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Vehicle leasing and rental company Ryder System Inc. reported strong third-quarter earnings on Oct. 27, exceeding Wall Street analysts’ expectations.
Net income rose to $138.7 million, or $2.58 per share, compared with $45.1 million, 85 cents, in 2020.
The Miami-based company saw quarterly revenue jump 14% to $2.46 billion from $2.15 billion in the same period a year ago.
The average estimate of four analysts surveyed by Zacks Investment Research was $2.12 per share. Regarding revenue, Zacks expected $2.36 billion.
“We are pleased with our record third-quarter earnings results reflecting favorable demand and pricing in used vehicle sales and rental, as well as higher lease returns from our ongoing pricing initiatives. We realized 15.7% ROE (return on equity) while also generating strong free cash flow,” CEO Robert Sanchez said in a statement. “Robust freight conditions combined with unprecedented supply chain and labor challenges provide growth opportunities as companies look for additional truck capacity and make long-term supply chain outsourcing decisions. In FMS, (fleet management solutions) limited truck availability is driving increased demand and pricing across all service offerings.”
The fleet management solutions segment saw quarterly revenue increase 11% to $1.43 billion from $1.29 billion a year ago.
Earnings before taxes surged to $186 million from $16 million in 2020, with much of the increase driven by a significant improvement in used vehicle sales, rental and lease performance. Also during the quarter, Ryder said it has seen higher rental revenue driven by strong demand and higher pricing and additional gains on used vehicles sold.
Rental results benefited from a 9% increase in pricing and record utilization.
Lease results benefited from higher pricing with revenue per average active vehicle up 4%, partially offset by a 3% smaller average active lease fleet.
Ryder said used vehicle pricing on trucks and tractors doubled from the prior year, and ending inventory levels declined to 3,500 vehicles, which is below the company’s target range of 7,000 to 9,000 vehicles.
The segment includes Ryder’s ChoiceLease, SelectCare and Commercial rental division.
The company’s Supply Chain Solutions segment reported a quarterly revenue gain of 17% to $802 million from $685 million a year ago.
Revenue was up because of new business, increased volumes and higher pricing.
However, earnings before taxes declined 62% to $22 million from $58 million a year ago and Ryder said much of the decline can be attributed to lower earnings from automotive supply chain disruptions and higher labor costs.
“Although labor shortages are affecting current results in DTS (Dedicated Transportation Services) and SCS (Supply Chain Solutions), we are encouraged by our early progress in implementing related price adjustments while delivering superior service. We also continue to work closely with our SCS automotive customers to mitigate the impact from their supply chain disruptions. We believe these actions position us well for improved returns in 2022,” Sanchez said.
The dedicated transportation solutions segment saw revenue increase 27% to $380 million from $300 million a year ago.
However, earnings before taxes fell 54% to $11 million from $25 million last year.
The company attributed the revenue gain to new business and higher volumes; in particular, it cited business won from competitors and private fleet conversions. Segment revenue before taxes decreased primarily due to increased labor costs, higher insurance costs and strategic investments.
Ryder Supply Chain Solutions ranks No. 11 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. It also ranks No. 11 on the TT Top 50 list of the largest logistics companies.
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