Increase in value and are close to or exceed their targets
Ryder System (NYSE : R) is taking steps to increase the value of its Ryder Used Truck Sales inventory and to control the pool. This is a step towards achieving the company’s goals.
This was one of the messages Ryder CEO Robert Sanchez conveyed in two presentations: the first, last week, after the company’s fourth-quarter earnings were released and the second, on Wednesday when Sanchez spoke via video link at the Citi Industrials Conference.
Sanchez stated that Ryder now sells used trucks at a higher value than the residuals it had set after previous writedowns. Some of these could be called steep. He stated that Tractor Ryder’s fourth quarter used truck sales were “still slightly lower” than the accounting levels.
Scott Parker, Ryder’s Chief Financial Officer, presented the numbers to show how Ryder has benefited from the improved used truck and tractor markets. Ryder Used Truck Sales saw an increase in revenue year-over-year of 15% for tractors, and 22% for trucks. The quarter ended with a significant increase in tractor proceeds of 13% and truck proceeds of 16%, respectively.
According to SeekingAlpha’s transcript, Parker stated that higher sales proceeds are primarily due to improved market pricing and to lesser INLAND TRUCK PARTS extent a greater mix of vehicles sold through our retailers channels.”
Ryder’s prices are, more importantly, at a level that will allow it to maintain its projected residual levels. Parker stated that Ryder had previously said that the U.S. company would need a 10% increase in used trucks and a 30% rise for tractors by 2022 to maintain those levels. Parker stated that truck sales have increased by 20%, while tractors have increased 24% since the second quarter. Ryder is on trucks, if it holds. Ryder is on tractors, if that holds.
Ryder has also seen an increase in the volume of vehicles sold. In his earnings call remarks Parker stated that Ryder sold 7,000 vehicles in the fourth quarter. This is an increase of 17% from last year. Another important indicator is the number vehicles the company has available for resale. That number was 7,700 at the end of quarter. This is “very close to our target range of 7,000-9,000 vehicles.”
This number is now pushing towards a 50% decrease in used vehicle inventories compared to the end of the first quarter, which was 14,000.
Ryder Used Truck Sales at the Citi Conference
Sanchez reiterated Parker’s comments at the Citi conference about Ryder selling more vehicles through retailers channels to help secure higher prices for its used fleet. He stated that Ryder is selling 25% more vehicles through retailers than last year and that the company has a greater inside sales effort. He said, “We can sell more and wholesale less.” “I feel very good about how the market is moving.”
