Ryder System Inc.
), one of the world's largest providers of integrated logistics
and transportation solutions, has reported third quarter 2012
adjusted earnings of $1.28, which surpassed the Zacks Consensus
Estimate of $1.18 and increased 17% from $1.09 in the year-ago
The year-over-year growth was aided by improvements in Fleet
Management Solutions along with higher contractual revenue,
increased used vehicle sales, cost improvements and adjustments
in rental fleet size.
Adjusted earnings for the third quarter 2012 excluded the
negative impact of $0.02 or $0.9 million in special items related
to changes in tax laws.
The company registered revenue of 1,573.3 million in the third
quarter, which came below the Zacks Consensus Estimate of $1,620
million and remained flat year over year. Operating revenue
(total revenue less Fleet Management Solutions fuel and all
subcontracted transportation) increased 2% year over year to
$1,283.2 million, driven by increased full service lease
Fleet Management Solutions
Total revenue inched up 1% year over year to $1,115.4 million on
higher Contractual revenues and other revenues that increased 4%
and 2%, respectively. The growth in Contractual revenues was
backed by increased Full service lease. Operating revenue
for the segment increased 3% year over year to $848.1
Supply Chain Solutions
: The segment includes operational activities of the company's
Dedicated Contract Carriage business. Total revenue remained flat
year over year to $563.2 million in the third quarter. Operating
revenue (excluding subcontracted transportation) also grew 2%
year over year to $485.1 million. The year-over-year growth was
primarily based on higher volumes in automotive and dedicated
Liquidity and Cash Flow
Ryder System ended the quarter with cash and cash equivalents
of $95.7 million compared with $113 at year-end 2011. Cash from
operations was $768.0 million compared with $782 million in the
year-ago quarter. Given heavy investments in vehicles, free cash
flow was a negative $436 million versus a negative $113 million
as of September 30, 2011.
Management expects fourth quarter 2012 earnings in the range
of $1.06-$1.11 per share, up. For 2012, management expects
earnings in the range of $3.93 to $3.98 per share, up from
previous expectation of $3.75-$3.90.
Despite the company's strong performance in the third quarter
and encouraging earning projections, we remain concerned about
the challenging economic environment surrounding its operations.
Further, heavy capital expenditures, a distressed cash position,
lower demand on tighter truckload market and competition from
AmeraMex International, Inc.
) are also expected to create significant headwinds for the
We currently have a long-term Neutral rating on Ryder System.
For the short term (1-3 months), the stock retains a Zacks #3
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