Ryder System, Inc.

Good morning and welcome to the Rider System Second Quarter 2025 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 Ms. Kayleen Candela, Vice President, Investor Relations for Rider. Ms. Candela, you may begin.

Thank you. Good morning and welcome to RIDER's second quarter 2025 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. I'm proud of the Rider team for delivering our third consecutive quarter of double digit earnings per share growth. Second quarter results were above our expectations, driven by outperformance in our supply chain segment. This benefit was partially offset by increased used vehicle wholesale volumes to manage aged inventory levels. The business continues to outperform prior cycles, driven by our resilient contractual portfolio that reflects 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, supply chain, and dedicated businesses. I'll begin today's call by providing you a strategic update. Christy will then take you through our second quarter results, and John will review capital expenditures and our increasing capital deployment capacity. I'll then review our updated outlook for 2025, and discuss how we expect to leverage the momentum of our transformed business model. Let's begin on slide four. Turning to slide four, the structurally higher earnings profile of our transformed business model and execution on our strategic initiatives continue to drive earnings growth. We remain on track to realize the benefits from the strategic initiatives outlined during the February earnings call. These benefits are the key drivers of the year-over-year earnings growth we are expecting. Long-term secular trends that favor transportation and logistics outsourcing remain strong. The value that our solutions bring to our customers remains compelling. We are also well positioned to benefit from increased industrial manufacturing in the U.S. as 93% of our revenue is generated here. We delivered return on equity of 17% for the trailing 12-month period which is in line with our expectations during a freight cycle downturn and continues to demonstrate the resilience of our transformed business model. Earnings growth from our high-performing contractual portfolio reflects our value proposition as well as our pricing discipline. Over 90% of our operating revenue is generated by multi-year contracts. We expect our transformed and cycle-tested business model to continue to outperform prior cycles. In addition to increasing the return profile of our business, 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. Earlier this month, we announced a 12% annualized increase to our quarterly dividend, reflecting higher profitability and improved returns over the cycle. In 2025, We returned 330 million to shareholders by repurchasing approximately 1.7 million shares and paying our dividend. Since 2021, we have repurchased approximately 21% of our shares outstanding and increased the quarterly dividend by 57%. We increased our 2025 forecast for free cashflow by approximately 500 million to a range of 900 million to a billion, due to lower expected capital spending and the estimated cash flow benefit of approximately $200 million from the permanent reinstatement of tax bonus depreciation. Slide 5 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 with an ROE of 13%. Operating cash flow was 1.7 billion. This was during peak freight cycle conditions. Now let's look at what we're expecting from Rider today. In 2025, a year in which freight market conditions are expected to remain near trough levels, Our transformed business model is expected to generate 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 60% of 2025 revenue expected to come from these asset-light businesses compared to 44% in 2018. 2025 comparable earnings per share is expected to be between 1285 and 1330, more than double 2018 comparable earnings per share of 595. ROE is expected to be approximately 17%, up from 13% generated during the 2018 cycle peak. As a result of profitable growth in our contractual lease dedicated in supply chain businesses, operating cash flow is expected to increase to 2.8 billion, up approximately 65% from 2018. As shown here, in 2025, the business is expected to continue to outperform prior cycles, even when comparing the pre-transformation peak to the current market environment. We're proud of 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. I'll now turn the call over to Christy to review our second quarter performance.