NEW YORK, May 20, 2020 /PRNewswire/ -- As announced earlier today, prominent investor rights law firm Bernstein Litowitz Berger & Grossmann LLP ("BLB&G") filed a class action lawsuit for violations of the federal securities laws against Ryder System, Inc. ("Ryder" or the "Company") and certain of the Company's current and former senior executives (collectively, "Defendants") on behalf of investors in Ryder common stock between July 23, 2015, and February 13, 2020, inclusive (the "Class Period"). The case, which is pending in the U.S. District Court for the Southern District of Florida, has been reassigned from the Ft. Lauderdale Division to the Miami Division and the civil action number has been reassigned from "0:20-cv-60997" to "1:20-cv-22109." The case is now captioned Key West Police & Fire Pension Fund v. Ryder System, Inc., No. 1:20-cv-22109 (S.D. Fla.), and has been assigned to U.S. District Judge Kathleen M. Williams.
The complaint, which BLB&G filed on behalf of Key West Police & Fire Pension Fund, is based on an extensive proprietary investigation and a careful evaluation of the merits of this case. A copy of the complaint is available on BLB&G's website by clicking here.
Ryder's Alleged Fraud
Headquartered in Miami, Florida, Ryder is a global provider of transportation and supply chain solutions, including leasing trucks to end users. As part of Ryder's truck-leasing model, Ryder assigns residual values to its trucks for depreciation purposes and then sells those vehicles at the end of their useful lives. The Company calculates its depreciation expense by subtracting the residual value from the present value of its trucks and dividing that number by the number of years in the trucks' useful lives. An increase in the residual value of Ryder's trucks enables it to decrease the incremental depreciation expense recorded on those assets. Thus, the higher the residual value that Ryder assigns to its trucking fleet, the less depreciation expense the Company must record, which has the effect of increasing Ryder's pre-tax earnings on a dollar-for-dollar basis. The claims alleged in this case arise from Defendants' misrepresentations and omissions regarding the residual values that Ryder assigned to its trucks.
The complaint alleges that Defendants inflated Ryder's financial results by systematically overstating the residual value of its trucking fleet. While Ryder repeatedly increased the expected residual values of its trucks, the actual amount Ryder was receiving from sales of used trucks had started to decline beginning in 2015. Nevertheless, the Company assured investors that it had been "conservative" in establishing the residual values of trucks in its fleet and "[w]e don't have a situation where we've got a bunch of vehicles that are at high residual values [and] have to be written down." As a result of Defendants' misrepresentations, shares of Ryder's common stock traded at artificially inflated prices during the Class Period.
The truth emerged through a series of disclosures beginning on July 30, 2019, when Ryder drastically reduced its full-year 2019 earnings forecast, which management attributed primarily to declining valuations of its trucks.
On October 29, 2019, the Company revealed that "our residual value estimates likely exceeded the expected future values that would be realized upon the sale of power vehicles in our fleet." As a result, Ryder significantly lowered the residual value of its trucking fleet and incurred $177 million in additional depreciation expense in the third quarter of 2019.
Then, on February 13, 2020, Ryder reported that, based on the significant reductions to the residual value of its fleet, it had incurred a total of $357 million in additional depreciation expense for 2019, as well as a loss of $58 million on the sale of used vehicles. The Company also announced that, for 2020, it expected to incur an additional $275 million in depreciation expense on its fleet, and an additional $20 million estimated loss on used vehicle sales. As a result of these disclosures, the price of Ryder common stock declined precipitously.
If you wish to serve as Lead Plaintiff for the Class, you must file a motion with the Court no later than July 20, 2020, which is the first business day on which the U.S. District Court for the Southern District of Florida is open that is 60 days after the publication date of May 20, 2020. Any member of the proposed Class may seek to serve as Lead Plaintiff through counsel of their choice, or may choose to do nothing and remain a member of the proposed Class.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Avi Josefson of BLB&G at (212) 554-1493, or via e-mail at [email protected].
BLB&G is widely recognized worldwide as a leading law firm advising institutional investors on issues related to corporate governance, shareholder rights, and securities litigation. Since its founding in 1983, BLB&G has built an international reputation for excellence and integrity and pioneered the use of the litigation process to achieve precedent-setting governance reforms. Unique among its peers, BLB&G has obtained several of the largest and most significant securities recoveries in history, recovering over $33 billion on behalf of defrauded investors. More information about the firm can be found online at www.blbglaw.com.
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SOURCE Bernstein Litowitz Berger & Grossmann LLP