Ryder System Inc.’s net earnings dropped 16.9 percent to $42.3 million in the second quarter of 2018, according to the company’s latest financial statements.
The Miami-based commercial fleet management, dedicated transportation and supply chain solutions provider posted diluted earnings per share of $1.43 for the quarter, down from $1.67 per share in the second quarter of 2017, despite total revenues rising 17 percent year-over-year to a record $2.09 billion.
Ryder attributed the growth in revenues to new business and higher volumes across all three of the company’s primary business segments, higher fuel costs that were passed on to customers, and the April acquisition of e-commerce fulfillment provider MXD Group, Inc. for $120 million.
Through the first six months of the year, Ryder’s net earnings have fallen 15.1 percent year-over-year to $75.8 million, while revenues are up 13.3 percent to nearly $4 billion.
“Our results exceeded expectations, driven by strong performance in our supply chain, rental, and dedicated businesses,” said Ryder Chairman and CEO Robert Sanchez.
Broken down by segment, Ryder’s Fleet Management Solutions posted earnings before tax of $72.9 million on $1.3 billion in revenues for the quarter, year-over-year increases of 7 percent and 11 percent, respectively. The company said its acquisition of full service leasing, rental, and maintenance company Metro Truck & Tractor Leasing, Inc. in June had no material impact on second-quarter FMS results.
Pre-tax earnings in the company’s Supply Chain Solutions segment soared 45 percent to $37.7 million in the second quarter, as revenues rose 20 percent to $430 million, thanks in large part to new business and increased volumes, as well as the MXD purchase. Following full integration, MXD is expected to add approximately $220 million in annual total revenue to Ryder’s bottom line.
Ryder’s Dedicated Transportation Solutions segment saw earnings before tax jump 25 percent to $18.5 million on revenues that climbed 21 percent to $331 million, boosted by increased volume, new business and improved operating performance.
“SCS earnings outperformed due to increased volumes and stronger operating results,” added Sanchez. “In FMS, rental demand and utilization continued at a robust level. Additionally, used vehicle sales results came in somewhat better than anticipated. DTS benefited from better than expected insurance results and operating performance.”
Thanks to the strong Q2 results, Sanchez said Ryder is increasing its full-year EPS forecast from between $4.55 per share and $4.80 per share to between $4.71 per share and $4.91 per share, but the expectations are still down from a prior forecast of $4.78 per share to $5.08 per share. The full-year guidance is also significantly lower than 2017 EPS of $14.88, which included benefits from U.S. federal corporate tax reform.
The company expects third-quarter EPS in a range of $1.53 to $1.63, up from $1.11 per share in the third quarter of 2017.
“For the second half of the year, we anticipate continued strong year-over-year improvement in rental, supply chain, and dedicated, moderately better than our prior outlook,” said Sanchez. “We expect the healthy freight environment to continue to drive stronger rental utilization through the balance of the year. In both DTS and SCS, we anticipate double-digit revenue growth and continued strong results, building on sales and operational improvements, as well as the benefits of the MXD acquisition in SCS.”