Ryder System, Inc. R reported its third quarter earnings on Wednesday. Shares of the company are up 4 percent.
Below are some key highlights and takeaways from its conference call.
• Comparable earnings per share from continuing operations were a record $1.63 for the third quarter of 2014, up from $1.46 in the prior year.
• This is an improvement of $0.17 or 12%.
• We came in at the top end of our third quarter forecast range of $1.58 to $1.63.
• Our performance was driven by fleet management, where we realized strong used vehicle sales and commercial rental results, as well as higher full-service lease results.
• Strength in FMS was partially offset by supply chain, which was expected to be down this quarter.
• Operating revenue, which excludes FMS fuel and all subcontracted transportation revenue, was up by 5% to a record $1.42 billion in the third quarter.
• During the third quarter, we bought 143,000 shares at an average price of $89.85.
• To-date, we've purchased 1.2 million shares at an average price of $78.90 under this program.
• Excluding non-operating pension costs, the comparable tax rate was 35.4%, above the prior year of 34.1%.
• Operating revenue was up 5% to $4.1 billion.
• Comparable EPS from continuing operations were $3.98, up 13% from $3.53 in the prior year.
• Contract maintenance revenue increased 3%, primarily reflecting the benefit of a significant new contract signed earlier in the year.
• With 30 customers signed to-date, we continue to see strong interest in this service.
• Commercial rental revenue was up 11%, driven by improved global pricing and higher demand in North America.
• Year-to-date, net capital expenditures increased by $55 million to $1.2 billion.
• We generated $1.54 billion of total cash year-to-date, up about $250 million from the prior year.
• Equity at the end of the quarter was just under $2 billion, up by $86 million from year-end 2013 as increased earnings more than offset share repurchases and dividends.
Guidance:
• Our full-year earnings outlook remains on track due to strong performance from Fleet Management Solutions, partially offset by lower supply chain results.
• We're seeing strong performance in both used vehicles and rental in October and we expect these trends to continue.
• As previously announced, we increased rental capacity in vehicle classes with high demand by purchasing a modest number of new units.
• We expect our full-year average rental fleet to grow by 6%, up from our previously forecast 5%.
• Our year-end fleet should grow by 5%, up from our prior forecast of 4%.
• In terms of pricing, we now expect full-year rental rates to be up 4%.
• We're seeing strong and early demand for rental trucks to support the holiday shipping season.
• As such, fleet utilization is up in October and we expect improved year-over-year comparisons for the full quarter.
• We continue to expect improvement in our full-service lease results, largely reflecting the benefit of higher residuals and growth in the lease fleet.
• We're on track with our prior forecast for lease fleet growth of around 2500 vehicles excluding UK trailers.
• New lease sales remained strong in recent months, which provides nice momentum for continued fleet growth next year.
• We're targeting a broader rollout of on-demand in 2015, which should result in stronger revenue growth for this product in the second half of next year. We continue to expect full-year.
• We're raising the low end of our full-year comparable EPS forecast to a range of $555 million to $560 million from the prior forecast of $550 million to $560 million.
• The new forecast represents a year-over-year increase of 14% to 15% and is above the original forecast from February of $530 million to $545 million.
• Our fourth quarter comparable EPS forecast is $1.56 to $1.61 versus the prior year of $1.35, an increase of 16% to 19%.
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