Ryder System, Inc.

Good morning and welcome to the Rider System's second quarter 2022 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 and Corporate Strategy for Rider. Mr. Brunn, you may begin.

Thanks very much. Good morning and welcome to Rider's second quarter 2022 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 circumstances. 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. I'm very pleased with this quarter's results, which reflect higher earnings in all three business segments. I'm also excited to update you. on the significant progress we continue to make on our strategy to increase core earnings and create long-term shareholder value, as we outlined in our recent investor day. I'll begin the call by providing you with a strategic update. John will then take you through our record second quarter results, which exceeded our expectations again this quarter. We'll then discuss our outlook and review how we've positioned the business to deliver on our long-term targets over the freight cycle. Our two recent supply chain acquisitions, Whiplash and Midwest Warehouse and Distribution System, performed above our expectations and continued to be accretive to earnings in the quarter. These acquisitions support our strategy to accelerate growth in our asset-light supply chain business. Whiplash significantly grows our e-fulfillment network with scalable e-commerce and omni-channel fulfillment solutions, and Midwest expands our multi-client warehouse offerings. Following record new contract wins in supply chain and dedicated in 2021, we realized record contractual sales year to date for the total company. Challenges impacting labor, supply chains, and truck production continue to drive companies to pursue long-term transportation and logistics outsourcing solutions. FMS also continues to benefit as companies look to source truck capacity in this tight market. We generated record ROE of 28% for the trailing 12-month period, above our high-teens target, reflecting continued strong demand and pricing in used vehicle sales and rental, as well as benefits from our multi-year lease pricing and maintenance cost savings initiatives. ROE also improved from a declining depreciation expense impact from prior residual value estimate changes. We revised our full year 2022 ROE forecast to 25 to 26% from our most recent forecast of 24 to 26% and increased our full year comparable EPS forecast. These increases reflect higher than expected results for the balance of the year in rental and supply chain. Supply chain and dedicated are on track to achieve their high single digit target for EBT as a percent of operating revenue in the second half of the year, reflecting pricing adjustments to recover higher labor costs as well as growth. Earnings in both segments increased sequentially and dedicated already reached their high single digit target in the second quarter. Our strong balance sheet continues to provide us with capacity to pursue targeted acquisitions and investments as well as return capital to shareholders. We expect to complete our 300 million ASR no later than October. Once complete and assuming market conditions remain favorable, we anticipate executing under our other authorized share repurchase programs, a 2 million share discretionary program and a 2.5 million share anti-dilutive program. Our board also recently approved a 7% increase in our quarterly dividend, which we have paid out without interruption for over 46 years. We increased our full year 2022 free cash flow forecast to $750 million to $850 million, primarily to reflect $200 million in lease capital expenditures that is now expected to be deferred due to OEM delivery delays. Slide five provides an overview of the investments we're making to drive accelerated growth in supply chain and dedicated, a key element in our strategy to generate higher returns. Developing new and enhanced capabilities in e-commerce fulfillment, last mile delivery, and freight brokerage, provide opportunities to leverage profitable growth areas in the market, and cross-sell services to our large customer base. Innovative technology enables us to deliver value-added logistics solutions that are in high demand and continue to influence a significant amount of new business awarded to Rider. In previous quarters, I highlighted our Rider Last Mile, Rider Share, and e-commerce fulfillment offerings. This quarter, I'll discuss our brokerage offering which provides us with the opportunity to leverage our logistics expertise and our ability to secure capacity for our customers. Sales and marketing are a key to our brand awareness and ensuring customers are aware of the full array of supply chain capabilities. Our ever better campaign and increased digital marketing presence have driven a significant increase in qualified sales leads. We're also expanding our sales force and investing in their capabilities to drive additional growth opportunities. We expect to continue pursuing strategic M&A opportunities with a focus on adding new capabilities, geographies, and industry verticals. These opportunities are an important way to accelerate growth, especially in supply chain and dedicated, and we have a strong track record of success in this area. Rider Ventures, our corporate venture capital fund, aims to invest $50 million over five years through direct investment in startups. Our investments here advance strategic relationships to support development of new products that benefit our customers and solidify our position as an industry leader. We've made investments in numerous exciting areas, such as autonomous vehicle technology, e-commerce fulfillment, and digital technologies that support freight optimization and are working with these startups to address important customer needs. Slide six provides a closer look at riders' brokerage offerings. Rider has been in the brokerage business for a long time. And in recent years, we began to focus on growing this profitable asset light business more aggressively. This high return asset light offering expands the services we offer and creates additional touch points for customers. Brokerage is an opportunity for Rider to leverage our logistics expertise, asset-based dedicated transportation solutions, extensive care relationships, and significant buying power to create value for our customers. Rider's brokerage offering provides a concierge level service for all customers that is supported by a single point of contact and tech enabled execution. This model provides shippers and carriers with the confidence that their transaction will be executed as promised. Our technology platform enables digital matching, tracking, and settlements, which drives efficiencies and provides customers with more solutions and flexibility. Our growth initiatives are focused on building scale and density. With existing offices in Novi, Michigan and Fort Worth, Texas, we recently opened a new office in Nashville with plans to open additional locations in 2023. Our brokerage sales headcount is planned to more than double this year with support to support expected growth. Our brokerage offering will also be promoted as part of Rider's Ever Better marketing campaign. Adding shippers and private fleets and key geographies will continue to build density, and investing in digitization, visibility, and automation will help us leverage increased scale and density. More than a third of Rider's brokerage activity is from customers that use multiple services with Rider, which provides us with significant opportunity to cross-sell our existing customer base, as well as add new customers. I'll turn the call over to John now, who will cover second quarter results.