Harrison Bauer

Harrison Bauer asked if Ryder's stated peak-to-trough market improvement opportunity of $200 million might be closer to $300 million if rebased to 2025 transactional earnings. He also questioned how the displacement of drivers due to non-domicile CDL regulations might lead to additional trucks in the market and affect used vehicle prices or residual values.

Answer

John Diez, President and COO, confirmed that Harrison Bauer's observations were directionally accurate, suggesting the $200 million opportunity might be understated given the more depressed state of UBS gains and rental earnings in 2025 compared to 2024. Robert Sanchez, Chairman and CEO, stated that while more used trucks might enter the market due to fewer drivers, this would likely be offset by the need for newer trucks, and generally, a tightening driver market is positive for used trucks and the rental business.

Harrison Bauer from Susquehanna asked about the expected margin cadence for Ryder's business segments in the second half of the year and whether a pivot to growth in 2026 could create margin pressure. He also inquired about demand differences between tractors and trucks.

Answer

EVP & CFO Cristina Gallo-Aquino projected margin growth for FMS and SCS in H2, while DTS margins face pressure from lower fleet counts. Chairman & CEO Robert Sanchez added that FMS is not yet at its target margin, which requires a market recovery. President of FMS Tom Havens noted that in leasing, truck demand is up while tractor demand is facing headwinds, and the rental fleet mix has shifted to 60% trucks.

Harrison Bauer of Susquehanna Financial Group sought to clarify the primary driver behind the $0.35 reduction in the top end of Ryder's full-year EPS guidance. He also asked how the widening spread between new and used vehicle prices might affect used vehicle pricing later in the year.

Answer

Chairman and CEO Robert Sanchez confirmed the guidance reduction was almost entirely due to removing previous upside assumptions for the commercial rental business, reflecting a softer demand outlook. He stated that contractual earnings expectations remain intact. He also noted that high new truck prices support used values, and as market inventory declines, pricing power should increase. He pointed to Q1's sequential price increase for tractors (ex-aged inventory) as a positive sign.

Harrison Bauer asked a broad question about how U.S. trade policy and potential tariffs are impacting Ryder's business, including cross-border operations and indirect effects on the SCS segment. He also followed up on competitive pricing pressure in the Dedicated segment.

Answer

CEO Robert Sanchez stated that the primary current impact from trade policy uncertainty is the delay of customer decisions on long-term contracts. For the Dedicated segment, Steve Sensing, President of DTS, noted that as the freight market and driver availability tighten, they expect growth opportunities to return. Sanchez added that Ryder's customized dedicated solutions are less susceptible to being replaced by lower-cost truckload services.

Harrison Bauer from Susquehanna asked about the syndication market, including customer reactions to economic uncertainty and visibility into future sales. He also inquired about the health of the secondary market for leased railcars, focusing on pricing, market depth, and liquidity.

Answer

EVP Brian Comstock described the syndication market as 'very robust and liquid,' a sentiment echoed by CEO Lorie Leeson, who noted investors look past short-term volatility for these long-lived assets. Executive Justin Roberts added that the timing of syndication is tied to production schedules. Regarding the secondary market, Brian Comstock confirmed it remains strong with high renewal rates and stable pricing, supported by a tight and aging North American railcar fleet.