* Q3 total revenue of $2.2 billion, down 3%, reflecting lower fuel revenue
* Q3 operating revenue (non-GAAP) of $1.8 billion, unchanged as higher revenues in supply chain solutions and lease were offset by lower revenues in commercial rental and dedicated transportation solutions
* Q3 GAAP EPS from continuing operations of $0.85 versus a loss of $(1.75) in prior year, primarily reflecting declining depreciation impact from prior residual value estimate changes as well as improved lease performance and higher supply chain solutions results
* Q3 comparable EPS (non-GAAP) from continuing operations of $1.21 versus a loss of $(1.49) in prior year
* Improvement in areas impacted by COVID-19:
* Used vehicle sales results benefited from record sales volume and higher sequential truck and tractor pricing
* Commercial rental demand and utilization improved throughout the quarter, with September utilization above same month in prior year
* Supply chain automotive revenue returned to pre-pandemic levels
MIAMI - Ryder System, Inc. (NYSE: R), a leader in supply chain, dedicated transportation, and commercial fleet management solutions, reported results for the three months ended September 30 as follows:
See more at: https://newsroom.ryder.com/news/news-details/2020/Ryder-Reports-Third-Quarter-2020-Results/default.aspx
Commenting on the company's third quarter results, response to the challenges of COVID-19, and the current business environment, Ryder Chairman and CEO Robert Sanchez said, 'Over the last year, we've taken significant actions to address a historic downturn in the used vehicle market and the impacts from COVID-19 on our used vehicle sales, commercial rental, and automotive supply chain businesses. These actions include adjusting our vehicle residual values, reducing the size of our rental fleet, and lowering operating and overhead costs. In addition, we have remained focused on our strategic initiatives to achieve our goal of 15% adjusted return on equity.
'In the third quarter, we saw improvement in the areas of our business most directly impacted by the pandemic. An improved freight environment contributed to the stabilization of used vehicle and rental market conditions in the quarter. Strong automotive production activity benefited our supply chain automotive business. We also continued to see the positive results of the actions we are taking.
'Fleet management results benefited from a declining impact from prior residual value estimate changes as well as improved lease performance. Lease performance benefited from higher pricing on lease vehicles reflecting our lease pricing initiative, and lower maintenance costs, including benefits from our cost-savings initiative. We realized gains on used vehicle sales from higher sequential pricing and lowered our inventory from the second quarter, driven by record used vehicle sales volume. We now expect our used vehicle inventory at year-end to be within our target range. We also continue to see solid momentum in the recovery of commercial rental due to increased freight activity, as well as actions taken to downsize the fleet. Utilization in the third quarter of 71% was up significantly from 56% in the prior quarter and October utilization to date is trending higher sequentially. Utilization for the fourth quarter is expected to be in line with the prior year.
'In our supply chain business, automotive revenue exceeded pre-COVID levels during the quarter, primarily reflecting higher automotive production support activity following shutdowns earlier this year. We're seeing strong sales in our supply chain business driven by favorable outsourcing trends. Growth with new and existing supply chain customers, as well as high COVID-19 related volumes and temporary cost benefits, resulted in pre-tax margins above our target range. Our supply chain business is also benefiting from accelerating trends in areas such as last-mile delivery of big-and-bulky goods and e-commerce fulfillment. Ryder Last Mile revenues were up nearly 30%, delivering returns in the quarter well above our overall target for SCS. These results were driven by new business as well as higher volumes partially due to COVID-19. We recently expanded our e-fulfillment distribution network and deployed automation technology.
'Looking ahead to the fourth quarter, we anticipate returns in supply chain and dedicated to moderate, reflecting seasonality and lower COVID-related activity, and to be within their target ranges for the full year. Also in the fourth quarter, we will be awarding our front-line employees a special recognition and retention bonus for their extraordinary efforts as essential workers during this pandemic, resulting in a one-time expense of approximately $30 million. We expect these sequential headwinds to be partially offset by a declining impact from depreciation due to prior residual value estimate changes and other items. In rental, we expect return improvements to accelerate in the fourth quarter due to higher demand and improved utilization. In lease, we expect the fleet to continue to decline; however, pricing is expected to be higher reflecting our pricing initiative. We anticipate record free cash flow of $1.4 to $1.5 billion in 2020, significantly above the prior year negative free cash flow of $(1.1) billion. Additionally, in the fourth quarter we expect to resume our anti-dilutive share repurchase program which was temporarily paused due to COVID-19.
'I would also like to highlight our recent announcement of RyderVentures, a corporate venture capital fund aimed at investing $50 million over the next five years. The fund plans to invest in and partner with start-up companies that are developing new technologies that address disruptions in the supply chain, driven by accelerating demand for e-commerce fulfillment, asset sharing, next-generation vehicles, automation, and data analytics, among others.'
Third Quarter Business Segment Operating Results: See full results at: