Ryder System, Inc.

good day everyone and welcome to the writer system second quarter 2021 earnings release conference call all lines are in a listen-only mode until after the presentation today's call is being recorded if you have any objections please disconnect at this time I would now like to introduce Mr. Bob Brunn senior vice president investor relations corporate strategy, and new product strategy for Rider. Mr. Bren, you may begin.

Thanks very much. Good morning, and welcome to Rider's second quarter 2021 earnings conference call. I'd like to remind you that during this presentation, you'll hear some forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstance. Actual results may differ materially from these expectations due to changes in economic, business, competitive, market, political, and regulatory factors. More detailed information about these factors and a reconciliation of each non-GAAP financial measure to the nearest GAAP measure is contained in this morning's earnings release, earnings call presentation, and in Ryder's filings with the Securities and Exchange Commission, which are available on Ryder's website. Presenting on today's call are Robert Sanchez, Chairman and Chief Executive Officer, and John Diaz, Executive Vice President and Chief Financial Officer. Additionally, Tom Havens, President of Global Fleet Management Solutions, and Steve Sensing, President of Global Supply Chain Solutions and Dedicated Transportation, are on the call today and available for questions following the presentation. At this time, I'll turn the call over to Robert.

Good morning, everyone, and thanks for joining us. Before we begin, I'd like to recognize John Diaz, who is joining this morning's call in his new role as CFO. John was most recently president of Fleet Management Solutions and brings a wealth of experience to the CFO role, having held various senior operational and financial roles during his 20-year tenure at Biden. I'd also like to welcome Tom Havens, who was recently appointed the president of Fleet Management Solutions for his first earnings call. Tom brings a great depth of experience to the leadership role at FMS from his 28-year career at Rider, having most recently served as Senior Vice President and Global Chief of Operations for the FMS business. On today's call, I'll begin with a strategic update, followed by a discussion around the investments we're making to accelerate growth in our supply chain and dedicated businesses. John will take you through our second quarter results, which exceeded our expectations. I'll then review our updated outlook for 2021, discuss the significant progress we're making on actions to achieve our ROE target, and review our initiatives to mitigate the impact of future cyclical downturns on our business. Following our prepared remarks, we'll open the call for questions. With that, let's turn to our strategic update. Secular trends continue to support our strategy to accelerate growth in our supply chain and dedicated businesses. while targeting moderate growth and increased returns in our fleet management business. We're seeing strong sales and pipeline growth across all our businesses, driven by secular trends that favor outsourcing, as well as increased focus by customers on supply chain resiliency and the use of innovative technology solutions. Trends that we saw accelerate during the pandemic, such as e-commerce and the demand for last-mile delivery of big and bulky items, remain strong and support the strategic investments we're making in these fast-growing areas. We remain focused on increasing returns and are pleased with the significant progress we're making to achieve our ROE target. Multiple years of lease pricing increases that began with a focus on de-risking our portfolio through lower residual assumptions and cost updates are benefiting returns. Most recently, we began implementing additional pricing actions to improve future lease returns using data analytics around customer segmentation, application, equipment type, and other key drivers of lease returns. Strong freight conditions combined with our initiatives resulted in better than expected results in used vehicle sales and rental. We're seeing the benefits of dynamic pricing in used vehicle sales and rental as well as our prior investments to increase retail used vehicle sales capacity. We now expect to achieve ROE in the range of 16% to 17% this year, above our long-term target of 15%. Later in the call, we'll review additional enhancements we're making to our playbook to improve returns over the cycle. Moving on to cash flow, our year-to-date pre-cash flow is $602 million, down $10 million from the prior year. as higher vehicle capital spending was largely offset by higher proceeds from the sale of used vehicles and property. We're increasing our full year free cash flow forecast to $650 to $750 million, up from $400 to $700 million, primarily to reflect the anticipated impact from delays for new vehicle deliveries from the OEMs. We're encouraged by our performance and by the market trends we're seeing in the areas that we're investing for future growth. We continue to invest in technology and other areas to address industry disruption in order to enhance our business model and position the company for long-term success. Slide five provides an overview of the investments we're making to drive accelerated growth in our supply chain and dedicated business, a key element in our strategy to generate higher returns and long-term profitable growth. Developing new and enhanced products, such as Rider Last Mile, e-commerce fulfillment, and freight brokerage is critical for us to leverage growth trends in supply chain and dedicated. Innovative technology enables us to deliver value-added logistic solutions that are in high demand. RiderShare, our visibility and collaboration tool, is a strategic differentiator for us, and its capabilities have moved to the forefront of our sales discussions. RiderView is our proprietary customer interface that supports self-scheduling, and delivery execution for rider last mile. Enhanced order management and fulfillment software supports our growing presence in e-commerce fulfillment. Sales and marketing effectiveness is key to our brand awareness and communicating the broad array of logistics and transportation solutions we offer. Our ever better campaign and increased digital marketing presence have driven an increase in qualified sales leads. We're also expanding our sales force and investing in their capabilities to drive additional growth opportunities. Rider Ventures, our corporate venture capital fund, aims to invest 50 million over the next five years through direct investment in startups, primarily where we can partner to develop new products and services for our customers. We've invested in areas including e-commerce micro-fulfillment, a tech-enabled hub-and-spoke transportation network, and an AI-enabled dispatch product for small to medium-sized fleets. In addition, we continue to evaluate strategic M&A opportunities focused on adding new capabilities, geographies, and our industry verticals, which we view as another important way to accelerate growth, especially in our supply chain and dedicated business. Slide six takes a closer look at Rider Last Mile. which provides final mile delivery of big and bulky goods through a nationwide network of hub and agent locations that service every zip code in the continental U.S. The Rider Last Mile offering was launched in 2018 as a result of a strategic acquisition. Since then, online purchases of big and bulky goods such as furniture, exercise equipment, and home appliances have accelerated driving demand for a seamless home delivery experience. We've We've been pleased with the strong revenue growth in Rider Last Mile. Rider View is our proprietary customer-facing technology that allows consumers to self-schedule their deliveries and provides them with real-time delivery updates. Our centralized customer support team is key to the execution of a qualified delivery experience. We carefully monitor customer delivery feedback to ensure that service levels are maintained. We're making strategic investments in this area in order to continue to enhance the capabilities and customer experience for this important product offering. We're enhancing rider abuse capabilities and plan to launch version 2.0 later this year. Enhancements include easier and more convenient self-scheduling and rescheduling of deliveries, as well as the option to schedule deliveries at the point of sale. We're enhancing the software used for delivery route optimization. We're also rolling out a customer experience that is branded for our customers, the retailer. So that Rider View 2.0 serves as an extension of their brand. We continue to expand our geographic footprint in order to place us closer to the end customer and improve delivery speed. We recently announced the addition of two new fulfillment centers in Milwaukee and Philadelphia. In addition to future geographic expansion, We'll also look at opportunities to add new services, capabilities, or industry verticals through strategic M&A or Rider Ventures. We're confident that Rider View 2.0 will be a market differentiator that will enhance the customer experience and propel further profitable growth for Rider Last Mile. Now I'll turn the call over to John to discuss second quarter results.