Ryder System Reports Mixed Q3: Contractual Growth Meets Freight Market Challenges

Ryder System Inc R shares are trading lower on Thursday after it reported third-quarter results.

Sales grew 8% year-on-year to $3.17 billion, missing the analyst consensus estimate of $3.29 billion.

Revenue from Fleet Management Solutions fell 1% to $1.47 billion, Supply Chain Solutions climbed 10% to $1.317 billion and Dedicated Transportation Solutions jumped 41% to $633 million.

Earnings before tax declined to $188 million from $213 million a year ago quarter. Adjusted EPS of $3.44 beat the analyst consensus of $3.42.

Operating cash flow for nine months totaled $1.7 billion, with a free cash flow of $218 million. Ryder System held $162 million in cash and equivalents as of September-end.

The company’s board recently authorized a new discretionary 2 million share repurchase program that replaces the recently completed program.

Ryder Chairman & CEO Robert Sanchez said, “We saw double-digit earnings growth in our contractual businesses. Higher ChoiceLease results from our pricing and maintenance initiatives benefited FMS. Stronger operating performance and cost-management actions benefited SCS. DTS delivered strong earnings growth, demonstrating the resiliency of our legacy business. Each of the segments also benefited from recent acquisitions.”

“The long-term secular growth trends remain intact for all of our contractual businesses, although we are experiencing near-term sales headwinds that reflect the extended freight downturn and overall economic uncertainty.”

Outlook: Ryder lowered its FY24 operating revenue growth to ~7% (vs. ~8% prior) and tightened the adjusted EPS forecast to $11.90 – $12.10 (vs. consensus of $12.13) from $11.90 – $12.40 earlier.

For the fourth quarter, Ryder sees adjusted EPS of $3.32 – $3.52 against the consensus of $3.57.

Investors can gain exposure to the stock via First Trust Nasdaq Transportation ETF FTXR and SPDR S&P Transportation ETF XTN.

Price Action: R shares are down 4.36% at $138.71 at the last check Thursday.

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