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Ryder (R) Posts Wider-Than-Expected Q1 Loss, Cancels View

Ryder System, Inc. R reported first-quarter 2020 loss (excluding 72 cents from non-recurring items) of $1.38 per share, wider than the Zacks Consensus Estimate of a loss of 85 cents. Notably, the company had reported earnings of $1.11 in the year-ago quarter. Results were hurt primarily due to softening of rental demand. Total revenues amounted to $2,161.3 million, which beat the Zacks Consensus Estimate of $2,111.7 million. However, the top line dropped 0.9% year over year.

Segmental Results

Fleet Management Solutions (FMS): Total revenues in the segment amounted to $1.3 billion, which dropped 1% year over year. Operating revenues (excluding fuel) summed $1.2 billion, up 2% year over year. Segmental results were affected by lower commercial rental performance due to lower demand. Commercial rental revenues fell 13% from the year-earlier quarter’s figure. Notably, the lease fleet increased 3% compared with the prior-year quarter’s levels.

Dedicated Transportation Solutions (DTS): Total revenues amounted to $335 million, down 4% from the year-ago quarter’s figure. The decline in DTS total revenues was primarily due to lower subcontracted transportation revenues and lower fuel costs passed to customers. Operating revenues (excluding fuel and subcontracted transportation) slightly rose to $237 million backed by higher pricing and volumes.

Supply Chain Solutions (SCS): Total revenues in the segment were $628 million, down 1% year over year. Operating revenues (excluding fuel and subcontracted transportation) declined 2% year over year to $467 million. Segmental results were hurt primarily by previously-announced lost business and COVID-19 related volume reductions in the automotive sector.

Ryder System, Inc. Price, Consensus and EPS Surprise

 

Ryder System, Inc. price-consensus-eps-surprise-chart | Ryder System, Inc. Quote

 

Liquidity

Ryder, carrying a Zacks Rank #3 (Hold), exited the year with cash and cash equivalents of $397.2 million compared with $73.6 million at the end of 2019. The company’s total debt rose 3.1% to $8.17 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

As the company is cancelling and deferring lease as well as rental fleets owing to the COVID-19 pandemic, capital expenditures (net) fell 71% year over year to $289 million. Lower capital expenditures reflect lower planned investments to grow as well as reinvigorate the lease and rental fleets. Owing to reduced vehicle capital expenditures, free cash flow amounted to $110.6 million. Increase in free cash flow boosts investors’ optimism since it is used to finance debt and reward shareholders. Operating cash flow for March end quarter was $439 million, down 9.5% year over year.

Suspends 2020 Guidance

Owing to the uncertainty related to the magnitude and duration of COVID-19 crisis, Ryder has suspended its 2020 earnings guidance.

Sectorial Snapshot

Despite existing challenges, there are a few companies in the Zacks Transportation sector like Werner Enterprises, Inc. WERN , Union Pacific Corporation UNP and Canadian Pacific Railway Limited’s CP that posted an earnings beat in first-quarter 2020.

Werner Enterprises reported first-quarter 2020 earnings per share (excluding 7 cents from non-recurring items) of 40 cents, which surpassed the Zacks Consensus Estimate of 35 cents. However, the bottom line declined 23.1% year over year.

Union Pacific’s first-quarter 2020 earnings of $2.15 per share surpassed the Zacks Consensus Estimate of $1.86. Moreover, the bottom line increased 11.4% on a year-over-year basis.

Canadian Pacific’s first-quarter 2020 earnings (excluding $1.08 from non-recurring items) of $3.3 (C$4.42) per share surpassed the Zacks Consensus Estimate of $2.86. Quarterly earnings surged more than 55% year over year.

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