Ryder(R) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Financial Statements Ryder System, Inc. reported increased revenue and net earnings for Q2 and YTD 2025, with significant growth in operating cash flow Condensed Consolidated Statements of Earnings Highlights | Metric (In millions, except EPS) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $3,189 | $3,182 | $6,319 | $6,279 | | Earnings from continuing operations | $132 | $126 | $230 | $212 | | Net Earnings | $131 | $127 | $228 | $212 | | Diluted EPS (Continuing operations) | $3.15 | $2.83 | $5.42 | $4.72 | | Diluted EPS (Net earnings) | $3.13 | $2.84 | $5.39 | $4.73 | Condensed Consolidated Balance Sheets Highlights | Metric (In millions) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $2,340 | $2,463 | | Total Assets | $16,470 | $16,672 | | Total Current Liabilities | $2,869 | $3,271 | | Total Liabilities | $13,396 | $13,555 | | Total Shareholders' Equity | $3,074 | $3,117 | Condensed Consolidated Statements of Cash Flows Highlights | Metric (In millions) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,403 | $1,078 | | Net cash used in investing activities | $(943) | $(1,305) | | Net cash (used in) provided by financing activities | $(444) | $194 | | Increase (decrease) in Cash and cash equivalents | $26 | $(40) | Notes to Condensed Consolidated Financial Statements This section details segment performance, revenue disaggregation, debt structure, and share repurchase activities - The company reports financial performance across three business segments: Fleet Management Solutions (FMS), Supply Chain Solutions (SCS), and Dedicated Transportation Solutions (DTS)[26] Segment Earnings Before Taxes (EBT) | Segment (In millions) | Q2 2025 EBT | Q2 2024 EBT | YTD 2025 EBT | YTD 2024 EBT | | :--- | :--- | :--- | :--- | :--- | | Fleet Management Solutions (FMS) | $126 | $133 | $220 | $233 | | Supply Chain Solutions (SCS) | $99 | $85 | $186 | $149 | | Dedicated Transportation Solutions (DTS) | $37 | $37 | $64 | $55 | FMS Revenue by Product Line | Product Line (In millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | ChoiceLease | $871 | $856 | $1,738 | $1,698 | | Commercial rental | $239 | $244 | $458 | $475 | | Fuel services revenue | $179 | $202 | $366 | $406 | Share Repurchases | Program (In millions) | Q2 2025 Shares | Q2 2025 Amount | YTD 2025 Shares | YTD 2025 Amount | | :--- | :--- | :--- | :--- | :--- | | 2023 Anti-Dilutive Program | 0.1 | $14 | 0.4 | $68 | | October 2024 Discretionary Program | 0.6 | $79 | 1.3 | $192 | | Total | 0.6 | $94 | 1.7 | $261 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) MD&A details strong contractual portfolio performance, 11% diluted EPS growth, and a substantial increase in free cash flow - The company's contractual portfolio and strategic initiatives helped mitigate the impact of weak market conditions on used vehicle sales and commercial rental demand during the first half of 2025[82] Selected Financial Highlights (Q2 2025) | Metric | Q2 2025 | Change vs Q2 2024 | | :--- | :--- | :--- | | Diluted EPS from continuing operations | $3.15 | +11% | | Comparable EPS (non-GAAP) | $3.32 | +11% | | Total revenue | $3.2 billion | 0% | | Operating revenue (non-GAAP) | $2.6 billion | +2% | Free Cash Flow (non-GAAP) | Metric (In millions) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,403 | $1,078 | | Total cash generated | $1,664 | $1,395 | | Purchases of property and equipment | $(1,203) | $(1,324) | | Free cash flow | $461 | $71 | - The recently enacted One Big Beautiful Bill Act (OBBBA) is expected to reduce the company's U.S. federal cash tax liability by approximately $200 million in 2025 and defer federal tax payments for several years[145] Consolidated Results of Operations Consolidated results show flat total revenue, improved gross margins, and a decline in used vehicle sales due to weaker market conditions Gross Margin by Revenue Type (Q2 2025 vs Q2 2024) | Revenue Type (In millions) | Q2 2025 Gross Margin | Q2 2024 Gross Margin | Change | | :--- | :--- | :--- | :--- | | Services | $331 | $321 | +3% | | Lease & Related Maintenance and Rental | $325 | $304 | +7% | | Fuel Services | $6 | $4 | +50% | - Used vehicle sales, net, decreased to $2 million in Q2 2025 from a net gain of $19 million in Q2 2024, reflecting weaker market conditions and higher wholesale volumes to manage aged inventory[102] Average Used Vehicle Pricing Change (2025 vs 2024) | Vehicle Type | Q2 Change | YTD Change | | :--- | :--- | :--- | | Tractors | (17)% | (16)% | | Trucks | (17)% | (18)% | Operating Results by Business Segment Segment performance varied in Q2 2025, with FMS EBT declining, SCS EBT growing, and DTS EBT remaining flat - FMS: EBT decreased 6% in Q2 2025, driven by lower used vehicle sales results, which were partially offset by higher ChoiceLease results from pricing and maintenance cost savings initiatives[122] - SCS: EBT increased 16% in Q2 2025, reflecting operating revenue growth and improved performance from the optimization of the omnichannel retail network[131] - DTS: EBT was flat in Q2 2025, as acquisition synergies and prior year integration costs were offset by lower operating revenue due to a reduced fleet count reflecting the freight market downturn[133][134] Segment EBT Performance (Q2 2025 vs Q2 2024) | Segment (In millions) | Q2 2025 EBT | Q2 2024 EBT | Change | | :--- | :--- | :--- | :--- | | Fleet Management Solutions | $126 | $133 | (6)% | | Supply Chain Solutions | $99 | $85 | 16% | | Dedicated Transportation Solutions | $37 | $37 | 1% | Financial Resources and Liquidity Liquidity strengthened in H1 2025 with increased operating cash flow, higher free cash flow, and an expanded credit facility - Net cash provided by operating activities increased to $1.4 billion for the first six months of 2025, up from $1.1 billion in the prior year, primarily due to lower income tax payments and timing of vendor payments[138] - In April 2025, the company amended its corporate revolving credit facility, increasing its borrowing capacity to $1.6 billion and extending the expiration to April 2030[63][148][149] - The company's debt-to-equity ratio was 251% as of June 30, 2025, consistent with 250% at year-end 2024[153] - In July 2025, the board of directors declared a quarterly cash dividend of $0.91 per share, a 12% increase from the prior year[154] Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk exposures have occurred since year-end 2024 - There have been no material changes to Ryder's exposures to market risks since December 31, 2024[174] Controls and Procedures Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of the end of Q2 2025, Ryder's disclosure controls and procedures were effective[177] - There were no changes in Ryder's internal control over financial reporting during Q2 2025 that have materially affected, or are reasonably likely to materially affect, such controls[178] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, and other relevant information Legal Proceedings The company refers to Note 14 for details on material pending legal proceedings - For details on material pending legal proceedings, the company directs readers to Note 14 of the Condensed Consolidated Financial Statements[180] Risk Factors No material changes to risk factors have occurred since the 2024 Annual Report on Form 10-K - There have been no material changes in the risk factors from those disclosed in the Form 10-K for the year ended December 31, 2024[182] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 646,953 common shares in Q2 2025 under discretionary and anti-dilutive programs Common Stock Repurchases (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 340,061 | $139.57 | | May 2025 | 305,513 | $150.80 | | June 2025 | 1,379 | $151.24 | | Total Q2 | 646,953 | $144.90 | Other Information Officers and directors participate in company stock plans, with transactions potentially under Rule 10b5-1 trading plans - Certain officers and directors participate in company stock plans, and their transactions may be executed under Rule 10b5-1 trading plans or other arrangements[185] Exhibits This section lists exhibits filed, including CEO/CFO certifications and XBRL data files - The exhibits filed with this report include certifications from the CEO and CFO pursuant to SEC rules, as well as XBRL data files[187]