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RS

RYDER SYSTEM INC (R)·Q1 2025 Earnings Summary

Executive Summary

  • Comparable EPS from continuing operations of $2.46 rose 15% YoY, driven by contractual earnings across all segments; GAAP EPS was $2.29, up 21% YoY . Operating revenue was $2.557B (+2% YoY) and total revenue was $3.131B (+1% YoY) .
  • EPS beat Wall Street consensus ($2.46 vs $2.393*) while revenue was roughly in line/slightly below ($3.131B vs $3.140B*). Management raised FY25 free cash flow to $375–$475M and lowered EPS and operating revenue growth ranges to reflect weaker rental demand . Values retrieved from S&P Global*.
  • SCS delivered record first-quarter earnings (EBT +35% YoY; 8th consecutive quarter of growth), DTS EBT +50% on Cardinal synergies; FMS contractual earnings growth offset weaker rental and lower used vehicle gains .
  • Liquidity and capital deployment capacity improved via a new $1.6B five-year corporate revolver; Board declared a $0.81 quarterly dividend (195th consecutive) . Near-term stock catalysts: increased FCF outlook and visibility to multi-year initiatives vs near-term rental headwinds .

What Went Well and What Went Wrong

What Went Well

  • SCS record quarter: Operating revenue +3% and EBT +35% YoY; “This marks the eighth consecutive quarter of earnings growth in SCS,” per CEO Robert Sanchez .
  • DTS momentum: Operating revenue +8% and EBT +50% YoY, driven by Cardinal acquisition synergies and strong legacy dedicated performance .
  • Contractual portfolio strength: Management reiterated benefits from lease pricing (+$125M vs 2018 run-rate), maintenance cost savings ($50M), Cardinal synergies ($40–$60M), and omni-channel optimization ($100M), sustaining ROE ~17% in trough conditions .

What Went Wrong

  • Rental and used vehicles: FMS EBT down 6% YoY; rental utilization 66% (flat YoY) with a smaller fleet; used truck/tractor proceeds down 17%/16% YoY and down 8%/7% sequentially; lower used vehicle gains .
  • Sequential rental softness below historical trends, contributing to top-end EPS guide reduction; CFO cited a more muted macro primarily impacting transactional rental .
  • Unallocated central support costs rose to $20M from $14M YoY, primarily due to lower performance on investments .

Financial Results

Consolidated Results vs Prior Periods and Consensus

MetricQ3 2024Q4 2024Q1 2025
Total Revenue ($USD Billions)$3.168 $3.189 $3.131
Operating Revenue ($USD Billions)$2.593 $2.617 $2.557
GAAP Diluted EPS ($USD)$3.25 $3.11 $2.29
Comparable EPS ($USD)$3.44 $3.45 $2.46
Wall St. Consensus – Revenue ($USD Billions)$3.140*
Wall St. Consensus – EPS ($USD)$2.393*

Values retrieved from S&P Global*.

Segment Breakdown – Q1 2025

SegmentTotal Revenue ($USD Millions)Operating Revenue ($USD Millions)EBT ($USD Millions)EBT % of Operating Revenue
Fleet Management Solutions (FMS)$1,447 $1,260 $94 7.5%
Supply Chain Solutions (SCS)$1,331 $1,000 $87 8.7%
Dedicated Transportation Solutions (DTS)$602 $460 $27 5.9%

KPIs and Cash Flow

KPIQ4 2024Q1 2025
Rental Utilization – Power Units73% 66%
Average Rental Fleet Count (Power)35,500 34,900
Used Vehicles Sold (Units)4,700 5,100
UVS Pricing Change – Tractors YoY(13%) (16%)
UVS Pricing Change – Trucks YoY(12%) (17%)
Net Cash from Ops (Quarter, $USD Millions)—$651
Free Cash Flow (Quarter, $USD Millions)—$259
Gross Capex (Quarter, $USD Millions)—$536
Debt-to-Equity250% 259%

Note: Q4 2024 cash flow metrics are disclosed annually; Q1 2025 reflects quarterly disclosures.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP EPSFY25$12.40–$13.40 $12.15–$12.90 Lowered
Comparable EPS (non-GAAP)FY25$13.00–$14.00 $12.85–$13.60 Lowered
Operating Revenue Growth (non-GAAP)FY25~2% ~1% Lowered
Capital ExpendituresFY25~$2.7B ~$2.6B Lowered
Free Cash Flow (non-GAAP)FY25$300–$400M $375–$475M Raised
Debt-to-EquityFY25~240% ~250% Raised
Net Cash from OpsFY25~$2.5B ~$2.5B Maintained
GAAP EPSQ2 2025N/A$2.85–$3.10 New
Comparable EPS (non-GAAP)Q2 2025N/A$3.00–$3.25 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Rental demand/transactional exposureWeak rental demand persisted; no recovery assumed in 2024 Softer conditions exiting Q1 and into April; rental softness drove top-end EPS guide cut Deteriorating near term
Used vehicle pricing/inventoryTractor pricing down YoY; sequential mixed; inventory elevated Tractor proceeds −16% YoY; sequential tractor −7% (aged inventory wholesale); sleeper tractors up sequentially; inventory 9,500 vs target Stabilizing in sleepers; managing aged inventory
Lease pricing & maintenance initiativesFMS EBT % of op rev 11.6% in Q4 on ChoiceLease and maintenance Continued benefits; targeted 100–150 bps spread vs WACC on new leases Ongoing execution
SCS omnichannel footprint optimizationImproved productivity late 2024 Continued optimization with incremental benefits expected; record Q1 earnings Improving
Tariffs/macro exposure (SCS)Secular outsourcing intact; cautious macro Auto work primarily U.S. assembly; limited tariff impact; mixed China vs other sourcing in omnichannel Mixed but largely insulated
Capital allocation & liquidityBuybacks, dividend increases; leverage ~250% $1.6B revolver upsized; raised FCF guide; continued buybacks and dividend Strengthening
Regulatory (EPA 2027)Not a major near-term assumptionNo pre-buy baked in; long-term used value uplift would be upside, not in targets Neutral
M&A pipelineCardinal integration/benefits Focus on capabilities/verticals; well-run cultures; opportunistic in uncertain markets Opportunistic

Management Commentary

  • “I’m proud of the Ryder team for delivering double-digit earnings growth in the first quarter… driven by the strength of our contractual businesses” — Robert Sanchez, Chairman & CEO .
  • “Our revised 2025 forecast assumes a more muted economic environment primarily impacting demand for our transactional rental business… we have also increased our free cash flow forecast to reflect lower capital spending” — Cristina Gallo‑Aquino, CFO .
  • “We increased our 2025 forecast for free cash flow to a range of $375 million to $475 million, primarily due to lower expected capital spending” — Robert Sanchez .
  • “Rental results… remain weak, and the sequential decline in rental demand was below historical trends… Power fleet pricing was up 2%” — Cristina Gallo‑Aquino .

Q&A Highlights

  • Used vehicle market: Wholesale of aged inventory weighed on Q1; underlying retail pricing flattish with sleeper tractors up; tractor inventory down ~1,700 units and manageable .
  • Lease pricing methodology: Target 100–150 bps spread vs WACC on 6-year FMS contracts; maintenance optimization continues to support returns .
  • Macro/guide sensitivity: Low-end FY25 guide assumes further deterioration in rental/UVS; even at low end, expecting YoY earnings growth due to contractual businesses and initiatives .
  • M&A runway: Wish list includes SCS capabilities/verticals, additional specialized DTS opportunities, tuck-ins in lease; culture fit emphasized .
  • Residual cushion: ~5% further drop from Q1 levels would hit low end of residual estimates; guidance low end covers potential downside; historical trough rare/short-lived .
  • EPA 2027: No pre-buy embedded; potential longer-term used pricing uplift not in targets .

Estimates Context

  • Q1 2025 EPS: $2.46 vs Wall Street consensus $2.393* — a beat. Q1 2025 revenue: $3.131B vs consensus $3.140B* — approximately in line/slight miss. Values retrieved from S&P Global*.
  • Near-term (Q2 2025) company guidance: Comparable EPS $3.00–$3.25 vs consensus EPS estimate $3.095* at quarter start; revenue guidance not provided at consolidated level, but company expects muted rental demand . Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Contractual segments drove the quarter: SCS record earnings and DTS synergy realization offset rental/UVS headwinds, supporting resilient ROE ~17% .
  • EPS beat despite rental softness; watch for continued aged inventory clearance in Q2 and sleeper tractor pricing stabilization as a leading indicator .
  • Guidance mix-shift: Lowered FY25 EPS/operating revenue growth, but higher FCF and lower capex create more dry powder for buybacks/M&A; liquidity enhanced by the new $1.6B revolver .
  • FMS margin trajectory: EBT % of operating revenue at 7.5% in Q1 vs 11.6% in Q4; medium-term uplift depends on rental cycle normalization and continued maintenance/pricing benefits .
  • Tariff/regulatory risk manageable near term given U.S.-centric assembly and USMCA-compliant vehicle sourcing; omnichannel demand mixed by sourcing geography .
  • Capital return intact: 195th consecutive quarterly dividend at $0.81 supports total return profile amid cycle uncertainty .
  • Trading lens: Near-term catalysts include FCF upgrade and visibility to multi-year structural initiatives; headwinds are transactional rental and UVS pricing—watch Q2 guide execution and any signs of freight capacity tightening (sleeper tractor momentum) .