Ryder System advanced its dedicated business segment with its February acquisition of Cardinal Logistics, the company said Tuesday.
The transport conglomerate sees the addition as part of a strategy to accelerate profitable growth in the dedicated segment, CEO and Chairman Robert Sanchez said on a Q1 earnings call.
Total revenue for its dedicated segment in Q1 increased 24% year over year to $563 million, and the segment’s operating revenue went up 33% YoY to $427 million, per an earnings announcement.
But acquisition and integration expenses as well as insurance costs put a road bump in that path for the quarter. That left a 38% YoY drop in earnings before tax. The company projects to pay about $10 million in integration costs, which should cover most of the expected costs, Sanchez told analysts.
That setback appeared temporary, though. Ryder Dedication Transportation Solutions earnings before tax was 4.2% of operating revenue in Q1 — falling below a high single-digit target amid the higher costs.
The company, which is still integrating the addition, expects further improvements to its bottom line. Ryder expects to reach an EBT target this year for its legacy dedicated operations and achieve its overall segment goal in 2025.
“As we reach full integration in year three, we expect net synergies realized to be between $40 million and $60 million,” Sanchez said on the call.
Ryder previously noted that the acquisition should deliver $800 million in operating revenue each year.
Cardinal and another acquisition, the 3PL known as Impact Fulfillment Services, also primarily drove an 11% increase in operating revenue for Ryder’s supply chain segment, CFO and EVP John Diez said on the earnings call.
