Ryder(US:R)2025-10-23 16:02Financial Data and Key Metrics Changes - The company reported operating revenue of $2.6 billion in Q3 2025, up 1% from the prior year, primarily due to contractual revenue growth in Supply Chain Solutions (SCS) and Fleet Management Solutions (FMS) [12] - Comparable EPS from continuing operations increased to $3.57, up 4% from $3.44 in the prior year, reflecting higher contractual earnings and benefits from share repurchases [13] - Return on equity (ROE) was 17%, up from the prior year, driven by higher contractual earnings and share repurchases, partially offset by lower rental demand and used vehicle sales [13] - Year-to-date free cash flow increased to $496 million from $218 million in the prior year due to reduced capital expenditures and lower income tax payments [13] Business Line Data and Key Metrics Changes - Fleet Management Solutions operating revenue was in line with the prior year, with pre-tax earnings of $146 million, reflecting higher ChoiceLease performance but lower used vehicle sales and rental results [14] - Supply Chain operating revenue increased by 4%, driven by new business in omnichannel retail, although earnings decreased by 8% due to e-commerce network performance and higher medical costs [16] - Dedicated operating revenue decreased by 6% due to lower fleet count, but earnings before tax (EBT) remained in line with the prior year, reflecting acquisition synergies [17] Market Data and Key Metrics Changes - The company expects 60% of 2025 revenue to come from asset-light businesses, up from 44% in 2018, indicating a shift in revenue mix towards supply chain and dedicated services [10] - The company anticipates a free cash flow forecast of $900 million to $1 billion for 2025, reflecting lower year-over-year capital spending [9][23] Company Strategy and Development Direction - The company remains focused on creating value through operational excellence and investment in customer-centric technology, aiming for earnings growth driven by resilient contractual businesses and strategic initiatives [6] - A new discretionary share repurchase program was authorized, reflecting the company's commitment to disciplined capital allocation [8] - The company expects to realize approximately $100 million in benefits from strategic initiatives by year-end 2025, benefiting all three business segments [25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to outperform prior cycles, citing a strong performance from the transformed business model and the execution of the balanced growth strategy [11] - The company anticipates continued earnings growth in 2025, driven by contractual earnings and strategic initiatives, despite headwinds from the freight market [22] - Management noted that the prolonged freight downturn and economic uncertainty are causing some customers to delay decisions, but robust sales and pipeline activity in SCS are encouraging [22][26] Other Important Information - The company has repurchased approximately 22% of its shares outstanding since 2021 and increased the quarterly dividend by 57% [8] - The company expects to generate approximately $10.5 billion from operating cash flow and used vehicle sales proceeds over a three-year period, creating $3.5 billion of incremental debt capacity [20] Q&A Session Summary Question: Impact of CDL regulations on the business model - Management indicated that tighter driver markets could benefit the dedicated business as companies seek help in driver recruitment, with minimal impact expected on the lease side [30][31] Question: Drivers of earnings growth for 2026 - Management expects contractual earnings growth and benefits from strategic initiatives to drive earnings growth, with strong performance anticipated in supply chain solutions [33][34] Question: Used vehicle pricing and tariffs - Management noted uncertainty regarding the impact of truck tariffs on pricing but suggested that higher new truck prices could eventually benefit used truck values [41][42] Question: Supply chain performance and headwinds - Management acknowledged temporary headwinds in supply chain performance due to higher medical costs and lower e-commerce volumes but remains optimistic about future growth [52][53] Question: SelectCare performance volatility - Management views the recent lower activity in SelectCare as temporary, expecting a return to normal levels in the fourth quarter [57] Question: Non-domicile CDL role and timing of impacts - Management indicated that the impact of CDL regulations would unfold over time, with expectations of increased demand for dedicated services as the driver market tightens [62]