R - Earnings call transcript Q4 2020

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Operator

Good morning, and welcome to the Ryder System Fourth Quarter 2020 Earnings Release Conference Call. All lines are in a listen-only mode, until after the presentation. Today's call is being recorded.

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

Bob Brunn

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

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

Robert Sanchez

then review on progress of fourth XXXX targets. call an and our we'll us. our morning, this achieve ROE we'll quarter turn XXXX actions the for and then -- review overview our for joining discuss and everyone making morning, our outlook our we're to thanks results. We'll Good provide On

believe all we'll has as improve, We're remarks, areas for questions. prepared benefiting call continue which result to delivery bulky dedicated and in to open overview to XXXX. of a investing and quarter, sales by see Ryder's with of broad tracked chain in resulted third seen two launched in which encouraged XXXX, with returns shipments leads RyderShare, -- pandemic. the in progress growth importance and XXXX. launched continue focused areas chain encouraged remain to continue on on our our and will that opportunities, customer second the solutions business. fulfillment, long-term important supply are We of the and of Market achieve and of trends supply of has let's goods, million customers. we've the especially, businesses. that increased We freight branding reliability that awareness a we the to such continue to conditions and activity. and range nearshoring chain to-date is logistics that in last in faced support awareness challenges and e-commerce an as turn the visibility and brand we In we onshoring Despite the an of our mile collaboration our objectives. the platform economic actions big With nearly accelerating expect Following quarter, our innovative in made to traction target increase already website supply and dedicated numerous freight campaign communicating capabilities, In strategic our support

products in estimate year These Full vehicle prior but intended investing estimates and automotive and has was are to also to changes innovative Supply our to help by to residual also customers. used or expected residual impacted impacted fund value chain our sales XXXX lower depreciation activity on higher vehicle costs. lease earnings negatively by decline results and lows. near were by and bring the focused improve. The new were forward and RyderVentures, that at were in capital partially COVID-XX, maintenance COVID-XX. offset We headwinds value technologies disruptive depreciation launched venture is set impacted corporate historic from recovered. continue impact is Rental going

During to capital our leverage to year-end. our $X.X target and due XXXX range as lower record cash was reduced free billion spending flow we of of within generated

While XXXX supported I proud customers efficiently. many of community challenges, presented our and unprecedented the ways which Ryder am in the and team extremely our safely

confident results trends it of of have our we Although, we well business over work saw that discuss I'll in turn this to still quarter for positioned is Scott ahead point and I'm us, key that At XXXX. to each segments. Ryder fourth

Scott Parker

declining Adjusted -- a vehicle expense the billion dedicated. was trailing prior and earnings earnings residual page improved $X.X as Improved Robert. for estimate Thanks, supply X. contributed depreciation lower line in on revenue also in ROE quarter per to XX-month Comparable period Total higher working and higher sales the results to XXXX compared expense was fourth quarter COVID to revenue and fourth offset lower and spending flow estimate related with vehicle earnings, share and earnings. and management. used cash year results Higher in value reflect the $X.XX revenue chain Operating related in a lease changes. company of impacts. as the capital state Record lower operations residual continuing loss reflects impact capital fourth reflects from share quarter was $X.XX per the value for year. changes results in management improved to in depreciation the prior mainly prior free due of to by prior rental

with of declined fleet due net realized revenue. the operating on to of lower changes, million. the by increased a X% in was impact higher is to X% earnings ChoiceLease Utilization XX% FMS insurance total FMS quarter of lease performance, the Solutions benefit to primarily X%, Rental the a -- of benefits lower realized improved from gains lease offset expense by and costs $XX results the initiative improved primarily a year depreciation includes program prior and lower reduced revenue earlier year-over-year FMS which on to of Included the higher million discontinuance pricing. $XX actions X%. This extension FMS by throughout partially than the revenue cost this lower results as million. quarter X%, above EBT pretax offset resulting taken vehicles, X% earnings fleet. align costs higher XX% and demand reflecting activity. vehicles. COVID from the pricing. value earnings from on impact $XXX on demand, our to also Management due year incremental a due for pricing our sales fourth Turning lower quarter renewal maintenance in liability decreased reflecting active impact of insurance pretax smaller in pricing. and savings sale we the $XX increase residual higher on including a saw the of partially of Fleet by due rental operating million the Rental lower benefited offset revenue prior Results revenue, to lease including of higher benefited XX% fleet from partially fourth related revenue fleet was estimate to power as used lower percent X. page by Utilization demand. prior lease benefit,

below versus pricing up tractors sales by depreciation the XX% truck XX% and used results from our up a were For up year-over-year We're lesser conditions Higher the proceeds proceeds mix Sequentially the and were for through vehicles Globally increases for to full X trucks. year were and reflecting trucks. long-term and residual the improvement encouraged expense XX% market company's proceeds extent sales prior primarily quarter. estimate vehicle high the higher double-digit of single-digits, both improved used for quarter. XX% was channels. tractors value X.X% a Page continued highlights primarily for proceeds reflect it negative vehicle retail target sold tractor price third in of market changes. XXXX, global with

XX% proceeds On noting our and provided the XX% policy increase XX%. trucks the increase call, sensitivity is maintain residual XXXX up the a to by in second and truck a were in tractor tractors depreciation US estimates. US we proceeds order price the XX% were current up for Since for price second quarter, quarter needed that

Although XXXX. mix quarter occurred that are these improvements age not second have increases or of the they of adjusted pricing generally indicative are since

levels these current residual As are adjustments would current such and tractor value our improvements, based has not that policy values additional truck require exceeded values residual approaching on those levels.

from capacity. of the XX% and we down X,XXX up X,XXX and within the target X,XXX X,XXX reflecting During for to year, prior the and is was improved our vehicles vehicle year Used vehicles investments used sales down market conditions prior Inventory held retail sale range vehicles from sequentially. X,XXX vehicles. quarter, X,XXX sold was quarter expanded our inventories at vehicles end that squarely

business the for with year favorable high to full SCS year quarter. was new earnings claims Growth partially X% in higher by higher compensation-related packaged and new Page our the percent prior increased X.X% as on Turning target long-term the offset costs. goods, It prior development increased digits. for and was versus EBT and by year sectors. X% consumer increased due higher operating Operating X. X.X% and was in to revenue of primarily pretax the single pricing revenue SCS chain automotive volumes. pricing driven the insurance of a retail reflecting line supply business,

XXXX. sales XX% was on claims was performance. XXXX. improved The Robert and impact the insurance line Page in over for X.X% earnings due our to of favorable year call for Moving reflecting quarter. a It development, year I'll Dedicated year tax high EBT outlook the revenue contractual DTS X% decreased target. X.X% the prior lower turn percent full single-digit as operating in Operating XXXX down versus revenue the to early offset before X. DTS was of by the to with late partially discuss our higher operating for back prior to

Robert Sanchez

Thanks Scott.

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

reaching target. before our our we of key XX% cost On interim of an for we've XXXX just outlined adjusted some is mentioned XX, outlook. As Page to equity our assumptions ROE match

was improved we financial it and thought has past guidance than the albeit lingering to uncertainty As visibility overall year in somewhat time with due economy. from the reinstate appropriate ranges an regarding wider last COVID to

is a Our growth of for assumption our based on macroeconomic the year. XXXX environment moderate forecast

SCS end company. for growth with line grow expected mid-single lease their total the by expecting lower targets. to and For be growth high year digits operating DTS digit is mid-single-digit due near sales. revenue the operating in FMS its lower single to we're long-term to of expected are the revenue full target

gains expected XXXX, tax to valuation prior to FMS all of estimate changes percent or value of in year also year-over-year sales prior revenue the earnings as than by from year. adjustments. strategic benefit expected first year in expected year million DTS potential earnings performance contractual and lease sales losses sales higher be the $XX $XXX driven million we depreciation the include rate full in range activity for to residual higher is activity high of In by to full of to $XXX its results higher resulting used investments. do policy. increased approximately from and offset not be the impact be XXXX SCS operating are and assuming expect improved tax is target benefits on These XXs the contractual a vehicle million partially remain of decline, the the in or expect operating in current single-digit XXXX. of to sales normal Rental high full pretax the the any We quarter activity In range sale impact continue revenue in XXXX.

range offset be investments increased below operating to as expected earnings as is high a percent the pretax target the single-digit slightly benefits growth. of strategic However of revenue

to Page Turning XX.

sheet on approval flow flexibility to with to allocation dividend cash moderate to to in and supply and/or positive and leverage business. focused out ROE target laid our subject over continue to cycle. growth generate in we of chain to achieve execute for we As XX% higher our growth Board share our buybacks. improve We're the strategic We continue ROE dedicated strategy future to on late our opportunities accelerating and committed XXXX long-term capital our reduce in plan businesses capital-intensive balance remain FMS free

to will cash capabilities industry. in that and or and develop for We via and investments. also discuss earnings growth capabilities These acquisitions capital strategic the disruptive Scott and leverage call opportunities long-term plan in technologies revenue I'll over to continue to organically may turn our to invest flow. through partnerships Ryder back provide spending

Scott Parker

Robert. Thanks,

replacement up billion in the between from Turning the $X.X be spending billion a in capital $XXX $X shown reflects levels, XXXX, rental activity below normalized XXXX, page XX. in resulting due billion, year to and improve to lease bottom sales following slide to capital was be capital fleets, Full of COVID. year. well the and in gross lease between as are from to are around where expenditures the $X.X This expected chart year XXXX. billion $X.X in investments billion $X.X better Lease primarily XXXX, up expected to increase environment, is spending. the at in economic higher million increased expenditures In forecasted last and

a However, and lease early fleet to in in activity late low due modest still expected is XXXX XXXX. decline sales

$XXX expenditures approximately be million, is by e-commerce increased line expected million as spending in the to line replacement dotted with grow from expected billion of the $XXX Rental market activity. in significantly the the about freight Forecasted normalized $X.X by shown and are billion used lease spending million fleet will between last to the to be up investment this used will be to chart. order and on capital $XX fleet. year million $XXX capture rental strong The remaining year. to XX% from Approximately refresh $X.X demand

shown XXXX above in of is spending spending As a well forecasted below $XXX rental million, rental following replacement level of CapEx normalized year. replacement chart, the last on the

leverage balance free XX. slide FMS at the to cash million, strategy but this under $XXX and is our cycle. cash well $XXX Turning expected flow growth to levels. cash record to business XXXX target. historical below sheet to our flow the free flow COVID generating reflects with capital-intensive the free in expected is over XXXX million Balance forecasted conditions, within of year level last above is remain year is

Importantly, operating declining we performance. this recovery including value initiatives, increased our EBITDA expect the Comparable in interim cost to contractual of higher maintenance growth ROE depreciation from reflecting expected prior also to to approach changes. by are XX% target Rental improved driven contribute savings residual year, impact XXXX, estimate and primarily returns. demand and

increase to We turn EBITDA call initiatives. comparable the our to discuss expect back strategic Robert I'll over to continue in XXXX. to

Robert Sanchez

and that earnings Slide XX the continuing the of improved logistics investments in initiatives to and gains is we platform highlights RyderShare. quarter and some of year, customer experience. of long-term revenue capabilities strategic experience provide offers and our our solutions customer collaborative in deeper RyderShare and enhance growth. expand the key expect We're will Launched translating visibility the in and second capabilities competitors' last efficiency to technology

win with us that Mile deals. Last provides or strategically in is the and enabling business We're RyderShare strategic consumer e-commerce more leverage of addition, to and of continuing located less. larger In days facilities e-fulfillment advantage utilizing reaching us our a two XX% to sites capable capability U.S. by

and in an encouraged leads that highlights We XX% exciting campaign to to of these We by year and ryder.com large used the network logistics returns appliances. our last XXXX. to above and capacity. continue which Last by Additional, white leverage chain of delivered the Ryder's Ryder number furniture provides the to expand trends sales X% of Ryder's target capabilities. activity. increase to retail launched planned software. increased investments for our investments and brand broad locations XXXX. the in supply following leverage increase towards third performance additional solutions. will profitable from sales management enhancements vehicle have We're Mile awareness continued campaign, sales delivery We encouraged believe well for We're in range will continuing home for us fulfillment order the We glove which include increased Mile, e-commerce position by planned run and and retail installation We're Last the quarter of everything in realized traffic overall an

improve our maintenance we're with physical capabilities an annualized enhanced technology expanding in costs also productivity, to for lower additional sales initiative generated million online to continuing experience. headcount. is and customer multi-year addition the XXXX. planning -- Included sales with savings workflow and investments has in in of million which our $XX expected locations, this already which invest initiative, forecast is We're to maintenance shop $XX and savings In we're cost

EPS now to tailwinds, forecasting of well earnings key loss outlook port $X.XX in page of The the to $X.XX prior on $X.XX, the improvement drivers of above to are EPS of comparable loss quarter growth. comparable Turning contractual $X.XX our and four-year a year. forecast rental $X.XX. of the improved depreciation We're and year first used We're XX. also EPS significantly a vehicle demand prior sales providing $X.XX above

an Turning target in to update to page with I'll XX. expectation our In actions provide support ROE our on to increase you our XX% approach returns. interim of XXXX,

higher long-term past impact last prior changes. shown the was progress residual since As expect declining key depreciation depreciation quarter estimate continued related of of impact ROE ROE year. move a in to we The we adjusted in second the make value our improvement to levels chart, as target towards to the contributor

demand that returns and vehicle making are to through retail In capacity remaining returns vehicle freight key continue the our cyclical market to including In our pricing our We're analytics to XX pleased improvement accelerated outlined. targeted cost higher size these We're used chain benefit our now by lease expected to utilization the capital Slide in Improved and continuing that the physical rental, dedicated sales actions. pricing environment. e-commerce applications results are to our and and primarily to addition, from and are target combination refine conditions and benefit growth our our include the rental expected higher more recovery and demand increases versus planning pricing continued XXXX needed utilization highlight see as by allocation expected with used from vehicles increase to sales areas versus year. year businesses. the and Full data and to expected quarter driven mid-single multi-year utilization the in on of I progress and to lease reflecting segments; capture vehicle size improve five XXXX. to maintenance we're used prior strong lease is just on rental supply using performance Revenue provide optimization digits We're ROE XX certain a fleet to cost fleet earnings we've we're initiatives prior rental aligned initiative; to actions customer is come expected benefits. savings reach and The and and decisions. earlier. market fourth new In investments portfolio pricing digital in and also conditions FMS, year. noted increased the year-over-year of changed locations initiatives. further year-over-year pricing expand

extension XX. XXXX, we multi-year date million Turning rental contributing annual maintenance lease cost XXXX. dedicated continued solutions. million additional Returns to savings to our slide expect RyderShare $XX in in as fulfillment growth In vehicles. further our in achieve We're accelerate above discontinuance the awareness last to we savings in program delivered to from e-commerce investments expected benefiting are in savings insurance chain million lease campaign supply businesses. brand from and our year. our on include initiative, also to are $XX These higher an and returns liability savings our Program investing in strategic $XX of and initiatives in and

logistics well We outsourcing strong compelling that trends to our leverage positioned this these prepared see believe That morning. remarks and and opportunities. concludes continue to we're transportation support

Before expect week. next go to please to on the later that questions file we XX-K note we

to please cover today, We so question lot one material limit of each. have yourself a

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

Operator

ahead Please our you. Truist. Stephanie question we'll take Instructions] go Thank go from ahead. from and first Benjamin [Operator And

Stephanie Benjamin

everybody. good Hi, afternoon

Robert Sanchez

Hi, Stephanie.

Stephanie Benjamin

moderate of year. prior called this on Robert kind you a to growth focus out lease calls

laid Or the guess focus relation the segment all? FMS how in said thinking has acceleration or I lease given the renewals environment guess, new I Thanks. to Just for changed freight this another out lease in way, year? prioritizing this the growth pricing, particularly are and guidance you in you've at about

Robert Sanchez

in We're and asset-intensive question. as our accelerating capital business and a XXXX, growth that's allocation supply in chain -- on talked strategy business. really dedicated changing the good Stephanie, focusing the really mentioned and we moderating about we in Yes. growth the more our beginning leasing

putting really we've portfolio, price So -- as that. part been increases to of we're also beginning of some see the as that doing in which is, through benefits our lease we

continue So did the we we to as that surgically than into of more we go next maybe years. year, last do couple to over expect

portfolio, end to expect business. growth getting try tail towards make I but on that that, we'll the start sure continue eventually the going in see to year be we're there with more lease to So to that sequentially. will we're -- then really And that of returns probably the appropriate the

-- the won't still sorry, would end going until say, to I'm the just probably of but have of of I growth growth, tail So, we're next -- that end XXXX. see tail this year year,

Stephanie Benjamin

Got it. you so much. Thank

Robert Sanchez

you, Thank Stephanie.

Operator

and Group And Instructions] ahead Scott [Operator we'll Wolfe take Research. Please from our next go question from go ahead.

Scott Group

thanks. Hey, guys. morning Good

Robert Sanchez

Scott. morning, Good

Scott Group

seeing So is what this any chain year? on you're for on just And side with talk spilling to the Thank is supply you. into trucks your then can you of get over can auto impact some you gains the year? assumption from these this if ability this issues? sales share And about us

Robert Sanchez

who've in this But relates while, are we gain you quarter, reasonable the around as following it the Sure. pretty a that's just waterfall as rate if UBS we think a that didn't that things we of net a give the about fourth the $XX forward. on. been had we the different Well, company you year the didn't going sale, on assumption going because about which all -- gains -- to -- gains in those that sale was had run million, just

rate that of below I run in because primarily year, probably a little volume. be think this XXXX for bit we'll

increases, just to fewer we bonds sell. would have are help though price even these to expect units going which So less

semiconductor rate. So, auto. the And overall, run that in then around slightly below issue

handle I wouldn't we you anything forecast. range we we've the think some into had to built pretty have we've say, have And good little impact impact. clearly of We've in know the with built from on got it's want that But major that? -- bit a I We that a don't Steve, if on of it. that. a an add

Steve Sensing

would I with said we're really base. just just each impact very diverse minimal a right of it's think say, but Robert, And I Robert our we're one been taking Yeah, to-date. OEMs it working customer as now week-to-week,

Scott Group

be just your impact minimal terms you're supply of impact getting talking or in start clear auto in terms to And business your ability to of chain trucks? minimal

Robert Sanchez

the was supply That on impact. chain

their we yet. had ability But we to trucks, On we flexibility to through rental accommodate a rental big some also the impact managing on able of sell It that. haven't it. We're side get would would that. be for feel probably be primarily we when trucks have that to our

want So I know if on seeing. what that to add you John don't we're to anything

John Diez

Yes.

So the Robert yet. stated, we impact as haven't seen

do a situation. disruption decline. record some ramp-up monitoring are up COVID the expect X the we've of manufacturing activity following seen moving We with in level We vehicle Class as that production

the times disruption of on as And get into do some yet. that will we some as for impact vehicles. of lead level But the business year. the now, haven't of any seen certainly, some we for we elongate expect So the

Scott Group

back Got it. Thank in you, guys. queue. I’ll get

Robert Sanchez

Scott. Thanks,

Operator

We'll from ahead. go KeyBanc question Capital our ahead Todd Fowler take go Markets. Please from next and

Todd Fowler

for been parts you've this where lot thinking you bit lower it guidance. about overall from as percent of in a a and full first than quarter moving year, little the out I appreciate guidance the maybe But of I putting there's morning. Thank the seems know seasonal standpoint. just a full Great. year. good the effort year a

that talk $XXX the seasonality to million from of you're a standpoint can the So targeting throughout flow And maybe cash of you're guidance, earnings $XXX kind year then free a we're what range think about the about to going first quarter? way normalized with just that you the million, expecting on right where is cadence relative the the at forward? the to CapEx in and

Robert Sanchez

slowdowns get sequential the in would the I the I in you seasonal standpoint, Yes. we first you a are that quarter, first say, guess if normal from first look the quarter at thing transportation. sequential seeing

Maintenance less little to with utilization, the Lower a miles. primarily then rental first lower gains the volume, sold up bit on down sequentially units So are fourth. and due from so the versus sale, usually come in that lease quarter weather the fourth. costs

I we're year, are it's you the also total of decline. were think of to pick percentage So getting seasonally, Rental the improvement right? the picks as at the a really expecting year --those us the give --but And look think for think drivers sequential which more throughout big as up I earnings I of would later rental getting the to we're addition are growing year. somewhat the And growing the the changes we're that less those due the benefits we remember XX%. Plus that, mentioned half from in value growing fleet depreciation rental in in to residual we're prior year. estimate as the second fleet the also

second question than So periods. And prior your cash flow. that around might be quarter in why free first you have a little then the bit less the in

of got we built of then capital And rental at a --remember, in kind million. little standpoint. a about growth a think replacement level I $XXX from there bit in lease

replacement range because were that this to really that in above have bit growth if little you we're year some it. probably only So capital, normalized look a that giving at does you're

up number. So flow If $XXX closer was probably it to capital. be million free that you'd cash $XXX just million replacement

Todd Fowler

Got it.

Okay. squeezed really I in on two with helpful Thanks, that was I'll so those. turn both of over but one, Robert. it

Robert Sanchez

Thank Todd. right. you, All

Operator

Allison Poliniak Please question Wells from go take our from next Fargo. We'll ahead.

Allison Poliniak

Good Hi, morning. guys.

talked increased provide? the conversion can at early point? awareness you color leads. I commentary Just brand any want on touch rates what campaign. I anticipating either color know the stages were about quality, to you know this you sales But any but or that on to it's relative

Robert Sanchez

type is campaign. pleased multi-channel this seeing very We're with what a far. Yes. we're And so

news So is but seeing you'll we're also of it pipeline we grow see the networks that of leads us terms online. on a some getting. really of And the in are lot

because Steve color around Steve? give you let and it's little a on Steve supply let bit I'll more dedicate, primarily I'll So chain that

Steve Sensing

Yes. Allison, months. campaign. from these we to business in Typically, did anywhere see higher-than-expected cycles six are sales leads our generated XX from the

that expect over to a QX So in really we us uptick have of about the seen half our back XX% and expectation in XXXX. impact

exciting chain across dedicated interest solutions board, really our of across supply all well. services and So as the

Robert Sanchez

right, is it our really really money in guess XXXX. campaign pieces chain key where of making even accelerating RyderShare And that. a it other of our this are get then efforts to part getting maybe and investments I of as awareness we're growth out strategy But want the a dedicated. get the our above important We the and to in we bit. e-fulfillment putting there. supply that that's one now key we're is part And single-digit into and is high that, range. to And that get in

Allison Poliniak

for Thanks the Great. color.

Robert Sanchez

Thanks, Allison.

Operator

next question ahead. from go from Alliger our take Goldman Jordan Sachs. We'll Please

Jordan Alliger

Hi, on Yes. DTS business. for you question the A morning.

relative I target You that of mentioned the strategic software targets does some are your to investments and impacting Thanks. that b, to when XXXX, just drag investments. towards temper wondering Presumably, case? And range? move sort to I'm we technology then that. margin that I'm guess that that's get we longer-term back past due and assuming a, is expectation long-term is

Robert Sanchez

is, answer are quick investments The yes. in technology. the guess I

by investments we're dedicated in being the they're the When is really in and if investments get then in paying helping a shared of for the dedicated also campaign supply some to paid So, partially ad you growth from growth. accelerate we didn't about between think that. really dedicated. RyderShare And wanted. The year we chain, coming so

sales and more too. putting in investment marketing there we're So

within to up can get to we they range. target us to are margins back see our you the yes, can we be, where our run of back come our rate need where So get kind

Jordan Alliger

you. Thank

Operator

Please next go we'll ahead question And Long from Justin and take go from Stephens. our ahead.

Justin Long

Thanks morning. and good

the could that provide you just your any ROC of the But back impact here this talked progression fleet. utilization? if circling growth based color, in on guidance about XX% wondering was you share And from assuming the on you what rental, I year for you're how provided. expectation you the that can freight could around, then spread the for So, to market and the

Robert Sanchez

Sure.

one. the take me Let first

to was want this We going on you our year, is XX%. XX%. our know mentioned call, the we're interim estimating get target our target we As ROE, if -- as -- to XX% approach to which to our we're

feel we that. feel about the good So, good about trajectory. We

the that As value really years. depreciation is changed couple depreciation that of here good residual the a those the off of portion additional you they're in know, the of lot from fall we just a taking where and final units of

off, a that. units nice those So from roll getting as tailwind we're

As we year, go talked about next we million. $XXX into

to that's So big boost. give us a going

rental that, we fleet go to addition seeing going In at into really XX%. to the year. improving rental traction We're that. gained and we're as seeing back some Utilization, next grow we're

contributors. are those cost So big another. two the Maintenance is

well target still $XX to way this on Our million year, we're $XX savings, we expecting we another we're a be million done time got maintenance maintenance the cost ago. few cost that our another probably as we'll so announced a By $XXX with initiative million full of years left. the

and get all XXXX. us about year really So, things of and XX% I that the to contribute is those we of that think good XX% feel full for

the an as $XXX way So additional additional go an really enter we're million we up of from million UBS tailwind of XXXX depreciation. as by with into long XXXX, as good rate $XXX holds tailwind a we as at run

Justin Long

you just color freight on utilization year? on that. Thanks. more following assuming what on Any Okay. for up piece provide can this the rental and you're And market the

Robert Sanchez

Sure.

one? to take -- that John, you me want Let

John Diez

Sure.

So yes, freight color, to do to stronger. rental little just expect on to obviously a get bit the of provide we environment the side, continue

QX the on activity seen in side. QX into and good e-commerce have We

planning and for factors. growth, are those around benefiting macro So, asset classes from those we're that momentum specifically

alignment the So historical fleet. year mid rental with to utilization of high in you levels can for back for full get the XXs expect to

each You back past the end at COVID of in three get saw alignment should as and expect year-over-year now first QX, get in that, we XXXX. the quarters of improvements we in

arrive kicking will of in the fleet the as year really in start this should the growth half well units second QX. we positioned for for So and be

Justin Long

Very helpful. appreciate I time. the

John Diez

Thanks, Justin.

Operator

our Brian and take Please ahead from go from We’ll go ahead. JPMorgan. Ossenbeck question next

Brian Ossenbeck

for Hey, questions. taking good morning. the Thanks

Robert Sanchez

Good morning, Brian.

Brian Ossenbeck

quick I follow-up guess So two on here e-commerce.

and had the the working And move got a mix you from been some the just that's a huge you you quarter, in it is uptick then UBS. you Did volume Clearly, clarification had probably then, on? on returns? the e-fulfillment guys can you've activity bit update follow-on where of in fourth strategy an have peak Maybe an more quick season log the positioned see can You just what little rental about that. for now. on the that business into

Robert Sanchez

Okay.

first to try me the hit one. Let

rental little asking sounds around On let impacted the a we were John e-commerce, it add ahead. our it I'll like -- you but that, more so how business, color on yeah, go

Brian Ossenbeck

things supply it's Yeah, side, chain else the other doing however impacting the portfolio? the you're fulfillment then and from or on rental

Robert Sanchez

Okay.

John in our increase color. a business. you think have definitely on big e-commerce rental will give little side, seen I a from activity more rental So We the overall first in

little quarter. let what I'll John we fourth the So bit in talk saw about you a

John Diez

talking of we Yeah. We of classes the in double-digit year-on-year. significant We're some tremendous pickup out classes light-duty vehicles definitely demand. market increases Candidly saw those meet those to ran from year-over-year e-commerce. a in

normal. truck continued into we that are So for little a performance around year. e-commerce strong we're better investing January next in But continue. And classes those we side seen planned light-duty our going that classes. bit seasonally had We've than on seeing is that. specifically demand

Robert Sanchez

me let about So, little fulfillments. let now talk bit a e the -- Steve

know we two you As components. have

capabilities Ryder have have network, that us Mile, handle And really more anything we which and providing the then you delivery e-fulfillment parcel the bulk Last and just is which mile final big -- go is e-fulfillment big delivery. else. We beyond and our bulky

go So, Steve. ahead

Steve Sensing

as e-fulfillment are couple years. combined, up last business, Yeah. about big approaching so revenue you over Robert. and here package there, those the million we the Thanks, of two gross bulky small Yeah, of look $XXX the businesses and at

Let me small talk package about first.

So the we e-fulfillment expanded.

really those to to system, that us out customers bulky we're One investments order the increases then rolling strong creating make feet. we'll square over volumes. a locations of very do business it be And for proprietary of big and our the a in again triple-digit now in quarter. in year-over-year with management in by half back and continuing year, locations and in here Customers million saw easier have that to one make business our

to us are to going make comfortable we and facing And like to with companies our self-service it there make be portal continuing investments picking us. business As do in people in customer up continue to with easier delivering it versus products for store. their home

seeing as year. here strong expect of good well is strong returns and So there, the at the growth pipeline end

Brian Ossenbeck

are tailwinds of off. the to like the then And great. looks million to as just back get it It factors? million, how this sense moving it's Can Okay, resuite for second assuming so XXXX point? And a some rolls are the going at a just D&A I'm quarter little about the us a of a on down give to clarification the set is you bit as about $XX just those what tailwind $XXX size. decline.

there have as well? gains So would an impact

Robert Sanchez

question. good a That's Yeah.

Scott so Let me he for you. to that hand that clarify can over

Scott Parker

Hey, had the Brian, the chart total that in allowances for to was in million. to taken the the and quarter, $XXX there clarify that $XX Of second just that $XX valuation first back second charges did was million. quarter we million of we

$XX quarter. accelerated. the quarter in So for and when million third really the half million we million $XXX the we change of in that's $XX year-over-year In had gains XXXX third between and million, fourth get second policy $XX fourth and the of the quarter,

the year, net-net half was in as the if net in beginning we that the allowance took zero. of the the gains at for So valuation the second look and the XXXX of year you a between

in of, gains going Plus seeing from million that benefit piece So still forward the really Robert mentioned XXXX. for we're and the policy $XXX accelerated. expectations about, kind

Robert Sanchez

the in $XXX $XXX million then So that a -- XXXX. million turns turns into

is. environment it $XXX you UBS XXXX, million benefit get So stays as the in assuming

Brian Ossenbeck

Okay. And or as or not that's the primary go could factor that obviously. down the that's up truck whether price

Robert Sanchez

Correct.

Okay?

Brian Ossenbeck

appreciate you for it. that. Thank I Okay.

Robert Sanchez

All right, Brian. you. Thank

Operator

Stifel. take question Ross David ahead. our from We'll Please go go ahead and from next

David Ross

Yes. gentlemen. Good morning,

Robert Sanchez

morning, Good David.

David Ross

little and have recently, bit on a M&A pause. The M&A environment, lot you guys organically been growing has a been

are financial acquisitive how do the in and go in right years? to the seem terms trends of a smoothen growth things out direction, over Ryder that from standpoint of couple next see you Now

Robert Sanchez

I the a one leverage, to opens we're within for the Yes. of back do some happy reasons, over yes, in ability that's up acquisitions future. David, to range good here because our our question. the target more that our -- That's be think

as you for to continue continuing we're know, we e-commerce So, capabilities. opportunities -- to our expand to look

certain roll-ups we that be at for and also customers, supply or e-commerce verticals even continue we increased verticals capabilities new our around get some chain look we today that's density to new in markets some maybe in whether leverage. and looking we offer We're might services obviously FMS businesses. and can we're not maybe So products of out maybe that looking that more at

it markets, look We're either where going have strategy. forward, we way to news the to that we our to go good of for we see to still organically. think I allow continue we're I pickup to to as main more So, do the acquisitions. But I going capacity look think enter new grow some is expect be don't is opportunities capabilities that driver us to that. or at new best those.

David Ross

Ryder down the And there? a and on Mexico growth quick then opportunities update just

Robert Sanchez

continues Ryder be a opportunity. big Mexico to

get more First well-performing near-shoring very of for operation good all, as a opportunity a we us, especially opportunity. it's and

the now to with So, there it's Steve growth Obviously good And I'll well open we there But, let we're multinationals that little been Steve very it story continuing seeing give need opportunities But that's big bit you returns. an mean update on continued else is add that? anything a there I operates up to COVID, that slower. are with to in is Mexico. that.

Steve Sensing

No.

you of just think right of here. as typically there said, majority the the US, of growth lot into support in the I OEMs a feeds

So, business to and good on continue great performing for solid business, focus us that.

David Ross

Thank sense. Make you.

Robert Sanchez

David. Thanks,

Operator

We’ll Scott Research. now go take our ahead. from next Group question Please from Wolfe

Scott Group

Hey. guys. Thanks for follow-up the

things sort policy current new to would longer need to think reraising used it, so today, potential, residuals levels you're trucks the electric side. end like rise the are ask that autonomous you on doing stuff residual given then, buying for trucks, even buying to with of longer-term think by maybe for prices impacts want term, about assumptions? the much And the call or your How you residual assumptions you I you're think raise anything from the decade of for today? -- different do So,

Robert Sanchez

that residuals? happen Well, raise the Yes. to you're -- policy us to would couple things. Was I question? saying guess our what of question a for the around for need

Scott Group

Yes.

Robert Sanchez

Yes.

Given jumping that see quickly. what through do been don't to we've us I

place I the think what in good our now, we market. where -- we're looking seeing policy we're are residuals right think at especially a

policy we residuals. we're side As truck call selling those above from mentioned the the on currently

in quarter side, below, the were we still close. tractor pretty slightly fourth getting the On but

So, of getting mid-XXXX. we a terms talk by in -- there we're good pretty in spot about

that I continuing think vehicles Those So, right Scott, in between between XXXX. now and prudent. residuals the with continuing levels, still And standpoint, those accelerated and is from the We're that? at appreciation the We're are to we're going gains we're those to those lower. wanted vehicles. it's to think continue add those else we depreciation they are are I The uncertainty depreciate that in way market. there levels. given place. trade-off remains to depreciate think the lower that to now and where That's residuals just anything a good to sell you to

Scott Parker

No, I think you're right.

term, factors. as then it's near And some factored So of kind kind mentioned policy to In past at I around kind near policy that you we think we term. consistency something on But and continue the the on of in be those side, into looking at. look monitor of we're and the look our discussions the see basis of would XXXX. stability go-forward of pricing kind that a as then, the pricing to we

Robert Sanchez

new the holding question units six years. that are seven signing. other your our on periods years were Remember, then And

adoption alternative frames, And think, already of an stuff our still the all But heavier -- as in down you closely. we've our where across we of vehicles. where know, going to massive monitoring appropriate, pretty those that them are of significantly making have bringing adjustments still classes. not further. we're we're residuals out lowered environment on But in fuel I we're So time especially duty

Scott Group

guys. you, Thank Helpful. Okay.

Robert Sanchez

Thank you, Scott. Okay.

Operator

from we'll ahead. Brian question And our go and final Ossenbeck JPMorgan. from go take ahead Please

Brian Ossenbeck

you've for follow-up. you the I rather. fund wanted quarter last ask a launched to Thank about Ryder that Hey. just Ventures

I what the was what there internal bit was and partnerships. had -- some a guess, putting what versus doing, the development idea maybe So, behind of little you capital behind before

it free reaction, going this the you to put process? been Or And is slower be the work So to from something already? tax what's is guess money I community? with a longer

Robert Sanchez

with technologies We now. started Yeah, an truck of of years us. been COO, four a startups and -- what these We these disruptive these disruptive first -- at sharing evolution some ago of started were this -- that initiatives. that's first really that engaging for a started we back app other had that's technology. few our started we And lot probably looking developing

new that to a add what of As base. they only where can really realized, help we know went companies a these not bit we're companies be able to can customers. some product unique which into you through we there's a position to -- us from market But of for customer the of these standpoint value our our in see

base. a really customer So to bring as in. as we went make our of we to some we we more would through that that, actually investment them were have want found there And certain companies stake,

can has it we together. to -- more our has So what well allowed contacted want what us think us XXX We've and announcement, us lot really can over that very been companies. see that the they received. post have a do has really to about -- got And to companies, talk announcement I been

a more it's say just So a what I would than initiative. much capital venture, venture

opportunities, a more And probably. we really As us understanding us you a know to customer change the with five-year to into But $XX startups those of then, our million they come talking fit pretty have for -- period good isn't market, it really about base. how world is to startups. over going as we're help a way engage with

that is an to called bring to exciting our company them to The them, bring about small that. the us to that company that first and company. did service to investment works by work with announcement for about operators. make owner It investment, dedicated supply was still, important with out opportunity yesterday working of are customers. what's went it. our a that's with we a chain So, We're Company but it's more for help excited We market. And SmartHop. help

Brian Ossenbeck

appreciate I Great. that. Robert. Thanks, Okay.

Robert Sanchez

you. Thank

Operator

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

Robert Sanchez

questions. Thank how of, excited Good everyone. We're you thank Well questions. XXXX kind XXXX. with right. ended the for really we pleased and All about Okay. you

at light, time the this drive I think a COVID really for market. have to continue tunnel freight in beginning it's clip. move the and position great really the We a leadership continue to pick getting to economy good up overall forward, at a business, continuing think company our great us end to to see new and of customers, prepare seeing with environment really and to the

I at all to to look you the you of thank some talking So, interest. forward And soon, your guys conferences. for

Operator

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

Ryder System (R) 11 Feb 212020 Q4 Earnings call transcript