Ryder System, Inc.

Good morning and welcome to the Rider System fourth quarter 2024 earnings release conference call. All lines are in 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 Ms. Kayleen Candela, Vice President, Investor Relations for Rider. Ms. Candela, you may begin.

Thank you. Good morning and welcome to RIDER's fourth quarter 2024 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 RIDER's filings with the Securities and Exchange Commission, which are available on RIDER's website. Presenting on today's call are Robert Sanchez, Chairman and Chief Executive Officer John Diaz, President and Chief Operating Officer, and Christy Gallo Aquino, Executive Vice President and Chief Financial Officer. Additionally, Tom Havens, President of Fleet Management Solutions, and Steve Sensing, President of Supply Chain Solutions and Dedicated Transportation Solutions, 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 President and Chief Operating Officer. Most of you already know John, as he was RIDER's EVP and CFO from 2021 through 2024. Replacing John as Chief Financial Officer is Christy Gallo Aquino. Christy is a 20-year RIDER veteran, most recently serving as SVP and Controller and prior to that as Chief Financial Officer for FMS. At Rider, we're committed to developing talent at all levels of the organization, and I'm extremely pleased that we have such qualified internal candidates to fill these critical leadership roles. So with that said, I'll begin today's call by sharing some key highlights from 2024 and providing you with a strategic update. Christy will then take you through our fourth quarter results, which were in line with our forecast and up versus prior year. We are pleased to report that this quarter is the first quarter in the last eight with year over year comparable earnings growth driven by double digit earnings growth in each of our business segments. John will then review capital expenditures and our increasing capital deployment capacity. I'll then review our 2025 outlook and discuss how we expect to build on the momentum of our transformed and cycle-tested business model. Let's begin with some key highlights from 2024 on slide four. I'm extremely proud of our team for delivering solid results throughout 2024, despite challenging freight market conditions. The business continues to outperform prior cycles, driven by our high-quality contractual portfolio and reflecting the actions we've taken under our balanced growth strategy to de-risk the business, increase the return profile, and accelerate growth in our asset light, SCS, and DTS businesses. During 2024, the business generated comparable earnings per share of $12, which is in line with our initial forecast and significantly above the 595 of comparable earnings per share generated in 2018 prior to our business transformation. The business also delivered adjusted return on equity of 16%, which is in line with our expectations for an extended freight cycle downturn and continues to demonstrate the resilience of our transformed business model. Operating revenue grew 8%, reflecting the Cardinal and IFS acquisitions. We're encouraged by the strong performance of our transformed business model and believe that executing on our balanced growth strategy will continue to deliver higher highs and higher lows over the cycle. Slide 5 provides key updates on the ongoing progress of our balanced growth strategy. Our transformed business model continues to drive outperformance relative to prior cycles. The integration of our recent acquisitions is on track. As you may recall, we completed the acquisition of Cardinal Logistics on February 1, 2024, enabling growth and further strengthening our position as a leading provider of customized dedicated transportation solutions. On November 1st of 2023, we completed the acquisition of IFS, which added co-packaging and co-manufacturing capabilities in SCS, primarily supporting our CPG business. We continue to see long-term growth opportunities in all three of our business segments, supported by secular trends that favor outsourcing decisions, large addressable markets, and the value of our solutions. Generating ROE of 16% during an extended freight cycle downturn reflects the benefits of our initiatives focused on enhancing returns. The strength of our contractual businesses continues to demonstrate the enhanced quality of the portfolio and increased resilience of our business model. The current phase of our balanced growth strategy is focused on creating compelling value through operational excellence, investing in customer-centric innovation, further improving full cycle returns, and generating profitable growth. We remain confident that continuing to execute our strategy while positioning ourselves for the cycle upturn will result in further enhanced full cycle returns. The earnings power of our contractual portfolio continues to provide us with increased capital deployment capacity, which we expect to use to support profitable growth and return capital to shareholders. During 2024, we returned $456 million in cash to shareholders through share repurchases and dividends. We repurchased 2.5 million shares and increased our dividend by 14%. Since 2021, We have repurchased approximately 19% of our shares outstanding and increased the average dividend growth rate to 12%. Slide 6 illustrates how key financial and operating metrics have improved since 2018, reflecting the execution of our strategy. In 2018, prior to the implementation of our balanced growth strategy, the majority of our $8.4 billion of revenue was from FMS. Rider generated comparable earnings per share of 595 and return on equity of 13%. FMS generated pre-tax earnings of 340 million, and SCS and DTS combined generated 191 million in pre-tax earnings. Operating cash flow was 1.7 billion. This was during peak freight cycle conditions. In 2024, a year we believe will represent trough freight cycle conditions, our transformed business model generated meaningfully higher earnings and returns than it did during the 2018 peak. Through organic growth, strategic acquisitions, and innovative technology, we have shifted our revenue mix towards supply chain and dedicated with 61% of 2024 revenue coming from these asset-light businesses compared to 44% in 2018. 2024 comparable earnings per share were $12, more than double 2018 comparable earnings per share of $595. ROE was 16% above the 13% generated during the prior cycle peak. FMS pre-tax earnings in 2024 were 1.5 times higher than in 2018, and SES and DTS earnings were 2.4 times higher, reflecting growth and our returns focus. As a result of profitable growth in our contractual lease, dedicated and supply chain businesses, operating cash flow has increased 32% from 1.7 billion in 2018 to 2.3 billion in 2024. As shown here, the business is outperforming prior cycles, even when comparing prior peak to an expected trough. We are proud of the results of our transformation thus far, and we are confident that continued execution and momentum from multi-year initiatives positions us well for 2025 and beyond. I'll now turn the call over to Christy to review our fourth quarter performance.