Ryder announces higher 3Q net earnings, lower revenue

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Ryder System today, Oct. 22, reported net earnings for the third quarter of 2008 were $70.2 million compared with $65.5 million in the year-earlier period. Net earnings in the third quarter of 2008 included an income tax benefit of $1.6 million related primarily to changes in Massachusetts state income tax laws. Net earnings in the year-earlier period of 2007 included a net after-tax charge of $1.7 million for restructuring costs partially offset by a gain on sale of property. Excluding these items, comparable net earnings of $68.6 million were up 2 percent from $67.2 million in the year-earlier period.

Revenue for the third quarter of 2008 was $1.63 billion, down 1 percent from $1.65 billion in the same period last year. Total revenue was impacted by a previously announced change from gross to net revenue reporting in a subcontracted transportation agreement, which has no impact on operating revenue or earnings. Operating revenue (revenue excluding Fleet Management Solutions fuel and all subcontracted transportation) was $1.21 billion, up 3 percent compared with $1.17 billion in the year-earlier period.

Fleet Management Solutions (FMS) business segment revenue increased 11 percent due to higher fuel services revenue, as well as contractual revenue growth of 4 percent that more than offset a 4 percent decline in commercial rental revenue for the quarter. Supply Chain Solutions (SCS) business segment revenue declined 22 percent due to a previously announced change from gross to net reporting, while operating revenue grew 6 percent. Dedicated Contract Carriage (DCC) business segment total revenue and operating revenue decreased 2 percent and 1 percent, respectively, as the impact of the nonrenewal of certain customer contracts was offset partially by the pass-through of higher fuel costs.

“Revenue and earnings in our contractual product lines were largely in line with our expectations,” said Greg Swienton, chairman and chief executive officer of Miami-based Ryder. “Even in this current challenging environment, we continued to have operating revenue growth in both Fleet Management and Supply Chain Solutions. Bottom-line performance in Fleet Management and Dedicated Contract Carriage were particularly strong considering this economic environment.”

Swienton said recently completed acquisitions also contributed to Ryder’s growth and earnings performance in the quarter. “Additionally, gains on used vehicle sales and overall asset management results improved from the prior-year period, reflecting our effectiveness in reducing our used vehicle inventory,” he said. “However, revenue in our transactional commercial rental product line was weaker than anticipated in both our U.S. and U.K. operations, reflecting the slowdown in the global economy. We took the additional steps necessary during the quarter to properly align our rental fleet with market demand, and we continue to closely monitor and respond to all conditions in this market.”

Revenue for the nine months ended Sept. 30 was $4.83 billion, down 1 percent from $4.90 billion in the same period of 2007. Operating revenue (revenue excluding FMS fuel and all subcontracted transportation) for the first nine months of 2008 was $3.60 billion, up 4 percent from $3.45 billion in the first nine months of 2007. Ryder’s 2008 year-to-date net earnings were $189.2 million compared with $181.9 million in the year-earlier period. Comparable year-to-date net earnings were up 6 percent to $194.5 million compared with the year-earlier period; comparable year-to-date net earnings excludes second quarter 2008 charges in the company’s SCS operations in Brazil to adjust accruals and tax deferrals related to prior years, the third quarter 2008 income tax benefit and the third quarter 2007 net charges.