Ryder(R) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported comparable earnings per share of $12 for 2024, significantly above the$5.95 per share generated in 2018 prior to the business transformation [11][19] - Operating revenue grew 8% year-over-year, reflecting the cargo and IFS acquisitions [12] - Return on equity (ROE) was 16%, in line with expectations for an extended freight cycle downturn, and above the 13% generated during the prior cycle peak [11][20] Business Line Data and Key Metrics Changes - Fleet Management Solutions (FMS) operating revenue increased 3%, with pre-tax earnings of $152 million, primarily due to higher ChoiceLease performance [24][25] - Supply Chain Solutions (SCS) operating revenue increased 4$1.7 billion in 2018 to $2.3 billion in 2024, reflecting profitable growth in contractual lease, dedicated, and supply chain businesses [20] Company Strategy and Development Direction - The current phase of the balanced growth strategy focuses on operational excellence, customer-centric innovation, and generating profitable growth [15] - The company aims to continue executing its strategy while positioning itself for a cycle upturn, expecting to enhance full-cycle returns [15][49] - The company returned$456 million in cash to shareholders through share repurchases and dividends during 2024 [16] Management's Comments on Operating Environment and Future Outlook - Management expects a muted growth environment in 2025, reflecting freight market conditions, with operating revenue expected to grow approximately 2% [42][45] - The company anticipates typical seasonal patterns in rental demand and a modest improvement later in the year [43] - Management expressed confidence in the strength of the contractual portfolio and ongoing execution of strategic initiatives to drive earnings growth [49][52] Other Important Information - The company completed the acquisition of Cardinal Logistics on February 1, 2024, and IFS on November 1, 2023, enhancing its capabilities in dedicated transportation and supply chain solutions [13] - The company expects to generate approximately $10 billion from operating cash flow and used vehicle sales proceeds over the next three years, creating$3.5 billion of incremental debt capacity [38][39] Q&A Session Summary Question: Revenue growth guidance and moving parts - Management expects mid-single-digit growth in FMS, with continued softness in the freight market impacting overall growth [68][69] Question: Dynamics in FMS and rental demand - Management noted no significant upturn yet, with lease miles remaining flat and used vehicle pricing showing single-digit declines [75][79] Question: Supply chain and dedicated revenue outlook - Management indicated that secular trends favor outsourcing, but the freight market slowdown is impacting growth in dedicated and supply chain segments [88][90] Question: Impact of tariffs and trade policy - Management highlighted that uncertainty around tariffs creates headwinds for long-term contracts but expressed confidence in navigating these challenges [112][113] Question: Dedicated revenue per truck and margin recovery - Management explained that seasonal slowdowns and customer mix adjustments are affecting revenue per truck, with expectations for margin recovery through the integration of Cardinal [102][106]