Ryder System Inc. (R) experienced a dip in its share price on Thursday following the release of its third-quarter earnings report. While the company reported an 8% year-over-year increase in sales, reaching $3.17 billion, this figure fell short of the $3.29 billion analysts had anticipated.
Despite the revenue miss, Ryder’s earnings per share (EPS) surpassed expectations. The company reported an adjusted EPS of $3.44, beating the analyst consensus of $3.42. This positive earnings performance was driven by growth in certain key business segments. Revenue from Fleet Management Solutions (FMS) decreased slightly by 1%, reaching $1.47 billion, while Supply Chain Solutions (SCS) saw a 10% increase to $1.317 billion. Dedicated Transportation Solutions (DTS) experienced the most significant growth, jumping by 41% to $633 million.
However, the company’s earnings before tax declined to $188 million from $213 million in the same quarter last year. Ryder also revealed that its operating cash flow for the first nine months of the year reached $1.7 billion, with a free cash flow of $218 million. The company held $162 million in cash and equivalents at the end of September.
Looking ahead, Ryder’s outlook for the full year was adjusted. The company lowered its FY24 operating revenue growth estimate to approximately 7%, down from the previous estimate of 8%. Additionally, Ryder tightened its adjusted EPS forecast to a range of $11.90 to $12.10, compared to the prior range of $11.90 to $12.40 and the current analyst consensus of $12.13. For the fourth quarter, Ryder anticipates adjusted EPS of $3.32 to $3.52, whereas analysts are currently forecasting $3.57.
Ryder’s Chairman and CEO, Robert Sanchez, provided insights into the company’s performance. He highlighted the double-digit earnings growth achieved in the contractual businesses, with improved performance in FMS driven by pricing and maintenance initiatives and strong operating performance and cost management efforts benefiting SCS. The resilient nature of the legacy business was demonstrated by the robust earnings growth in DTS, he noted.
Sanchez also acknowledged the impact of the extended freight downturn and broader economic uncertainty, stating that these factors are creating near-term sales headwinds. Despite these challenges, he remains optimistic about the long-term secular growth trends for all of Ryder’s contractual businesses.
Investors seeking exposure to Ryder’s stock can explore ETFs like the First Trust Nasdaq Transportation ETF (FTXR) and the SPDR S&P Transportation ETF (XTN).
As of the last check on Thursday, Ryder’s shares were down 4.36% at $138.71.
