R - Earnings call transcript Q3 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Ryder System Third Quarter 2020 Earnings Release Conference Call [Operator Instructions]. Today's call is being recorded.

If you have any objections, please disconnect at this time. I would now like to introduce Mr. Bob Brunn, Vice President, Investor Relations, Corporate Strategy and Product Strategy for Ryder. Mr. begin. may you Brunn,

Bob Brunn

available XXXX. and are due differ within More political in Good Ryder's and conference Vice and contained may market, Web Chief the welcome Act business, remind call. presentation, Sanchez, regulatory Chairman forward-looking factors are information during with filings much. factors. these Securities management's measures Exchange Ryder's GAAP the quarter expectations and Litigation each on changes you nearest Ryder's based call detailed XXXX this this statements some and of are hear earnings Officer I'd you'll materially morning's President current Executive meaning in morning, a very Executive non-GAAP which Commission, of to Scott competitive, are results on in of to today's financial and Private presentation Reform Securities and third Parker, and and Robert that reconciliation Presenting the site. earnings is Thanks like to circumstances. these uncertainty Actual on release, expectations Officer. to economic, the measure subject and about These Financial statements Chief changes call in from earnings to

call John it the turn Global today Steve Global Robert. I'll available Supply the Additionally, Diez, questions With Transportation, Fleet to of that, on of for and Sensing, Chain Dedicated President President Management Solutions are Solutions presentation. over and following

Robert Sanchez

review our warehouse and our over of achieve services joining personnel by thanking on and our worked also quarter customers frontline on Good Ryder truck associates, our our the our us. third progress who an ROE goods results of overview call like call maintenance targets to we're time. this workers, our our tirelessly of outlook. actions and the employees, On an morning, We'll I'd and technicians, to everyone, ensure morning, behalf the essential have on thanks drivers, making we'll provide update flow to economy. the all for throughout particularly start our

the increased earnings prior a year-over-year $XXX impact used declining estimate related supply sale from Comparable the of improved contributed for and was that, third questions. Operating with Higher our X% operating by With prepared our was higher $X.X Page turn changes as lease expense and higher gains million, a for reflect year the revenues performance. of improved results. benefit up in in the Results and the in the in third were compared supply continuing remarks, a rental we'll was per open prior overview by from $X.XX revenues Following financial on to million line to $XXX call performance of billion vehicles. of year. third EBITDA quarter quarter results. Comparable X revenue earnings depreciation loss brief to some also for in of quarter additional to prior in share third lease residual offset information chain quarter. value earnings the year, the includes chain operations lower dedicated. a prior quarter from primarily as let's and driven $X.XX

overall Scott over X.X% year. as and Excluding in period capital flow from key each X% prior quarter XX-month expense changes positive was compared the trailing in lower pension cash depreciation an now turn business for trends related that costs to to items, spending, saw residual rate year, and tax the it compared impacts earnings to to related prior negative COVID-XX. leverage. the we the an the discuss and expense reflecting I'll was in value and the to review expense of to as in other comparable a prior a equity XX.X% X.X% return of on Adjusted

Scott Parker

a to Management reflecting lower revenue, in ChoiceLease quarter, XX% Fleet Robert. third rental due revenue. the Year-over-year demand. decline by X% down revenue partially revenue in rental Thanks, Solutions’ was by operating higher offset decreased

recovery We with utilization quarter, our quarter. downsize well fleet. September are our modestly sequential in encouraged up benefits the XX% improved the above which XX% third actions of reflects the from the fleet powered prior freight was as Utilization utilization and significantly increased the in by quarter, from from levels. throughout Demand rental in the year to year quarter, but the activity, as below prior of second XX% second

a cash sale free realized expected XXXX. expense resulting earnings value size sale used operating vehicles. environment changes lower savings of $XXX highlights long-term sales of Page to below to of was An the due quarter, and leased we and million. timely depreciation initiatives, high activity. million, online sold benefit sales and included single-digits, reflecting capacity result sales earnings conditions are and We year our rental impact a initiatives. the increase quarter, pricing. as the fleet FMS X% Our increased offset capabilities. used performance. company's our the X is third X.X% Higher vehicles pricing on EBT XX% prior quarter end, in was up of partially reflecting ending costs, vehicles, all-time to inventories vehicle million X%, also These vehicle significantly including the ChoiceLease was to rental benefits X,XXX Used held improving benefits from for prior residual sales well lower expense to vehicle also value actions of target at the sales initiatives for X,XXX offset contracts the revenue rental from $XX fleet reflecting capital versus than year lower was This quarter, earnings new for related pricing cost the and than down of up used took Lower residual Higher maintenance leased year sequentially record our renewal compared quarter. flow year-over-year expenditures on gain this $XXX COVID-related sequentially. sequentially, volume global and of higher lower depreciation address vehicles XX% sales record to the improvement. contributed results stabilization vehicles lower on demand. the the changes down pricing the pretax lower reduced record in as contributed and lease rental to sales estimate primarily XX% leased to prior prior lease estimate higher and vehicles redeploy as impact X,XXX to from up year, an vehicle and to retail vehicles in market from which freight Used revenue by activity. lease XX,XXX impact prior during in higher initiatives as to pricing the sequential FMS were sales fulfill results. active down but due more lower percent resulting prior in resulted

our to end We expect year of decline to within vehicles. to target used range X,XXX and the vehicle X,XXX inventories continue

very tractor both In vehicle proceeds were up strong volume, the sales proceeds were up used addition up truck to X%. increase truck XX% encouraging In proceeds sequentially. X% it's that and US, Globally, proceeds were sequentially. and per unit tractor

in tractors policy to that provided second quarter price recall, XX% for the needed residual you current order trucks XX% estimate. US increase maintain in a noting sensitivity, we XXXX and the was by on our may depreciation price increase for call As

us Although it don't occurred that adjusted, residual the to brings of the is pricing in generally age improvements quarter, indicative X% the any value additional sequential pricing mix which levels increase the policy adjustments. require is closer or not that

digits. support and to volumes due supply versus pricing. in increased Now to and as and higher a were was operating Mile. due recent to new the XX.X% percent following Operating due SCS COVID-related the above volumes target high EBT X. of turning X%, company's SCS CPG increased XX% Ryder and increased chain new long Page of to partly freight pretax business, operating Last higher automotive primarily on shutdowns production performance. for revenues quarter, prior business, pricing increased term the year improved increases earnings revenues Higher single

from the lowered gross percent sales $XXX economic were expenditures was prior performance. year. on more $X.X down under to and lower of prior leverage. versus and earnings Year-to-date capital activity X. impact well year high XXXX nonrenewed and in for changes billion $X.X digits. expenditures company's revenue tax as to a X%, We lower billion lower DTS, billion, vehicles value business primarily of residual XX.X% new initiatives Use used spending. vehicles. due Moving of lower increased and Weaker reflecting to are from lease in leased expect a resulting billion decrease contracts DTS single Slide termination XXXX also from a investments flow a was $X fulfill strategic This $X our XX% revenue full benefit volumes. in Page customer before equipment gross for by down onetime to as conditions reduced to capital target estimate reflects dedicated our operating by has capital billion. below prior improved XX now quarter, term as now rental redeployed long turn capital the contract cash operating previous I'll above of the than expenditures, forecast DTS of and EBT lease capital discuss $X.X to and Operating million, year spending. just

capital nature line our free direction are billion XXXX flow reflecting strategic of in included prior were model lease. business Year-to-date from the growth billion property in to forecasting of $XXX negative which up $X.X to XXXX, billion, sales in and from $X.X million flow We with year cash cash years, full sale. of a limit now $X.X countercyclical proceeds our

proceeds over $XX to year-to-date. billion solely by vehicles these expenditures $XXX PP&E, $X.X Net from up were Excluding capital sales decreased of million. million

year-to-date, expense the increased from due a year, economic to flow year end Debt-to-equity to from spending. due to just by impacts to $X.X XXX%, We to value year, prior pension Free working estimate prior uncertain at Turning a balance total year-to-date, charge. than up X% conditions positive of management. the billion the residual generated $X.X reflecting of reduction capital cash depreciation from significantly to capital normal $X.X lower reflecting third equity to changes, approximately cash billion equity cash higher prior the due a the primarily prior the page. was higher billion under related and quarter next up

curtail higher We of the certain net the to quarter. cost Debt was action The respectively. normal discuss equity to fourth expect percentage from during $XX cash delever recent balance balance excess to a fourth point, to with equity I'll to pension cash taken increased pension equity update conjunction future our in sheet the use of free tax. Robert to points XXX% pension and approximately last charge action resulted of remeasurement required a by process from our percentage the provide debt however, and occurs the reduction year, that a to declined, equity sequentially and cash at quarter. year-end. actions to liabilities, lower as pension Canadian returns. points normally in approximately charge US XX than as equity in over A this remeasurement At This the assets benefits. our call XX million discount this Due an second and on to the quarter outlook increase turn to well and flow

Robert Sanchez

Thanks, Scott.

anticipate merit decline includes holiday the to Looking the increases. fourth dedicated and of well ahead reflecting timing certain customers, reduced from quarter, third shutdowns, activity. the to annual seasonality we impact supply as from employee moderate returns production chain seasonal lower COVID-related automotive the activity and with as quarter, This

of For single-digits. within the our both supply and a percent as EBT long-term expect we chain be for revenue to target full of range dedicated year, high operating

improved million These performance. estimate other appreciation drivers, riders, this essential supplies of improvement special rental onetime headwinds are expect pricing and delivery In success. Return customers. is continued And recognition ensure fourth before, the be approximately be the say expected utilization. $XX warehouse prior dedicated the retention of decline, continued technicians, value goods improved pricing quarter behalf offset in however, healthcare our me their employees. higher, other bonus on in will and to employees changes expected personnel depreciation to the rental in are partially have quarter. expected and a decline for we these fleet and residual earnings fourth awarding This in a heard efforts, the to our initiative. investment Throughout to of to are are lease expense critical safe these and due workers demand result to the non-bonusable to by food, reflecting continue to expense you've from our of pandemic, accelerate we impact higher to As

in expecting of billion are We driven $X.X billion expenditures. record cash flow XXXX, by $X.X free lower capital to

uncertainty economic this anti-dilutive result program We earlier in planning repurchase the year are to temporary of of the following pause resume to fourth share due activity a as quarter, a COVID.

that and target. As shown a segment operating target growth highlights The components financial outlined and here pretax cycle. primary our we ROE long-term XX previously earnings key revenue goals the XX% reminder, to this Page of are over achieving are

adjusted our long to an before, interim is an cost equity As target. only key the match I highlights mentioned for reaching reaching XX ROE Slide XX% term our of ROE target. drivers of

chart, impact value the past in residual related significant to target towards depreciation by illustrated we As our changes. make moving of estimate higher levels prior progress to expect

accelerated cyclical chain a is utilization dedicated adjusted page, addition, additional that primarily in from key actions, pricing results The negative and supply in multiyear including ROE X.X% and in second the lease initiatives come the chain to third impact In improvement in maintenance demand include and cost remaining which and to cost our X.X% reach target negative is improvement benefit. the from rental our provide to earnings shown is improvement needed initiative in expected expected businesses. on quarter, our higher a savings and to depreciation supply a the to drivers quarter. ROE were Declining growth increases, lease

Turning I areas outlined. key I'll just on share the the progress XX. to we're five Slide making

As expense changes. in decline value expected, impact residual earnings from benefited a depreciation from

improving used quarter. used realization third conditions market the vehicle sold the on addition, in gains contributed to In of vehicles

digital used combination We from We recently our physical investments which site continue sales new device. through locations. of launched retail vehicle the access our to any the website, users to increase capacity allows a and

enable lease The improved also and research, best locations customers better pre-owned includes for pleased users to from year. In to improve date results that vehicle centers for expected is pricing to make inventory pricing benefit line digits, see analytics the nearest Revenue our higher third used beginning throughout with Our allocation trending end. to utilization quarter search is size the prior site to find, engage data expanded decisions. new to plan vehicles site and utilization them. fourth sequentially pricing October we're further vehicle on conditions, We're so market to mid-single capital purchasing Ryder by increased from and open more by additional We've to also in actions. portfolio new be the quarter. decisions. opened make rental, seven utilization easier it at locate and our to reflecting year-over-year initiatives. September, new we've sales offers FMS, leverage optimization capabilities the lease year with and in far these to continue refine two fleet In XXXX aligned to

million track Turning program million. expected million. to of maintenance achieve other that in to we savings $XX cost actions over XXXX are expected estimated annual in bringing July, Page our $XX an date $XX XX. to savings implemented our initiative, We're In result savings of on from multiyear to annual to

delivery, dedicated encouraged approximately sales campaign savings support to million growth Canadian $X by logistics our by is for supply to efficiency, XX% realized by Mile customer performance exempt of well result productivity, performance activity a in new in and and everything by and recently well. the are curtail installation transportation, We significant expected nearly higher for strategic third cost well launch We various on-time leads the our and actions also to RyderShare, Revenues provides chain. leverage Last following of warehousing white technology The through chain capabilities, to network were fulfillment, recently quarter, from the the as Mile our ryder.com large future which We previously US took Mile, our that and as online We've also well range businesses above e-commerce of in appliances. so returns increase enabling delivery profitable as in to improvements We're the actions broad visibility target service. goals awareness driven Ryder the Last This our of in traffic in encouraged higher delivered taken far. platform benefits is results We business increased accelerating labor as furniture Last logistics overall XXXX. customers change we return Sales the and for visibility as and pension pension and volumes. participants including glove from quarter launched froze Ryder's highlighted plans. was solutions. when home in of our collaborative benefit brand campaign. saw strong in Ryder supply continued

for We're a that believe of our and shippers in trends expect freight the in to location We demand this position post-COVID increased are scalability operations. to to We've and support RyderShare to us e-fulfillment in expanded size the automation for are We towards our activity visibility to of sales driven leverage the strong these will grow, continue increase their invest environment. by offering. of the encouraged well Pennsylvania continuing activity use software part capabilities. implementing e-commerce technology will by expecting investments

e-commerce that Although towards economic of final morning. bulky positioned prepared a goods on. this and we're Ryder operations, strongly on-shoring trends fulfillment, and uncertainty mile presents of remains, our with accelerating delivery capitalize to manufacturing opportunity near-shoring concludes compelling and remarks That big

we so questions, lot please We to Before material a on that note one this question week. we yourself file XX-Q each. had to expect go limit later to please today, covered of our

time, take welcome as for the open you it operator in queue up we'll I'll we to turn the get have questions, additional questions. and line as At to If back over you're the to many this can.

Operator

take first Stifel. from We'll question David Instructions] our [Operator Ross with

David Ross

business. Last of where to and area good obviously due of Supply area in year on allow on for it's of that pricing? one Mile this But Last to little on to and the sustainable the ties business on volume segment, guys the then want decent the maintaining growth good has for been been single-digits. XX% around the the that the Last you fragmentation And kind on side. focus Chain two long-term benefited margin all, So bit wasn't really pricing returns get first margin enough theoretically has of an historically on pricing Mile Mile SCS, I the Solutions commentary a SCS two Because of to is the the target Wanted So in high that, a side? parts and to you're margins. to

Robert Sanchez

just a I'll of over it little Let and bit give hand then me an to Steve. you overview,

years And it we We Last returns. obviously, to because, MXD had, around and model this ago really the Mile efficient few into MXD, we really I environment, First, Last think, a and was wanted acquisition acquisition did reason -- delivery made like service. was that model that good of Mile. very Ryder this this we get the that giving was also in the was competitive a and which was

quarter, But service. we're very the especially this on certainly world, acquisition mentioned our results type now in for imagine, demand think, to with and marketplace, pretty of business might in probably quarter. profitability be in supply saw class. now in post-COVID expect targets, significantly, where we the line know chain of this in you As we would big that that The pleased I of as which, increase increased really as the that business I a earnings best we in this with last be

pricing. So one thing is the

what our is shareholders. competitive returns for I this is that think business. find pricing model, we can we get be with good the and competitive in that But

that think which the as production I volume had normally And of the we comment chain, strongly coming sustainable COVID-related did profitability forward. going other those increases, as let supply it be see quarter during I'll were As we in is, the But some question the extra in increases, did. we we onetime shutdowns auto back have volume pickups summer, with how on that. sustainability really as saw far which have, did then the we would there. so also no There Steve

to want add to you Steve, that? So

Steve Sensing

David, on mile back the So last piece.

our Last pricing Last growth was line sales We stabilized. I is new shows our market had volume. growth the think We in top a had Mile think as of kind Mile. the product. related in really good portion Robert said, I It in in to the double-digit of

on the market. last about continued is think profitability perspective, in the calls, of a I I couple from as the it density said

network last I a gain think continue to that quarters. we've we -- better is We our couple think as we got the sustainable. do team to utilization and of further much got great operating continue to that really is density. But expand over optimizing route our

question your SCS. I was next So around think

retooling it's trailing Robert it color think the on the and little we a auto this hit on QX expect year plant we in than we balance on typically shutdowns to QX plant Typically, to fewer our XX best model our And the conversion some business head. QX. QX. We this look as months. had full more QX in for And shutdown A Saturdays more would look we quarter, typically a best-performing worked or new I see of quarter. quarters. at at and year. rate bit run

that So your -- answered hopefully, most questions. of the

Operator

[Operator to go Stephanie Instructions] with We'll Truist. Benjamin

Stephanie Benjamin

on market used kind And truck of of view, improvement you than on truck and used in up drivers if XQ these that your the the October. of based Has business, are so, faster and sustainability expected? factors? main what Thanks. saw what the improved Just really, the actually following in you

Robert Sanchez

color that did volume. let in as The to the expected. drivers is it of some some yes, we terms John give than we're you quicker simple in I'll that of answer improve the seeing

in had record the As in we along pricing. quarter volume with we in sales increasing mentioned the release,

color? So John, to want little you do a more give them

John Diez

tractors also started is What opened So as but freight space we activity on retail take seeing QX. to continue e-commerce environment we're to continue trucks up it and at straight market The tail see UVS is, seeing side. we owner coming the Stephanie, QX see what of and off. into really you looking for operators end the the into primarily the has

high sequentially the I level, coming and did quarter. demand inventory, sequentially our don't these just and eating freight as expect to down to at our be buyers that as of We We but QX. good But with pretty not lot at were you the XX% what we're a gobbling heard. levels inventory multiple a time. by are seeing one is up in see expected start is in to from You're encouraged to volume am up moving record up we cycle forward. I into that continue see QX assets going go to

short both activity So and I our tractor will expect into for term, expect pricing trucks XXXX. good pieces that the I expect and us I in carry

So demand. activity overall driven that the then these cycle e-commerce we're higher some are good by freight driving seeing primarily activities and of

Operator

moving we'll with And Wolfe. Group go Scott on, to

Scott Group

that gains So for just where are a couple forward? of rate run how next year, won't on prices for again? on in then for follow-ups going on the used the prices, you improvement to side. any the you. residuals sales need Can and cut you tailwind to good used you Thank depreciation a today then And do just quarter relative have close remind us is what with threshold sense fourth

Robert Sanchez

for question, then me the pricing. year-over-year depreciation can you into turn depreciation Let it get vehicle impact can answer the over to and year-over-year, the we give Scott your -- used he

Scott Parker

is that time number for gains, provided was XXXX it that for have of quarter $XXX. year of without UVS. $XXX an gave ago, we expectation any have A depreciation What was those about was million, last we to UVS the so exclusive numbers of fourth

expecting So sequential quarter third $XXX. in on are we a come basis, to at

closer $XXX. we gains, came to UVS in the With

the and for accelerated piece the fourth providing expectations not that are at for policy that's is So where that the but UVS the guidance going fourth quarter. on to be least the quarter, we're

Robert Sanchez

that to having for close was are to need second talked trucks. to not I any XX% then we call, question more improve for improve numbers about that your XX% how and the we to tractors think we needed make we had last adjustments about And

prepared any mentioned even and X% gives some not adjustments. of it's We've made do of no we quarter. certainly progress for both one to remarks in will in that lead longer years more two sequentially, the terms to directionally. we perfect was it have those, in And things pretty on though the it's in that those the for up the again, I we of strong so some make One there a think we've of just to quarter mix make but because pricing levels, getting is correlation move call get adjustments you kind age good so a got

Operator

And to we'll Justin go Long with Stephens. next,

Justin Long

just to follow-up Scott. question, maybe that So on

the XXXX, changes? about at and of you laid impact been targets you that do has of have longer-term terms In And there looking expect ROE? from out. when to value depreciation target thoughts XX% interim achieve update Robert, could any any the and target you the then you updated to residual returns a that

Scott Parker

we depreciation true for up number we be to was number that $XXX that are expected what the still last we million, when XXXX It's policy and gave not accelerated XXXX where but was and as of have $XXX And Yes, quarter, for million. that was of quarter. so we updated we expected that. kind we'll that provided into as go XXXX. But second

the improvement quarter. had be than the we expected quarter, in we've what that to the provided be number made XXXX second third with lower So would in

Robert Sanchez

changes, the And the we the waterfall to maintenance the timing, around right deck from the to environment uncertainty shows the and come in in all rental that continue; pricing growing two pin around dedicated. of value supply on is and depreciation, then, the costs drivers I that think, of the earnings on that more that subsiding because you that's the show with that down big are we're getting having hard higher really remember Justin, that obviously, chain the depreciation the taking it's then levels; back we're snapback around a already, so our and stuff and us to lease, big back initiatives normalized contributor impact and seeing now, the depreciation; happening residual rental

of would some to carrying going call Scott go a economy you comes to dictate value see, depending impact get going be we're seeing even pretty do we're back, out already quickly in will as get how that we're significant from to next period. a have, So changes, into But mentioned, depreciation still year, of depreciation tailwind But on We of going the a expense I some how the the that. as we benefits we're still that quickly there. reduction probably that from residual and that.

get to we more where as So we and that. into really that into starts when environment get XXXX an lighten stuff up some is less have impact from you

So hopefully, you. helps that

Operator

Fowler KeyBanc go we'll next And Markets. with to Capital Todd

Todd Fowler

a quarter lease understand guess. with on the up. truck of see we're we're I correlation there's Robert, seeing the ask directionally, a to term, the that I What but on what kind trends lease And you near been wanted fleet. I I difference fleets, orders some seeing and here pick think order makes, activity

comments, As initiatives 'XX, you side? some think expecting Do around strategically how baseline you fleet? thoughts could on think kind tie look doing you're versus a CapEx. out some 'XX growing that CapEx we about how pricing sounds still thinking it you you're you with do if for CapEx fleet about of the have the lease lease as into you're lower the of And about like in the potentially the

Robert Sanchez

growth are lease Todd, it's more up remember, seen going forward. activity of understanding that we side. for as the still go. going some you've pick economy early OEMs, in we're going But But on seeing said lease is to of terms moderate the to the orders where we've

in you even year. that a see, us So a what that environment, is shouldn't XX,XXX means in growing units to robust expect

that see getting and pricing to that make really investments. order focused going in growth those a you're need sure initiatives returns holding think we're on to are we the environment. I robust moderate rate business there's making we in more But that on our a if

market. seeing give what a bit in more John I'll we're what we're little terms So color sales let of from now lease seeing the you and on

John Diez

on is, Todd, activity quarter, during what QX, see lease to from sales. QX sequentially to So the better saw we we continue

in recall, customers evaluating decisions you QX, see we second that really had better were we their moving a business as we environment. When As number deferred of a they quarter, did stepped conditions forward. saw into

I think numbers you're hearing X that that's of the reflected the and seeing in some Class OEMs. from

move momentum vehicle I hit we to that as seeing Robert year, expect next we freight picking regards up think get side as into to well. QX it. We are orders With on new up because for cycle our

saw year. But right we from to next us see very we'll early start QX, up now, that momentum bit I still low continue towards from what think QX. we levels to pick saw to little it's that is in a and QX good for signaling

Todd Fowler

do not point growth, seen directional the it's last opposed than And CapEx that we've then to moderate So just maybe have cycle. more on you are in it's at thoughts 'XX? this any what you growth for

Robert Sanchez

Todd. not yet, No,

I kind of think is a -- remember, FMS for lease we digit long-term mid line said growth. our top single and goal

But X,XXX we think it that don't a cycle term, X,XXX over you yet if to we're would at. the probably have year pinned be year. down So anything it's next what about is for looking no maybe units long

Operator

we'll Ossenbeck hear next, from And Brian with JPMorgan.

Brian Ossenbeck

like giving guess but to Just I seems obviously, it quarter, off here, talked couple dependent. of that from vehicle a used coming I fourth sales on we've what not level about a pricing you're guidance we bit think in know should the already. follow-ups gains the record moderates

just you give there's more I a how single that So maybe talked as of the hold just to on competitive how digit you can to initiatives are some in response look sense us line a about, And then non renewal? received? expectation. just just make segment and the the reasonable pricing those they've want opportunities, pricing going market, some was you that the been any on mid of optimize If the portfolio sure

Robert Sanchez

used your question vehicle around Yes. first sales. I guess

of has used terms up the so holding I been think nice kind of in pricing a saw increase sequentially. we vehicles,

to that the would as indication are our expect So however, we fourth will going we to low. would I don't as Volumes, lower. inventories right change. -- be have that's expect we go into any that quarter, I now continue.

And within at pretty we the going the third our end should target quarter, coming the were quarter. levels by inventories down. be high range. They're of into third Our

be I this pretty less more through So in selling expect vehicles expect did importantly, more a fewer still healthy selling quarter and we'll would guess, the but we're through going third, I to would And probably in I level. we wholesale. than be retail

overall also vehicle on us So used that the to results. mix going help is

lease still terms In early think of to it's tell. pricing, too I

his a this of of coming We lot and team vehicles. of redeployments, John have and have redeployments lot done a rental and of idle year out done vehicles

CapEx But gone pricing. In signed, very as into and we we limited, have get of And new to the also I that to play over would from been deals the how has goes. is in see I so do the as be can better rational time been a next So we've test market capital after that numbers. a you that think able our we year, in market, it's pretty get move going to expect going direction.

Operator

hear Markets. with Kauffman from Capital we'll Loop Jeff next, And

Jeff Kauffman

congratulations. Well,

this XXXX, way. question. we follow-up maybe Fowler's like this market. to on little could to it think CapEx early see a I turnaround want but terrific Todd I to about about if in think a know it's the And Just

of want and of that normally If you cycle do we steady, to units X,XXX spending What growth would hold the a count think capital we kind in decided steady. looked just holding X,XXX that just to and replacing before FMS in about fleet would the to be? at fleet you

Robert Sanchez

CapEx... number, I CapEx, $X.X billion. the Scott, believe, replacement is about you Our replacement that got

Scott Parker

billion a on bit Yes, side. would the Jeff, about $X.X and then have rental have you -- you little

defleeting, clearly have would but rental some expected to So levels, CapEx. we increase to with the of year-over-year bit little rental historical at expect of in the a not be

Jeff Kauffman

a is call spending? sales figure, that decided to of net I that. and any the or we're figure, with just part No, the first second was billion? year in the of $X.X not I what that's refleeting you defleeting flat, still would equipment I of be year, agree in if would maybe it part thinking a that's gross the And if just of Yes. net

Robert Sanchez

That's a gross number.

Operator

And Benjamin with follow-up. Stephanie Truist a has

Stephanie Benjamin

you're been what improved would On a the seeing seeing that past said some side, of rental some the as so improvement? business October. by has holiday demand driven or on side, little you Thanks. leading Is has are love this a this the indicator being that you customers bit broader fueled to in into hear e-commerce about commercial the

Robert Sanchez

they we're some the economy leading uncertainty, put customers initially. But because the typically a and rent Let it seeing, me you back, going there's and John to to rental to run which down before willing lease. indicator because in. aren't let as will customers go and buy sectors pickup we're do come going also so out And on yet, capital you're color more see seeing as is a they're what give well starts to trucks come

some give color on John, that. you So I'll let us

John Diez

we've pick What picked going third quarter, certainly, up the that's and freight seen environment into during up. QX, seeing, is the you're

classes be into to now utilization So our normal September levels tractor demand continues strong from there and October. are back to

the by with X side, space. we on a without in doubt industry pickup To space drag is light-duty bit activity the e-commerce, a still the I you which still of truck market mentioned, of straight are little Stephanie, say that, for is a the impacted balance seeing think a you that so parcel driving I that's lot will of event some COVID. see a being the

the the QX also QX I we the refrigerated the sequentially freight picked and with and house the auto restaurant other really, kind you, up environment, what to quarter. from then picked But up during side You're seeing during lagging. straight quarter, saw segments have the trucks of of of some would in through sequentially tell quarter also e-commerce, it the

encouraged very that. by So

demand environment. I good be QX is a think going to

forward As in what quarter. to expect utilization our again, back see prior as And get we line into with we brings the we'll year. be XXXX we mentioned, deeper

Operator

Wolfe to follow-up. with Group a return We'll Scott for

Scott Group

Robert, the takes year. and for I next puts had maybe some if directional thoughts was you broader wondering, of on some

investments just rental do you or bad So business year? go more then another of should about we've headwind any here. Just thoughts think years of good the some the next next Thank know it some on Does parts, anything, -- the other cost feels some thinking either is tailwind year? be of that to and side? parts that should away? as that And the we about big of broadly, I other or strategic you. like had expect year on Maybe that used contractual start tailwinds. I'm

Robert Sanchez

Yes.

ones, and trend, next vehicle sales, you If will hit I we get year. on used keep tailwinds. think the as expect I rental be two we into certainly big this would

On supply also. certainly the grow and provide to some chain, continuing side, contractual dedicated tailwind

you'll be depreciation of the and it depends On benefit then that piece, we get. based but us. see the got to And are cost other help a cost maintenance around initiatives much how -- lease outside will initiatives a -- amount we've benefit grow we on see side, going growth of the you'll lease

like RyderShare especially headwind to see think obviously, the -- around investments, you're chain as invest and technologies things of to have going some business our we side, the we I On supply will continue normal have within to position to costs then inflationary across need leadership come businesses we that going the we that And to also, year. just continue that have each you're a type make in sure there. we

see. we I go items as that kind are have mean still picture next year. But too early. into into You'll again, it's of XXXX going big the go that as we those we're to

be a going on, I about think election we've to coming February. got position year, up, going still got better uncertainty into that much in everything we'll of with we've an talk in next lot a

Scott Group

earnings, positive And sort one what's back quick as right going of we're one, to just just forward? really just the rate tax

Scott Parker

a going basis with we've uncertainty benefit look expense a in rate, we're year-to-date you tax had quarter. kind at of given tax that through, if our tax the third Yes, on the

that think we've of you the basis, the depreciation high outside But last kind taking. kind without year, we've -- are if levels little couple a the So of normalized XXs, income on for charges of muted guidance. kind it's been what you basis, has past, about that company. based on where rate in of about low the precision of this give the of talked hard year, kind on talked bit we've we of XXs normalized the But the tax a in this of years, a to being been kind because providing about over

Robert Sanchez

that that is the other forget we quarter one the the another to thing people a medical whether that I item in of add we expenses. be COVID, a had COVID savings a I we as see but go that are would -- temporary And do Scott, back be travel of they're next if lot can't year, but it's to to could pre-COVID but up where tailwind was to or lift it year, little thinking that maybe from is next bit second not will cost just facing. benefits primarily also it begins starts

Operator

Stephens Justin with return follow-up. to a for Long We'll

Justin Long

customer termination. you around I quantify was happened XQ, any color going what some contract this had out impact I help impact Could more called gain maybe forward? a from from that dedicated. you what one on and know there us onetime that in

Robert Sanchez

not of of provider Yes, that went go a was and we sale that gain model. sale, really what And LTL that was transportation, customer. change more a by sold that a of result really to to more dedicated but They a that's it was customer mode of million from another dedicated had modes. there in in different dedicated that equipment of mode of And for that, provider changed change an follow-on couple a is. a so dollars. way, as on to equipment, on the we was a type the the Gain

Justin Long

call. you've put And helpful. the fourth expectation your together the discussed moving some Just commentary I earnings sequentially quarter, maybe directional all the might in be for you know you're not fourth specific guidance down giving pieces of that when quarter? kind the but are Is on different adjusted

Robert Sanchez

would to from down earnings see back I important continuing quarter. year you'll lot next we to in to continue expect is are as think the start down market over period, rental, year, used Yes. that of The the to would will go be you're into in depreciation But see be as dependent up. thing solid and start degree be from we to benefits tailwinds still we the some be I on depending the it and somewhat. of fourth come But what start vehicle to a different from then going on get a -- the the that it to it things which, expect economy. Directionally, then to happens

feeling year, are going. as we're So decline where seasonal fourth quarter. some next about earnings But go good in the really then into we

Operator

Fowler And follow-up. we'll a Markets with back go to KeyBanc Todd Capital for

Todd Fowler

last two for me. ones just So quick

You've utilization quarter is that points hold the rental the into utilization is fourth about of that math shared rental with think $X past Does the as we given million every fleet about XXX right the us in pretax. where the at still basis now? increase of size

John Diez

still points works. think I the Yes, XXX basis

earlier, QX we going expect, utilization we expect QX year. As to line QX, last mentioned with in be I that into do

going performance. you in pickup So rental see to there QX a from to the QX are sequentially

Todd Fowler

then kind I annually. one it it of In depreciation seemed one, that was theoretical like guess. the adjustment, something more was the just past, And policy done

the point back, as I the side that take is do to two or from policy at year. long as the the this What on we in guess, again? something mark middle it used with moving equipment XX% were would kind look policy you this adjustment I price increase the if of year tractor potential bogey XX% towards XXXX? Now depreciation saw values at for out had a you trigger step a you potential kind where of about of mean are we some how have in -- the that think to

Scott Parker

normally then you're year the and on of because was of was one a relooking COVID. annual really circumstances. had year kind an The on correct. based adjustments trends, It's of based last this some couple process. of the We Yes,

a seeing we're side. you as trends the the from sequential of mentioned, improvement, tractor especially So perspective pricing encouraged we're on by

where is getting of we and XX% that it's quarter the the So in kind of trending. gap kind talked about the between second

around expectations policy. those think we So I our think going about are all factors positive as forward

at trends going the the now So we end we're from years. that the do will of into do that seeing this continue that to right But We'll that are annually encouraging following perspective. year. view

Todd Fowler

have it'd the your in something expectations to different were? what like trends or be sounds significantly it So maybe

Scott Parker

Correct.

Robert Sanchez

Okay.

quarter at look versus so onetime will Again, to add the $XX that expense I third. to quarter. to nonbonusable -- on contributor the frontline a key the me Let have mention, the question forgot be the employees, bonus script, the we which it's think that's do mentioned fourth the item. why in just we fourth a million down for in to Justin's earnings we I why

Operator

Robert turn remarks. time, Mr. at over back I'd there are call no questions. And to like to this the additional Sanchez closing for

Robert Sanchez

benefits is and for the call. you, Thanks a not being an Okay. actions we've we're to return on and continue improving everybody. excited, seeing the also but environment really profitability been Again, the one, number to of that only taking Well, thank take.

Look thanks, So Stay speaking with safe. soon. everyone. you forward guys to

Operator

Thank today's that conference. concludes for And all your you participation.

Ryder System (R) 28 Oct 202020 Q3 Earnings call transcript