Ryder Lags on Low Revenues - Analyst Blog

Ryder System Inc. (R) fourth quarter earnings per share of 41 cents was short of the Zacks Consensus Estimate of 46 cents. Last year, the company reported earnings of $1.10 per share. The decline was driven by decreased global results in full service lease, higher pension expense, reduced commercial rental performance and lower results from used vehicle sales operations.

Ryder reported total revenue of $1.25 billion, down 7% from $1.34 billion in the same period in the prior year, adversely impacted by lower fuel volumes. This was partially offset by favorable foreign exchange rate movements.

Operating expenses declined 3.12% year-over-year to $576 million. Total revenue from continuing operations for the full year was $4.89 billion, down 19% from $6.0 billion in the same period of 2008.

Revenue from continuing operations was $4.06 billion, down 11% from $4.59 billion in 2008. Operating cash flow from continuing operations for the full year was $1 billion, down 20% from $1.25 billion in the comparable period of 2008, due to lower cash-based earnings and voluntary pension contributions. Free cash flow from continuing operations was $629.7 million, up 85% from $341.0 million in the same period of 2008, primarily due to lower net cash paid for capital expenditures.

Capital expenditures from continuing operations were $611.4 million for 2009, reduced from $1.27 billion in the same period of 2008. The decrease in capital expenditures at Ryder reflects reduced full service lease vehicle spending due to lower new and replacement sales in the current global economic environment, as well as increased use of lease term extensions and used vehicle redeployments.

Ryder forecasts full-year 2010 earnings to be in the range of $1.80 to $1.95 per diluted share. The anticipated EPS growth is expected from improved commercial rental performance, productivity initiatives, better used-vehicle sales, stronger Supply Chain Solutions (SCS) results, lower annual pension expense and the benefit of 2009 stock repurchases.

These items are partially offset by significantly reduced full service lease results, increased vehicle depreciation expense resulting from residual value changes and some currently intended compensation restoration. Total revenue is expected to be approximately $4.9 billion, which is flat compared with 2009.

Management expects a stable economic environment in 2010 with improvements in second half of the year. Shares are down 8% in today's trading session.

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