Ryder outlines $12.85–$13.05 EPS and targets high teens ROE for 2025 amid supply chain growth and capital returns

Earnings Call Insights: Ryder System, Inc. (R) Q3 2025

MANAGEMENT VIEW

* Chairman & CEO Robert Sanchez stated the company delivered "our fourth consecutive quarter of earnings per share growth" with Q3 performance "in line with our expectations as the operating performance of our resilient contractual businesses and the benefits from our strategic initiatives more than offset headwinds from freight market conditions." Sanchez highlighted the shift toward asset-light Supply Chain and Dedicated businesses, noting "60% of 2025 revenue expected to come from these asset-light businesses compared to 44% in 2018."
* Sanchez announced the Board authorized a new discretionary 2 million share repurchase program, replacing a prior completed program. In 2025, Ryder returned $457 million to shareholders via share repurchases and dividends, and since 2021 has repurchased approximately 22% of shares outstanding while increasing the quarterly dividend by 57%.
* Sanchez reported, "2025 comparable earnings per share is expected to be between $12.85 and $13.05," and ROE is "expected to be approximately 17%."
* CFO Cristina Gallo-Aquino said, "Operating revenue of $2.6 billion in the third quarter, up 1% from prior year, primarily reflects contractual revenue growth in SCS and FMS. Comparable earnings per share from continuing operations were $3.57 in the third quarter, up 4% from $3.44 in the prior year."
* Gallo-Aquino stated, "Year-to-date free cash flow increased to $496 million from $218 million in the prior year due to reduced capital expenditures and lower income tax payments."
* President & COO John Diez highlighted, "Year-to-date lease capital spending of $1.2 billion was below prior year," and explained, "By the end of this year, our ending rental fleet is expected to be down 12% and our average rental fleet is expected to be down 5%."

OUTLOOK

* Sanchez updated guidance: "Our full year 2025 comparable EPS forecast is updated to a range of $12.85 to $13.05, above the prior year of $12 as higher contractual earnings benefits from our strategic initiatives and lower share count more than offset the impact from market conditions in rental and used vehicle sales."
* The company maintained its ROE forecast at 17% and free cash flow guidance at $900 million to $1 billion, with an estimated annual benefit of $200 million from the permanent reinstatement of tax bonus depreciation.
* Sanchez noted, "Our fourth quarter comparable EPS forecast range is $3.50 to $3.70 versus a prior year of $3.45."
* Sanchez emphasized, "The key driver of expected earnings growth in 2025 is incremental benefits from multiyear strategic initiatives," with $50 million in benefits remaining to be realized next year and expected annual pretax earnings benefit of at least $200 million by the next cycle peak.

FINANCIAL RESULTS

* Gallo-Aquino reported, "Fleet Management Solutions operating revenue was in line with prior year. Pretax earnings in Fleet Management were $146 million, up year-over-year, reflecting higher ChoiceLease performance driven by pricing and maintenance cost savings initiatives, partially offset by lower used vehicle sales and rental results."
* Rental utilization on the Powerfleet was 70%, down from 71% prior year, with higher rental Powerfleet pricing up 5% year-over-year.
* Used vehicle sales pricing declined 6% for tractors and 15% for trucks year-over-year; sequentially, truck pricing increased 7%. The retail mix of used vehicle sales rose to 54% from 50% in Q2.
* In Supply Chain Solutions, operating revenue increased 4%, but earnings decreased 8% due to "e-commerce network performance and higher medical costs."
* Dedicated operating revenue decreased 6%, with EBT in line with prior year as acquisition synergies offset revenue decline.

Q&A

* Scott Group, Wolfe Research: Asked about CDL regulations' impact on business. Sanchez noted, "tighter driver market typically is good news for our dedicated business as you're more likely to have companies looking for help on how to bring those drivers in." Diez added most of the lease portfolio is "private fleets... not impacted by this."
* Ben Moore, Citi: Questioned used gain headwinds and truck tariffs. Sanchez explained, "if there is a price increase... obviously, we pass through in our lease rate with our customers" and expects higher new truck pricing could support used truck values.
* David Zazula, Barclays: Inquired about supply chain headwinds. Sensing highlighted "higher medical costs," "productivity miss... in e-com," and "higher move in shutdown costs." Gallo-Aquino said, "on the high end of the range... some market improvement and also some benefit from us shifting to more retail mix."
* Ravi Shanker, Morgan Stanley: Asked about regulatory changes and private fleet trends. Sanchez commented, "private fleets have been defleeting over the last 2 to 3 years."
* Jeffrey Kauffman, Vertical Research: Asked about bonus depreciation. Gallo-Aquino confirmed, "bonus depreciation... is going to be a cash tax benefit... about $200 million."
* Jordan Alliger, Goldman Sachs: Inquired about supply chain margin sustainability. Sensing said, "continued optimization of the footprint, specifically in e-commerce and last mile... would set us up for a rebound in 2026."

SENTIMENT ANALYSIS

* Analysts focused on regulatory changes, used vehicle pricing, supply chain margins, and capital deployment, with a neutral to slightly cautious tone as they pressed for clarity on headwinds, timing of recovery, and margin sustainability.
* Management maintained a confident tone in prepared remarks, citing resilience and strategic execution, but expressed caution in Q&A regarding uncertainty around regulatory impacts, customer decisions, and market timing. Quotes such as "I think that's still developing" and "it's hard to tell at this point" reflect this measured stance.
* Compared to the previous quarter, management's optimism on supply chain growth and disciplined capital returns is more pronounced, while analysts remain focused on near-term headwinds and execution risks.

QUARTER-OVER-QUARTER COMPARISON

* Q3 guidance for full-year comparable EPS narrowed to $12.85–$13.05 from the previous quarter's range of $12.85–$13.30, reflecting more muted expectations for used vehicle sales and rental.
* ROE guidance is unchanged at 17% versus the prior quarter's update.
* Management highlighted continued strong share repurchases, now totaling $457 million year-to-date compared to $330 million at Q2.
* The tone remains confident regarding long-term strategy, but management noted ongoing headwinds in transactional businesses and persistent delays in customer decision-making, similar to last quarter.
* Analysts' questions this quarter shifted more toward regulatory risk and supply chain optimization, compared to Q2's focus on margin cadence and capital allocation.

RISKS AND CONCERNS

* Management cited persistent freight market weakness, muted rental and used vehicle sales, and delays in Lease and Dedicated sales decisions as ongoing challenges.
* Regulatory changes, including CDL rules and potential truck tariffs, introduce uncertainty regarding driver supply and equipment pricing.
* Higher medical costs and productivity issues in the e-commerce network affected supply chain earnings.
* Management indicated mitigation through pricing discipline, continued cost-saving initiatives, and shifting sales mix toward retail channels for used vehicles.

FINAL TAKEAWAY

Ryder's third quarter highlighted resilient contractual earnings and disciplined capital allocation, with continued execution on asset-light growth and strategic initiatives supporting robust cash flow and shareholder returns. While persistent freight market softness and regulatory uncertainties temper near-term expectations, management emphasized the company's strong position to benefit from eventual market recovery and supply chain growth, supported by a solid balance sheet and ongoing operational improvements.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/r/earnings/transcripts]

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