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Presenting on today’s call are Greg Swienton, Chairman and Chief Executive Officer; and Robert Sanchez, Executive Vice President and Chief Financial Officer. Additionally, Tony Tegnelia, President of Global Fleet Management Solutions; and John Williford, President of Global Supply Chain Solutions, are on the call today and available for questions following the presentation.With that, let me turn it over to Greg. Greg Swienton Thanks, Bob, and good morning, everyone. This morning we’ll recap our second quarter 2010 results, we’ll review our asset management area, and discuss our outlook and forecast for the year. After our initial remarks, we’ll open up the call for questions. So let me begin with an overview of our second quarter results. For those of you who are following along in the PowerPoint, I’ll begin on page four. Net earnings per diluted share from continuing operations were $0.58 for the second quarter 2010, up 21% from $0.48 in the prior-year period. Second quarter EPS of $0.58 were also above our forecast range of $0.45 to $0.50. Total revenue for the company was up by 6% from the prior year and total revenue reflects higher fuel cost pass-throughs, favorable foreign exchange rate movements and higher operating revenue. Operating revenue, which excludes FMS fuel and all subcontracted transportation revenue, was up by 2% from the prior year. Operating revenue increased due to higher commercial rental revenue, favorable foreign exchange rates and fuel cost pass-throughs in Dedicated Contract Carriage. The increases were partially offset by lower full service lease revenue. On page five, in Fleet Management total revenue increased 4% versus the prior year. Total FMS revenue included a 24% increase in fuel services revenue, reflecting higher fuel cost pass-throughs. FMS operating revenue, which excludes fuel, declined by 1%, due to lower contractual revenue. Contractual revenue, which includes both full service lease and contract maintenance, was down 5% due to fewer contracted units in the fleet.
Lease revenue was down 4% consistent with the decline we saw in the first quarter, excluding foreign exchange. Commercial rental revenue was up by 20%. Rental revenue benefited from improving global demand and higher pricing. Net before tax earnings in fleet management were up by 12%. Fleet management earnings as a percent of operating revenue increased by 70 basis points to 6.5%.FMS earnings were positively impacted by improved commercial rental performance, better used vehicle results and lower expenses in our retirement plans. These improvements were partially offset by lower full service lease performance due to fewer vehicles in the fleet and higher maintenance costs on an older fleet, as well as increased compensation expense and higher depreciation expense per unit. Turning to the Supply Chain Solutions segment on page six. Total revenue was up 12% due to higher subcontracted transportation and increased operating revenue. Operating revenue grew by 7% due to higher automotive volumes and favorable foreign exchange rate movements. These increases were partially offset by the closure of some locations last year, as we rationalized underperforming contracts. SCS net before tax earnings doubled to $12.6 million for the quarter. Supply Chain’s net before tax earnings as a percent of operating revenue increased by 230 basis points to 5%. Higher SCS earnings were driven largely by improved automotive volumes; the impact of closing some underperforming locations last year; as well as better consumer and high-tech results. These benefits were partially offset by higher compensation expense. Dedicated Contract Carriage total revenue was up by 6% reflecting increased operating revenue in higher subcontracted transportation. Operating revenue was up 4% due to higher fuel cost pass-throughs and improved freight volumes. Net before tax earnings in DCC decreased by 21%. DCC’s net before tax earnings as a percent of operating revenue declined by 230 basis points to 7.1%. The decline reflects higher self-insurance costs related to prior year claims development, compensation expense and investments in new technology initiatives. These items were partially offset by earnings from higher customer volumes. Read the rest of this transcript for free on seekingalpha.com