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RYDER SYSTEM INC (R)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered year-over-year growth: GAAP EPS $3.11 vs $2.74 and comparable EPS $3.45 vs $2.95, on total revenue of $3.19B (+5%) and operating revenue of $2.62B (+7%) supported by acquisitions; each segment posted double‑digit EBT growth .
  • First YoY comparable EPS growth in eight quarters; SCS had record Q4 earnings on omnichannel retail volumes/productivity; FMS lease earnings offset rental/used vehicle headwinds; DTS benefited from the Cardinal acquisition .
  • FY25 guidance introduced: comparable EPS $13.00–$14.00, adjusted ROE 17–18%, ~2% operating revenue growth, FCF $300–$400M, Q1 2025 comparable EPS $2.30–$2.55; management expects initiative-driven earnings growth with only modest late‑year rental improvement .
  • Capital return and capacity remain catalysts: $456M returned in 2024 via buybacks/dividends; leverage at 250% (bottom of target range) supports allocation to growth, repurchases, and M&A .

What Went Well and What Went Wrong

What Went Well

  • SCS delivered record Q4 EBT ($90M, +58% YoY) driven by higher omnichannel retail volumes and productivity; EBT margin on operating revenue rose to 8.9% . “SCS delivered record fourth-quarter earnings which benefited from higher volumes and optimization efforts in our omnichannel retail vertical.” — Robert Sanchez .
  • FMS EBT increased 13% to $152M as ChoiceLease performance more than offset weaker rental; EBT as a % of operating revenue improved to 11.6% .
  • DTS posted +10% EBT to $34M with strong legacy performance and Cardinal acquisition synergies beginning to flow; management expects DTS EBT% to return to high single digits in 2025 as integration completes .

What Went Wrong

  • Rental demand and used vehicle pricing remained weak/flattish; power‑fleet utilization was 73% (vs 75% YoY), and UVS proceeds declined YoY (tractors −13%, trucks −12%) .
  • Dedicated EBT% on operating revenue compressed to 7.1% (−230 bps YoY) reflecting acquisition integration costs and mix; revenue per truck decelerated sequentially on seasonal and customer mix effects .
  • Macro/tariff uncertainty delayed long-term contractual decisions, creating near-term sales headwinds across SCS/DTS and SelectCare downsizing in certain large fleets .

Financial Results

Consolidated Quarterly Metrics (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Total Revenue ($USD Billions)$3.182 $3.168 $3.189
Operating Revenue ($USD Billions)$2.561 $2.593 $2.617
GAAP Diluted EPS ($USD)$2.83 $3.25 $3.11
Comparable EPS ($USD)$3.00 $3.44 $3.45
Comparable EBITDA ($USD Millions)$704 $716 $720
S&P Global Consensus EPS ($USD)— (Unavailable)— (Unavailable)— (Unavailable)
S&P Global Consensus Revenue ($USD Billions)— (Unavailable)— (Unavailable)— (Unavailable)
Note: Consensus estimates unavailable via S&P Global at time of writing.

Segment Breakdown (Q4 2024 vs Q4 2023)

SegmentQ4 2023 Total Rev ($MM)Q4 2024 Total Rev ($MM)Q4 2023 Op Rev ($MM)Q4 2024 Op Rev ($MM)Q4 2023 EBT ($MM)Q4 2024 EBT ($MM)EBT % of Op Rev (Q4 2023)EBT % of Op Rev (Q4 2024)
FMS$1,481 $1,485 $1,271 $1,308 $134 $152 10.6% 11.6%
SCS$1,301 $1,340 $972 $1,007 $57 $90 5.8% 8.9%
DTS$443 $615 $324 $472 $31 $34 9.4% 7.1%

KPIs and Operational Metrics (oldest → newest)

KPIQ2 2024Q3 2024Q4 2024
Rental Utilization – Power Units69% 71% 73%
Avg Rental Fleet Count35,500 35,000 35,000
Used Vehicles Sold (Units)6,000 4,700 4,700
UVS Pricing Change – Tractors (YoY)−19% −22% −13%
UVS Pricing Change – Trucks (YoY)−27% −19% −12%
ChoiceLease Avg Fleet Count146,000 145,300 145,300

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating Revenue Growth (non-GAAP)FY 2025—~2% New
GAAP EPSFY 2025—$12.40 – $13.40 New
Comparable EPS (non-GAAP)FY 2025—$13.00 – $14.00 New
Adjusted ROEFY 2025—17% – 18% New
Net Cash from Ops (Cont. Ops)FY 2025—~$2.5B New
Free Cash Flow (non-GAAP)FY 2025—$300 – $400M New
Capital ExpendituresFY 2025—~$2.7B New
Debt-to-EquityFY 2025—~240% New
GAAP EPSQ1 2025—$2.15 – $2.40 New
Comparable EPS (non-GAAP)Q1 2025—$2.30 – $2.55 New
Tax/Comp EPS headwindFY 2025—−$0.10 EPS from higher tax rate and comp costs (partially offset by lower share count) New
FMS EBT % (Op Rev)FY 2025Target low‑teens LTUp YoY, but below low‑teens LT target Maintained trajectory
SCS EBT % (Op Rev)FY 2025High single‑digits LTAt high single‑digits target Maintained
DTS EBT % (Op Rev)FY 2025High single‑digits LTReturn to high single‑digits target in 2025 Raised near‑term
DividendNext payment—$0.81 per share payable Mar 21, 2025 Confirmed

Earnings Call Themes & Trends

TopicQ2 2024 (Prior‑2)Q3 2024 (Prior‑1)Q4 2024 (Current)Trend
Rental & Used Vehicle CycleWeaker rental demand; UVS pricing declines (trucks −27%, tractors −19% YoY) No recovery in rental/UVS; utilization 71% Flattish; seasonal uptick in Q4; modest improvement expected later in 2025; utilization 73% Stabilizing at trough; slight late‑2025 lift
Lease Pricing & Maintenance SavingsChoiceLease strength; maintenance cost savings initiatives noted Continued benefits to FMS earnings 2025 benefits: ~$20M incremental lease pricing; $50M maintenance savings; $150M total structural pretax benefits over time Structural EPS tailwind
SCS Omnichannel RetailHeadwinds highlighted in outlook Stronger operating performance and cost management Record Q4 earnings on volumes/productivity; EBT% 8.9% Improving execution
DTS/Cardinal IntegrationIntegration on track; synergies expected Strong earnings growth with acquisition benefits $40–$60M annual synergies; DTS EBT% to high single digits in 2025 Synergies ramping
Tariffs/Macro Uncertainty—Economic uncertainty delaying contracts Tariffs/policy uncertainty delaying decisions; 93% of revenue is U.S.; ability to pass truck cost changes to customers Ongoing headwind
Capital DeploymentDividend up 14%; strong balance sheet capacity New 2M share repurchase authorization $456M returned in 2024; leverage 250%; ~$13.5B deployable over 3 years with ~$4.3B flexible Ample capacity

Management Commentary

  • “This quarter is the first quarter in the last 8 with year-over-year comparable earnings growth, driven by double-digit earnings growth in each of our business segments.” — Robert Sanchez (CEO) .
  • “Operating revenue of $2.6 billion… Comparable EPS… $3.45… Free cash flow increased to positive $133 million from negative $54 million in the prior year.” — Cristina Gallo‑Aquino (CFO) .
  • “2025 comparable EPS is expected to increase by 17% at the high end of our $13 to $14 forecast range… ROE is expected to increase to 17% to 18%.” — Robert Sanchez .
  • “We expect $50 million in benefits from the multiyear maintenance cost savings initiative… $40–$60 million in annual synergies from the Cardinal acquisition.” — Robert Sanchez .
  • “The high end of our 2025 forecast range assumes continued contractual earnings growth and a very modest improvement in rental demand later in the year.” — CFO .

Q&A Highlights

  • Revenue growth bridge: Management expects muted growth in 2025 (~2%), driven by initiative‑based earnings gains rather than freight‑driven top‑line; FMS mid‑single‑digit within target, while SCS/DTS face near‑term sales headwinds .
  • FMS dynamics: No clear upturn yet; rental seasonal only; lease miles flattish; used vehicle prices still down single digits; customers delaying decisions amid tariff/economic uncertainty .
  • SelectCare: Q4 revenue up 3% YoY despite large fleet downsizing; 2025 SelectCare targeted mid‑single‑digit growth .
  • SCS pipeline/verticals: Pipeline slightly up; stronger interest in industrial, tech/health, retail; auto not yet picking up; lead times 6–9 months .
  • Tariffs and USMCA: Current impact is uncertainty delaying long-term contracts; majority revenue U.S.; confident in ability to pass truck‑related costs through to customers .
  • Bonus depreciation: Combination with interest deductibility could lower cash taxes by about $200M depending on timing and specifics .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q2–Q4 2024 were unavailable due to provider access limits at time of preparation; as a result, beats/misses vs Street cannot be assessed herein. Management’s FY25 guidance implies upward pressure on EPS expectations ($13.00–$14.00 comparable) with initiative‑driven earnings and only modest cyclical help, suggesting potential estimate revisions focused on contractual businesses and DTS synergy ramp .

Key Takeaways for Investors

  • Structural earnings levers are intact: lease pricing, maintenance savings, and Cardinal synergies underpin FY25 EPS $13–$14 with ROE rising to 17–18% despite muted freight recovery .
  • Watch SCS/DTS sales conversion: pipelines are up, but tariff/policy uncertainty and long lead times delay revenue; cycle tightening could unlock Dedicated growth late‑year .
  • Rental/UVS at trough: utilization improved seasonally (73%); pricing declines narrowing; management assumes flat UVS pricing vs 2024 and modest rental improvement later in 2025 — key for incremental EPS .
  • Margin trajectory: FMS EBT% improving but below low‑teens LT target near term; SCS at high single digits; DTS expected to return to high single digits in 2025 as integration completes .
  • Capital return supportive: $456M returned in 2024; leverage at 250% creates deployment capacity for buybacks and growth; dividend $0.81 declared for Mar 21, 2025 .
  • Near‑term setup: Q1 is seasonally lowest (comparable EPS $2.30–$2.55); investors should anticipate initiative‑driven EPS progression through 2025 rather than top‑line acceleration .
  • Policy optionality: Potential bonus depreciation/interest deductibility changes could reduce cash taxes by ~$200M, enhancing FCF and capital flexibility .