Ryder System, Inc.

Please stand by, we're about to begin. Good morning and welcome to the Rider System fourth 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 fourth quarter 2025 earnings conference call. I'd like to remind you that during this presentation, you'll hear some forward-looking statements within the meaning 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. Today, I'll begin by providing you with an update on our balanced growth strategy, and share some highlights from our 2025 performance. Christy will provide you with an overview of our fourth quarter results, which were in line with our expectations, and we'll also discuss our capital spending and capital deployment capacity. John will then provide you with our outlook for 2026 and discuss the strategic initiatives that are the key drivers of expected earnings growth in 2026. Before I get started, I'd like to provide a quick overview of our CEO succession plan that was announced in December. Effective March 31st, I will retire and John Diaz will assume the role of chief executive officer. I will remain on Rider's board as executive chair. Many of you have had the opportunity to interact with John during his 20 plus year career at Rider, where he has held various leadership roles across the organization, including chief financial officer, as well as president of FMS and president of DTS. John has been a key player in the development, execution, and success of our balanced growth strategy, and I am confident that he is the right leader to build upon the strength of our transformed business model and create incremental value for our customers, employees, and shareholders. So with that, let's move to the strategic update on slide four. We've made remarkable progress on our balanced growth strategy, and I continue to be extremely proud of the Rider team for their consistent execution. Our journey has been transformative, enabling us to outperform prior cycles, even during this prolonged freight downturn, and providing us with a solid foundation for future growth. In order to establish our transformed foundation, We de-risked the business model by significantly reducing our reliance on used vehicle proceeds to achieve our target returns. We also exited underperforming geographies and services. Our multi-year lease pricing and initial maintenance cost savings initiatives meaningfully contributed to increasing our return profile by delivering a combined annual pre-tax earnings benefit of over $225 million and also contributing to positive free cash flow over the cycle. In addition, we accelerated growth in our asset-light supply chain and dedicated businesses, resulting in a more resilient business mix that is less capital intensive. We continue to evolve our transformed foundation by executing on strategic priorities focused on operational excellence, customer-centric innovation, and profitable growth. We're expecting another $50 million in benefits from the next phase of our maintenance cost savings initiatives. We're optimizing our omnichannel retail warehouse network through continuous improvement and are better aligning our footprint with the demand environment. We're also taking cost actions to increase efficiencies. We're investing in customer-centric technology aimed at delivering our customers a proactive supply chain that gives them a competitive advantage. We're enhancing proprietary technologies such as RiderShare and RiderGuide by embedding AI to increase functionality and effectiveness. Baton, a Rider technology lab, is developing an AI-enabled software and data platform that will power next-generation customer-facing technology at Rider. We're leveraging AI from leading technology partners in various use cases, including increasing the effectiveness of our customer call centers. We continue to deploy automation and robotics in our warehouses to drive operating efficiencies. Technology and innovation, including how we deploy AI, is a key component of our strategy and we'll provide you with updates as our journey progresses. We continue to pursue profitable growth opportunities and are focused on higher return segments and verticals, increasing our share of wallet with port-to-door solutions and generating acquisition synergies. Our transformed model has demonstrated the effectiveness of our balanced growth strategy by outperforming prior cycles. The earnings power and resiliency of our business continues to be supported by our high-quality contractual portfolio that generates over 90% of our revenue. Our significant flexible capital deployment capacity further strengthens our position and ability to pursue strategic opportunities. 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. Slide five 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 Rider today. In 2025, a year in which freight market conditions remain at or near trough levels, our transformed business model has once again delivered 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 62% of our 2025 revenue generated by these asset-light businesses compared to 44% in 2018. 2025 comparable earnings per share of 1292 are more than double 2018 comparable earnings per share of 595. ROE of 17% is well above the 13% generated during the 2018 cycle peak. As a result of profitable growth in our contractual lease, dedicated and supply chain businesses, operating cash flow of 2.6 billion is up more than 50% from 2018. As shown here, in 2025, the business outperformed prior cycles, even when comparing the pre-transformation peak to the current market environment. Turning to slide six, I'll share key performance highlights for full year 2025. First, Our resilient business model and benefits from our strategic initiatives delivered higher year-over-year earnings and solid returns in 2025. Comparable earnings per share was up 8% and ROE was solid at 17% in line with our expectations given where we are in the freight cycle. Next, consistent execution on multi-year strategic initiatives delivered $100 million in cumulative benefits through 2025. We now expect to outperform our initial estimate by 20 million and expect to realize another 70 million in incremental benefits in 2026. This takes the total expected annual benefit to 170 million. Finally, the earnings power of our high-quality contractual portfolio is driving higher operating cash flow which continued to increase our capital deployment capacity in 2025. Our strong balance sheet and capital deployment capacity provide us with ample resources to support strategic growth opportunities while returning capital to shareholders. Since 2021, Rider has generated $3 billion in free cash flow, repurchased 24% of shares outstanding, and increased the quarterly dividend by 57%. I'll now turn the call over to Christy to review our fourth quarter performance.