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Ryder System projecting year-end balance sheet leverage of 190% total obligations to equity
By Jennifer Lanning Drey
Portland, Ore., Sept. 9 - Ryder System, Inc. expects to end 2010 with balance sheet leverage of 190% total obligations to equity, which is well below its target leverage of 250% to 300% total obligations to equity, Art Garcia, Ryder's chief financial officer, said Thursday.
"This provides significant capacity to support organic growth, acquisitions and share repurchases over time," Garcia said during a presentation at the Credit Suisse Automotive & Transportation Conference in New York.
Garcia also said Ryder expects to report full-year free cash flow of $250 million, which was "lower but still strong," when compared to $614 million of free cash flow in 2009. The decrease is due to higher capital spending, he said.
The CFO also noted that Ryder has made fundamental changes to its business model and internal processes over the past 10 years. As a result, the company expects to generate $2.1 billion of free cash flow for the current decade, as compared to negative free cash flow of $1.6 billion in the 10 years making up the 1990s.
"These initiatives changed how we do business, and we expect them to continue to benefit our free cash flow profile in the future," Garcia said.
Garcia also said that looking ahead, Ryder likes its prospects for profitable, contractual growth.
"We operate in larger markets where increasing complexity and higher ownership costs should drive more outsourcing," he said.
The CFO noted that the company can use its strong balance sheet to take advantage of growth opportunities in the future.
Ryder is a Miami-based transportation and logistics company.
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