2018 was a solid year for US-based Ryder System, its annual results revealed last week.
The supply chain solutions and vehicle leasing provider saw full year comparable non-GAAP earnings per share (EPS) from continuing operations up 28% to $5.79 from $4.53 one year earlier.
Top-line growth accelerated against 2017 trends, with record full-year revenue of $8.4bn, up 15%, and operating (non-GAAP) revenue of $6.7bn.
[Operating revenue is a non-GAAP measure excluding all fuel and subcontracted transportation].
Fleet Management Solutions (FMS), its core operating unit, recorded revenue of $5.2bn (+11%), before fuel adjustments, with operating revenue (a non-GAAP measure excluding fuel) at $4.4bn, up 9% annually.
Latest fourth-quarter trends confirmed it continues on the right track, with growth projected to persist this year.
It said “Ryder ChoiceLease™ (lease) revenue increased 8%, reflecting a larger average fleet size and higher prices on replacement vehicles.
“The lease fleet increased organically by 9,600 vehicles year-to-date reflecting a 7% increase for a total of 149,300 vehicles. Commercial rental revenue grew 19% from the year-earlier period due to higher demand and pricing. Fuel services revenue increased 16%, primarily reflecting higher fuel costs passed through to customers.”
Pre-tax earnings in FMS rose 4% to $324m for the year, although the underlying pre-tax margin dropped 40 basis points to 6.2% from 6.6% as a percentage of total revenues and 30 basis points to 7.4% as a percentage of operating revenues.
Its other ancillary units – dedicated transportation solutions (DTS) and supply chain solutions (SCS) – continued to grow revenue, with steep earnings growth for SCS.
The DTS division saw gross sales grow 22% to $1.3bn, with pre-tax income of about $61m, up 11% against comparable 2017 numbers. Meanwhile, SCS earnings and gross revenues were both up to almost $2.4bn and $133.6m (+29%), respectively, on a reported basis.
It’s hard to determine a neat free cash flow number, but non-GAAP free cash flow was negative to the tune of $944m as capital expenditures increased to $3.2bn for 2018, versus $1.9bn in 2017 ($1.76bn in 2016), reflecting increased capital spending and, to a lesser extent, higher working capital requirements.
It said the increase in capital expenditures primarily reflects “higher planned investments to grow and refresh the lease and rental fleets”.
“Proceeds of $396m, primarily from used vehicle sales, decreased 8% due to fewer vehicles available for sale. Net capital expenditures (including proceeds from the sale of assets) were $2.8bn in 2018, up from $1.5bn in 2017.”
Operating cash flow was $1.64bn, up from $1.55bn in 2017. Total cash generated (a non-GAAP measure that includes proceeds from used vehicle sales) was $2.11bn, compared with $2.05bn one year earlier. Debt metrics are within range.
Source: Transport Intelligence, February 20, 2019
Author: Alessandro Pasetti
