First look: almost all strong numbers in Ryder’s third quarter earnings

Earnings before tax at FMS rose 21%. At SCS they were up 7%. But at DTS, that measure fell 5%, due to what Ryder said was “(reflecting) lower operating revenue and a prior year workers’ compensation insurance benefit, partially offset by cost savings from strategic initiatives.”

Used vehicle sales, which Ryder has been trying to restructure the company so that its earnings are not so tied to that market, were strong nonetheless. Used vehicles sold rose to 5,100 from 4,900 a year earlier. But it was the price where the company really benefited from that market, with used tractor prices rising 19% from a year ago, and used trucks climbing 5%.

Prices were improved sequentially as well. For used trucks, the jump from the second quarter was 6%. For tractors, it was 15%.

Used vehicle sales are reported in Ryder’s earnings as a net cost based on provisions for used vehicle sales made by the company. The figure for the third quarter was a net negative $17 million, wider than the positive $3 million a year earlier and negative net $7 million in the second quarter. That is a benefit to the company to have that negative number larger.

In a rapid note put out soon after the release of the earnings, Citi’s Ariel Rosa described Ryder’s number as “better than expected,” and highlighted the 77% rental utilization rate. The company’s target is 80%, Rosa said.

He added that the $17 million net benefit on used vehicle sales was wider than the expected $10 million.

On the DTS performance which came up short of the prior year, Rosa said he saw a benefit from tightening driver markets. “DTS is likely facing elevated driver hiring costs/wages/bonuses on ongoing driver market tightening, which should drive a partial offset of shippers outsourcing more to DTS,” he said.

Ryder’s conference call is at 11 a.m. Thursday.  The company’s stock is up 29.8% in the last year, but is down about 12.5% for the three months up slightly in the last month. The first numbers out of the gate at about 9:40 a.m. EDT showed a positive reaction to the earnings, with Ryder up 5.92%, or $14.22, to $254.53.

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