Ryder (R) Q1 Earnings & Revenues Surpass, 2018 View Bullish

Ryder System, Inc.’s (NYSE:R) first-quarter 2018 earnings (excluding 28 cents from non-recurring items) of 91 cents per share beat the Zacks Consensus Estimate of 88 cents. Moreover, the bottom line climbed substantially on a year-over-year basis.

Ryder reported total revenues of $1,903.5 million, surpassing the Zacks Consensus Estimate of $1,889 million. The top line also increased on a year-over-year basis with growth witnessed across all segments.

Segment Results

Fleet Management Solutions (FMS): Total revenues were $1.24 billion, up 10% year over year. Operating revenues (excluding fuel) came in at $1.04 billion, up 8% year over year. Segmental results were aided by an increase in commercial rental and ChoiceLease revenues.

Dedicated Transportation Solutions (DTS): Total revenues came in at $299 million, up 12% from the year-ago quarter. Operating revenues (excluding fuel and subcontracted transportation) rose 4% year over year to $201 million.

Supply Chain Solutions (SCS): Total revenues in the quarter under review were $495 million, up 10% year over year. Operating revenues (excluding fuel and subcontracted transportation) improved 6% year over year to $383 million.

Liquidity

This Zacks Rank#3 (Hold) company exited the first quarter with cash and cash equivalents of $73.9 million compared with $78.3 million at the end of 2017. The company had total debt of $5,677.7 million compared with $5,409.7 million at 2017-end. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Q2 Outlook

The company expects adjusted earnings per share of $1.20-$1.30 in the second quarter of 2018 compared with $1 reported in the year-ago period. The Zacks Consensus Estimate for the metric stands at $1.33.

Upbeat 2018 Outlook

For 2018, Ryder anticipates adjusted earnings per share of $5.45-$5.70. Prior forecast had estimated the metric between $5.40 and $5.70. This upside has been driven by an earnings improvement in the quarter as well as the impressive contractual sales performance in all business segments. The Zacks Consensus Estimate for full-year earnings stands at $5.59 per share.

Further, the company expects ChoiceLease fleet growth of 7,500 vehicles for the full year, an increase of 1,000 units from the past projection. Moreover, owing to robust pipeline sales, the company estimates a further upside in the estimate. In fact, with the majority of fleet growth likely to occur later this year (on account of longer manufacturer lead times), the company is well-positioned for earnings and revenue growth next year as well.

This apart, Ryder’s recent acquisition of MXD Group to boost its e-commerce portfolio is a huge positive for the company. The transaction is projected to be partly accretive to its earnings this year. However, the company hopes to witness earnings growth from this integration in the coming years.

Additionally, the company expects to achieve double-digit revenue growth at both its DTS and SCS segments in the latter half of the year. Also, it assumes a continued volume expansion pertaining to the sale of used vehicles. However, the used vehicle pricing challenge might persist for the remainder of the year.

Upcoming Releases

Investors interested in the broader Transportation sector keenly await first-quarter earnings reports from key players like American Airlines Group Inc. (NASDAQ:AAL) , Southwest Airlines Co. (NYSE:LUV) and Union Pacific Corporation (NYSE:UNP) , all scheduled to release the respective earnings numbers on Apr 26.

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