Ryder System (R) Q4 2023 earnings summary

Executive summary

• FY23 adjusted ROE was 19% vs. 29% in FY22, within the high-teens through-cycle target; comparable EPS was $12.95 vs. $16.37, above the initial forecast midpoint of $11.55.

• FY23 operating revenue grew 2% to $9.497B as 7% contractual growth was partly offset by lower rental activity and the UK exit; total revenue fell 2% to $11.783B.

Financial highlights

• Q4 operating revenue was $2.447B, up 2% YoY; total revenue was $3.023B, down 2%.

• Q4 comparable EPS was $2.95 vs. $3.89 and GAAP EPS was $2.74 vs. $4.06; weaker used-vehicle sales and rental results were partly offset by stronger SCS performance.

• FY23 net earnings were $406M vs. $863M; comparable earnings from continuing operations were $602M vs. $833M.

• FY23 operating cash flow was $2.4B; free cash flow was negative $54M vs. positive $921M in FY22, below forecast partly due to year-end working capital needs.

Outlook and guidance

• FY24 guidance: operating revenue growth ~13%, comparable EPS $11.50–$12.50, GAAP EPS $10.70–$11.70, adjusted ROE 15%–16.5%, and free cash flow negative $275M–$375M.

• FY24 operating cash flow is forecast at ~$2.4B; capital expenditures at ~$3.3B gross and $2.8B net.

• At the $12.50 comparable EPS high end, the bridge includes used-vehicle sales −$2.25 and rental −$0.70, partly offset by FMS contractual and other +$1.00 and SCS/DTS +$1.50.

• FMS and SCS revenue growth and EBT percentages are forecast at target; DTS revenue growth is above target from Cardinal, with EBT percentage below target during integration.

• Q1 2024 comparable EPS guidance is $1.55–$1.80 and GAAP EPS guidance is $1.28–$1.53; Q1 is expected to be FY24’s most challenging YoY comparison.