Ryder(US:R)2023-07-25 16:00Revenue Performance - Total revenue for Q2 2023 was $2.9 billion, a decrease of 5% compared to $3.0 billion in Q2 2022[87]. - Operating revenue increased by 1% to $2.3 billion in Q2 2023, driven by growth in Supply Chain Solutions (SCS) and Dedicated Transportation Solutions (DTS) segments[88]. - Services revenue remained stable at $1.8 billion in Q2 2023, with a 4% increase for the six months ended June 30, 2023, driven by new business and higher pricing in SCS and DTS[95]. - Total revenue for Fleet Management Solutions decreased by 10% in Q2 2023 compared to Q2 2022, while Supply Chain Solutions remained stable[113]. - FMS total revenue decreased by 10% in Q2 2023 and 6% for the six months ended June 30, 2023, primarily due to lower fuel services revenue and operating revenue[124]. - SCS total revenue remained at $1.2 billion in Q2 2023, with a 5% increase for the six months ended June 30, 2023, driven by higher operating revenue[136]. - DTS total revenue decreased by 2% in Q2 2023 but increased by 2% for the six months ended June 30, 2023, primarily due to higher operating revenue[140]. Earnings and Profitability - Diluted EPS from continuing operations was $(0.39) in Q2 2023, significantly down from $4.72 in Q2 2022, primarily due to a non-cash UK exit charge[87]. - Comparable EPS from continuing operations was $3.61 in Q2 2023, compared to $4.43 in the prior year, reflecting weaker market conditions in used vehicle sales and rental[87]. - EBT decreased by 87% to $44 million in Q2 2023, primarily due to lower gains on used vehicles sold in North America[89]. - Earnings from continuing operations before income taxes decreased by 87% in Q2 2023 compared to Q2 2022, totaling $44 million[113]. - FMS EBT decreased by 37% to $180 million in Q2 2023 from $286 million, and by 32% to $362 million for the six months ended June 30, 2023 from $535 million[125]. - SCS EBT increased by 23% in Q2 2023, while it decreased by 11% for the six months ended June 30, 2023, due to a $30 million asset impairment charge[137]. Cash Flow and Capital Expenditures - Net cash provided by operating activities from continuing operations was $1.2 billion for the six months ended June 30, 2023[91]. - Free cash flow declined to $16 million for the six months ended June 30, 2023, compared to $551 million in 2022, primarily due to increased capital expenditures[146]. - Cash provided by operating activities increased to $1.2 billion for the six months ended June 30, 2023, compared to $1.1 billion in 2022[143]. - Cash used in investing activities increased to $1.2 billion for the six months ended June 30, 2023, compared to $982 million in 2022, mainly due to increased capital expenditures[143]. - Gross capital expenditures increased to $1.8 billion for the six months ended June 30, 2023, compared to $1.3 billion in the same period of 2022, reflecting higher investments in lease[147]. Expenses and Costs - Lease & related maintenance and rental revenue decreased by 7% in Q2 2023, reflecting lower commercial rental demand and the exit of the FMS U.K. business[92]. - Fuel services revenue decreased by 37% in Q2 2023, reflecting lower fuel prices passed through to customers and fewer gallons sold[99]. - SG&A expenses decreased by 5% in Q2 2023, remaining at 12% of total revenue for both Q2 and the six months ended June 30, 2023[102]. - Non-operating pension costs increased due to higher interest expense from a higher discount rate, totaling $10 million in Q2 2023 compared to $2 million in Q2 2022[103]. - Interest expense increased by 29% in Q2 2023 and 27% for the six months ended June 30, 2023, reflecting higher interest rates, totaling $72 million in Q2 2023[106]. Taxation - The effective tax rate on continuing operations was 140.8% in Q2 2023, significantly higher than 29.0% in the prior year, due to a one-time currency translation adjustment loss[111]. - The effective tax rate on continuing operations for the three months ended June 30, 2023, was 140.8%, significantly higher than 29.0% in the same period of 2022[166]. Market Conditions and Future Outlook - The company anticipates a softening macroeconomic and freight environment impacting future performance[176]. - The company expects labor shortages and subcontracted transportation costs to affect its operations[176]. - The company faces risks from higher borrowing costs and increased inflationary pressures that could impact financial performance[180]. Fleet and Equipment - The average power fleet utilization declined to 75% in Q2 2023 compared to 85% in Q2 2022[125]. - The North America fleet of owned and leased revenue earning equipment increased by 3% to 187,200 units as of June 30, 2023, compared to 182,600 units at the end of 2022[126]. - The company redeployed 2,300 units from the rental fleet into new ChoiceLease contracts in the first half of 2023[125]. - The active ChoiceLease fleet increased to 130,500 vehicles as of June 30, 2023, representing a 2% increase from December 2022 and a 1% increase from June 2022[131]. Debt and Financing - The debt-to-equity ratio was 211% as of June 30, 2023, down from 216% at the end of 2022[155]. - The company issued $500 million in unsecured medium-term notes in February 2023 and $650 million in May 2023, with interest rates of 5.65% and 5.25%, respectively[152]. - The company had $754 million available under its global revolving credit facility and $217 million under its trade receivables financing program as of June 30, 2023[154]. - The variable-rate portion of total debt was 18% as of June 30, 2023, compared to 19% at the end of 2022[154]. Shareholder Returns - The company repurchased 0.8 million shares for $70 million under the 2021 Anti-Dilutive program and another 0.8 million shares for $63 million under the 2023 Discretionary Program[156]. - A quarterly cash dividend of $0.71 per share was declared in July 2023, representing a 15% increase compared to the previous year[157].