R - Earnings call transcript Q1 2019

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Operator

Good morning, and welcome to the Ryder System First Quarter 2019 Earnings Release Conference Call. All lines are in a listen-only mode until after the presentation. Today's conference is being recorded.

If you have any objections, please disconnect at this time. I would now like to introduce Mr. Investor Strategy President, for Product Vice Ryder. Brunn, Relations, and Corporate Strategy Bob Mr. begin. you Brunn, may

Bob Brunn

you differ subject much. Private are very current quarter conference to the These factors. may morning's you'll changes factors certain includes results This and first and from statements statements information Actual forward-looking these competitive, filings Reform to to XXXX XXXX this measures. and circumstances. in within remind expectations Act financial in hear earnings like XXXX. non-GAAP some I'd changes these of due Thanks materially in management's Ryder's Commission. in call. conference market, with expectations morning, Litigation earnings and call this based about Good the uncertainty and on welcome meaning during contained is political are presentation, More Securities the also that business, release to Exchange Ryder's economic, Securities of and regulatory detailed and

non-GAAP the Presenting Chief on which and are: each our Executive Officer investor.ryder.com. is at of call, and Parker, reconciliations Sanchez, Financial President Chairman website Chief Robert measures Vice available this Scott measure find nearest in today's written accompanying to Executive You'll on presentation the Officer. and GAAP call

the on of are Solutions; This the and of time Dedicated call Steve to Additionally, and Global Transportation presentation. Fleet Robert. Dennis Solutions call John over today Cooke, for Solutions Supply I'll Global Sensing, President Management Diez, following questions Chain President turn President the available of

Robert Sanchez

joining Good morning, and us. for thanks everyone,

open to shares our call share current the year forecast in extensive in segments. our at quarter. questions. introducing contractual Ryder. Comparable the We The began we'll strategic were shares the you number to the repurchasing turn prior the excludes improved leasing and businesses. earnings was of under year million that unchanged person contractual the year. XXXX strong higher for financial million fuel range growth outstanding prior operating as was record include forecast also depth for a particularly to contractual Dedicated. the up quarter. up this start vehicle highlight X at depreciation $X.XX reflecting average of February, Supply $X.XX to include ChoiceLease overview of our $X.X change performance. private progress $XXX both $X transportation in businesses lower Operating his headwind recap Scott million activity and to expected, accounting Parker or our Dedicated revenue as our shares earnings reflecting that anti-dilutive and and earnings EBITDA of upcoming Pre-tax our in Let for morning of some information the Comparable Page CFO remain results on billion call business for was primarily then XXXX. background X.X look in results. revenue XXXX has Sales [indiscernible] Chain public secular subcontracted operations Also and by the of sales from marketing continuing program great $X.XX we'll in our quarter and Discuss conferences to two-year from quarter by were from used primarily XX% a than better let's for outlook million which business With trends quarter. outsourcing and our XX% delivered $X.XX all and contributing XX% in by first the was some versus the from than by first double-digit investor lease prior and CFO, Scott segments initiatives brings we well growth role the forecast. companies first ChoiceLease, first welcoming grew $XX.X performance growth me quarter experience strong to per forward repurchase performance despite first new driven results. Scott rental first This at quarter in I from our increased above related businesses, XX% for $X.XX from the all Comparable benefit initiatives. and and an diluted revenue to pricing.

we price average at bought During an the quarter $XX.XX. approximately shares of XXX,XXX

in The the X earnings. up Excluding I'll and the capital from in elevated is the turn of of to certain extent but prior vehicles one-time with XXXX XXXX, quarter rate beneficial and expectations. prior higher in the somewhat was OEMs. points X% which the earlier due our year's in year. fleet the than Fleet year replacement a by by rate state product rate quarter Growth of driven The in Solutions anticipated comparable in organically pension items tax increased spread tax on The during in of XX.X% discuss and X,XXX and the lease record year. XX%, increased declined in in in revenue the from Management revenue on we the quarter. operating to then fuel benefited second the basis a jurisdictional the from vehicle to excludes XX ChoiceLease lease rate fleet change primarily in increase all Page that the half deliveries growth a other comparable trends key NOLs the expected fleet to growth XX% quarter. cost vehicles. from basis return lesser from lines. the line business and now saw for mix XX second first a adjustment the points remain expiration up was of prior This reflects XXXX increased

market customers We continue outsourcing. with the XX% coming penetrate non-outsourced recent fleet effectively to from to of growth new

slightly the from also significant These fleet. a earnings recovery Used offset were commercial extent for percent in XX% SelectCare and ancillary expanding organically activity. by company. year-over-year. and depreciation policy to prior least full in FMS increased increased ChoiceLease quarter for track in year. revenue prior and were power XX continue development X.X% record a separately XX%. pricing on higher year from insurance pricing larger from a record and discuss primarily growth Commercial XX% new was benefits higher the The would We as changes fleet from revenue year. X,XXX achieve their which growth line be sales, [indiscernible] of grew average X%. depreciation were Overall to also depreciation. generally prior and investments our higher cost cost average an lesser claims on year a customers increased XX,XXX service higher see this a earnings fleets I'll We units marketing of and to item. and before FMS on up in maintenance related from results nearly sizes. FMS in to growth was XX.X% minute. up Higher performance fleet maintenance to SelectCare down remain of in related at results was Global consistent with by those vehicle vehicles the up was the benefited Rental revenue demand the vehicles liability technology. was expectations. partially rental. tax up demand XX% the rental Results rental accelerated year utilization with points driven Earnings reflecting XX% due by operating basis

sequentially to units the pricing coming increased and a pre-tax including for on summarizes and impact strong to XX% for reflecting revenue offset prior vehicle. retail increased market earnings past per Excluding sequentially. in of and higher in at held I'll years the Solutions Transportation lease business. result mix. to to existing this up total were sales greater improvement as for quarter. off X% both higher as target Primarily lease few a results DTS year valuation new sale our challenging were operating market the larger vehicles by quarter operating higher sold results X,XXX for a up and trends We vehicle key Page range Due contributed year to now on trucks driver vehicle compared inventory customers inventory Expanded vehicles in a turn reflecting size vehicle Dedicated XXX this quarter were new end to from XX% tractors number sales. again by years of in over Favorable was than change to with of the Page for XX% year sales a X,XXX the US up outsourcing adjustment versus X,XXX of we've ago. X,XXX used FMS the very pricing a and up and Used increased due Inventory X%. vehicles vehicle X. used the target sold revenue down by this within X, expected. range. volume used Proceed Both quarter for growth X% fleet business the volumes. revised slightly accounting Used increased more quarter X,XXX the inventory. target X,XXX vehicles

Our favorable this points year insurance to sales focus XX this a opportunity a related operating Segment and DTS business. earnings quarter claims. on percent revenue a development performance to up upselling which growth, our were continued due earnings customers prior from revenue prior basis team increased year. for X.X% Dedicated the lease improved to operating also significant growth remains to of before taxes

the of by cost during accounts. XXXX start were half second impacted may recall of You the results with DTS associated challenging

and with Revenue the associated acquisition this account growth to MXD discussed revenue grew going As Group been I'll this volumes Page Last expect revenue we now the to turn and quarter last resolved of second driven from our Chain the business, grew forward. have operating business pricing. by in includes increased impact issues Total Solutions on account X. of year. higher call, on new XX% and Ryder's positively XXXX results we last XX% the Mile Supply

Supply earnings of Segment tax point Chain operating were Supply driven Scott operating XX% for capital the spending. and At items XX% respectively. basis to Solutions by with growth. over Chain XX% revenue from cover grew before by taxes revenue Solutions percent turn CFO, up points the the a Excluding year. prior our were up and this earnings I'll acquisition to starting several organically call revenue total X.X% XX the Parker quarter before

Scott Parker

Thanks Robert.

proceeds the million million capital billion. Turning increase from realized This equipment planned $XXX around by up from higher to lease sales of refresh the capital reflects and over the fleet. grow $X of increased Page volume. prior $X.X and prior pricing year. sale reflecting XX, totaled to revenue year just million from the $XXX investments gross We higher approximately billion to expenditures $XXX contractual primarily increased expenditures Net up earning

$XXX the cash driven primarily million was of negative lower $XXX by approximately to the around for working $XXX Turning page, and million from needs. next up around cash of The cash million higher we operating $XXX earnings from increase approximately total company's XX%. $X prior activity Cash We up reflecting cash quarter sales operating generated higher capital million capital or by generated capital $XXX and the based million the from billion. year expenditures increased just free prior down spending. flow net million negative The was cash reflecting $XXX increased the million proceeds. payments over of $XXX to for year quarter for

forecast negative spending. Our reflecting full $X.X flow billion capital year at significant for unchanged remains cash free growth in

at increased the XXX% growth. equity end investments the in to primarily XXX% to in debt Our And XXXX. from the end quarter first fleet reflects of of

our this hand to our Our the of to balance back range sheet XXX%. target At cover leverages it XXX% outlook. of to midpoint Robert I'll point, near

Robert Sanchez

Scott. Thanks

with a track from accounting. outlook on earnings with the impact better of expectations expected prior overall the for Our lease our remains modestly balance than year

from sales, additional year. increasing down beat We be balance used to to of previously ecommerce of full we XXXX to up rental medium reflecting year. EBT to negative due remain below we in to demand our rates due the used to Commercial to FMS, supply higher quarter year XXXX favorable expect this come to to targets comparisons number performance. decline continue business should inventory due growth with to turn vehicle expected current we're retail we handle revenue in volume range In by to factors although sales - year potentially to date levels on however market. In impact second year-over-year our to light meet the raising from these reduction trucks full announced initiative meet of conditions of year-over-year the a accounting expected in planning in our versus chain, new growth half or are pleased EPS to to maintenance year continue track be fleet. of growth $X standard. to $X.XX to forecast improve. for In later our better year segments. to that's primarily first we results our our perform expect of revenue from all levels. was to our on first full $X.XX, initiative. pricing the although for DTS, second the revenue growth expected are expected growth half In expect we're impact the the duty capacity vehicle although to prior revenue comparable is business softer to than improved to a particularly the earnings We're slightly loss on additional new to cost comparisons the In the Dedicated operating target our rate in $X.XX in likely percent rate leverage lease range reflect the quarter track the rental the we're expand pricing

is in $X.XX quarter estimated $X.XX decline full $X.XX comparisons expected benefit as from accounting to compared from age. XXXX EPS Our second to the second prior reflecting impact an lease $X.XX quarter The the year. to compared in fleet is negative in year second in include impact per earnings negative method. lease compared an a XXXX impact by quarter expected $X.XX $X.XX from comparable impact the accounting share negative year. to XXXX to the forecast reduce $X.XX of lease prior reflects accounting year-over-year the prior approximately as accounting The lease in

a the the earnings As lease result new contract flow a total standard. of accounting no life there's of cash the as change lease reminder to or over

brief some Turning Slide making XX, you on on like the initiatives. update progress I'd strategic to a to with our we're provide of

the XXXX has first increased sales sales pleased on the with sales in strong proposal to with larger record been very deals. in DTS First, for strong we contractual continue into from with focus continued profitable driving We're long-term and XXXX momentum XXXX growth. activity quarter. activity particularly has

sharing sales XX% with successful the team completed pipeline last strong launch Florida and with since We're experience the Ryder of in our and of drive and launch our new an from lease average vehicle integration the growth last In Ryder realizing Florida for also We're We're Mile its the the bulky that's we're team, Atlanta South first size. this outsourcing, addition big COOP organic its commercial initial for expected and pleased consecutive our expanded size more into selling see expectations leading of growth gain well goods. last earnings of our by acquisition. to track from eight We're by XX,XXX a the April's beyond. benefitting from activity first sales our encouraged month COOP record larger fleet we with year. deal positioned secular leveraging larger to across of kind completed vehicles of expand by and market. opportunities increased recent the trends platforms ahead to year in year success services and provider as year collaborative that increased market organization products. deliver the initiatives a operations Last is on platform of We

Finally, our we're from our Zero-base from expected budgeting cost achieve our process. multi-year maintenance cost year on initiatives reduction to full track savings and

rates on below FMS three-year opportunities announced larger and revenue and the growth to new early We compared for can in the chain secular and our trends XXXX expect come year. XX, efficiencies expected the our to in half previously beat to depending are of DTS segments results laid of lower the timing drive lead XXXX. targets future. provides Supply growth their we as out targets significant reflecting contracts in loss expectations chain due business to expected the our financial operating initiatives. the are this in cost targets the lumpiness year loss to which their in business. is individually in Supply second to Slide

CAGR this three-year operating to XX% for be expected revenue is Our growth year.

to long-term or used year-over-year X% performance target pipeline to FMS improve older of our supply expected beat Given below overtime. higher certain and maintenance the meet model EBT will and to year ongoing to revenue business remain our chain target growth is the ability sales in our we vehicle impact remain for due new cost of of X% confident vehicle.

the levels As to be XXXX. expected are target an we performance maintenance earnings headwinds should to Supply is largely expected improve results of into before eliminated cost this discussed this chain move up Dedicated end approach in bottom year. their range the year.

below capital target due Our spread return on be earnings. FMS will improve to forecast or to is

within I our of first under to standard. accounting requirements leverage mention Finally our additional the quarterly to new lease remain That morning. the that our this range XXX% we want with concludes remarks due to prepared target do expect filings to XXX%.

the earnings operator it expect open the please in regular to quarter the call. middle up the by of filing to second for questions. expect cadence the an to each. we over the question opportunity At to file of We of yourself same next turn our on our limit Q one give day to line XX-Q week. this to return everyone order time, In I'll to the Starting

If back queue welcome many you're in the can. we'll to take questions additional calls get you as we have and as

Operator

SunTrust. we'll our and Instructions] go Stephanie ahead. question from Benjamin with take [Operator first Please

Stephanie Benjamin

used little in a your first on talk I think lot to expected prepared good remarks. bit higher loss bit the native higher wanted - bit than unused a of sales are just the But vehicle vehicle the the just color are sales environment, impact on from vehicle are quarter. used I than

seeing full environment changed second year of could kind the flush move kind just the kind what the through have of out hoping of in than quarter. was we overall and you you're for So your expectations

Robert Sanchez

just But XX% because primarily where mentioned direction is we price that tell of definitely expected. capacities the especially trucks so in few Pricing color. I because I tractors more wholesaling right which came in typically opposed as a to up bit a pricing is little a the deferential is we're move you trackers is focus happened part was give we're retail The to continues vehicle XX% last used wholesale. more of Dennis really a what's when to the retail on our you in as retail the able which so a pricing between growing and on years. let would generally I'll highlight Okay,

of in was trucks to I'll a more retail the So be expand our capacity. Dennis we Capacity expect we're our seeing. to second to the strategy half in what is continue able year-over-year grow with half, you this color year. XX% to continue quarter second We to up that give really let the little more but

Dennis Cooke

Yes, Stephanie up I'd of values a comments little through book the as just add that what coming Robert than was but to we was Robert's pricing expected. shared was higher

to really we several we've get and got need to initiatives that. price little So more even target a

of example, have our the for we're now is online Inside So volume retail being unit. sales point going to and vehicles where retail from more. inside and per generated proceeds X.X% nice view who're telemarketers getting of using sales we leads selling

Stephanie Benjamin

color. you. I really at the leave I'll Thank appreciate it. Got that.

Operator

take KeyBanc with [Operator Fowler Capital ahead. Markets. Todd go Please Instructions] our we'll from question next

Todd Fowler

can and where the it lease what changes year. also were maybe can came the is out about looking XQ cadence out you in you and adjustment and for the little about end with the range kind year, in year of set for all you Robert, if what of you and got back coming then guidance just then of the headwind that rest of the just full the waiting the talk XQ to $X.XX help above guidance. you bit, the is for XQ, that the us full accounting flush was a to in

would helpful. that I think be

Robert Sanchez

the that. was a quarter. the let think brought the primarily accounting really first answer is changing driven is a beat beat, permanent of on one guidance so year, guidance Changing result adjustment. the by lease that Sure. It a of $X.XX Portion the Well up really we the as the guidance. for first in me we question

operating rest you of, the is with terms would line in I so expectations. the In of business our tell

be first the is at In quarter was if saw I second. year-over-year big year-over-year. of quarter, rate really a flat you that the $X.XX going in look accounting in good accounting going year-over-year second and to quarter is what the to the that of first delta's, growth Lease to the we terms compared down part Lease to it's in guy in think a $X.XX second guy the the a bad quarter it.

really a that chunk takes big it. of So

end if quarter X%. would - of you going quarter was XX%, for second up accounting exclude you're guidance high So lease first our the be

that second The down was at quarter of earnings supply rate grew first I earnings the bulk the grew that a they the in supply first growth than chain primarily in the in a So it is quarter. bit comes chain, at XX%, think lower quarter.

primarily So difference. that's the

year comps up in back A up I'll segments. was other as but The go the the up of to supply about were certainly little all across were second in half bang a earnings tell supply very thing and quarter, you contractual if chain quarter bit second good quarter the business second quarter and growing chain, second last tougher really we XX%. see you we feel for continue

in feel business this of good the how So the that that's for and year. to about know really we we're that going play is profitable out we is locking balance

guidance now didn't months year the you, lot ago than adjust three tell of though terms our hit adjust it. did to we we just didn't we balance confident more excluding the ability the guidance in would even just accounting I probably lease So feel the for of

Todd Fowler

at point. be range this did was are mean you in guidance above to accounting that operationally same really clear, things though and XQ lease helpful that's rest was or the in no good down the for adjust XQ Yes, of the guidance an even benefit the operationally year your

Robert Sanchez

Correct.

Todd Fowler

good. the it this thanks for time but one, asking you're morning. [Indiscernible] over. for Okay, turn I'll

Operator

ahead. Baird. question We'll with next our Please take from Hartford Ben go

Ben Hartford

duty? of for know commercial What on trends spot the like coming you anything being of quarter. perspective weak in kind obviously better a in little in Utilization the I but the Can a talked versus medium pretty on [indiscernible] you and came rental your the environment good rental the balance unchanged, Robert, trends. impressive. slice year look out outlook bit is in side first about X underlying class

So slice you for the an heavy the could - the outlook what and duty updated medium maybe versus balance duty of out what is year?

Robert Sanchez

I'll little ask let I you guess more bit a coverage.

I'll line in, Just we you with had demand in tell coming what is expected. level, at a high

If you slice but X medium a out worse, we probably it is little been generally by class expected that maybe bit coming little and class the demand where have we duty a better maybe bit initiative it.

So you we terms X expect class we our all forecast have I'll in utilization, we half in Dennis a of in give in what does the expect line new class demand market, the X and the class. of the but primarily some to forecast. more you it's of second little the expect around softening hit all let but around color the I'll as year more tell

Dennis Cooke

between Yes, we're we trucks. with to on demand tractors so for Ben second say and the April year-over-year We particular but And still just split to when we're add in strong. trucks But west preparing would in softening are planning still tractors. the from that. what comes coast, demand for tractors Robert expect from strong coming and half strong tractors particular. demand and little be it the sleepers saw softer said, Trucks looking even to a I with strong is

Ben Hartford

I get Okay, great. And related if follow-up. can

is to something before and it existing over and rollout us buffer that When providing it that utilization, terms mean of expected perhaps cyclical longer still in the term or becomes to I and COOP and become next highlight that can product. expansion be fleet that years there. rental development think couple of of can the about Robert You material. initiative type result the meaningful you it's as the is a

Robert Sanchez

guess initiative. I you it's tell I Yes, a term longer high level would at

decided and it year head Our Diez would broader plan this is on roll what And three we South really in that, last and this Obviously in go to it do Florida. we're at to this Florida impact in maybe really a be little position years least of national I strategy. just we out Atlanta would doing seeing at Florida, end start you to I with give is year. then broader that - year you or till term, a our type helping rollout a out here by the John broader going of but continue rollout. help market-by-market to him We're national go know before to up. meaningful finalize we're us we're been impact. certainly look all that I'll shorter to a would encouraged let at in have color But nearer this to

John Diez

Georgia. our in Ben encouraging [indiscernible] the been you actually we've acceptance fairly has Florida market just Atlanta quickly. we give than original could and demonstrate The an update scale here. platform with Yes, to to very for that able been a COOP market market The that and this been favorable a market in has actually lot more

other scale from and we the to is, we quickly the encouraging to going take and how up signs is this the could for I we what's markets broader acceptance that platform be as us So think market. do

Ben Hartford

the for time. Got it. Thanks

Operator

take We'll Please Group question our ahead. Research. go with Scott next Wolfe from

Scott Group

of Robert? about first decline maintenance in about a talked you you rental, can In talked things, that Why the a part that's a was and quantify couple just if second year. of recovery, then you about were prepared one time new a or comments you talking when don't just - the initiatives. you clarify And of one the half

year-over-year to about the XX% things. in two wanted just last than quarter talking revenue growth those decline or first clarify, You're revenue just in

Robert Sanchez

now. recovery let hit one-time a maintenance period one warranty first the I'll item - The second negotiated half. I'll a was prior maintenance for take just me cost, cost and let the so Okay, was Dennis related recovery it items

progress this a was to about? that on achieving cost $XX Dennis prior one-time initiative that way to addition we're period we cost. which called In million item you talk that, $XX for so the also, team Dennis's want it yes so year, maintenance maintenance I out was for And made to on million that as also mentioned and well our was

Dennis Cooke

we grew second so a growing side, we revenue don't we'll that Scott but be clear continue, on just to in expect fast. be XX% decline in still as rate. the just it's growth XX% growing rental not the in QX, it to the half

Scott Group

was that recovery? maintenance much how And

Robert Sanchez

lots not takes, and to out. of but it wanted call meaningful that because We're discussing puts enough it that was we

Scott Group

any last just what this $X.XX and numbers give Okay or on on year a headwind truck change of sort and your this for - or take year, you're headwind losses I so and then reviews residuals lower think you year used seeing, next those lastly, sales about market similar quarter next talked year? from do given and then either

Robert Sanchez

No, now most half of on second lot say a say the track would I I probably of them those we're year, right again but in this for - it's would - more numbers.

Scott Group

guys. thank Okay, you

Operator

question next Please Bank. with ahead. go Our come Amit from Mehrotra Deutsche will

Amit Mehrotra

can or year headwind leases adding in fleet get from continue bit is Scott, a this to year from Thanks. Robert and adding of about negotiate I How there's and just year guess year next between a younger meaning? the year? XXXX does to have understand earnings of age ask the impact P&L. you're puts when terms obviously and XXXX this push the leasing just of incremental this we you is you some if the so earnings stream leases this the the growth and is in much when I just hits lag leases the is bit business wanted takes written will a beyond look under you're for about, talk can you new also beyond it any and as that maybe

Robert Sanchez

signed The of little getting first early just that into to it of XXXX, vehicles in a year we leases lot that we're as of or the part Well I taking be but now answer guess we're to a your at end service. the last question. might that

leases that So signing were I January for in call the on mentioned we timeframe. May

here signing and timeframe. sit we As for leases today we're August September

look locked the to can September that's you come August, So at all of and signed already between is lease in. now equipment into going and

a our ChoiceLease, good Dedicated of businesses we growth we'll numbers feel being revenue why accounted three confident is So now and primarily so our hitting more where feel we're be Chain we we that. locked year, that's is the Supply really about than for lot I because getting already ago the feel by earnings said, good months so about to driven this did in, out about we

part around. was of second The your question

Amit Mehrotra

next year? age fleet The

Robert Sanchez

right we we into as months depends what come it Yes, into at down one on this fleet sequentially now with it XX the lease happens maybe fleet year down age another month is get sales. and for I guess year It's our to year-over-year go next month we expect age. as

again kind that what's from would be sales next but that XXXX, neutralizes again, still with If bit. a production for for If some. the you already then [indiscernible] really seen. look again at would the just expect X will XXXX to be that bit X in age down class will little production class to year's remains which I be our down happening some aging expect out fleet out happens, start you of forecast

Amit Mehrotra

just could. Right I one follow-up if

you back higher stuff. the are just the off could they strategic was various of and year. is investments some earnings dial think EPS decent hoping type pay to to headwind those those drive investments guys some size in expand guidance maybe from if a growth maybe willing you I you may that, back The pay Are quick Or investments in guess strategic willing? embedded investments. those near the guidance when mid-term? kind to I or of of going I this on pretty sized

Robert Sanchez

those covered really sales taking, on you investments we sales of we are marketing, about growth, help and mentioned the new in $X.XX the e-fulfilment. as January We're on that of a customers. of to e-fulfilment rolling some as strategic around product to some call new service money with drive at which continued we're investments Yes and about entirely people, we're talk got cost technology, showed provide was of marketing investments the really to we're COOP. be investments. so able look out we've actions We technology, spending adding set

next investments and pay year, going are we and in years. the two next service new to So those confident new years offerings, are sales products three which the in dividends really in here are

Obviously would So a we're a scenario it's future. now of back, possibly type with areas into the really growth good pull the environment We they're those probably, would in some important some we to slowed pull questions down. them what them seeing but think make back. to look of that of we some we we in in at we're we investments the think and time of these your crunch things got where

Amit Mehrotra

it. Got

a thanks Okay, lot. Appreciated.

Operator

Stifel. Moving ahead. next go Please with Ross David to

David Ross

talk about wanted to now Ryder Last Just MXD the Last division, Mile the Mile.

that I segment? better us there? there there or think around the Are that Can on SCS of worse moment. it's the average, a going growth you more of about is $XXX and color million lot at run improvement give margins rate

Robert Sanchez

it I guess to hand Steve. I'll over

which now to seeing fails think we it's well to [indiscernible] estimate the exceeded and one-year we're very the when we're of of earnings that Last the going initially did our innings that to of we're expect integration traditional it important early about made the very about since key tell that expect really can part I'm and seeing. chain is we out I getting so, the the we that happy the what to this had investments into that was is acquisition that mark the we the we see what sell report Mile business you we're I supply excited synergies we're excited we piece hit in really point business, a

Steve Sensing

Steve. David,

Ryder on Just e-fulfilment supply business XXX a part in and reminder chain. many Last an is of customers Mile that's e-commerce, that our of combination of a for solution the our overall really

really about coming so cross-selling strong QX, so a end half, period, from going hit focused start. names customers people, pipeline between pipeline. and sales expansion SCS and DTS is about so really sales mix across got we're off to coming think said, a customers, started and SCS we Robert about of our new We good I if think As you third the a DTS and business about their it. the about day really customers the feeling channel, Got it's in our through good execution good in the really you're of be at to peak sales think obviously We QX. feel about back in retail target for volume our so

David Ross

you do, be. get where still to it Ryder get today to have what to where is Mile to the is And and it with MXD Last do I anything to integration or guess with want to there left to did you it

Steve Sensing

integration business cost The last cutting on great, initiatives track actually year. went got the ahead schedule in so They've there. Yes, is of executing.

about continue asked to customers business the serve you footprint slightly normal EBT business think the out earlier many SCS targets. just and really expand I growing to below It's there. but the the now it's the

David Ross

you. Thank

Operator

from will Our Jeff Markets. Kauffman Capital Loop with next question come

Jeff Kauffman

business the the par yield slightly If was that to been the gains there Is FMS quarters? has few kind yield year-on-year over on last flat on could so you because here trend yield leasing of on what's down? my me math tell going the on slower

Robert Sanchez

talking You're margins? the about FMS

Jeff Kauffman

per I'm vehicle. at revenue No, looking

Robert Sanchez

the as a that fleet there's a Revenue way read of long-term both we that, coming a slight that you've into the per some a take lot QX, see and look the churn out that you the of growth lease there's that X,XXX the but see fleet you coming us you saw could down Yes vehicles wouldn't it on at vehicles on that in vehicle. you [indiscernible] have fleet, that vehicles grew vehicles. Well, so process a might of let are change. vehicle way during I through come in, possibility in as got are get as what's lot so down,

that, to replacement vehicles. lot addition of In

lease so take anomaly going see So to that you're to number out our that a an a time. fleet during happens when revenue if might have you the just out little see by, lot divide you come total that there you of vehicles

Jeff Kauffman

duty Okay, fact more complicated taking no. smaller a maybe is be there okay? with, light that might mixed where you're vehicles

Robert Sanchez

is units you. No, obviously out. coming the I we're I units the for the in meaningfully tell going can that new revenue mean getting higher than

Jeff Kauffman

have I bit. scratching little a head my why guessed would so, I that's was Yes

Robert Sanchez

Yes.

Jeff Kauffman

my That's one. right. All

thank So you.

Operator

will Matt from next come Our go Brooklier Please with Buckingham Research. question ahead.

Matt Brooklier

to more the it outperformance. with more of accounts drove any or account just, a little existing DTS related the bank hit if it could you line on what wanted terms out volume top in customers. is quarter Maybe to win or provide So is color was

a it think bit more helpful there. to get color I be little will

Robert Sanchez

answer color. Well I little think you a was but the more easy give above, the I'll John let all

John Diez

the year Last new we historical names one and Yes, growth Matt at perform level. quarter had that of we that quarter had that sales existing you at QX. you have look expansion if of in about if portfolio. at how was by the the half drove of number impacted account were the didn't have certainly We the year quarter as look but a in accounts had relative in was the quarter performance second a activity year look account and to that number level record is well About came in win significant we to terrific. of is wins, meaning, here from if highest overall that for added we of a our which that that the significant you didn't sales so we've our last

then win still you play the three all solutions they're we're we at solutions look market the drivers in in to around is and We're place I to trends which and the continue with have visibility technology in secular for seeing looking people seeing challenges, we out think cost looking mitigate headwinds. place.

Robert Sanchez

investments. let me And strategic just on going question add the guess back I to

and to bottom the growth the has of top in chain a off where some investments grown bottom is adding drive these growth whole money XX technology of of years to dedicated seeing example great line line, goes, segment pay growth you're strategic Here's that, [ph] to FMS' a investments other result to that. Dedicated sales do prior acquisition that's I where there. order the in and we've know get an top we example and dedicated, adding people and the really people and marketing XX% the you're XX you line, made as top seeing of think the sales line where and adding but line on dollars of supply got But

Matt Brooklier

cost question. much of Okay there's and some led part talk my I to insurance how second the quarter. you original quickly benefit just in Can that to EBT? know

Robert Sanchez

the on on Yes negative in I and It year. prior positive generally at company side [indiscernible] for year-over-year with flat, was a There the look was insurance was FMS net Chain. the line and Dedicated flat right. and a the Supply would was

Matt Brooklier

Appreciate the time.

Operator

ahead. We'll Seaport to go Global Securities. Sterling Kevin move next with Please

Kevin Sterling

bump might we some you'll still How you to about channel retail the you those think have think with you in can up of vehicle Robert, your should Do wholesale ship inventory. to think used the sell market? that? or inventory do that in

Robert Sanchez

Yes, aggressive Sales of sales an retail Dennis and ramp channel our that up are building our organization really Head out. to we through have it's an Gleason primarily sales John imitative inside and

retail, hold additional So the structure. is plan and really through really and units the to new those go up initiative this

in our the that XX% but QX, retail. of So sales was was volume majority up

of that can the second meaningful So of number the vehicle is really we in a ramping in and retail. up half keep increase have year the that the to goal

Dennis Cooke

let Yes, me just that. add to

said inside this to add where we're to and sales X% said, why to of feeding is goes and that, then the marketing of as in QX that that increase now Just sold X,XXX for up as added we've getting or is the Robert I we X,XXX units them and in volume. XX% north new and our in prospects QX retail earlier

got we're with to units X% doing, having a and about more success retail QX. in lot reach of sell here that is So yes expanding our and we we're

Kevin Sterling

still you. I'm things used mistaken have traction not assume If because good have like records you that's pretty guys the the market case. always in like of your thank maintenance Okay, and that,

Dennis Cooke

and customer. as That add, larger We're again over Robert investment vehicles for talked seven-year just about to used about is maintaining the value six would for a and the maintenance the is retail still marketing audience vehicles our in reaching having available and the earlier. records the prop with there period I

Kevin Sterling

Got you your okay, today. appreciate for thanks well time thoughts, your

Operator

Colley from will ahead. Brian go question Please come next Stephens. Our with

Brian Colley

and about XXXX demand earnings what's around what the guidance the sensitivity wanted you're I ask rental So just in there. assuming to

we your ability demand to if assume projecting, to flex is of guys are in than lower park X% the headwind you if ball bottom rental the reallocate line, factor were what So and equipment? what's sort

Robert Sanchez

X% would say so in lower the half year. second in the Q half X% the of be let's the lower happens in second it [ph] the of year,

Brian Colley

the X% you're I year, for full guess for sorry projecting what Right, lower the than year.

Robert Sanchez

equation math Well about a point. it's that think you at if

in million XX% XXX you is million, If we're of say what be a time $XXX so through about line thinking. is if obviously we $XX of that. take $XX probably mitigate that million that the half chunk million product - to million, million adjust last rentals - we $XXX a if pull quarter, fleet matter of million, and so just $XX the would half good adjust had the you that would one the XXX% a were downturn $XX able the we fleet to be of we assume is, able you $XX of year It's

just So a Obviously in we built that's we - have to way quick clear. to look be at it.

talking We have the already second in slowdown about in built you're half, another beyond a so X% that.

Brian Colley

and what Got the across more it, sales all segments. to maybe detail different trended right that's seeing the pipeline just how wanted the about, you're helpful. in quarter, ask I some

Robert Sanchez

the company year's the across first were sales very strong think in not I last first quarter. record Well as strong as from quarter, the

quarter was last If the in first the first record perspective strongest in in put to in the quarter was the history, second really year's first company. was company. it but in FMS across remember Dedicated history the But it and it strongest you quarter

So you is to the confidence sales. tell commercial the still willing GDP in customers robust up helpful. We the very X.X I see would The environment very sign US contract, is here good. long-term

We about still good needs. the very the see transportation companies outsource logistics feel and So we to looking still prospects. sales

growth start the in we top for So bode we healthy that line, also good the year bottom saw the was which quarter very in with XXXX. line the the you year well as to only sales it start but terms I were second tell in not results double-digit of would half of double-digit

Brian Colley

good appreciate the well Great, time to that's today. and hear I

Robert Sanchez

thanks right, All Brian.

Operator

closing like would remarks. conclude over this question-and-answer to at does today's And Sanchez to this call time, session. Robert I for Mr. back the turn

Robert Sanchez

get show. the road thanks of seeing All next to over in getting everyone. Thanks quarters and conference the on be lot meet a call. well we'll few the I'm a and chance sure Scott you right, the for

So look forward to doing that. Thank you.

Ryder System (R) 30 Apr 192019 Q1 Earnings call transcript