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Ryder (R) Stock Down on Q4 Earnings Miss, Tepid Q1 Guidance

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Ryder System, Inc. R delivered fourth-quarter 2020 earnings per share (excluding 35 cents from non-recurring items) of 83 cents per share, which missed the Zacks Consensus Estimate of 93 cents. The company had reported a loss of 1 cents per share in the prior-year quarter.

Total revenues of $2,212.9 million also missed the Zacks Consensus Estimate of $2,232.1 million and fell 2.8% on a year-over-year basis. The top line declined primarily due to lower fuel revenues.

Ryder expects adjusted EPS for first-quarter 2021 in the range of 50-60 cents per share. The midpoint (55 cents) of the guidance is below the Zacks Consensus Estimate of 93 cents per share. The below-par report and dull earnings guidance for the first quarter of 2021 disappointed investors. Consequently, shares of the company declined 3.8% on Feb 11.

Ryder System, Inc. Price, Consensus and EPS Surprise

Ryder System, Inc. Price, Consensus and EPS Surprise
Ryder System, Inc. Price, Consensus and EPS Surprise

Ryder System, Inc. price-consensus-eps-surprise-chart | Ryder System, Inc. Quote

Segmental Results

Fleet Management Solutions (FMS): Total revenues in the segment amounted to $1.3 billion, down 7% year over year. Operating revenues (excluding fuel) summed $1.2 billion, down 3% year over year. Segmental results were affected by fall in commercial rental revenues, thanks to weak demand and lower fuel services revenues. Commercial rental revenues and fuel services revenues fell 7% and 29%, respectively, from the year-ago quarter’s figures. However, ChoiceLease revenues inched up 1% year over year.

Dedicated Transportation Solutions (DTS): Total revenues amounted to $301 million, down 13% from the year-ago quarter’s figure. The decline in DTS’ total revenues was primarily caused by lower contractual sales in late 2019 and early 2020. Operating revenues (excluding fuel and subcontracted transportation) fell 4% to $231 million.

Supply Chain Solutions (SCS): Total revenues in the segment were $711 million, up 10% year over year. Operating revenues (excluding fuel and subcontracted transportation) rose 8% year over year to $506 million. Segmental results were driven by new business, higher volumes and increased pricing.

Other Details

Ryder, carrying a Zacks Rank #3 (Hold), exited the fourth quarter with cash and cash equivalents of $151.3 million compared with $73.6 million at the end of 2019. The company’s total debt (including current portion) fell to $6,610.2 million at the end of the fourth quarter from $7,924.8 million at the end of 2019. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Full year gross capital expenditures plunged 69.4% year over year to $1.1 billion. The decline in capital expenditures was caused by lower investments in the lease and rental fleets as a result of weak demand. With reduced capital expenditures, free cash flow was $1.6 billion in 2020 against negative free cash flow of $1.1 billion in 2019.

2021 Outlook

Anticipating low lease sales in 2021, the company estimates full-year gross capital expenditures in the range of $2-$2.3 billion. Free cash flow is estimated in the range of $400-$700 million. Cash generated from operating activities is estimated to be at $2.2 billion. Adjusted return on equity is estimated in the range of 10-11%.

Moreover, both total revenue growth and operating revenue growth is anticipated to be in mid-single digits range. The company expects full-year adjusted earnings in the range of $4.15-$4.65 per share. The Zacks Consensus Estimate for 2021 earnings is currently pegged at $4.06.

Sectorial Snapshots

Let’s take a look at some of the other recently released earnings reports from companies within the Zacks Transportation sector.

United Airlines UAL incurred a loss (excluding 6 cents from non-recurring items) of $7 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $6.56. Further, operating revenues of $3,412 million lagged the Zacks Consensus Estimate of $3,420.4 million.

J.B. Hunt Transport Services JBHT reported earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.27. Total operating revenues of $2,737.7 million also surpassed the Zacks Consensus Estimate of $2,514.3 million.

Delta Air Lines DAL incurred a loss (excluding $1.34 from non-recurring items) of $2.53 per share in fourth-quarter 2020, wider than the Zacks Consensus Estimate of a loss of $2.43. Total revenues of $3,973 million topped the Zacks Consensus Estimate of $3,754.5 million.

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