Ryder Reports Q1 Net Loss
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Ryder System Inc. reported a net loss of just over $100 million in the first quarter and revenue slipped 1% as it adjusted to the impact of COVID-19 on the economy and its markets.
For the quarter, ended March 31, Ryder reported a net loss of $109.1 million, or a loss of $2.09 per diluted share, compared with a profit of $45.9 million, or 87 cents, a year earlier.
Revenue dipped to $2.16 billion compared with $2.18 billion a year earlier.
Ryder provides commercial truck rental, truck leasing, used trucks for sale and last-mile delivery services. Considered an essential business during the COVID-19 pandemic, Ryder reported it continues to provide supply chain and transportation services to its customers in the vast majority of its locations.
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Overall operating results were well ahead of management’s expectations through mid-March, the Miami-based company reported. Then came the quick spread of the novel coronavirus.
Ryder estimated the negative pre-tax earnings impact of COVID-19 in the first quarter was $70 million, and primarily due to $48 million of additional depreciation resulting from an expected weaker used-vehicle sales environment through year-end 2020 — resulting in additional depreciation for vehicles expected to be sold through mid-2021.
Automotive supply chain volumes dropped due to production shutdowns. Startups are expected in May, the Miami-based company said.
“While these unparalleled challenges present a setback to earnings in the near term, we remain focused on our strategic initiatives to achieve our long-term target [return on equity] of 15%,” Ryder Chairman and CEO Robert Sanchez said in a release.
“These initiatives include increasing lease prices, executing on our multiyear maintenance cost-savings initiative, and reducing capital investment in lower performing accounts and geographies. In addition, as we move past higher levels of depreciation from residual value estimates changes, we expect to recognize significantly improved returns,” he said.
Sanchez
Ryder Supply Chain Solutions ranks No. 5 on the Transport Topics Top 50 list of largest logistics companies in North America.
Results for its fleet management solutions segment included total revenue of $1.3 billion, down 1% compared with the year-earlier period. Ryder ChoiceLease revenue increased 7%, reflecting a larger average fleet size as well as higher prices on new vehicles. The lease fleet increased by 5,300 vehicles, or 3%, compared with the prior year. Commercial rental revenue decreased 13% from the year-earlier period due to lower demand, partially offset by higher pricing. The segment posted a loss before tax of $115 million compared with earnings before tax of $61 million in the 2019 period.
In its supply chain solutions segment, total revenue was down 1% to $628 million compared with the year-earlier period. Earnings before tax of $31 million decreased 4% in the first quarter of 2020 compared with $32 million in 2019. This decrease reflected COVID-19-related automotive industry production shutdowns and currency valuation charges which together total approximately $10 million, as well as additional impacts from prior-year insurance rebates and increased medical expenses. These impacts were mostly offset by higher pricing and increased volumes with non-automotive customers, it reported.
In the Dedicated Transportation Solutions segment, total revenue was down 4% to $335 million The decline in total revenue reflected lower subcontracted transportation revenue and lower fuel costs passed through to customers. DTS earnings before tax of $12 million decreased 30% compared with $17 million in 2019 due to a $4 million change in residual value estimates on vehicles used in this segment, prior year insurance rebates, increased medical expenses, and bad debt reserves. These impacts were partially offset by higher pricing and volumes.
“This pandemic has heightened awareness of the importance of a reliable and efficient supply chain. New trends and opportunities will emerge as a result, including an increase in near-shoring and growth in e-commerce and last-mile services,” Sanchez said.
Meanwhile, the company’s liquidity as of April 28 included $1 billion in cash, $565 million in available revolver borrowings, and $100 million available under its receivable-backed financing facility. The company noted it is well-positioned to support operations, fund $600 million of remaining 2020 debt maturities, and it expects to continue paying its dividend.
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