Earnings call transcript Q4 2022

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Operator

Good morning and welcome to the Ryder System, Fourth Quarter 2022 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 Ms. Investor Ryder. President, Vice Candela, Relations for Calene Ms. Candela, begin. you may

Calene Candela

this morning welcome you. and circumstances. uncertainty to fourth Private some Securities during XXXX. of quarter expectations Act statements the Thank statements remind you'll Ryder's changes within and forward-looking that Litigation like XXXX and current the I'd to are to in based Good are meaning management's hear subject call. earnings you of Reform presentation, These conference on

these expectations competitive, from to results changes regulatory business, materially Actual may economics, due market, factors. in differ and political

For the a earnings to release, a non-GAAP and are which Securities in detailed Ryder's the information of measure earnings with and morning's call about Exchange Commission, presentation contained these financial on is this reconciliation available factors and nearest in website. measure GAAP filings each Ryder's

today's Officer; Executive Chief Presenting and Robert President and Officer. John are on Chairman and Executive Vice Financial Sanchez, Chief call Diez,

Supply President today and for Haven, the Solutions; call following Global and Management President of Transportation on Dedicated presentation. the of Fleet Additionally, questions Tom Global are Steve Chain available and Sensing, Solutions

turn I’ll time, Robert. over call this At to the

Robert Sanchez

revenue the Good earnings and in execution thanks morning, us. by joining extremely the and with balanced growth conditions our everyone on to the trends, delivered record results in fourth us for pleased quarter favorable Secular deliver throughout strong continued XXXX. I'm market and team and enabled strategy XXXX.

quarter. our the exceeded strategic today's which our then and again quarter progress through of begin made an expectations John priorities fourth overview our during will you I'll this take call with we significant XXXX. results,

outlook, we our then flow business targets and deliver positioned introduce on the assumptions expenditures, and We will our allocation capital cash how also priorities. cycle. review the over our to discuss capital I'll review XXXX our

Let's with slide four. begin

on value. with ultimately progress growth cash to top us balance and made which balanced returns and increase line In XXXX, shareholder growth, strategy, allows significant free our we flow

business growth. term our taking and cash and priorities long on free cycle, strategic focused are model, Our flow profitable enhancing over derisking optimizing drive key and to the returns actions

As we to estimates it late us we reduce FMS DTS levels optimizing insulate targeted on derisking began proceeds vehicle model, returns. variability. the value low cost to residual to In contracts years historically order ago to XXXX used in achieve and the adjusting to from relate several in our labor reliance lowered better

We wages escalated DTS revenue greater driver time, of and our than under and future. recover customers with approximately to facilitate year-end. increases contract adjust the a amounts more terms began pass-throughs quickly also initiative At efficient terms. cost is in we XX% contract by structure negotiated rapidly our new quicker, existing with the of could rate contract to multiyear as under This

decision of to vehicles Another business We received operations the this from proceeds as opportunities. optimizing initiative we of million the of in and announced in business have early higher our substantially and proceeds and UK. approximately the properties. the completed year-end, XXXX FMS was sub-performing return sale exit These been in redeployed exit of $XXX

flow. The maintenance FMS as cash initiatives labor initiative segments supply we in We in with higher to also chain anticipated. pricing $XXX costs, both address returns In million transportation free surpassed savings multiyear increase subcontracted returns dedicated to executed our in initiatives improve and our annual targets XXXX. important and and cost

to initiative returns higher Our FMS. lease pricing contributor in remains a strong

$XXX annual the end benefit an of the to total be XX implemented in service initiative upon over vehicles model, higher lease XX% priced the been With XXXX, already estimated completion. had months or An portfolio be As expected million has at fully the pricing returns. of of so. expected with been next contracted new our This to of is of XX% year-end XXXX. under additional portfolio by

increase Accelerating revenue businesses. achieving of from XX% initiatives long these an growth Lease Ryder’s Supply growth a XXXX trends driver and XXXX up Dedicated Chain in growth. reflecting higher UK XXXX, secular XX% in X,XXX accelerate of our the to profitable was in is growth for in Chain vehicles. term Supply with inflicted in key from Dedicated, positive and return

Chain Supply expect generated of continue term new to also Dedicated contribute to and XXXX, customer in which strong contracts long growth. we sales will profitable

us our accelerate XXXX fund business. balance us in strong growth to we our growth acquisitions. acquisitions In supply supply executed enables as support well organic Our several sheet chain strategy enables - to to strategic as targeted chain fund that

solutions. e-commerce largest the scalable was XXXX e-fulfillment omni-channel in fulfillment acquisition significantly and and network and Whiplash grew our

Baton, product of development capabilities. a new Our enhanced tech and technology our startup, acquisition

to strong value. Our dividends. opportunity repurchase shareholders us progress quarterly significant strategy through programs Overall, ahead with increased balance demonstrated of and we million to shareholder $XXX over share our through balance return returns, and plenty sheet also on growth cash enabled flow three for

the I'll turn now to our call fourth John over review quarter results. to

John Diez

quarter operations sales. Comparable $X.XX year, higher earnings in by prior fourth and supply $X.XX acquisition. revenue earnings fourth offset billion five. on $X.X and revenue chain, driven company partially dedicated supply the and Operating continuing fourth chain the lower are from Thanks, XX% year, used Total quarter the Robert. the from were in in prior page was for in segments all per share by rental vehicle the up from quarter, reflecting results growth up

vehicle truck was well increase flows to primary cash properties in business. cash XX% from million on sales prior in $XXX year, XXXX, returns. $XXX XXXX constraints for benefits capacity XXXX of billion exit million the of our in that expenditures, of year market, reflecting contained our as reflecting ongoing initiatives decreased to financial partially approximately includes sale vehicles the planned the free full $X.X and metric Free the in higher the from capital part UK, as from higher flow Return by offset process. used as equity,

revenue negative UK classes. the business. Fleet down pricing globally results on management X% from higher higher six, operating primarily increased of rental FMS due all a operating by solutions increased increased the management to X% higher Rental reflecting to fleet driven wind revenue across Turning page X%, X% to despite revenue pricing. rates impact vehicle

year, were changes million, million from benefits to unchanged gain despite cost management These depreciation prior the $XX earnings and in headwinds from prior pressures. earnings residual value from year-over-year rental higher $XXX estimate declining fleet by and inflationary related Pre-tax offset were lower results.

full Rental quarter target utilization above percent fourth larger the was strong both at XX% the XX.X% XX.X% as Fleet operating EBT in segments for on fleet. power long a fleet revenue of double digits. well on remains management the a low the term year, and of

target low in management fleet gains quarter, vehicle percent in double was range. used digit all EBT still the the Excluding segment's

America amount by for tractor highlights X%, results both vehicle market the vehicle conditions X% than amid proceeds used proceeds the tight quarter. sequential anticipated. a activity. year, declined sales used availability were reflecting freight in used Used On relatively remain prior with seven moderating Compared strong, Page whereas truck we a declined higher. basis, lower proceeds used North and trucks, tractors for vehicle

and X%. In truck proceeds decrease proceeds fact, the X% decrease

During vehicles the of from X,XXX the sold we which exit to related our used X,XXX quarter UK business.

sales down and prior UK activity, year vehicles the the vehicles approximately quarter. vehicles from XXX XXX versus by the Excluding down sold third sequentially were used

X,XXX of was inventory target at Our year-end, X,XXX range X,XXX used to vehicles. vehicles our below vehicle

for residual Although pricing remains purposes. used depreciation well used estimates above it value vehicle declined,

of slide used estimates incurred tractors for XX appendix your original residual cost, the both sales a provides For information, trucks. and percent in value as historical proceeds

digit page XX%, XX% the primarily double higher revenue reflecting eight. industry year Whiplash generated increased organic chain of All verticals new well revenue growth the adjustments supply Supply Operating to Turning versus EBT higher as and increased on by higher prior acquisition for the new volumes. organic business. as quarter. pricing, primarily chain pricing and XX%, reflecting growth driven business revenue

prior early a as to distribution percent in Supply customer partially These charge by single of chain a were asset digit offset impairment range. segment's operating termination $XX high of benefits the was quarter, year, but million EBT the from target a up below revenue center. X% related the the

Moving operating benefits line target. labor to to from adjustments conditions single-digit Dedicated and higher as increased the volumes. page XXX%, high increased high for primarily was in address of revenue professional of a market on due increased operating drivers. unusually to Dedicated percent with costs, nine, pricing as X.X% due improved to EBT EBT pricing well as segment's Dedicated revenue XX%

XX. $X.X lease up for was billion due replacements to Turning year-over-year lease to vehicle increased of XXXX capital spending expiring slide lease contracts.

and Our replacement XXXX of lease growth forecast reflects capital. higher billion $X.X

We lease vehicles be to the X,XXX X,XXX expect to fleet up, at year-end.

to declined rental to XXXX In prior rental $XXX year, as to decline is million of we're expected versus $XXX reflecting capital normalize. spending [ph] expecting conditions investments. million further capital planned more spending greater XXXX

anticipated X,XXX from down average be rental be vehicles. Our down ending to is to is fleet our and XXXX, fleet by or X% expected slightly

and demand tends a trucks on downturn. volatile trucks spending asset We during to continued relatively the to versus less trends, increase benefit to continue from stable as tractors class and be little a capital pricing

and $X lease XXXX Our full forecast billion growth capital primarily is year capital reflects for higher replacement gross XXXX. versus and expenditures

We UK the ’XX. expect of exit. from the year related to million low of proceeds in vehicles The approximately $XXX includes used which sale proceeds prior

$X.X year net are full XXXX expected Our capital expenditures billion. be to

continues Dedicated cash comprise In increase $X.X slide to businesses, billion, and the reflecting in the cash expected flow XX, operating $X.X and our grew growth XXXX. Turning improve trajectory Lease revenue. supply of we to XXXX, approximately contractual operating of which Ryder’s chain XX% our to in flow over time, our to billion

strategy. free has reflected Proceeds The profile UK targeted the from resulted free XXXX also well the in capital free From in balanced the implementation COVID as delays and benefited strategy, growth changed since lower XXXX growth growth negative spending cash of growth free flow. higher time. effects cash flow for our under the cash XXXX. higher in OEM balanced of objectives capital FMS Our lease lower business at exit generated and flow significantly lease as the

right XXXX. to number free of generated fleet prior to volumes business in in capital, reflecting from slide offset sold be illustrates flat investing proceeds units expect to and sale XXXX, expected activity on we lower investing $XXX in due replacement to generate cash flow, to and cash million increased side for Proceeds by exit UK of of growth prior XXXX be the expected this to the the higher flow the the $XXX free approximately in used to strong are the Summary adjusting be million. in growth year-over-year, is pricing. vehicles by

term long our Our drive profitable support to growth. capital strategy allocation continue priorities to

in growing amount in Our invest large top continue and of to which time, priority our to organic includes year. capital over growth. ChoiceLease each This fleet is a draws replacing

invest facing mix. vertical in plan our to Supply to pursue in supply also chain as a other drive in growth and expanding acquisitions, digital targeted our continue have Chain transform to and RyderShare, accelerating as been continue We’ll have our customer through balancing both and growth We key Dedicated. our technologies, to including accelerate platform technologies capabilities, to business, helped of which contributor Acquisitions chain. supply terms visibility well

sheet and as balance Our as dividends. to strong, fund return targeted repurchases share to remains ample through capacity capital well organic and we shareholders acquisitions growth, have

turn full the back now introduce to to I'll year our his XXXX call from key forecast. and XXXX results highlights over share Robert

Robert Sanchez

along favorable secular revenue our highlights outsourcing XX%, full John. and results. demand XX%. our increased key year to for initiatives all supply including Thanks, conditions term up trends, chains with up solutions. in from and trends, continue to drove accelerated revenue drive long XX operating XXXX pursue comparable resilient reflecting Slide in companies provides EPS segments market $XX.XX Secular higher transportation logistics These to

returns reflecting We initiatives. FMS our XX%, of favorable in conditions generated market from strong continued and ROE benefits

in positioned XXXX Looking for execution ahead, initiatives XXXX. from we our believe well momentum our and us solid multiyear

of XX, key highlights XXXX our outlook. aspects Slide

market In to continue to we outsourcing. and favor terms trends assumptions, secular logistics expect of transportation

XXXX, We in in soften rental. freight to lower macroeconomic and vehicles and demand expect used the for conditions

and delay the We expect constraints to from signed. new delaying earnings and delivery throughout OEM revenue leases production XXXX, impact continue

We target in schedules. dependent expect delivery on although range, lease OEM regrowth our

expecting months, not lease sales as until leases most for signed XXXX deliveries approximately of remains today. XX backlog Our at and we're

professional also higher We to were are in expected including conditions encouraged and improving interest drivers Inflationary by in quarter anticipate continue. fourth XXXX. market costs, the rates improvement for incremental

as X% financial In impact is forecast approximately rental of by dedicated the to revenue exit, terms and XXXX, operating UK supply offset normalizing expected growth chain delays conditions. strong and partially is OEM of for grow our

$XX.XX strong Overall, cash around in between in returns of vehicle to and growth and chain million, is XX%, in XXXX, prior in we EPS flow higher cycle. from down $XX.XX the with from to result through be in higher earnings to remain and ROE conditions dedicated Free XXXX, expect is prior supply drive UK long expected initiatives target strong between normalizing the rental. reflecting primarily is and exit. $XXX Comparable year, expected to teens. term to our remain increase sales be expected to planned our used due line reflecting year be proceeds lease XX% and profitable and and investment and high our in

our outlines key XX Slide segment outlook highlights.

be of impact operating our expected normalized as conditions percent a OEM revenue to delays the FMS. operating in expect rental growth exit, and multiyear of and conditions target maintenance in market double to as We benefits well EBT digit is in the revenue used UK rental. low as cost FMS pressure reflecting vehicle savings our range, normalizing segment's and pricing sales lease from initiatives,

Supply the dedicated to operating offset as digit and our is percent operating of revenue secular the range, in at operating the high segment’s partially EBT of target are contract be by end as are to from expected driven segment's growth wins acquisitions double percent by revenue chain a chain trends is digit single expected target, new range, initiatives. expected growth in low pricing amortization target low growth of the and approach pricing actions. recent to EBT be reflecting revenue intangibles in and actions Supply

In primarily disruptive accelerate to trends addition, make profitable investments in growth innovative dedicated continue strategic expect in to and chain supply logistics. product transportation technologies we and and new leverage and development, in to

in the Our conditions. forecast new discretionary Overall, earnings morning. we million strong execution announced of XXXX this also assumes generation repurchase program economic expect weakening despite share X

sold macroeconomic are to Slide comparable are lower changes results, on the by of $X.XX. environment expected transactional EPS from EPS gains slowing these provides end outlining a XX the both from freight of chart on the forecast. used the rental XXXX and vehicles impact key and high The Lower largest a reduced reflecting XXXX headwinds EPS businesses. reduce to our reach gains

pricing used year. expect vehicle the We below and be prior sequentially expect to it throughout decline year to

their reflecting our target Inventory reaching vehicle a are leases are range levels the expected of term. expected to below X,XXX but number of approximately vehicles. sales of to increase increase, XX%, also volumes Used to X,XXX higher end remain

These be Lower in is Rental rental smaller plus fleet growth. $X.XX. strategic and addressing in investments are investments to to XX’s, expected technologies $X.XX. our range but utilization to EPS expected on to logistics, to than the target foundation XXXX. reduce in levels disruptive on Incremental lower transportation by providing continue a EPS XX% utilization seen the by expected earnings for and focused mid and reduce revenue of be high is future

Non-recurrence of UK our exit earnings and decline will in assets comparable FMS from sale the exited results reduce the XXXX. of from prior business from which by per in share related does earnings year were This $X.XX. not excluded include costs, UK EPS gains

which EPS, prices. SelectCare and reflecting lease contribute ChoiceLease $X.XX to is reflects expected higher contractual, FMS primarily to

to and delays. increase reflects continue We from earnings from by primarily count delivery $X.XX. lease expect XXXX OEM XXXX ongoing expected be revenue This the by activity progress. to limited share to growth share Due is impact repurchase in and EPS

in supply well ongoing from businesses. EPS to by EPS benefit return trends, growth initiatives returns reflects as growth $X.XX. profitable increase increase accelerate largest This chain to and secular They is are expected these The and as in higher increase in XXXX expected our in dedicated.

high gains and dedicated The EPS to as are of supply earnings end outsized our in results $XX range as $X rental. to be for contractual gains spring, our generated the to is well with EPS year. $XX.XX and normalized rental $XX.XX, our comparable XXXX. chain Based by core lease, the on a and of forecast forecast, approximately primarily our businesses, estimated $XX.XX Included of XXXX in approximately forecast

our to a EPS to currency cumulative note comparable approximately EPS $XX.XX our a XXXX. to in to the translation FMS related year business. that forecast forecast comparable UK of prior of also XX, GAAP the exit of for we're $X.XX. includes full $X.XX year We're the Turning $X.XX quarter EPS charge Please $XX.XX page versus forecasting $X versus first $XX.XX providing of

chain strategic and drive On our page ongoing we beyond, initiatives initiatives. sales new in XX, expect expect into trends and Supply marketing looking key ahead multiyear from benefits profitable for XXXX growth. opportunities incremental dedicated, secular to we and

both supply to dedicated higher will inflationary and recover returns. contracts contribute actions chain in strengthen costs dedicated and Our to

We remaining expect we portfolio higher our at upon returns price as incremental lease renewal. benefits

targeting will XXXX benefits cumulative estimated to annual are be We and $XXX initiative complete million. this

exceeded pipeline savings maintenance We and multiyear annual million the our in target efficiencies. initiatives to from drive have cost savings XXXX our $XXX in initiative additional further

We targeted expand expect additional industry add to our supply to pursue accretive in acquisitions capabilities order and chain verticals.

dividends. capacity strong through sheet to shareholders to to return repurchases Our provide continues us and with balance capital

operating Turning Ryder demonstrated to XXXX believe record on positioned in to our momentum opportunity supported significant expertise see for trends and secular slide value. balanced our initiatives. growth profitable strong with from ongoing operational move strategy, shareholder meaningfully our is momentum strong – expertise multiyear we us results operational to has well XX, We forward. by our which we and contributed execution as growth and provides increase It

including achieving to prior are on we shareholders. products, initiatives to so outperform long that in strategic technologies as continuing are focused our capabilities transform as business cycles. and financial that Our positioned term high and committed the ROE over cycle, our deliver well ultimately customers the will remain teens targets, our investing to value We to

each. to lot yourself to Please file of our so cover today. concludes please we today, had prepared a material remarks. our XX-K that That note We to expect later one question limit

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

Operator

first Thank go question from you. And comes Please our Alliger. Instructions] Jordan [Operator ahead.

Jordan Alliger

know in you economy. to slowing Yeah bit. know you supply a be you the pipeline that hi! inbound talk getting, you about Maybe Can talk bit chain the the little a little about I want for might just proposals

the pretty security. sharing Are How seeing we whole be are manufacturing. of into dovetail what still pickup. you think seem sort end most the supply meets it because concept just And general, in which it it more you chain the about, for may seeing still robust, especially do the you hearing demand? are higher to You know seeing verticals near

And it about quarter. And impairment maybe what more that just the the million. was is just it Thanks. to for finally, $XX thinking the then did how about, reflective add back,

Robert Sanchez

Jordan. Yes, thanks

we're you – But seeing the and it strong. more stats, secular some Let be color some more to supply hand you outsource, give around might Steve me level activities to I'll to companies wanting to people then listen, be we continues outsource, certainly where over give high more to benefit trends give wanting you seeing of chain I'll it.

Our pipeline as an example very a we strong is up year last year-over-year, and X% sales had year.

deals Large the up with help on I Last of are would for that and business looking we've corporations with multinational e-commerce are supply are got and also now e-comm these picking major chain activity, up type XX%, so more that also Mile. say Ryder

that's So we're seeing. what

what – than relates bit is The them. impairment, with. we it in As distribution little a we're bit bit customer of an was that terms credit the we of a Their to a specialized. would little say would doing anomaly what management with. I was contract softer the types was a a go equipment was that more for of This customers normally

to equipment. the So account that we've redeployment of taken that impairment for

There's But forecast the still in we you and year you. as built credit. this going still of that that that full There's we a bit know, customer exposure. for – the depends built we makes just how so that some as into this into far out year, on gave all little exposure have

the to of pipeline color hand types So Steve seeing. bit we're little a let it give that to you customers and around more the over me

Steve Sensing

really again very chain, a row. sales know remains digit years Jordan give record that's double up year, you year supply a Pipeline straight yeah, last – of recap two of year-over-year, Thanks, in healthy so in you Robert. we're percentage. kind another

our effort sales the I our really industry think better certainly continued, campaign, marketing Now of expertise that's and investment team. really in deep the ever of an vertical our team

are capabilities. and a services of our customers expanding lot So

customers I think of our than you more to before, or come I've us service shared guys capability. one XX% with for

very So that be continues strong. to

onshoring Mexico, providers Certainly top out shoring there. top near probably a then one and built the cross down the in on the of great we front, service of one And border business there.

we've Mexico, ball there. on So feeding expanding in U.S. is the got which our into We're the eye

point. So signs at all positive remain this

Jordan Alliger

you. Thank

Robert Sanchez

Thanks Jordan.

Operator

come [Operator Instructions] question is Jeff go our to Kauffman. going And ahead. from next Please

Jeff Kauffman

very be this me currency explain congratulations, to much, more please seeing you results. that a about Thank you and we'll terrific translation little expense just cumulative in Could ’XX.

to to I understand to a better is want you to. going related happen, through to Do should I'm little point as its and just it what Just when it, non-cash look understand it's have we that's and your predictability but guessing better. any

John Diez

Yeah Jeff, John here.

that to It today we're You're the correct. going – that sit to going absolutely item cumulative the need in accounting rules to under we're need translation is non-cash a to equity. take losses

second fully Sometime to call to out the quarter, but ask through tough next accounting probably it exercise, and it then next year UK, all you complete when midyear. do third midyear that is rules be will whether take we It’s to or that be to earnings. exit expecting of year will we're the

is impact UK been either the flow cash equity. there impact losses It's today. we've translation no not the it a since and So related cumulative in to operating represents on

Robert Sanchez

way next Yeah, year, this by not the that's year.

John Diez

this year. XXXX year, This

Jeff Kauffman

That's one. thank in queue, my in ’XX Got get got you. This you, you. back Yeah, I'll now. year? we're

Robert Sanchez

Thanks, Jeff.

Operator

And with Scott Research. Group our next Wolfe come question is from going to

Scott Group

pricing. just a just there's tailwind like morning, current you've free the from Hey, how leasing Can then aren't this guys. growth. about more little and you headwind fall FMS earnings this sounds year? look contractual got if bit just go Why the separately, to right, IT thanks. I or year? much leasing growing maybe any on assuming levels prices you depreciation Good within used if And are talk guide,

Robert Sanchez

A of Okay, thanks comments. couple Scott.

we're UBS’s pretty the the we're want as we the would are to how don't coming ended where market We a year in going, because where to don't First we were all, like from. expect that, but where cycle much with and leave give assuming driving? you drop of significant we certainly from

expect to look sold consideration. be that proceeds. you why certainly vehicles when So the kind on do the cash we though, expecting about that's taken at overall so of we're We flow, have more our same into

benefit around it’s been Around we about lease, expenses. that's do have primarily offset by variable million. $XX depreciation, But interest a

interest, year, increase we debt we've interest, fund an our of our – impacting through know that up and there's that's You in seen as a we gone which variable the portion FMS. over variable is

So have then why on firstly, margins much FMS certainly not we're the seeing are the ranges, more rental – and to you remember, even target within to juice our though going to more on normalized be UVS are going levels.

So beginning benefit changes changes see and that all the you around made those are the of seeing and we side. those on to maintenance pricing also cost

we're from is deliveries OEMs. having around this issue the uncertainty we go into the The year the as

to We year, are pushed but grow in and based that end out we our tail in now on we be more pushed that fleet more the probably vehicles, Otherwise come the to into sooner, allocation more X,XXX are it'll towards is more it's see X,XXX benefit continuing able to you're today. produce that going going to to the allocation growth If of XXXX. or expecting get have benefit get XXXX.

the start, target, high XXXX, at we're end of that OEMs assuming to the that's can get you in get period hitting as probably caught in a to up. coming So target we – point some now range, and multiyear really of going that have

Scott Group

are gains. they where helpful, you we going I them them anymore. do We're they to going are understand just keep the Is to just to on where now can we're That's not that that them and just around continue see plan? and keep means just know the we move that, hope and residuals, just

John Diez

We back in appendix. with sitting where Yeah Scott, residuals. there the the we presented we're in presented

year, not estimate into future. next are the residual into any could to estimate so going you expect meaningful projecting We changes, value continue changes that

Scott Group

thank Okay, you guys.

Robert Sanchez

Thanks, Scott.

Operator

And Morgan, from question our go ahead. J.P. Brian Please comes from next Ossenbeck

Brian Ossenbeck

morning. questions. Good thanks taking the Hey! for

You bit a Just was impairment. that little how around it's the this weaker was you but context bit it back sounds than can than you some if like happened? It unexpected, a be going to thought. that it credit maybe more come customer maybe sounded a wanted on was $XX put know million, like little to

So impact combined maybe there’s with market an that. end

you you around context the some around and things maybe you see these frequency if also to helpful, further be would context So – know get be with this. happened that which good will Thanks.

Robert Sanchez

I the points key Yes, think here. hit you

this typical of say specialized number our developing is – a is, kind one was warehouse Just, below obviously not I this also we to only us credit It's average automation customer that operation, more really not which way were because serve there, profile customers would in to using as not use a the for customer. had a our, of we to capability.

customer. operating are We have two the still operate impairment the We to this one that on continue the facility. facilities for for customer. was facility This other we

than that, an that I kind assuming As there. forecast like other that where some specialized it's type of equipment have investment, to take of we unusual situation have any we have especially many other this adjustment mentioned, built our into But on very we of for customers the year don't we do amount have this.

a little you color. it So, gives

we credit unfortunately couple relatively deteriorated ago. the situation since a I think it customer’s signed that years for deal is of unique us has a the

Brian Ossenbeck

just just Okay, like to to on there's And clarify, the, dollar then gains, it back understood. sounded outsized in an the XXXX. additional

So path, split potentially between maybe have a little we as won't rental go utilization maybe I had tractors. that that shifting down go where just back trucks quite bigger so higher, to now to stickier wanted versus a couldn’t Shouldn't you're you you rent it to more could that and be see you just as it understand that it then out question picture gains. And you and is, if before was?

Robert Sanchez

– of breakout year. be couple gains Around the things. now, side. the primarily right it going this $XXX Yes, to I of guess a had the dollar, of million We is gain on it's

again, So a would forecast. is we're come it's expecting say I this again, – But that down. to just

got you rental. primarily a So gains, in of but there buck also some

you're Rental, right more trucks and now. that it's

now trucks, be it and is like used XX% trucks. think to I rental fleet our XX%

trucks that is less in the So, certainly tractors. movement are there, than cycle and we've which the already less terms a on dependent believe positive we seen of freight cyclical,

But And that because be period a than and lower the that typically way, local back truck is remains forth. the used utilization tractors truck versus a taken more seen. again, deliveries out can are bit of longer typically by for tractors type come is to and little time

more is driven all a the adjustment by fact lower. is in tractors, that of forecast the well as that might those versus into So kind utilizations built bit the be the little as shift trucks

Brian Ossenbeck

Robert. it Okay, thank I Very you. appreciate helpful.

Robert Sanchez

getting By the but point a way, the return. better important lower still there utilization, is

the get rates you better lower Thank able returns are you because with So of to Brian. utilization.

Operator

And Poliniak our Wells comes Fargo. from question Allison from next

Allison Poliniak

Good Hi! morning.

we're that we just go far that you're back the of acquisitions that with you're to to know 'XX? well. for the because as walk intangibles that you percentage. business terms at amortization outsized in actions growth starting pricing How that the through Could are headwinds to at see are margin or there? services chain excluding if growth getting well? I as are the Just kind to not – along trying in know Any there, of the on get you from the situation, you Thanks. supply maybe of the this want EBIT those target client point,

Robert Sanchez

Other, growth back, without amortization the be tell target. improving. we the at would getting to lift you, XXXX, the got the margins in expect would of I Yes. we've and

would – you bit e-commerce, I of saw less a I In saw wouldn't say would in any We a so expected seasonally, we what tell growth. but a of e-commerce that you're in that. than headwinds seeing uptick December an we have slowdown terms we of little see,

bit maybe have of a As we little taken on this go into we year, view cautious a that.

better a depending it little on be It works could out. bit goes. how how see e-commerce Let's

We built also there as in I have mentioned.

potential some associated additional with We additional customers. have on risk that costs

without the amortization, again, So at in forecast. we'd our be target

opportunity negative In that, addition have don't with to you those do the to other if in out that I play fashion. these mentioned, items even better a

Allison Poliniak

that acquisition, of the there? know outperforming the or to opportunity given Great! just I And there's maybe been growth is market it plan? Whiplash is then thoughts? Any performing just volatility it in lot on e-commerce, a just that

Robert Sanchez

last of seeing you plan. a year, with really we cycle. did tell Yes. the I now thing half would through well. It's generally We're first kind this performing of

we little So not actually as seasonally as would much since we slow nice saw as down volumes grow expect. they we December, a or to bit got slowdown,

So make forecasting looking We see perform growth as positioned go around we're excited and for as that cautious e-commerce opportunities omni-channel. well thing help want The the and over into more cycle. sure this in how probably fulfillment to very we customers we are opportunities We're that very the there. we're more little this it. with about we're a capability. year, But

Allison Poliniak

Great! Thank you.

Robert Sanchez

Thanks Allison.

Operator

from KeyBanc Markets. at comes question Fowler ahead. Todd our go Capital And Please next

Todd Fowler

look and just the Thanks how good Hey I guidance, to Hey morning. and quarter thinking at an Robert! get Maybe year. shape If the Great! John! you're first about the know you it's of and idea there's sounds coming of it midpoint parts timing in of really the guidance lease full expectations about like XX% rental. that the with year at for the some moving vehicles of

some for and year what the of cadence see rental are with So, quarters about throughout this you the just thinking year moving utilization? of and parts the gains should we how the

Robert Sanchez

a for about to conditions assuming color. we're in bit would we kind in the deteriorate type the of of we there's potential But of throughout half year. of we're go and I that transactional Things the built more down second year. a generally a the mean throughout the let the vehicles, slowing give and type I throughout shallow business, the lot John talk a assuming Yes, environment really little as recession market continue year, right? slow parts rental you of used

of expecting The earnings chain, lease deliveries, on potentially, doesn't side. OEM we're along acceleration we tail the continuing growth, supply on to until Right now, the happen offset would then some with year, of that anything? in that continued earnings end And those assuming XXXX. recover. into then dedicated and could benefit the see especially more have which John, to is depending be we're

John Diez

would what Yes the just we're do Todd, have of projecting I add, impact we for results UVS and proceeds.

the throughout proceeds year. are we declining So expecting

business half as in do put growth momentum that bit of the both second seeing to perspective, we the a as dedicated of and better. lease little growth some we're expect in some building, pressure, supply supply from of well which that So, other chain, offset we're of chain be parts that a the the will

that's out how and to So you year those things we're got the to just about. balance projecting come

Robert Sanchez

it a as used we for a I we're normalized mean on you trucks said, at expecting on average, - normalized average, if rental. look environment and

play we've the about So, over the core this is we right. think about you had earnings and discussions if this expect grow, how last several is quarters out, it continue seeing that to to it,

rental earnings to the used We from down. and come vehicles expect outsized

earnings We and expect to the continue those as grow move businesses. we hold up to core

to important an we that. on and obviously, execute strategy continue year So us our as for

Todd Fowler

Yes.

that was of and of You UVS question in know my basically, by normalized the second actually Robert, with more half a in you're sounds the kind it rental. range both like thought kind that

so it And of pretty and into in earnings run about exit think a the of should the fourth rate be exit as rate the a 'XX this quarter decent we power we point, and as more going kind normalized the cadence at year.

Robert Sanchez

statement, I think that's a fair yes.

Todd Fowler

I one. And good. last if Okay just one could,

cash know flow to we to going is of forward think more reason a kind throughout fleet cash free about big Is usage? a profile, an the million normalized you'd this step-up be for free year, annual that to plans your $XXX there cycle? As in growth cash why have and you of shift do that free think a with should a on positive reason cash free you there remain could basis expecting

Robert Sanchez

go only due could to 'XX, That some units 'XX could give put there's service. in be that delivery pressure The you it’s caveat a cash flow, you need OEM that's year, is fair. would I'd think I catch-up bunch of or have maybe on negative. to free Yes, the a delays, of you but a

at that today, the mean have And delivering, the it's balanced be shooting year you're strategy only growth this right. But and a you’d it negative. to we most I in now, an we not you the I you right. the we're Based – might think likely flow, on way operating for anomaly positive it's go as go model, way highly years, are could cash have what look the for. strategy, free earnings that's

Todd Fowler

Got it, yes.

average two to years. need the You out

year, in into that benefit So if was the have other one you'd a there push year.

Thanks this Yep, morning. time thanks. all okay, the helpful. So for very that's

Robert Sanchez

Okay. Thank you, Todd.

Operator

ahead. our Justin And from to from Please next go going is come question Long Stephens.

Justin Long

Thanks. sounds this towards of the your like year. fleet amount lease a visibility you It good growth have in

You you the if next know was backlog. curious And on in for year visibility year? is the and essentially comment dedicated could have the this you locked SCS growth in I

fourth freight maybe you you that in anything been trends and to a what monthly a rental, share you've utilization weak. been up in on January bit the saw the on that's see market It's seen can hold well quarter well. then in as just fairly so surprising

Robert Sanchez

Yes.

supply I'll me it and first to it you to you then around chain, the Steve give to give Tom hand Steve? some Let to over color give rental.

Steve Sensing

Yes. Thanks Robert.

Justin here.

said before, very healthy. the pipeline As I remains

we expect year the be target for range know You full to SCS. in

So double and high single well. for that's digit Dedicated low as for SCS

again, So positive. everything remains

Robert Sanchez

XX% you as The of say I sell that and ramped up, so add, to rest guess business the of Because new we I already year. the accounts would also times will of already lead about come could the contracted, throughout that right? XX% implement signed. is it its get

you the saw in and January do color now some and fourth want February? in what give rental to what we on quarter, us seeing we're Tom,

Tom Haven

Yes, sure Robert, thanks.

we've rental. think in decline typical a seasonal more normal I seen

as quarter, year, been utilization rental pretty saw of really If the utilization This hold actually the we and in what last you freight line look typical back it's we're from in with to seeing seasonality fourth quarter in went we kind year the into have fallen first market. the falls well.

seen sleeper decline. So, for the utilization example, trailer that are in ones directly if tied the the and the the types Those market. various you look classes, the of the vehicles, classes at to freight we've where

our what and - seen from the and we hoping XXXX, moved we seeing truck fleet trucks, a more that's truck what enter we to from wanted we to adjusted and our classes pretty has excuse me, perform we're Robert have as the where were that's to mentioned, quarter-to-quarter. And continue as classes perspective. the see And as what utilization in to see, well rental we resiliency lease

Justin Long

Got ahead Robert. you. go [Cross it. Thank Talk] Sorry,

Robert Sanchez

coming down utilization What we’re to high forecast the terms saw XX% we mid our in year. assuming plus from of XX% that it's in last

you normalization demand. if we've So, will, of built more

Justin Long

Great! high correct? you're And first it range quarter. the in expecting to that Is sounds mid in XX% like to that be

Robert Sanchez

correct. That's

Justin Long

Got it. Thanks the time. for

Robert Sanchez

so the the more because the usually mid-XX%s first it's weakest. it's quarter, Probably

Justin Long

Makes sense. Thanks.

Robert Sanchez

Thanks Justin.

Operator

Vertical from Jeff Our from go Please Kauffman next question Partners. Research comes ahead.

Jeff Kauffman

everybody. Thanks

the seasonality follow-up, for utilization. and Just a on you the rental and thank that guidance

normally quarter down right? first X.X X, The is about points,

John Diez

fourth the Generally quarter. yes, from

Jeff Kauffman

thank is you. question, here my Okay,

technology. So have I in longer just road lot of guys of in coming progressive a vehicle you very at technologies. looking down looking changes term, know been the terms vehicle new

going in a is I California; a new coming we we regulation XXXX. new have to these begin a We change EPA as in economics pass-through, CARB regulation but transitions. realize this have fleet are

may impact where us update vehicles? just terms new rental of vehicle for environmental some think technology? are demand you these customer you regulations do Can you in lease potentially new how And

Robert Sanchez

is typically lot a And been XX for truck around or general the years regulation So would as the good guess a who understand complexity, over help. industry regulation, has technology. last, the know say seen statement, understand for I you vehicles that they'll we've to more customers more uncertainty I for people more there XX, as Ryder, come more because

the As very I to it focused we're think relates to that. on EVs, transition

a have We team of

the who find and working to a providers the folks new understand the technology are technology to the OEMs, time, it's really with dedicated for to performance XXX% introduce technology ready with ways prime to what's when to working of the market. working and ready

economically if they ready companies for prime to be on standpoint, point is only vans, most more progress delivery on the makes it you will, is we're that to light-duty it. type one So for price our that more but seem from view invest not getting that technology viable time that, in ones probably seeing a to the the are

through work our those think an introduce of to to fleet, EV to as to decades, that customers. but from our role that we and time, rental years, that first navigate then also Because only time vehicles expect for OEMs types rental to plays fleet, over well their beginning go can we're to diesel I with Ryder them when companies out. to some go So help many our not the Ryder’s of through transition. over ultimately they're these transition period. probably people through they them, And positioned take important in will introducing that so ready, lease try When helping part vehicles really vehicles them of

large some to able with to our of very So them be with to been it even pilots the and and the those those very AV to for and time, on OEMs – focused, testing integrated betas and ready on the and and working the stuff. has closely along you technologies into And know providers, which stay - begin approach we tied technology bring what get them the stay get base a have, to into fleets. it's customer when is prime very

Jeff Kauffman

you. That’s Thank question. my

Operator

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

Robert Sanchez

and some of Okay. conferences and Thank you. you we of out in safe Ryder I as Well, to thank you, Thanks everyone. your for interest to all Have forward seeing look day! roadshows. the head a

Operator

conference. That you Thank concludes for your participation. today's

Ryder System (R) 15 Feb 232022 Q4 Earnings call transcript