Ryder Reports Record 2018 Revenue

Ryder achieved record contractual sales which beat revenue growth targets

Ryder System a commercial fleet management, dedicated transportation, and supply chain solutions, reported it exceeded its initial full-year outlook for 2018, driven by record revenue growth. Total revenue and operating revenue grew across all three business segments reflecting new business and higher volumes. Full-year GAAP EPS was $5.21 versus $14.90 in the prior year, reflecting the one-time benefit of tax reform in the prior year. Full-year comparable EPS, which management believes is more reflective of ongoing performance, was up 28% to $5.79. In the fourth quarter, GAAP EPS was $2.06 versus $12.12 in the prior year, reflecting the one-time benefit of tax reform in the prior year. Comparable EPS was up 33% to a record $1.82.

Commenting on the company’s results, Ryder Chairman and CEO Robert Sanchez said, “In the fourth quarter, we delivered year-over-year comparable earnings per share growth, which was in line with our expectations. We are pleased with this quarter’s comparable pre-tax earnings improvement of 16%, which was driven by double-digit revenue growth in all three of our business units and the benefit of cost actions taken earlier in the year. This quarter’s pre-tax earnings growth included used vehicle sales and depreciation headwinds of $16 million (15% of prior-year comparable pre-tax earnings). During the quarter, used vehicle prices increased modestly, while our inventory remained within our target range. In our commercial rental business, we saw a 19% revenue increase reflecting strong rental demand primarily supporting our growing lease customer base.

“Looking back to the full year of 2018, we achieved record contractual sales which allowed us to beat revenue growth targets in all three business segments and positions us well for continued growth in 2019. Additionally, we exceeded our initial comparable earnings forecast for the year and realized earnings growth in all business segments. We achieved record organic lease fleet growth of 9,600 vehicles, our seventh consecutive year of growth, as we continue to successfully win customers that are new to outsourcing and expand with current accounts. We also delivered on cost reduction targets through our new zero-based budgeting process.

“In addition, we executed a customer agreement for 1,000 commercial electric trucks – the largest deal of its kind in the United States. We recently announced our new e-commerce fulfillment solution enabling manufacturers to go direct to online consumers. We also significantly expanded our supply chain capabilities in final-mile delivery for big-and-bulky goods and launched COOP by Ryder™, the first-of-its-kind commercial truck sharing platform. These capabilities position Ryder well for long-term profitable revenue growth in a changing transportation environment.”

2019 Earnings Forecast

Commenting on the company’s outlook, Mr. Sanchez said, “In 2019, we are again anticipating solid earnings growth across all business segments. Higher expected earnings are driven by robust contractual revenue growth from record sales results in 2018 as well as the strength of our sales pipeline. We forecast record ChoiceLease fleet growth of 11,000 vehicles, driven by a continued trend toward outsourcing, our ongoing sales and marketing initiatives, and expansion with existing customers. We expect solid rental revenue growth, primarily in the expanding light- and medium-duty truck markets. In DTS and SCS, we anticipate revenue growth and margin expansion due to improved operating performance.

“Overall used vehicle results are expected to be modestly lower than the prior year due to slightly lower market pricing expectations on increased volumes. We are continuing to reduce our long-term residual value estimates on vehicles in operation and accelerating depreciation on vehicles we expect to make available for sale through mid-2020. The combined incremental impact from these items is expected to negatively impact year-over-year pre-tax earnings by approximately $27 million, an improvement from our prior expectation of $45 million.

“We anticipate a continued impact from higher maintenance costs on certain older model year vehicles, although to a lesser extent than in 2018, as these vehicles will be largely out of our operating fleet in the second half of the year. In addition, we expect significant cost reduction from a new, multi-year maintenance initiative to improve shop and parts supply efficiencies. We also forecast ongoing cost reductions across all segments driven by our zero-based budgeting process.

“We continue to invest in strategic initiatives related to sales and marketing, information technology, and new product development related to disruptive trends in the industry.

“We are planning significantly higher capital expenditures this year primarily due to increased investments to grow and refresh our lease fleet, more than offsetting decreased rental capital spending. We expect to deliver higher operating cash flow of $2 billion, reflecting the returns from several years of fleet investment. Free cash flow is forecast at negative $1.1 billion, from increased capital spending to support fleet growth and replacement.”

Category: Featured, General Update, News