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Ryder's (R) Q3 Earnings & Revenues Top Estimates, Down Y/Y

Zacks Equity Research
·5 min read

Ryder System, Inc. R delivered third-quarter 2020 earnings per share (excluding 53 cents from non-recurring items) of $1.21 against the Zacks Consensus Estimate of a loss of 43 cents. However, the bottom line declined 20.4% year over year.

Moreover, total revenues of $2,150.6 million beat the Zacks Consensus Estimate of $2,001.9 million but fell 3.3% on a year over basis. The top line declined primarily due to lower fuel revenues.

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, which dropped 7% year over year. Operating revenues (excluding fuel) summed $1.1 billion, down 3% year over year. Segmental results were affected by fall in commercial rental revenues due to low demand. Commercial rental revenues fell 16% from the year-earlier quarter’s figure. ChoiceLease revenues inched up 2% year over year.

Dedicated Transportation Solutions (DTS): Total revenues amounted to $300 million, down 17% from the year-ago quarter’s figure. The decline in DTS’ total revenues was primarily due to non-renewed business and lower volumes. Operating revenues (excluding fuel and subcontracted transportation) fell 6% to $234 million.

Supply Chain Solutions (SCS): Total revenues in the segment were $685 million, up 11% year over year. Operating revenues (excluding fuel and subcontracted transportation) rose 9% year over year to $492 million. Segmental results were driven by new business, higher volumes, and favorable pricing.

Liquidity

Ryder, carrying a Zacks Rank #2 (Buy), exited the quarter with cash and cash equivalents of $684.2 million compared with $73.6 million at the end of 2019. The company’s total debt fell to $7,436.6 million at the end of the third 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.

Year-to-date gross capital expenditures plunged 73.3% year over year to $0.8 billion. The decline in capital expenditures was due to lower investments in the lease and rental fleets as a result of reduced demand thanks to the coronavirus outbreak. With reduced capital expenditures, free cash flow was $1.2 billion in the year-to-date period against negative free cash flow of $964.6 million in the year-ago quarter.

2020 Outlook

Anticipating low lease sales in 2020, the company estimates full-year gross capital expenditures in the range of $1-$1.1 billion, compared with previous forecast of$1-$1.3 billion. This reduction in capital expenses is estimated to generate free cash flow of $1.4-$1.5 billion in 2020, against negative free cash flow of $1.1 billion in the prior-year period. Operating cash flow is estimated between $2 billion and $2.1 billion in the current year. Additionally, in the fourth quarter Ryder expects to resume its anti-dilutive share repurchase program which was temporarily paused due to COVID-19.

Sectorial Snapshot

Apart from Ryder, let’s take a look at some other Zacks Transportation sector’s third-quarter earnings like Delta Air Lines DAL, J.B. Hunt Transport Services JBHT and United Airlines Holdings, Inc. UAL.

Delta incurred a loss (excluding $5.17 from non-recurring items) of $3.30 per share in the September quarter, wider than the Zacks Consensus Estimate of a loss of $3.14. With the health peril showing no signs of subsiding, passenger revenues continued to be weak in the September quarter as well with a plunge of 83% year over year to $1,938 million.

J.B. Hunt reported mixed third-quarter 2020 results, with earnings missing estimates and revenues beating the same. Quarterly earnings of $1.18 per share fell short of the Zacks Consensus Estimate of $1.26. Moreover, the bottom line declined 15.7% year over year due to disappointing performance of its intermodal (JBI) unit. Total operating revenues increased 4.6% to $2,472.5 million. Revenues also beat the consensus mark of $2,345.2 million.

United Airlines incurred a loss (excluding $1.83 from non-recurring items) of $8.16 per share, wider than the Zacks Consensus Estimate of a loss of $7.63. Results were hurt by the coronavirus-induced weakness in air-travel demand. Moreover, operating revenues of $2,489 million slumped 78.1% year over year and lagged the Zacks Consensus Estimate of $2,570.1 million. This year-over-year plunge was due to an 84.3% drop in passenger revenues to $1,649 million.

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