3) believes free cash flow provides investors with an important perspective on the cash available for debt service and shareholders after making capital investments required to support ongoing business operations. The calculation of free cash flow may be different from the calculation used by other companies and therefore comparability may be limited. Free Cash Flow excludes acquisitions and changes in restricted cash. (4) 47
    • Debt to Equity Reconciliation ($ Millions) % to % to % to % to % to % to % to % to 12/31/00 Equity 12/31/01 Equity 12/31/02 Equity 12/31/03 Equity 12/31/04 Equity 12/31/05 Equity 12/31/06 Equity 12/31/07 Equity Balance Sheet Debt $2,017 161% $1,709 139% $1,552 140% $1,816 135% $1,783 118% $2,185 143% $2,817 164% $2,776 147% Receivables Sold 345 110 - - - - - - PV of minimum lease payments and guaranteed residual values under operating leases for vehicles 879 625 370 153 161 117 78 178 PV of contingent rentals under securitizations 209 441 311 - - - - - Total Obligations (1) $3,450 275% $2,885 234% $2,233 201% $1,969 146% $1,944 129% $2,302 151% $2,895 168% $2,954 157% (1) The Company uses total obligations and total obligations to equity, non-GAAP financial measures, which include certain off-balance sheet financial obligations relating to revenue earning equipment. Management believes these non-GAAP financial measures are useful to investors as they are more complete measures of the Company’s existing financial obligations and help investors better assess the Company’s overall leverage position. Note: In connection with adopting FIN 46 effective July 1, 2003, the Company consolidated the vehicle securitization trusts previously disclosed as off-balance sheet debt. 48
    • Debt to Equity Reconciliation ($ Millions) Forecast % to Midpoint % to Equity Equity 12/31/08 12/31/09 Balance Sheet Debt $2,863 213% $2,620 175% Receivables Sold - - PV of minimum lease payments and guaranteed residual values under operating leases for vehicles 163 120 Total Obligations (1) $3,026 225% $2,740 183% (1) The Company uses total obligations and total obligations to equity, non-GAAP financial measures, which include certain off-balance sheet financial obligations relating to revenue earning equipment. Management believes these non-GAAP financial measures are useful to investors as they are more complete measures of the Company’s existing financial obligations and help investors better assess the Company’s overall leverage position. 49