Ryder System (R) Bank of America’s 33th Annual Industrials, Transportation and Airlines Key Leaders Conference summary

Business overview and strategy

• Operations are focused in North America, organized around fleet management, supply chain, and dedicated transportation, serving a diversified customer base across food, retail, and industrial sectors.

• Supply Chain Solutions and Fleet Management Solutions each represent a significant share of revenue, with supply chain now the largest segment at 43%.

• The balanced growth strategy launched in 2019 aimed to de-risk the lease portfolio, enhance returns, and accelerate asset-light business growth.

• Revenue grew from $8B to $13B, with a shift to 60% supply chain and dedicated, and operating cash flow up 60%.

• The company is positioned for growth as the freight cycle recovers, targeting $250M in earnings uplift over the next several years.

Market conditions and cycle outlook

• Early signs of a freight cycle upturn are visible, with increased customer commitments and record sales in Q1 for both Fleet Management and Supply Chain.

• Spot rates are up 30% year-over-year, used vehicle sales and pricing are stronger than expected, and capacity continues to exit the market.

• New emission standards in 2027 will drive significant technology investments, raising new vehicle costs by $10,000-$15,000.

• No delay is expected for the 2027 emission standard, but a proposed 10-year warranty requirement may be scaled back.

• Outsourced supply chain continues to grow at high single digits, with organic growth in double digits over the past five years.

Structural changes and operational improvements

• $100M in annual maintenance costs were removed from the leasing model through process redesign, smarter parts buying, and technology.

• Residual values were reduced and pricing raised, improving margin profile by over $200M; the portfolio repricing will be completed this year.

• The business is now less dependent on used vehicle sales, with fleet management expected to deliver low teens margins over the cycle.

• Capital intensity remains highest in fleet management, while supply chain and dedicated require less capital, except for some automation investments.

• Margin targets for supply chain and dedicated are high single digits, with fleet management expected to reach mid to high teens at cycle peak.