On Tuesday, Ryder System Inc (NYSE:R) reported its second quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Commercial Rental Demand
Kevin Sterling – BB&T Capital Markets: Greg, a month ago you guys lowered guidance on essentially lower commercial rental demand and (having the wholesale more used trucks) and now a month later you’re raising your 2012 outlook, (indiscernible) by the upside we saw in the quarter. So does that mean the back-half of the year assumes continued weakness in commercial rental revenue and lower wholesale used-truck prices? And if commercial rental were to pick up in the second half of the year maybe due to housing improving, would you cut back on the number of used vehicles you sell in the second half of 2012?
Gregory T. Swienton – Chairman and CEO: First of all, the expectation for demand is certainly considerably less than our original business plan and our forecast for the second half of the year reflects the demand levels that we think we’ve kind of matched up our supply with through the second half of the year. If there should be some unexpected surprise or upside and demand suddenly heated up, which is certainly not in our reasonable expectations at this time, then we probably again adjust how much we move out in the fleet, how much you may move to other service, how much you may move to sell, but that we’ll monitor in the days ahead. I think at this point we feel that we’ve about got it right. You never know what’s in the months ahead. After the month of May things looked pretty weak, June stabilized, July looks better. But you can never tell in this environment, this very weak uncertain economic environment kind of how things are going to go month-to-month, so I think we’ll monitor it.
Kevin Sterling – BB&T Capital Markets: So June was better than May and July, a little bit better than June, so the decline in volume that you saw in commercial rental in May, could you help characterize that how much is the tight driver situation may be impacting some of your smaller customers where they can’t find drivers and therefore have outsourced that business to say larger fleets?
Gregory T. Swienton – Chairman and CEO: Frankly, I don’t think it has anything to do with drivers. I think it has to do with how much freight and volume there is to move. And as rental, is one of the prime users for supplemental capacity for our customers who are lease customers as well as just rental customers. I think that you had many things going on simultaneously but certainly a slowdown in May for volume, and I really think that the case is not due to drivers.
Lease Fleet Fall in Average Age
David Ross – Stifel Nicolaus: You talked about the lease fleet declining in average age earlier than anticipated. How much earlier than anticipated, I guess when did you expect that to decline?
Gregory T. Swienton – Chairman and CEO: I think our original plans were that maybe by the end of this year going into the start of next year, we would begin to see some reduction in average age of the fleet, so the fact that it’s showing up now I think is a positive sign that portends well for the future. Now the question is will that keep up and will that continue to kind of flow through, but certainly that was a positive and an upside addition in the second quarter. Maybe Dennis, if you want to say anything from FMS in addition to that about fleet age of the moment?
Dennis C. Cooke – President of Global Fleet Management Solutions: That’s right, Greg. We were expecting it to decline towards the end of the year due to the replacement activity that we’re seeing. We actually saw it start to come down sooner and that alone with the initiatives that we’re driving, bode well for maintenance cost.
David Ross – Stifel Nicolaus: Even though extensions are still rising, replacements are well exceeding extensions to bring the average age down?
Dennis C. Cooke – President of Global Fleet Management Solutions: The replacement activity is very high David. So, as a result, we are seeing as we said the age come down sooner than expected.
David Ross – Stifel Nicolaus: Then on the Dedicated side of things, it sounded like you’ve made some improvements there. I know there was talk about fixing some legacy Scully account specific issues, have other cost pressures gotten better and we kind of fixed all of those Scully issues?
Dennis C. Cooke – President of Global Fleet Management Solutions: Yeah. That’s right. That’s good memory. We had some, last year in the third and fourth quarter, we had some margin decline in DCC largely because of the accounts you referenced. Our team has done a good job working on those accounts one at a time and brought the margin of those accounts back in line and that’s part of what you’ll see in these results.
David Ross – Stifel Nicolaus: Did you retain all of those accounts and bringing them back in line or did you have to exit some of them?
Dennis C. Cooke – President of Global Fleet Management Solutions: Virtually, all the accounts, yes.