Ryder System generated record revenue and lower net earnings in the first quarter as strong sales for the Miami-based equipment leasing and logistics service provider were offset by a write-down of goodwill for its operations in the United Kingdom and higher expenses associated with the sale of used vehicles.
CEO Robert Sanchez said the company’s results “were at the high end of our expectations” with solid gains in its truck rental, supply chain and dedicated contract carriage business units.
Overall, Ryder earned $33.5 million, or 63 cents a share, on total revenue of $1.9 billion in the three months ended March 31. That compares with net income of $38.5 million, or 72 cents a share, on revenue of $1.7 billion in the same period a year ago.
Revenue in the Fleet Management Solutions segment was $1.24 billion in the quarter, up 10% from $1.13 billion a year ago. Operating earnings before tax was $49.8 million, down 5% from $52.3 million.
Dedicated Transportation Solutions revenue was $299 million in the first quarter of 2018, up 12% from $201 million in 2017. Operating earnings rose 12% to $13.1 million from $11.3 million.
Supply Chain Solutions revenue also increased to $495 million in the first three months of the year, a gain of 10% from $451.6 million a year ago. Operating income fell 7% to $26.2 million from $28 million.
The results include higher pension and acquisition-related costs, plus a noncash, pre-tax charge of $15.5 million, or 29 cents a share, related to the impairment of goodwill in Ryder’s equipment leasing and rental business in the U.K., reflecting a downturn in market conditions in Europe.
The company also boosted capital expenditures in the first quarter to $711 million from $436 million in the same period a year ago, reflecting higher investments in the fleet.
Looking ahead, Sanchez said the company expects to see continued growth in sales across all of its business segments and higher profits from continuing operations in 2018.
“We continue to successfully penetrate the non-outsourced market and are now also seeing fleet expansion with current customers driven by a strong freight market,” Sanchez said in a statement April 24.
Rental demand is “very robust” with utilization at the highest level in a decade, and by year end, Ryder expects to have 7,500 vehicles in its ChoiceLease fleet, an increase of 1,000 units from its prior forecast, Sanchez noted.
Longer term, the company expects to benefit from several strategic initiatives, including the recent acquisition of MXD Group, which is expected to enhance Ryder’s e-commerce fulfillment and final-mile delivery services, and the launch of COOP by Ryder, an asset-sharing platform for commercial vehicles that began operations in Atlanta in March.