Profits at Ryder Fall 32%, Miss Analyst Estimates by 2¢
Ryder System Inc. reported profits fell 32% in the first quarter compared with 2016 after a drop in demand to rent trucks and an overall weak used truck sales market continued into 2017.
The Miami-based company earned $38.1 million in net income, or 71 cents per share. After adding back pension costs and a tax adjustment, the earnings per share total was raised to 82 cents. One year ago, the figures were $55.8 million or $1.04.
Revenue increased 7.2% to $1.75 billion as strong results in fuel and service boosted top-line results making up for the flat results from lease and rental business. However, expenses went up 8.7% with a significant increase in fuel costs and an $18.3 million reduction in used vehicle sales.
Ryder’s largest division, Fleet Management Solutions, generated $1.13 billion in gross revenue and $962 million after fuel surcharges were removed, unchanged from one year ago. However, earnings before income taxes were down 37% to $52.1 million year-over-year. The company blamed the results on lower used vehicle sales, lower demand to rent trucks and higher depreciation and maintenance costs for the fleet.
Ryder’s Dedicated Transportation Solutions segment reported $267 million in gross revenue and $193 million after fuel and transportation costs were removed, 2% higher than the year-earlier period. However, earnings before income taxes were $11.3 million, down 21% from 2016 levels, which Ryder blamed on higher insurance costs and maintenance.
One of the bright spots in a difficult quarter was the Ryder Supply Chain Solution division.
Gross revenue was $463 million and, after fuel and transportation costs were removed, there was a 12% jump to $362 million. Earnings before income taxes increased 39% to $27.4 million year-over-year.
Ryder Supply Chain Solutions ranks No. 7 on the Transport Topics Top 50 list of the largest logistics companies in North America and No. 13 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
“[Supply Chain Solutions] operating revenue grew across all industry verticals, primarily as a result of increased volumes, new business and higher pricing,” the company said.
Despite the positive outcome, Ryder alerted investors that it lowered the full-year earnings forecast because it believes the commercial rental and used truck market will be worse than company executives previously thought for 2017.
“Supply Chain Solutions is expected to perform generally in line with expectations for the full year, as the first-quarter out-performance is not expected to continue in the remainder of the year. We expect Dedicated Transportation Solutions to continue to be negatively impacted by the items we saw in the first quarter but to a lesser degree,” CEO Robert Sanchez said.
Ryder lowered the full-year forecast to a range of $3.90 to $4.20 from the prior $4.78 to $5.08. For the quarter, the company fell 2 cents short on the earnings forecast, according to a Bloomberg News consensus survey of industry analysts.
