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

Business overview and transformation

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

• Transformation since 2019 emphasized de-risking the lease portfolio, enhancing returns, and accelerating growth in asset-light businesses.

• Revenue mix shifted from 44% supply chain/dedicated to 60%, with total revenue growing from $8B to $13B and operating cash flow up 60%.

• Structural changes improved return on equity from 13% to 17-18% and positioned the business for cyclical upturns.

• Expanded capabilities now cover port-to-door solutions, including drayage, warehousing, fulfillment, and final mile delivery.

Market conditions and outlook

• Early signs of freight cycle recovery observed, with increased customer commitments and record Q1 sales in supply chain.

• Spot rates up 30% year-over-year, used vehicle sales and pricing stronger than expected, and new vehicle prices expected to rise due to emission standards and inflation.

• No delay anticipated for 2027 emission standards, but a proposed 10-year warranty requirement may be scaled back.

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

• Labor market tightening benefits dedicated business, with driver pay and sign-on bonuses rising in select markets.

Strategic initiatives and financial performance

• Achieved $100M in annual maintenance cost reductions through process redesign, smarter parts procurement, and technology.

• Reduced residual values and repriced leases, delivering $125M in annual savings and improving margin profile by $200M+.

• Contractual businesses now drive earnings, with 90% of revenue from long-term contracts.

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

• Full-year guidance raised due to better-than-expected used vehicle sales and improved pricing.