Ryder System Inc.
), the world's largest provider of integrated logistics and
transportation solutions, reported fourth quarter 2011 adjusted
earnings of 97 cents in line with the Zacks Consensus Estimate and
improved 49% from 65 cents in the year-ago quarter.
The year-over-year growth reflected accelerated organic growth
in commercial rental and Supply Chain Solutions alongside business
acquisitions gain, improved asset utilization and higher used
vehicle sales. Adjusted earnings exclude the negative impacts of 5
cents related to restructuring costs arising from the integration
Adjusted earnings for fiscal 2011 increased 57% year over year
to $3.49 per share. Adjusted earnings for the year excluded the
impacts of 18 cents per share related to special item such as
acquisition related transaction cost, restructuring charges and tax
The company registered revenue of $1,541.1 million in the fourth
quarter, reflecting a 17% year-over-year increase. The quarter's
revenue also outpaced the Zacks Consensus Estimate of $1,535
million. The pass-through of higher fuel costs to customers and
increased commercial rental revenues led to the robust growth.
Operating revenue (total revenue less Fleet Management Solutions
fuel and all subcontracted transportation) increased 16% year over
year to $1.2 billion, driven by acquisitions and organic growth.
Revenue for the full year grew 18% year over year to $6.1 billion,
while operating revenue climbed 16% year over year to $4.8
Operating expenses for the quarter was $1.5 billion, up 16.2%
year over year and for fiscal 2011, Operating expenses increased
16.6% year over year to $5.8 billion.
Fleet Management Solutions
Total revenue climbed 13% year over year to $1.1 billion on higher
Commercial Rental and Fuel Services revenues that increased 38% and
18%, respectively. The growth in Commercial Rental was backed by
higher global demand and pricing.
Fuels Services' revenues increased on higher fuel prices passed
through to customers. On a year-over-year basis, Contract Related
Maintenance revenue grew 24%, year over year. Other revenue dropped
2% year over year while Full service lease revenue increased 5%
owing to acquisitions. Contractual revenue climbed up 4%. Operating
revenues for the segment (revenue excluding fuel) increased 12%
year over year to $813.3 million.
Supply Chain Solutions
Total revenue climbed 26% to $408.7 million in the fourth quarter
from $325.1 million in the year-ago quarter. Operating revenue
(excluding subcontracted transportation) also nudged up 26% year
over year to $324.7 million. The improvement was driven by higher
freight volumes, new business wins and the acquisition of Total
Dedicated Contract Carriage
Total revenue and operating revenue (excluding subcontracted
transportation) increased 29% and 23% to $156.6 million and $147.1
million, respectively, from the year-ago quarter. Higher revenues
were aided by the acquisition of Scully Companies, Inc., higher
fuel recoveries and improved operating performance that largely
offset higher compensation-related and legal expenses.
Liquidity and Cash Flow
Ryder System ended the year with cash and cash equivalents of
$1.04 billion compared to $1.03 billion in the year-end 2010. Cash
from operations was $1.4 billion against $1.3 billion in the
year-ago. Given heavy investments in vehicles, free cash flow was a
negative $256.8 million versus a positive $257.6 million in the
Total debt at the end of fiscal 2011 was $3,078.5 million versus
$2,512.0 million at the end of fiscal 2010 due to acquisitions and
investments in vehicles. Debt-to-equity ratio was 257% compared
with 196% at year-end 2010.
For the first quarter of 2012, management expects earnings in
the range of $0.55-$0.58 per diluted share.
Management expects fiscal 2012 earning in the range of $4.00 to
$4.10 per diluted share, excluding the impacts of 2 cents per share
related to estimated restructuring costs in the first quarter.
Total revenue for the full-year 2012 is estimated to grow
approximately 4% year over year to $6.3 billion. Operating revenue
is estimated to be approximately $5.1 billion, up 6% year over
Despite a modest economic outlook for 2012, Ryder expects to
deliver solid revenue and earnings growth backed by strong
commercial rental and used vehicle sales in a favorable lease rate
environment. Further, the company remains well positioned for lease
fleet expansion in 2012. These continued investments in fleets and
technology will fuel earnings growth in future ahead despite high
maintenance cost. Further, the company aims at expand its footprint
via acquisitions that will facilitate more market share gains and
edge over other competitors like
We are currently maintaining our long-term Outperform
recommendation supported by a Zacks #2 (Buy) Rank.
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