Despite recession fears, Miami-based Ryder just keeps on truckin’. Shares are up 23% this year.
Ryder CFO Robert Sanchez joins the panel for this conversation. Following is a summary of his main points.
Are you positive or negative on the economy?
“We’ve been in a freight recession for about the last year and that’s why the transports have suffered through out ’07,” explains Sanchez. “But now the rate of decline is going down which we view as a positive.”
Are you typically ahead of the broader economy?
“In the transports and in the rental business, we see the slowdown 12-18 months early,” says Sanchez, “and then we also see a pick-up early too. So we hope that what we’re seeing now is close to the bottom of the freight slowdown.”
What about the high cost of fuel?
“Fuel only impacts our business to the extent that it impacts our customers,” says Sanchez. “We resell fuel. We buy fuel in bulk and then pass along the savings to our customers.”
You changed your business model. What’s significant?
“The big change is that in the ‘90’s, 60% of the business was cyclical, now only 9% is cyclical,” replies Sanchez. “The rest of the business is contractual which mean we sign long term contracts with companies either to lease a truck or to supply full solutions. That way we’re locked into revenues.”
Traders, what do you think?
I think Ryder is a buy on a dip, says Guy Adami.
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