Ryder Q1 Profit Slides on Lower Used Vehicle Sale Prices
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Lower used-vehicle sale prices and the U.K. market exit hurt profits at Ryder System Inc. in the three months ending March 31, it said, as the company’s results fell short of analyst expectations.
The vehicle leasing and rental company posted net income of $139 million, or $2.94 per diluted share, compared with a profit of $176 million, $3.35, in the year-ago period, it said April 26.
Ryder’s adjusted earnings per share, also hurt by a 66 cents-per-share hit from its U.K. market exit, fell to $2.81 from $3.59 per share in the year-ago period. The analyst consensus was $2.96. For the second quarter of 2023, the company expects adjusted EPS of $2.80 to $3.05 per share, compared with a consensus of $3.02.
Miami-based Ryder posted revenue of $2.95 billion in the most recent quarter, falling short of the consensus estimate of $2.99 billion, according to Zacks Equity Research. In the year-ago period, Ryder reported revenue of $2.85 billion.
Of that most recent quarterly revenue total, some $1.5 billion was from its fleet management solutions unit, compared with $1.53 billion in the year-ago period, the company said, a decrease of 2%.
Ryder’s fleet management solutions unit’s 2% year-over-year decrease in quarterly revenue reflected lower used vehicle sales and rental results, it said. The unit’s operating revenue increased 4% year-over-year in North America in the first quarter, but the overall figure fell on its exit from the U.K. market, the company added.
The unit saw 16% and 35% declines in used truck and tractor pricing, respectively, Ryder said. Still, its used truck and tractor proceeds fell 7% and 10% year-over-year in the most recent quarter, beating the company’s expectations, Chief Financial Officer John Diez said during the company’s earnings call April 26. Used vehicle sales totaled 5,100 in the first quarter, compared with 3,600 in the year-ago period, it added.
“Consistent with our expectations, we delivered strong first-quarter results in a challenging freight environment,” CEO Robert Sanchez said in Ryder’s earnings statement. “Results benefited from out-performance in used vehicle sales and [dedicated transportation solutions], which were offset by [a supply chain solutions] asset impairment charge related to a customer bankruptcy.”
The customer that filed for bankruptcy was Bed, Bath & Beyond, he said during the earnings call.
Through the rest of 2023, Ryder expects strong but reduced earnings as weak freight conditions will hurt used vehicle sales and rental, the backbone of its fleet management solutions unit, noted Diez. The company’s contractual lease, dedicated transportation solutions and supply chain businesses continue to improve based on growth and return initiatives, he added.
“Longer-term secular trends including escalating demand for supply chain resiliency, near-shoring activity, and e-commerce fulfillment provide significant opportunities for future growth,” added Sanchez.
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Ryder’s supply chain solutions arm saw its first-quarter revenue rise 10% compared with the year-ago period to $1.201 billion, the company said, citing new business, higher volumes and an increase in prices. Revenue rose 7% year-over-year at the company’s dedicated transportation solutions unit to $454 million, it added.
Sanchez said on the call the company’s focus moving forward would be on the higher return segments — supply chain solutions and dedicated transportation solutions. He added that the company was shifting away from leasing trailers to leasing trucks for the same reason — the greater return.
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