Ryder System Inc. (R: 43.25 +0.06 +0.14%), the world’s largest provider of integrated logistics and transportation solutions, reported second-quarter earnings of 58 cents per share, which surpassed the Zacks Consensus Estimate of 49 cents. The company released its second-quarter earnings on July 22, 2010. The company’s earnings shot up 21% from the year-ago quarter’s earnings of 48 cents.Stronger-than-expected earnings growth in the quarter was driven by higher commercial rental demand and stronger used vehicle sales, partially offset by the ongoing customer fleet downsizing. Net income increased 13% year over year to $30.6 million.
Revenue rose 6% year over year to $1.29 billion, ahead of the Zacks Consensus Estimate of $1.26 billion. The pass-through of higher fuel costs to customers and favorable exchange rate movements led to the solid revenue growth during the quarter. Operating revenue (revenue excluding Fleet Management Solutions fuel and all subcontracted transportation), was $1.04 billion, up 2% year over year.
Segment Results
Fleet Management Solutions: Total revenue upped 4% year over year to $931.2 million while operating revenue (excluding fuel) spiked 1% to $709.0 million. Contractual revenue dipped 5% due to the trimming of customer fleet. Improved market demand, and higher pricing led to a 20% increase in commercial rental revenue. Rental fleet utilization improved 920 basis points to 78% from the year-ago quarter.
Fleet Management Solutions: Total revenue upped 4% year over year to $931.2 million while operating revenue (excluding fuel) spiked 1% to $709.0 million. Contractual revenue dipped 5% due to the trimming of customer fleet. Improved market demand, and higher pricing led to a 20% increase in commercial rental revenue. Rental fleet utilization improved 920 basis points to 78% from the year-ago quarter.
Supply Chain Solutions: Total revenue climbed 12% to $310.1 million from $275.9 million in the year-ago quarter. Operating revenue (excluding subcontracted transportation) was $249.9 million, up 7% compared with $233.5 million in the year-ago quarter. The improvement in revenue was driven by higher automotive volumes, favorable foreign exchange rate movements, partially offset by contract realization.
Dedicated Contract Carriage: Total revenue and operating revenue (excluding subcontracted transportation) increased 6% and 4% to $123.0 million and $118.6 million, respectively, from the year-ago quarter. This increase was attributable to strong freight volume and the pass-through of higher fuel costs.
Liquidity and Cash Flow
Liquidity and Cash Flow
Ryder System had cash and cash equivalents of $108.4 million at the end of the second quarter compared with $98.5 million at the end of fourth-quarter 2009. Total debt declined by $25.6 million to $2.5 billion compared with year-end 2009. Debt-to-equity ratio increased to 180% from the end of fourth-quarter 2009 of 175%.
Ryder System generated operating cash flow of $531.2 million, up 3.7% compared with $512.3 million in the year-ago quarter. Free cash flow plunged to $123.1 million from $257.4 million in the year-ago quarter, primarily due to increased vehicle spending.
OutlookBased on improving market conditions, management raised its 2010 earnings outlook by 15 cents per share to the range of $2.00 to $2.10 per share. The midpoint of $2.05 is well ahead the Zacks Consensus Estimate of $1.94. The company also expects third-quarter earnings per share to be in the range of 62 cents to 67 cents, the midpoint of which is also above the Zacks Consensus Estimate of 61 cents.
| Overall Summary: |  45%, Bullish 55%, Bearish | Trade Quality: | Upside 30%, Poor Downside 65%, Fair |
| Analysts' Targets | |
| RBC Capital Markets | $36 |
| Sector Perform | |
| Thursday, February 04, 2010 | |
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