The commercial fleet management, dedicated transportation and supply chain solutions provider saw third quarter net income fall 6.3 percent to $85.1 million compared to the same 2015 period despite a 3.3 percent uptick in revenues.
Ryder System, Inc. posted net earnings of $85.1 million in the third quarter of 2016, a 6.3 percent decrease from the same 2015 period, according to the company’s latest financial statements.
The Miami-based commercial fleet management, dedicated transportation and supply chain solutions provider saw third quarter diluted earnings per share (EPS) similarly drop 6.5 percent to $1.59 per share, compared to $1.70 per share the previous year, despite a 3.3 percent year-over-year uptick in revenues to $1.72 billion.
Ryder said the increase reflected higher contract revenues across all business segments, which were partially offset by lower transactional rental revenue, negative impacts from foreign exchange and lower fuel costs.
The company’s Fleet Management Solutions (FMS) business segment reported earnings before tax of $112.3 million in third quarter 2016, down 11 percent from the same 2015 period. Revenues in the FMS division were relatively flat at $1.16 billion for the quarter.
Ryder attributed the decrease in FMS earnings to lower commercial rental performance as well as lower used vehicle results, partially offset by higher full service lease performance and reduced overhead spending.
Earnings in its Dedicated Transportation Solutions (DTS) business segment shot up 32 percent to $17.6 million in the third quarter thanks to a 15 percent year-over-year increase in operating revenues to $261 million. Ryder said DTS revenues grew as a result of increased volumes, as well as new business and higher pricing.
The firm’s Supply Chain Solutions (SCS) segment saw earnings jump 16 percent to $31 million for the quarter as revenues grew 8 percent to $417 million compared with third quarter 2015. SCS revenue growth resulted from new business and increased volumes, said Ryder.
Year-to-date, Ryder has decreased capital expenditures from $2.11 billion in the first three quarters of 2015 to $1.4 billion in 2016, thanks primarily to lower planned investments in its commercial rental and lease fleets. Net capital expenditures (including proceeds from the sale of assets) stood at $1.07 billion through the first nine months of 2016, down from $1.78 billion the previous year.
Ryder Chairman and CEO Robert Sanchez said the results were in line with company forecasts, despite a “very challenging transactional rental and used vehicle sales market.”
“Our team’s proactive efforts, including right-sizing the rental fleet earlier in the year, allowed us to maintain stable rental pricing and realize utilization within our target range,” said Sanchez. “We maintained used vehicle pricing in line with expectations in the quarter; however, used vehicle sales volumes were lower than anticipated. We also benefited from lower than expected overhead spending.
“Looking beyond our transactional offerings, our core contractual offerings – full service lease, dedicated transportation, and supply chain solutions – all demonstrated strong revenue growth of 7 percent or above in the quarter,” he added. “In our lease product line, we also remain on track with our previous fleet growth expectations for the full year, with nearly 40 percent of new business coming from customers new to outsourcing. Our dedicated transportation business is also benefiting from favorable outsourcing trends, with more than 50 percent of its growth coming from customers new to outsourcing.”
The company said it expects continued revenue growth across its contractual offerings thanks to “secular trends” toward outsourcing of manufacturing, but that growth is expected to be slower due partly to the timing of new sales.
As a result, Ryder revised its full-year 2016 EPS forecast to a range of $5.29 to $5.44 per share from prior forecasts of $5.49 to $5.64 per share in Q2 and $5.79 to $5.99 per share in Q1, including a fourth quarter 2016 EPS forecast range of $1.27 to $1.42 per share.
Ryder Q3 earnings drop despite increased revenues
