Ryder System, Inc. (NYSE:R) Q2 2019 Earnings Conference Call Transcript

Jul 30, 2019 • 11:00 am ET

Previous

Ryder System, Inc. (NYSE:R) Q2 2019 Earnings Conference Call Transcript

Share
Close

Loading Event

Loading Transcript

Q & A
Operator
Operator

Thank you [Operator Instructions] We will take our first question from Matt Brooklier with Buckingham Research. Please go ahead.

Analyst
Matt Brooklier

Yeah. Thanks, and good morning. Maybe if you could -- want to talk about the rental business and there is some deceleration there, but can you talk about your thoughts on the size of the fleet this year? Are the expectations that potentially you grow a little bit less than maybe how you're thinking about things in the first half? And then, I know, we're a little bit of a ways, but what are your thoughts on the rental fleet as we look into 2020?

Executive
Robert E. Sanchez

Yes. Let me just give you a high level overview of what's changed from maybe a quarter ago. And it is a relatively contained area, where we saw really a slowdown in rental demand. It was really around tractors, primarily driven, I would say, by the for-hire carrier market, where there was just less demand for rental tractors. So we would expect now in the second half we're going to downsize the fleet and we'd expect less demand in that area. The rest of the business, though, I would tell you on the truck side, especially around the medium-duty tractors, where we've upsized the fleet in order to capture more of that e-commerce driven demand, it's on track and going well. So, Dennis, I don't know if you want to give him a little more color?

Executive
Dennis C. Cooke

Yeah. Matt, I'd just add, when you look at Q2, we had originally expected tractor demand to be up year -over -year about 13% and we realized 6%. So it is still growing just at a slower rate than we expected. Trucks actually were pretty robust. We realized 11% demand increase year-over-year. We had expected even a little more, but we still feel good about what's happening from a truck point of view, but tractors are softer.

Analyst
Matt Brooklier

Okay. So it sounds like this is -- this cycle is a little bit different in the fact that there are some secular tailwinds on the truck side that's potentially offsetting incremental softness on the tractor side, and you guys feel pretty good about I guess the fleet size for the year?

Executive
Dennis C. Cooke

Yes, right. Obviously, we're reducing the tractor fleet side, while on the truck front, we feel good. When you compare this to 2012 and Q1 was actually stronger this year than in 2012, when we saw that downturn, Q2 was a little weaker, but in the second half, we see the trucks remaining very strong.

Analyst
Matt Brooklier

Okay. And what's the mix right now between tractors and trucks in the rental fleet?

Executive
Dennis C. Cooke

Yes. So we have got 33% of the fleet is tractors and 52% is trucks.

Analyst
Matt Brooklier

Got it. Okay. I appreciate it.

Executive
Robert E. Sanchez

So, I would add Matt too is that, it doesn't really change our long-term strategy though of, we've said, we view rental as really a complementary product line to lease and our goal is to really grow it at about the