Ryder Posts Q2 Loss on Market Weakness, UK Exit Charge

Weaker Rental Demand, Used Vehicle Prices Weigh on Profits
Ryder truck
(Ryder System Inc.)

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Ryder System Inc. posted an $18 million loss in the second quarter of 2023, compared with a profit of $239 million in the year-ago period, due to weaker market conditions and a $183 million one-time charge on its exit from the United Kingdom, the company said July 26.

Miami-based Ryder’s Q2 loss on an earnings per share basis was 40 cents, compared with an EPS gain of $4.70 in the year-ago period.

Total revenue for the vehicle leasing and rental company held fairly steady, dipping to $2.9 billion for Q2 compared with $3 billion a year ago.

Ryder Supply Chain Solutions ranks No. 10 on the Transport Topics Top 100 list of the largest logistics companies in North America, and No. 9 on the TT 100 list of the largest for-hire carriers.

The company’s fleet management solutions unit reported Q2 revenue of $1.45 billion, a 10% decrease compared with $1.62 billion in the same period a year earlier.

The decrease reflects lower fuel revenue passed through to customers and lower operating revenue, it said, adding that operating revenue fell because of the company’s exit from the U.K. market plus lower rental demand.

Ryder’s fleet management unit saw lower used vehicle returns and rental results in the most recent quarter, with higher used vehicle sales volumes offset by a 41% slump in used tractor prices and a 34% decline in pricing for lighter-duty trucks.

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Used tractor prices fell 15% in the second quarter, compared with the first three months of 2023, while used truck prices fell 14% over the same time span, the company’s quarterly earnings presentation showed.

Ryder sold 5,500 used vehicles in the three months that ended June 30, compared with 4,000 in the year-ago quarter. Also, the company’s used vehicle inventory totaled 7,000 at the end of the quarter, compared with 3,900 a year earlier.

The company’s supply chain solutions unit posted total revenue of $1.18 billion in the most recent quarter, little changed from $1.17 billion in the year-ago period.

Ryder’s dedicated transportation solutions segment posted Q2 revenue of $440 million in the quarter, down 2% compared with $450 million a year earlier.

“Achieving these results against a backdrop of weakening freight conditions and declining used vehicle prices highlights the effectiveness of our transformative changes,” Ryder CEO Robert Sanchez said in a statement. “Ryder’s operations are more diversified with expanded capabilities across three scaled businesses, which has enabled us to deliver outstanding service to our customers, outperform prior cycles, and create long-term value for our shareholders.”

Ryder posted EPS from continuing operations of $3.61, compared with $4.43 in the year-ago period. The company expects EPS from continuing operations of $3-$3.25 in the third quarter.

Sanchez said during an earnings conference call with analysts that he expects Ryder’s used vehicle and rental revenues to continue to drag for the rest of 2023, but expects contractual business to somewhat bolster earnings.

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In 2024, Sanchez told analysts, the company’s leasing operations should be a bigger contributor to overall revenues, having lagged other segments due to original equipment manufacturer delays.

“We still have a long pipeline of deals that have been signed, and we’re still waiting for the vehicles to come in,” he said, adding that Ryder currently has a nine-month lead time rather than a 12-month lead time that was common a year ago.

Used vehicle and rental markets are expected to continue to trough through the first half of 2024, but improve in the second half of the year, said Sanchez, adding that the segments could bottom out in the first quarter of 2024.