Ryder System Inc. reported record revenue but lower profits in the third quarter of 2017.
The Miami-based truck leasing and rental firm and one of the nation’s largest providers of logistics services also cut its earnings projection for the year as rising insurance premiums and higher maintenance costs are expected to cut into profits from its dedicated transportation business. The company is also grappling with higher-than-expected expenses in its supply chain solutions unit.
Separately, Echo Global Logistics, a Chicago-based provider of freight brokerage and transportation management services, reported record revenue as well, along with higher earnings in the three-month period ending on Sept. 30.
Echo earned $2.4 million, or 9 cents a share, on gross revenue of $509.5 million. That compares with net income of $2.4 million on gross revenue of $460.2 million in the same period in 2016.
Much of the revenue growth for Echo came from managed transportation, which jumped 24.4% to $108.4 million in the latest quarter. Brokerage revenue increased 7.5% to $401.2 million.
Net revenue, which is gross revenue minus the cost of purchased transportation, was $86.7 million in the third quarter, an increase of 7.2% from $80.9 million in the same period a year ago.
Kyle Sauers, chief financial officer of Echo, said based on recent results and business trends, the company boosted its revenue projections for the fourth quarter to between $460 million and $500 million, from $439 million, and boosted its full-year revenue forecast to between $1.86 billion and $1.9 billion from $1.8 billion.
Echo Global Logistics ranks No. 39 on the Transport Topics Top 50 list of the largest logistics companies in North America.
Echo earned $2.4 million, or 9 cents a share, on gross revenue of $509.5 million. (Echo Global Logistics)
For Ryder, net earnings from continuing operations fell 31% to $58.9 million, or $1.11 a share in the third quarter of 2017. It earned $84.9 million, or $1.59 a share, on revenue of $1.72 billion in the comparable period in 2016.
Total revenue grew 7% to $1.85 billion.
Ryder officials said they expect full-year earnings to be in the range of $3.95 to $4.05 a share, down from its prior forecast of between $4.03 and $4.23 a share.
Notwithstanding the downward earnings projection, Ryder CEO Robert Sanchez said the company performed “in line with our expectations for the third quarter.” He said the company is on track to add 3,500 vehicles to its ChoiceLease fleet with 40% of the increase coming from customers new to outsourcing. The company also saw a boost in rental truck rates and increased sales of used trucks in the most recent quarter.
The impact of recent hurricanes — Harvey in Houston and Irma in Florida — was neutral in the quarter as storm-related increases in rental demand were offset by property losses, Sanchez said.
Revenue from Ryder’s Fleet Management Solutions business, which provides vehicle leasing and truck rental, contract maintenance and fuel services, rose 4% to $1.2 billion in the third quarter from $1.03 billion in the same period a year ago. Revenue from its Dedicated Transportation Solutions business, which provides trucks and drivers under contract to shippers on an exclusive basis, also increased 4% to $272 million from $260.9 million a year ago. Ryder’s Supply Chain Solutions business, which includes transportation management and freight brokerage, warehousing and distribution, order fulfillment and freight bill payment services, rose 19% to $496 million from $416.9 million.
“SCS is havin’ a party on the top line but having issues converting those revenue dollars into profits,” commented Austin Remey, a stock analyst with Stifel, Nicolaus & Co. “A couple large customers — one new, one old — had lower-than-expected [quarterly] volumes, and the company needs to readjust their contracts. We hope these issues can be resolved by 2018.”
Ryder Supply Chain Solutions ranks No. 7 on the TT Top 50 list of logistics companies and No. 13 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.