Ryder System, Inc. (NYSE: R), a leader in supply chain, dedicated transportation, and fleet management solutions, reported results for the three months ended June 30 as follows:
| ) | EarningsBefore Taxes | Earnings | DilutedEarningsPer Share | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Continuing operations (GAAP) | $ | 178 | 44 | $ | 126 | (18 | ) | $ | 2.83 | (0.39 | ) | ||||||
| Comparable (non-GAAP) | $ | 188 | 237 | $ | 134 | 170 | $ | 3.00 | 3.61 | ||||||||
Total and operating revenue for the three months ended June 30 were as follows:
| (In millions) | Total Revenue | Operating Revenue(non-GAAP) | ||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||||
| Total | $ | 3,182 | 2,884 | 10% | $ | 2,561 | 2,326 | 10% | ||||||
| Fleet Management Solutions (FMS) | $ | 1,478 | 1,459 | 1% | $ | 1,276 | 1,254 | 2% | ||||||
| Supply Chain Solutions (SCS) | $ | 1,341 | 1,179 | 14% | $ | 989 | 865 | 14% | ||||||
| Dedicated Transportation Solutions (DTS) | $ | 635 | 440 | 44% | $ | 485 | 327 | 48% | ||||||
CEO Comment
“Ryder delivered solid second-quarter results and continued to outperform prior cycles,” says Ryder Chairman and CEO Robert Sanchez. “Comparable EPS were above our forecast primarily reflecting better-than-expected ChoiceLease results. ROE of 16% demonstrated the increased resilience of our transformed business model and is in line with our expectations for the latter stage of a freight-cycle downturn.
“Our contractual lease, dedicated, and supply chain businesses generated higher year-over-year earnings. Higher ChoiceLease results and our maintenance cost-savings initiatives benefited FMS. Strong automotive performance benefited SCS. In DTS, integration of the Cardinal Logistics acquisition remains on track and we continue to expect to achieve planned synergies.
“Long-term secular growth trends remain intact for all of our contractual businesses, although we are experiencing near-term sales headwinds that include customer fleet reductions and delayed decision-making that reflect the extended freight downturn and overall economic uncertainty. We remain well positioned to grow with our customers as conditions improve.
“Our strong balance sheet and increased return profile provide us with ample capacity to support organic growth and strategic acquisitions as well as return capital to shareholders through share repurchases and dividends. We recently announced a 14% increase to our quarterly dividend which demonstrates our continued confidence in the earnings power of our transformed business model.”
Second Quarter 2024 Segment Review
Fleet Management Solutions: Earnings Reflect Weaker Market Conditions in Rental and Used Vehicle Sales, Partially Offset by Higher ChoiceLease Performance
| (In millions) | 2Q24 | 2Q23 | Change | ||||
| Total Revenue | $ | 1,478 | 1,459 | 1% | |||
| Operating Revenue (1) | $ | 1,276 | 1,254 | 2% | |||
| Earnings Before Tax (EBT) | $ | 133 | 180 | (26)% | |||
| EBT as a % of total revenue | 9.0% | 12.3% | (330) bps | ||||
| EBT as a % of operating revenue (1) | 10.4% | 14.4% | (400) bps | ||||
| (1) Non-GAAP financial measure excluding fuel services revenue. | |||||||
- FMS total revenue and operating revenue increased 1% and 2%, respectively.
- Total revenue primarily reflects higher operating revenue
- Operating revenue reflects higher ChoiceLease revenue, partially offset by lower rental demand
- FMS EBT of $133 million
- Higher ChoiceLease performance and benefits from maintenance cost-savings initiatives
- Lower used vehicle gains compared to elevated levels in prior year and weaker rental demand
- Used truck and tractor pricing declined 27% and 19%, respectively from prior year, and declined 10% for trucks and increased 5% for tractors, sequentially from first quarter of 2024
- Rental power-fleet utilization was 69%, down from 75% in prior year on a 11% smaller average power fleet
Supply Chain Solutions: Solid Earnings Reflect Continued Growth
| (In millions) | 2Q24 | 2Q23 | Change | ||||
| Total Revenue | $ | 1,341 | 1,179 | 14% | |||
| Operating Revenue (1) | $ | 989 | 865 | 14% | |||
| Earnings Before Tax (EBT) | $ | 85 | 76 | 13% | |||
| EBT as a % of total revenue | 6.4% | 6.4% | — bps | ||||
| EBT as a % of operating revenue (1) | 8.6% | 8.7% | (10) bps | ||||
| (1) Non-GAAP financial measure excluding fuel and subcontracted transportation. | |||||||
- SCS total revenue and operating revenue both increased 14%
- Total revenue primarily reflects increased operating revenue and higher subcontracted transportation costs passed through to customers
- Increase in operating revenue driven by recent acquisitions and organic growth across all industry verticals
- SCS EBT grew to $85 million
- EBT growth primarily reflects stronger automotive performance
Dedicated Transportation Solutions: Strong Operating Performance Partially Offset by Acquisition Costs
| (In millions) | 2Q24 | 2Q23 | Change | ||||
| Total Revenue | $ | 635 | 440 | 44% | |||
| Operating Revenue (1) | $ | 485 | 327 | 48% | |||
| Earnings Before Tax (EBT) | $ | 37 | 33 | 10% | |||
| EBT as a % of total revenue | 5.8% | 7.6% | (180) bps | ||||
| EBT as a % of operating revenue (1) | 7.6% | 10.3% | (270) bps | ||||
| (1) Non-GAAP financial measure excluding fuel and subcontracted transportation. | |||||||
- DTS total revenue increased 44% and operating revenue grew 48%
- Total and operating revenue increased due to the Cardinal Logistics acquisition
- DTS EBT of $37 million
- Increase due to improved operating performance, partially offset by Cardinal Logistics acquisition integration and other related costs
Corporate Financial Information
Tax Rate
Our effective income tax rate from continuing operations was 29.1%, as compared to 140.8% in the prior year, due to the 2023 one-time, nondeductible cumulative currency translation adjustment loss from the FMS U.K. business exit. Our comparable effective income tax rate (a non-GAAP measure) from continuing operations, which excludes the impact of the prior year currency translation adjustment loss, was 29.0%, consistent with the 28.6% in the prior year.
Capital Expenditures, Cash Flow, and Leverage
Year-to-date capital expenditures decreased to $1.3 billion in 2024 compared to $1.8 billion in 2023, primarily reflecting reduced investments in the ChoiceLease fleet due to lower sales activity.
Year-to-date net cash provided by operating activities from continuing operations was $1.1 billion compared to $1.2 billion in 2023, primarily reflecting higher working capital needs. Free cash flow (non-GAAP) of $71 million compared to $16 million in 2023, reflects reduced capital expenditures partially offset by lower cash from operating activities and proceeds from sales of used vehicles and property.