MIAMI, July 21 /PRNewswire/ -- Ryder System, Inc. (NYSE:R) today announced strong secondquarter performance, demonstrating continued improvements from the strategic change in directionand restructuring efforts the company initiated in 1996. ``Our second quarter results continued to benefit from the changes we implemented last year,' saidRyder Chairman, President and Chief Executive Officer M. Anthony Burns. ``Our earnings are ontrack, the cost savings are where we expected them to be, and we are focused on profitablegrowth.' Revenue in the second quarter of 1997 was $1.39 billion, compared with revenue of $1.43 billionin the second quarter of 1996. Excluding second quarter 1996 revenue of $147 million from thecompany's former consumer truck rental operations, sold in October 1996, revenue increased8.9% year-over- year. Earnings increased to $50.0 million, or $0.64 per share, compared with$31.6 million, or $0.39 per share, in the second quarter of 1996. Results for the second quarter of1996 included pretax earnings of $12.4 million from the company's former consumer truck rentaloperations and a pretax restructuring charge of $19.6 million ($12.4 million after tax) associatedwith cost reduction programs. For the first half of 1997, revenue totaled $2.73 billion, compared with revenue of $2.50 billion inthe first half of 1996 (excluding consumer truck rental revenue of $253 million). Earnings increasedto $83.7 million, or $1.07 per share, compared with earnings of $41.8 million, or $0.52 per share,in the first half of 1996. Results for the first half of 1996 included a pretax loss of $2.6 million fromthe company's former consumer truck rental operations, and a pretax restructuring charge of $19.6million, which is described above. Capital expenditures in the first half were $554 million (including acquisitions of $46 million),compared with $770 million in the first half of 1996, a decrease of $216 million, or 28%. EVA (Economic Value Added), which Ryder has adopted as an important measurement ofprogress, turned positive during the first half and at mid year totaled $9.1 million, exceeding plan. Operations In the second quarter of 1997, total revenue of Ryder Integrated Logistics increased 29%,operating revenue increased 12%, and pretax product line earnings rose 83% (67% excluding the1996 restructuring charge) compared with the same period of 1996, in response to operationalimprovements and cost controls. Pretax product line earnings as a percentage of operating revenuewere 6.0% versus 3.7% (4.0% excluding the 1996 restructuring charge) in the second quarter oflast year. During the quarter, the company continued to focus on the composition of the customerbase and to emphasize higher margin opportunities. ``RIL continues to grow, and our second quarter profits were above our target,' Burns said. ``Wecontinue to be selective and disciplined with our contracts and to work toward improved pricingand margins. In addition, we are excited about our relationship with Andersen Consulting and IBMGlobal Services, and we expect this relationship to rapidly enhance our logistics capabilities.' In Ryder Transportation Services, revenue from truck leasing increased modestly. While the smallerfleet size caused total revenue from commercial truck rental to decrease, the trends of higherproductivity of the rental fleet, higher per-unit revenue and stronger pricing continued. RTS's pretaxearnings increased 64% (31% excluding the 1996 restructuring charge), primarily as a result ofimprovements and cost reductions implemented in 1996; for example, employee and facility costs inthe second quarter of 1997 decreased $19 million compared with the second quarter of 1996. Pretax earnings as a percentage of dry revenue (revenue excluding fuel) were 9.8% in the secondquarter, compared with 7.4% in the second quarter last year, excluding the 1996 restructuringcharge. Ryder Public Transportation Services revenue increased 21% in the second quarter, and pretaxproduct line earnings grew 27% (20% excluding the 1996 restructuring charge), compared with thesame period of 1996. As in the first quarter, the division's strong performance was bolstered by theacquisitions of Larson Transportation Services and School Bus Services, as well as continuedgrowth of business with existing customers. During the quarter, Ryder/ATE began implementationof a contract to manage the New York City Transit Authority's paratransit system, one of thelargest such projects in the country. In addition, RPTS was awarded a contract with the publicschool system in Madison County, Mississippi, bringing to 24 the total number of states in whichRPTS provides student transportation services. ``RPTS is performing strongly and, as the New York City and Madison County contractsdemonstrate, we continue to see a growing interest in transportation outsourcing in existing and newmarkets,' Burns commented. During the second quarter, international operations were just below break- even, with a $2.7 millionimprovement in pretax earnings over last year (a $1.7 million improvement excluding the 1996restructuring charge). Argentina, Germany and Mexico continued their profitable operations, andBrazil reported a profit. In the United Kingdom, pretax earnings of Ryder Plc increased 54% overlast year's second quarter. ``We are pleased with the continued improvement in our international operations,' Burns said.``The British Airways contract, which leverages our maintenance strengths and does not requiremajor asset investments, contributed positively to second quarter earnings and is illustrative of thebreadth of our global logistics capabilities.' As previously announced, in another important step toward reducing cyclicality, increasing strategicfocus and improving returns, the company has agreed to sell Ryder Automotive Carrier Services, Inc. to Allied Holdings, Inc. (Nasdaq:HAUL) for approximately $114.5 million incash and the assumption of liabilities. The period for anti-trust review under the Hart-Scott-RodinoAct has expired without further action by U.S. Government regulatory authorities, and the proposedsale is now contingent upon regulatory approval from the Canadian Government and finalization of adefinitive agreement. Second quarter revenue for Ryder Automotive Carrier Services was $163.1million, compared with $160.5 million in last year's second quarter, and performance continued toimprove as the cost-cutting, restructuring and utilization improvements made in 1996 continued toshow results. Outlook Commenting on the outlook for the remainder of 1997, Burns said, ``We are very pleased to reportsolid second quarter results, which contributed to a strong first half. Our new operating model,which contains three high- quality, profitable businesses in growing markets, is less cyclical and lesscapital intensive. With the new composition of our business, the second and fourth quarters willtypically be Ryder's strongest. We expect to see continued positive results, and we are on track forthe rest of the year.' Ryder provides high-quality logistics and transportation solutions throughout the United States andin Canada, the United Kingdom, Germany, Poland, The Netherlands, Mexico, Brazil andArgentina. Revenue in the 12 months ended June 30, 1997 was $5.5 billion. Assets at June 30,1997 were $5.6 billion. Ryder's stock is a component of the Dow Jones Transportation Averageand the Standard & Poor's 500 Index.
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