Ryder System, Inc.
Q1 2019 Earnings Call Transcript

Published: 30 Apr 2019

[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.

[Bob Brunn:]

Thanks very much. Good morning, and welcome to Ryder's first quarter 2019 earnings and 2019 conference call. I'd like to remind you that during this presentation, you'll hear some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive, market, political and regulatory factors. More detailed information about these factors is contained in this morning's earnings release and in Ryder's filings with the Securities and Exchange Commission. This conference call also includes certain non-GAAP financial measures. You'll find reconciliations of each non-GAAP measures to the nearest GAAP measure in the written presentation accompanying this call, which is available on our website at investor.ryder.com. Presenting on today's call are

[Robert Sanchez:]

Good morning, everyone, and thanks for joining us. Let me start by welcoming our new CFO, Scott Parker in his first earnings call at Ryder. Scott brings a great depth of experience to the CFO role from both public and private companies and also has extensive background in leasing businesses. I look forward to introducing you to Scott at person at upcoming investor conferences this quarter. This morning we'll recap our first quarter 2019 results. Discuss the current outlook for our business and highlight progress on some of our strategic initiatives then we'll open the call for questions. With that let's turn to an overview of our first quarter results. Comparable earnings per share from continuing operations were $1.11 for the first quarter 2019 up 16% or $0.15 from the prior year primarily reflecting growth in our contractual businesses, ChoiceLease, Dedicated and Supply Chain and improved operating performance in all business segments.

[Scott Parker:]

Thanks Robert. Turning to Page 10, gross capital expenditures totaled approximately $1.1 billion up around $390 million from the prior year. This increase reflects higher planned investments to grow and refresh the contractual lease fleet. We realized proceeds primarily from the sale of revenue earning equipment of $103 million up from the prior year reflecting higher pricing and increased sales volume. Net capital expenditures increased by $389 million to just over $1 billion. Turning to the next page, we generated cash from operating activity of around $500 million for the quarter up approximately $150 million or 44%. The increase was primarily driven by higher cash based earnings and lower working capital needs. We generated around $600 million of total cash up approximately $160 million from the prior year reflecting higher operating cash and sales proceeds. Cash payments for capital expenditures increased by $364 million to just over $1 billion. The company's free cash flow was negative $438 million for the quarter down from the prior year of negative $236 million reflecting increased net capital spending. Our full year forecast for free cash flow remains unchanged at negative $1.1 billion reflecting significant growth in capital spending.

[Robert Sanchez:]

Thanks Scott. Our overall earnings outlook for the balance of the year remains on track with our prior expectations with a modestly better than expected impact from lease accounting. We are on track to meet or beat our 2019 revenue growth targets in all business segments. Commercial rental is expected to perform for the balance of the year although we're planning to revenue growth rates to decline from the current levels due to potentially softer demand conditions later in the year. We're pleased with results to date on our initiative to leverage ecommerce growth by increasing the number of medium duty trucks in our rental fleet. In used vehicle sales, we continue to expand our retail sales capacity to handle additional volume expected this year. although used vehicle pricing was up in the first quarter we continue to expect pricing to be down slightly for the full year particularly in the second half of 2019 due to additional inventory that's likely to come to the market. In FMS, we're on track to meet our full year target from our new maintenance cost - our reduction initiative. In DTS, we expect revenue growth rate comparisons to remain favorable although below the first quarter levels. Dedicated EBT percent should be higher year-over-year reflecting improved operating performance. In supply chain, we expect revenue growth rate comparisons to turn negative in the second half due to the impact of previously announced loss business however year-over-year earnings are expected to improve. In light of these factors we're raising our full year comparable EPS forecast range to $6.05 to $6.35 versus a prior range of $6 to $6.30, primarily to reflect a better than expected impact from the new lease accounting standard. Our second quarter comparable EPS forecast is $1.34 to $1.44 as compared to $1.46 in the prior year. second quarter comparisons include $0.10 negative year-over-year impact from lease accounting reflecting an estimated $0.05 negative impact in the second quarter of 2019 compared to a $0.05 benefit in the prior year. The negative impact from lease accounting in 2019 reflects an expected decline in the lease fleet age. The full year 2019 impact from lease accounting is expected to reduce earnings per share by approximately $0.15 as compared to the prior accounting method. As a reminder there's no change to cash flow or total earnings over the life of the lease contract as a result of the new lease accounting standard.

[Operator:]

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

[Stephanie Benjamin:]

I just wanted to talk a little bit on the used vehicle environment, a lot of good color on your prepared remarks. But I think just the native impact from used vehicle sales are bit higher than are the loss - unused vehicle sales are bit higher than expected in the first quarter. So was hoping you could kind of flush out what you're seeing and your expectations have changed for the full year than just kind of overall the environment we kind of move through in the second quarter.

[Robert Sanchez:]

Okay, I'll let Dennis give you a little bit more color. But just as a highlight I would tell you used vehicle came in generally when we expected. The pricing especially on trackers which is really where the focus is primarily because of what's happened in the last few years. Pricing on tractors I mentioned was up 17% so definitely the pricing continues to move in the right direction part of that is because we're growing our retail capacities so we're able to retail more trucks as opposed to wholesaling which is a 30% price deferential typically between a retail and a wholesale. So our strategy is to continue to expand our capacity. Capacity was up 17% year-over-year this quarter we expect that to grow in the second half of the year. We really be able to continue to retail more trucks in the second half, but I'll let Dennis give you a little more color with what we're seeing.

[Dennis Cooke:]

Yes, Stephanie I'd just add to Robert's comments that pricing was up as Robert shared but the book values of what was coming through was a little higher than we expected. So we really need to get even a little more price and we've got several initiatives to target that. So for example, from the retail point of view we're using inside sales more. Inside sales is now 0.7% of our retail volume where we have leads being generated online and going to telemarketers who're selling vehicles and getting nice proceeds per unit.

[Stephanie Benjamin:]

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

[Operator:]

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

[Todd Fowler:]

Robert, can you maybe just help us flush out a little bit, the changes to the full year guidance. 1Q came in above the range of what you were looking for and you got the lease accounting headwind coming in about $0.05 for the full year, was all of that in 1Q and is that just what the adjustment is to the guidance and then if you can also talk about the cadence with 2Q, where you set it out and then kind of back end waiting for the rest of the year. I think that would be helpful.

[Robert Sanchez:]

Sure. Well first let me answer the question on the changing guidance. Changing guidance is primarily driven by the lease accounting adjustment. It was a beat in the first quarter. Portion of that beat, the $0.05 we think is really a permanent one for the year, so we really brought the guidance up as a result of that. In terms of, so the rest of the business I would tell you is operating in line with our expectations. In terms of the second quarter, I think the year-over-year delta's, if you look at the growth rate that we saw in the first quarter compared that to what is really going to flat to down in the second. Lease accounting is a big part of it. Lease accounting in the first quarter was a $0.06 good guy year-over-year and in the second quarter it's going to be a $0.10 bad guy year-over-year. So that really takes a big chunk of it. So you're going - if you exclude lease accounting first quarter was up 10%, second quarter for the high end of our guidance would be 6%. So the bulk of that is primarily supply chain, earnings growth at a lower rate than they grew in the first quarter. The supply chain earnings in the first quarter grew at 28%, I think it was that comes down a bit in the second quarter. So that's primarily the difference. The other thing if you go back second quarter of last year was a bang up quarter for supply chain, earnings were up and supply chain were up 45%. A little bit tougher comps in the second quarter, but I'll tell you we feel very good about the second quarter and certainly in the second half as we continue to see contractual business really growing across all segments. So this is business that we're locking in that we know is profitable and we feel really good about how that's going to play out for the balance of the year. So I would tell you, even though we didn't adjust the guidance excluding lease accounting we didn't adjust the guidance for the balance of the year probably feel lot more confident now than we just did just three months ago in terms of our ability to hit it.

[Todd Fowler:]

Yes, good no that's helpful and to be clear, you mean operationally did an adjust guidance down even though 1Q was above your guidance range that was the lease accounting benefit in 1Q in operationally things are really the same or for the rest of the year at this point.

[Robert Sanchez:]

Correct.

[Todd Fowler:]

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

[Operator:]

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

[Ben Hartford:]

Robert, perspective on commercial rental trends. Utilization came in pretty good in the first quarter. Can you kind of slice out class 8 versus medium duty? What the trends look like and I know you talked about your underlying outlook for the balance of the year being unchanged, but anything on the rental side obviously coming in a little bit better in a weak spot environment is impressive. So could you slice out heavy duty versus medium duty and maybe what the - what an updated outlook is for the balance of the year?

[Robert Sanchez:]

I guess I'll let ask you a little bit more coverage. Just at a high level, I'll tell you demand is coming in, in line with what we had expected. If you slice it out by class probably the medium duty initiative that we have coming maybe a little bit better and maybe class 8 a little bit worse, but generally demand is been where we expected it. So we expect our forecast does expect some softening in the second half of the year in terms of demand and utilization, but primarily around the class 8 as we expect more of the new class 8 to hit the market, but all in all I'll tell you it's in line what we have forecast. I'll let Dennis give you a little more color around the class.

[Dennis Cooke:]

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

[Ben Hartford:]

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

[Robert Sanchez:]

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

[John Diez:]

Yes, Ben just to give you an update here. The Florida market has actually been very encouraging for the COOP platform and that we've been able to demonstrate that we could scale in a market fairly quickly. The acceptance in this market has been actually a lot more favorable than our original market with Atlanta and Georgia. So as we scale up and we take this platform to other markets I think the encouraging signs for us is, how quickly we could do that and what's the acceptance is going to be from the broader market.

[Ben Hartford:]

Got it. Thanks for the time.

[Operator:]

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

[Scott Group:]

Why don't you just first clarify just a couple of things, Robert? In prepared comments you talked about a maintenance recovery, was that a one - can you quantify and if that's one time or part of the new initiatives. And then when you were talking about rental, you talked about a decline in the second half of the year. You're talking about year-over-year decline in revenue or just last revenue growth than the 15% in first quarter just wanted to clarify, those two things.

[Robert Sanchez:]

Okay, let me just - I'll hit the first one and I'll let Dennis take the second half. The maintenance cost recovery items was a negotiated warranty related recovery for prior period maintenance cost, so it was a one-time item now. In addition to that, Dennis's team also made progress on the $75 million maintenance cost initiative which as I mentioned $20 million was for this year, so we're well on our way to achieving that also, so yes that was a one-time item that we called out and it was for prior period maintenance cost. And Dennis you want to talk about?

[Dennis Cooke:]

Scott on the rental side, it just a decline in the growth rate. so we grew revenue 15% in Q1, we don't expect that 15% to continue, but we'll still be growing to be clear in the second half it's just not growing as fast.

[Scott Group:]

And how much was that maintenance recovery?

[Robert Sanchez:]

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

[Scott Group:]

Okay and then just lastly, so I think last quarter you talked about give or take $0.40 headwind from losses on sales and lower residuals this year and then a similar headwind next year, given your sort of reviews on used truck market and what you're seeing, any - do either those numbers change for this year or next year?

[Robert Sanchez:]

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

[Scott Group:]

Okay, thank you guys.

[Operator:]

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

[Amit Mehrotra:]

Robert I just wanted to ask about, I guess leasing business is obviously a bit of lag between when you negotiate the new leases and when the earnings stream hits the P&L. can you just talk about the impact that will have as you look beyond this year and is 2020 meaning? How much of the earnings growth is under written in 2020 from leases you're adding this year and also maybe for Scott, is the fleet age a push next year in terms of the puts and takes or does it continue to get a bit younger and just so we can understand if there's any incremental headwind beyond this year from some leases you're adding this year? Thanks.

[Robert Sanchez:]

Well as we're getting into 2020, it might be a little early but just I guess to answer the first part of your question. The leases that we signed at the end of last year a lot of that or vehicles that we're now taking in to service. So I mentioned on the call that in January we were signing leases for May timeframe. As we sit here today we're signing leases for August and September timeframe. So you can look at all of the equipment that's going to come into lease between now and August, September is already signed and locked in. So we're getting out to a lot of the revenue this year, is already accounted for where we'll be locked in, so we feel good about that's why I said, we feel more confident about hitting our numbers now than we did three months ago because the earnings growth is really primarily being driven by our ChoiceLease, Dedicated and Supply Chain businesses so we feel good about that. The second part of your question was around.

[Amit Mehrotra:]

The fleet age next year?

[Robert Sanchez:]

Yes, fleet age right now year-over-year is at 41 months for the lease fleet age. It's down sequentially one month as we go into this year we expect it to come down maybe another month and as we get into next year I guess it depends on what happens with our sales. If you just look at what's happening with class 8 production in the forecast for next year's already the class 8 production will be down some. I would expect that our sales for 2020 will be down some from 2019, but again that still remains to be seen. If that happens, you would expect then fleet age to really start aging out little bit again, again which kind of neutralizes out a bit.

[Amit Mehrotra:]

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

[Robert Sanchez:]

Yes as we mentioned on the call in January about $0.47 of strategic investments which as we showed was really covered entirely with some of the cost actions we're taking, those investments are really around sales and marketing help drive some of the continued growth, so you look at we're adding sales people, we're spending money on marketing, we've got technology, investments. We talk about COOP. technology, investments and e-fulfilment. We're rolling out new e-fulfilment product to be able to provide that service to a new set of customers. So those are investments in new service offerings, new products and in sales which we are confident really are going to pay dividends here in the next year, the next two years and three years. So we think they're important to your questions of what we pull them back. Obviously we got into some type of a crunch scenario where really things slowed down. We would probably, we would look at some of those areas and possibly pull some of them back, but in the environment we're in now with the growth that we're seeing we think it's a good time to make these investments in the future.

[Amit Mehrotra:]

Got it. Okay, thanks a lot. Appreciated.

[Operator:]

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

[David Ross:]

Just wanted to talk about the Last Mile division, the MXD now Ryder Last Mile. I think it's about $350 million run rate at the moment. Can you give us more color around the growth and margins of that segment? Are there better or worse that SCS average, is there a lot of improvement going on there?

[Robert Sanchez:]

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

[Steve Sensing:]

David, Steve. Just a reminder on the 350 that's a combination really of Ryder Last Mile and our e-commerce, e-fulfilment business that is part of an overall solution for many of our customers in supply chain. As Robert said, we started really cross-selling across SCS and DTS customers, so if you think about the sales pipeline. We got a good mix between new names and expansion business about a third of our pipeline is coming from DTS and SCS customers and sales people, so I think we're off to a really strong start. We hit our target in Q1, feel really good about Q2. Got think in the back half, you're obviously focused about execution for our customers in peak period, so at the end of the day it's going to be about volume coming through their retail sales channel, so feeling really good about it.

[David Ross:]

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

[Steve Sensing:]

Yes, so the integration went great, on track actually ahead of schedule last year. The business is executing. They've got cost cutting initiatives in there. I think you asked earlier about the EBT targets. It's just slightly below the normal SCS business but now it's really growing the business and continue to expand the footprint to serve the many customers out there.

[David Ross:]

Thank you.

[Operator:]

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

[Jeff Kauffman:]

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

[Robert Sanchez:]

You're talking about the FMS margins?

[Jeff Kauffman:]

No, I'm looking at revenue per vehicle.

[Robert Sanchez:]

Revenue per vehicle. Well, let us take a look at that, there's a possibility that you might see it coming down as you get a churn of lot of vehicles coming in through the fleet, you've got vehicles that are on the way out and so vehicles that are on the way in, so during that process you could see some slight what's down, but I wouldn't read that as a long-term change. Yes there's a lot of vehicle that have come into the fleet in Q1, both growth as you saw we grew the lease fleet 4,200 vehicles. In addition to that, lot of replacement vehicles. So when that happens a lot of vehicles have to come out so if you just take our total lease fleet number that you see out there you're going to divide the revenue by, you might see a little an anomaly during that time.

[Jeff Kauffman:]

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

[Robert Sanchez:]

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

[Jeff Kauffman:]

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

[Robert Sanchez:]

Yes.

[Jeff Kauffman:]

All right. That's my one. So thank you.

[Operator:]

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

[Matt Brooklier:]

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

[Robert Sanchez:]

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

[John Diez:]

Yes, Matt if you look at the growth in the quarter about half of that came from new names that were added to the portfolio. About a quarter that is expansion of existing accounts as well and if you look at how we perform relative to our historical level. Last year in the quarter we had a record year of sales and that was certainly impacted by significant win in last year in Q1. We didn't have that level of activity meaning, we had a significant number of account wins, but we didn't have one account that drove the number so overall if you look at our performance was the second highest sales here for the quarter that we've had which is terrific. I think we're still seeing the secular trends which is around drivers challenges, you look at people looking for visibility in technology solutions and then they're looking to mitigate cost headwinds. We're seeing all three play out and we continue to win in the market place with the solutions we have in place.

[Robert Sanchez:]

And I guess let me just add going back to the question on strategic investments. Here's an example of where we made strategic investments in prior years of adding sales people to dedicated, adding sales people to the other segment and adding marketing dollars and technology to drive the growth you're seeing really top line, you're seeing top line and bottom line growth as a result of that, where FMS' has grown 10% dedicated 17 and supply chain 25 we've got whole acquisition there. But you know these investments do pay off and in order to get the growth on the top line and the bottom line, that's where some of the money goes, but I think Dedicated is a great example of that.

[Matt Brooklier:]

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

[Robert Sanchez:]

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

[Matt Brooklier:]

Appreciate the time.

[Operator:]

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

[Kevin Sterling:]

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

[Robert Sanchez:]

Yes, we have an aggressive imitative to really ramp up our retail sales channel and it's primarily through an inside sales organization that Dennis and John Gleason our Head of Sales are building out. So the plan and the initiative is really to go up and really hold retail, those additional units through this new structure. So our sales volume was up 17% in Q1, but majority of that was the retail. So the goal is to keep ramping that up and in the second half of the year really have a meaningful increase in the number of vehicle that we can retail.

[Dennis Cooke:]

Yes, let me just add to that. Just to add to that, where we sold 4,900 units in Q1 and that goes up to 5,300 or 8% increase in Q2 and as Robert said, this is why we've added the marketing for getting new prospects and then we're feeding them in the inside sales and that as I said earlier is now north of 20% of our retail volume. So we're doing, is we're expanding our retail reach and having a lot of success with that and yes we got to sell about 8% more units here in Q2.

[Kevin Sterling:]

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

[Dennis Cooke:]

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

[Kevin Sterling:]

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

[Operator:]

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

[Brian Colley:]

So I just wanted to ask about the sensitivity what's in the 2019 earnings guidance around rental demand and what you're assuming there. So if were to assume rental demand is 5% lower than what you guys are projecting, what's the ball park headwind sort of bottom line, if we factor in your ability to flex and reallocate the equipment?

[Robert Sanchez:]

5% lower in the Q would be let's say it happens in the second half of the year, so 5% lower in the second half of the year.

[Brian Colley:]

Right, sorry 5% lower than what you're projecting I guess for the year, for the full year.

[Robert Sanchez:]

Well if you think about it's a math equation at that point. If you take - if you assume the rentals about $900 million product line so half the year is $450 million, 10% of 450 would be $45 million and half of that is, $24 million, $25 million is what we're thinking. It's probably $24 million, $25 million if you just say 100% pull through of that obviously we would adjust the fleet the last time that we had a downturn we were able to adjust the fleet in a matter of one quarter, so we - be able to mitigate a good chunk of that. So that's a quick way to look at it. Obviously we have - we built in just to be clear. We have already built in a slowdown in the second half, so you're talking about another 5% beyond that.

[Brian Colley:]

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

[Robert Sanchez:]

Well I think sales across the company were very strong in the first quarter, not as strong as the record from last year's first quarter. If you remember last year's first quarter was really record across the company. But to put it in perspective in FMS and Dedicated it was the strongest first quarter in history, but it was the second strongest first quarter in the history in the company. So I would tell you still very robust sales. The 3.2 GDP environment here in the US is very helpful. We see commercial customers willing to sign up the long-term contract, the confidence is good. So we still feel very good about the sales prospects. We still see companies looking to outsource the transportation and logistics needs. So I would tell you not only was it good start to the year in terms of the results double-digit top line, with double-digit bottom line growth but also the sales that we saw in the quarter were very healthy which bode well for second half of the year as we start in 2020.

[Brian Colley:]

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

[Robert Sanchez:]

All right, thanks Brian.

[Operator:]

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

[Robert Sanchez:]

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