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RS

RYDER SYSTEM INC (R)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered a fourth straight quarter of EPS growth: GAAP EPS $3.33 (+2% Y/Y) and comparable EPS $3.57 (+4% Y/Y), as resilient contractual businesses and strategic initiatives offset weak freight conditions .
  • Versus S&P Global consensus, EPS modestly beat while revenue was slightly below: $3.57 vs $3.54* and $3.171B vs $3.189B*, respectively. Management narrowed FY25 comparable EPS to $12.85–$13.05 (from $12.85–$13.30) and introduced 4Q EPS guidance ($3.50–$3.70 comparable) .
  • Segment mix: SCS operating revenue rose 4% but EBT fell 8% on e‑commerce network performance and higher medical costs; FMS EBT rose 11% on lease pricing and maintenance savings despite used/rental headwinds; DTS held EBT flat with synergy benefits offset by lower fleet count .
  • Capital return remains a support: new 2.0M-share discretionary and 1.5M-share anti‑dilutive buyback plans authorized; quarterly dividend of $0.91 declared for payment Dec 19, 2025 .
  • Setup for 4Q and 2026: free cash flow guide intact at $900M–$1B; SCS pipeline robust into 2026; used vehicle pricing stabilizing sequentially; management notes an 8% pricing cushion before hitting residual limits, reducing downside risk to gains .

What Went Well and What Went Wrong

  • What Went Well

    • “Ryder delivered our fourth consecutive quarter of earnings-per-share growth,” with earnings “in line with our expectations” as contractual earnings and strategic initiatives offset freight weakness .
    • FMS margin expansion: FMS EBT up 11% Y/Y; EBT as % of operating revenue improved 110 bps to 11.4% on lease pricing and maintenance cost savings .
    • Capital deployment capacity rising; new share repurchase authorizations and continued dividend support shareholder returns .

  • What Went Wrong

    • SCS profitability headwinds: EBT down 8% Y/Y as e‑commerce network performance and higher medical costs more than offset operating revenue growth; EBT margin on operating revenue fell 100 bps to 8.3% .
    • Transactional softness: rental demand “weaker than seasonal,” utilization 70% (−100 bps Y/Y), and used truck pricing down Y/Y (tractors −6%, trucks −15%) .
    • Higher tax rate: effective tax rate rose to 27.1% (vs 24.0% prior year) and comparable tax rate to 25.6% (vs 23.9%) due to prior-year discrete benefits not repeating .

Financial Results

Overall company results (oldest → newest):

MetricQ1 2025Q2 2025Q3 2025
Total Revenue ($USD Billions)$3.131 $3.189 $3.171
Operating Revenue (non-GAAP) ($USD Billions)$2.557 $2.610 $2.611
GAAP Diluted EPS (Cont. Ops)$2.29 $3.15 $3.33
Comparable EPS (non-GAAP)$2.46 $3.32 $3.57
Comparable EBITDA ($USD Millions)$671 $729 $742

Q3 vs S&P Global consensus

MetricConsensus*ActualBeat/(Miss)
Revenue ($USD Billions)$3.19*$3.171 −$0.02
EPS ($)$3.54*$3.57 +$0.03

Values retrieved from S&P Global.*

Segment performance (Q3 2024 vs Q3 2025)

SegmentMetricQ3 2024Q3 2025
FMSOperating Revenue ($USD Billions)$1.281 $1.282
EBT ($USD Millions)$132 $146
EBT as % of Operating Revenue10.3% 11.4%
SCSOperating Revenue ($USD Billions)$0.996 $1.034
EBT ($USD Millions)$93 $86
EBT as % of Operating Revenue9.3% 8.3%
DTSOperating Revenue ($USD Billions)$0.486 $0.458
EBT ($USD Millions)$36 $36
EBT as % of Operating Revenue7.5% 7.8%

Key KPIs (Q3 2024 vs Q3 2025)

KPIQ3 2024Q3 2025
Rental utilization – power units71% 70%
Rental rate change (YoY)−1% +5%
Used vehicles sold (units)4,700 4,900
UVS pricing change – tractors (YoY)−22% −6%
UVS pricing change – trucks (YoY)−19% −15%
Avg rental fleet count (units)35,000 33,300
End-of-period UVS fleet (units)9,100 8,500

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Comparable EPS (non-GAAP)FY25$12.85–$13.30 $12.85–$13.05 Narrowed/lowered high end
GAAP EPSFY25$12.15–$12.60 $12.10–$12.30 Lowered
Operating Revenue Growth (non-GAAP)FY251% 1% Maintained
Total Revenue GrowthFY251% 1% Maintained
Adjusted ROEFY2517% 17% Maintained
Net Cash from Ops (Cont. Ops)FY25$2.8B $2.8B Maintained
Free Cash Flow (non-GAAP)FY25$900M–$1B $900M–$1B Maintained
Capital ExpendituresFY25$2.3B $2.3B Maintained
Debt-to-Equity (target/outlook)FY25230% 250% Updated
Comparable EPS4Q25—$3.50–$3.70 Introduced
GAAP EPS4Q25—$3.30–$3.50 Introduced
Dividend per share (quarterly)Current—$0.91 declared for 12/19/25 pay date Ongoing dividend
Share repurchase authorization10/2025–10/2027Prior 2.0M discretionary plan largely completed New 2.0M discretionary and 1.5M anti‑dilutive plans New authorizations

Earnings Call Themes & Trends

TopicQ1 2025 (prior)Q2 2025 (prior)Q3 2025 (current)Trend
Contractual earnings & initiativesSCS record Q1 earnings; DTS synergies; FMS contractual growth offset transactional weakness SCS: 9th consecutive earnings growth; optimization benefits EPS growth sustained; initiatives (lease pricing, maintenance savings) driving FMS; balanced growth strategy reiterated Positive, consistent
SCS e‑commerce networkImproved operating performance on initiatives Optimization supporting margins E‑commerce network performance and medical costs weighed on EBT; optimization continues with 2026 benefits Near‑term headwind; 2026 improvement targeted
Rental demand/utilizationUtilization 66%; transactional weakness Utilization 70% Utilization 70%, demand weaker than seasonal; RPD +5% Y/Y Flat/subdued; pricing discipline
Used vehicle pricingTrucks −17%, tractors −16% YoY Both −17% YoY; retail/wholesale mix actions Tractors −6%, trucks −15% YoY; sequential tractor flat, trucks +7%; retail mix 54% Stabilizing sequentially
Regulatory (CDL)——Tighter driver market likely favors Dedicated and outsourcing; ~5% of driver capacity potentially impacted over time Potential positive
Tariffs on trucks——Pricing/pass‑through uncertain; new truck price inflation could support used values and outsourcing demand Watch
Capital allocation—Dividend up 12%; continued buybacks New discretionary & anti‑dilutive buybacks; >$457M returned YTD; leverage 254% at low end of target Continued returns
Tax bonus depreciation—FCF increased by ~$500M including permanence of bonus depreciation ~$200M annual cash tax benefit; no tax rate effect Structural FCF tailwind

Management Commentary

  • CEO positioning on the quarter and strategy: “Ryder delivered our fourth consecutive quarter of earnings‑per‑share growth… operating performance from our resilient contractual businesses and benefits from our strategic initiatives more than offset the impact from freight market conditions.”
  • On outlook and confidence: “We remain on track for earnings growth and free cash flow of between $900 million and $1 billion in 2025… our revised earnings forecast continues to assume a muted freight environment.” — CFO Cristina Gallo‑Aquino .
  • On used vehicle residuals: “We would need pricing to decline 8% from where it is today in order to hit the bottom end of our residual levels… we are not anticipating a decline.” — CFO .
  • On tax bonus depreciation: “Bonus depreciation… is going to be a cash tax benefit… about $200 million [annually]… there is no tax rate effect.” — CFO .

Q&A Highlights

  • Labor/regulation: Tightening driver market from CDL changes likely favors Dedicated and outsourcing; minimal direct exposure to affected driver categories; potential 5% capacity impact over time .
  • Tariffs: New truck tariff outcomes uncertain; potential pass‑through to lease rates; higher new truck prices could tighten supply and support used values; complexity drives outsourcing demand .
  • Transactional trends: Rental demand slightly below seasonal; utilization at 70%; rate discipline intact (RPD +5%); lease customer rental activity muted .
  • Used vehicles: Sequential stabilization (tractors flat, trucks +7% on higher retail mix); retail channel 54%; inventory ~8,500 within target .
  • Residuals: ~8% used price cushion before residual floor; no changes planned to residual assumptions or depreciation .
  • Pipeline/starts: SCS sales on pace for one of best years; contribution expected to pick up in 2026 after ongoing network optimization and some automotive plant retooling in 2H25 .

Estimates Context

  • Q3 results vs S&P Global consensus: EPS $3.57 vs $3.54* (beat); revenue $3.171B vs $3.189B* (slight miss). Estimate counts: EPS (9), revenue (5).*
  • FY25 EPS consensus $12.87* sits within the company’s updated comparable EPS guidance range of $12.85–$13.05 .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Contractual engine delivering: Comparable EPS up 4% Y/Y in a muted freight market; FMS structurally higher margins from lease pricing and maintenance initiatives offset transactional softness .
  • SCS: Short‑term e‑commerce and medical cost headwinds, but robust sales pipeline and footprint optimization position SCS to re‑accelerate through 2026 .
  • Transactional trough dynamics: Rental demand below seasonal and used pricing down Y/Y, but sequential stabilization (especially trucks) and an 8% residual cushion reduce downside risk to gains .
  • Guidance: FY25 EPS range narrowed (top end trimmed) with 4Q EPS guide slightly above prior year; FCF guide unchanged at $900M–$1B, underpinned by ~$200M annual bonus‑depreciation cash benefit .
  • Capital returns/capacity: New discretionary (2.0M) and anti‑dilutive (1.5M) buybacks plus ongoing dividends; leverage at the low end of target supports continued deployment .
  • Catalysts to watch: Any freight upturn (rental/used gains leverage), progress on SCS network optimization and large wins, regulatory impacts on driver supply, and tariff developments potentially supporting used values and outsourcing .
  • Risk checks: Persistent e‑commerce network underperformance, further rental softness, or renewed used price pressure could constrain margins; tax rate normalized higher vs last year’s discrete benefits .