Ryder System, Inc.

Good morning, and welcome to the Rider System third quarter 2025 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 third 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. The Rider team delivered our fourth consecutive quarter of earnings per share growth. The third quarter earnings were in line with our expectations as the operating performance of our resilient contractual businesses and the benefits from our strategic initiatives more than offset headwinds from freight market conditions. The business continues to outperform prior cycles, demonstrating the impact from actions that 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 with a strategic update. Christy will then take you through our third 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 strong foundation provided by our transformed business model. Let's begin with a strategic update on slide four. We remain focused on creating compelling value for our customers through operational excellence and investment in customer-centric technology, while further improving full cycle returns and unlocking long-term value for our shareholders. We expect earnings growth in 2025 driven by the operating performance of our resilient contractual businesses and the execution on our strategic initiatives. We are on track to realize the benefits from the strategic initiatives we outlined at the beginning of the year. These benefits are the key drivers of the year-over-year earnings growth expectations. Long-term secular trends that favor transportation and logistics outsourcing remain strong, and we are well-positioned to benefit from increased domestic industrial manufacturing, as 93% of our revenue is generated in the U.S. We delivered high-teens ROE of 17% for the trailing 12-month period, which is in line with our expectations during a freight cycle downturn. We expect our transformed business model to deliver ROE in the low to mid-20s when market conditions improve for our transactional rental and used vehicle sales businesses which will enable us to achieve our over-the-cycle ROE target of low 20s. 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. Our transformed business model has demonstrated its resiliency over this elongated freight cycle downturn, which is going on its fourth year. We are confident that our cycle-tested business model will continue to outperform prior cycles while providing us with a solid foundation to meaningfully benefit from the eventual cycle upturn. Consistent execution of our balanced growth strategy is increasing the earnings and return profile of our business while also growing our capital deployment capacity. Ample capacity and our strong balance sheet support our capital allocation priorities focused on profitable growth, strategic investments, and returning capital to shareholders. Aligned with these priorities, our board recently authorized a new discretionary $2 million share repurchase program that replaces a program that was largely completed. So far in 2025, we've returned $457 million to shareholders by repurchasing approximately 2.2 million shares and paying our dividends. Since 2021, we have repurchased approximately 22% of our shares outstanding and increased the quarterly dividend by 57%. Our new share repurchase program and the dividend increase announced earlier this year demonstrate our commitment to disciplined capital allocation. Our 2025 forecast range for free cash flow is unchanged at $900 million to $1 billion, which reflects lower year-over-year capital spending and includes an annual 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 and 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 which freight market conditions remain at or 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 1305, more than double the 2018 comparable EPS of 595. ROE is expected to be approximately 17%, up from the 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 conditions. 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 third quarter performance.