With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

World's Most Admired Companies

Industries included in the sector are airlines, transportation equipment, logistics, mail and freight delivery, railroads, shipping, and trucking.

Fortune Sector Leaders: Transportation

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-357-Ryder System

Commonly known by just Ryder, the transportation company offers commercial rental vehicles as well as logistics and supply chain services.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune 500 marks the 66th running of the list.

Ryder System provides commercial transportation, logistics, and supply chain management services in North America, Europe, and Asia.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Strongest Dimension

Years on list

Previous rank

State

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

American transportation and logistics company Ryder Systems offers truck rental, leasing, fleet management, supply-chain options, and transformation services, and is the largest truck supplier in the U.S. The company also operates a peer-to-peer truck sharing platform, COOP, that lets owners of commercial trucks and vehicles rent them to other businesses. The company announced its first-ever NASCAR sponsorship in the 2025 Craftsman Truck Series featuring television star Frankie Muniz in a Ryder Ford F-150.

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Ryder System (R): Company Profile, Stock Price, News, Rankings

legacy

Ryder System

ryder system

Morning, and welcome to the Ryder Systems Second Quarter twenty twenty five 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. Kayleen Candela, Vice President, Investor Relations for Ryder. Ms. Candela, you may begin.

Thank you. Good morning, and welcome to Ryder's second quarter twenty twenty five earnings conference call. I'd like to remind you that during this presentation, you'll hear some forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive, market, political, and regulatory factors.

More detailed information about these factors and a reconciliation of each non GAAP financial measure to the nearest GAAP measure is contained in this morning's earnings release, earnings call presentation and in Ryder's filings with the Securities and Exchange Commission, which are available on Ryder's website. Presenting on today's call are Robert Sanchez, chairman and chief executive officer John Diaz, president and chief operating officer and Christy Gallo Aquino, executive vice president and chief financial officer. Additionally, Tom Havens, president of Fleet Management Solutions, and Steve Sensing, president of Supply Chain Solutions and Dedicated Transportation Solutions, are on the call today and available for questions following the presentation. At this time, I'll turn the call over to Robert.

Good morning, everyone, and thanks for joining us. I'm proud of the Ryder team for delivering our third consecutive quarter of double digit earnings per share growth. Second quarter results were above our expectations, driven by outperformance in our Supply Chain segment. This benefit was partially offset by increased used vehicle wholesale volumes to manage aged inventory levels. The business continues to outperform prior cycles, driven by our resilient contractual portfolio that reflects the actions we've taken under our balanced growth strategy to derisk the business, increase the return profile and accelerate growth in our asset light supply chain and dedicated businesses.

I'll begin today's call by providing you a strategic update. Christy will then take you through our second quarter results, and John will review capital expenditures and our increasing capital deployment capacity. I'll then review our updated outlook for 2025 and discuss how we expect to leverage the momentum of our transformed business model. Let's begin on Slide four. Turning to Slide four, the structurally higher earnings profile of our transformed business model and execution on our strategic initiatives continue to drive earnings growth.

We remain on track to realize the benefits from the strategic initiatives outlined during the February earnings call. These benefits are the key drivers of the year over year earnings growth we are expecting. Long term secular trends that favor transportation and logistics outsourcing remain strong. The value that our solutions bring to our customers remains compelling. We are also well positioned to benefit from increased industrial manufacturing in The U.

S. As 93% of our revenue is generated here. We delivered return on equity of 17% for the trailing twelve month period, which is in line with our expectations during a freight cycle downturn and continues to demonstrate the resilience of our transformed business model. Earnings growth from our high performing contractual portfolio reflects our value proposition as well as our pricing discipline. Over 90% of our operating revenue is generated by multiyear contracts.

We expect our transformed and cycle tested business model to continue to outperform prior cycles. In addition to increasing the return profile of our business, the earnings power of our contractual portfolio continues to provide us with increased capital deployment capacity, which we expect to use to support profitable growth and return capital to shareholders. Earlier this month, we announced a 12% annualized increase to our quarterly dividend, reflecting higher profitability and improved returns over the cycle. In 2025, we returned $330,000,000 to shareholders by repurchasing approximately 1,700,000.0 shares and paying our dividend. Since 2021, we have repurchased approximately 21% of our shares outstanding and increased the quarterly dividend by 57%.

We increased our 2025 forecast for free cash flow by approximately 500,000,000 to a range of $900,000,000 to $1,000,000,000 due to lower expected capital spending and the estimated cash flow benefit of approximately $200,000,000 from the permanent reinstatement of tax bonus depreciation. Slide five illustrates how key financial and operating metrics have improved since 2018, reflecting the execution of our strategy. In 2018, prior to the implementation of our balanced growth strategy, the majority of our $8,400,000,000 of revenue was from FMS. Ryder generated comparable earnings per share of $5.95 with an ROE of 13%. Operating cash flow was 1,700,000,000 This was during peak freight cycle conditions.

Now let's look at what we're expecting from Ryder today. In 2025, a year in which freight market conditions are expected to remain near trough levels, our transformed business model is expected to generate meaningfully higher earnings and returns than it did during the 2018 peak. Through organic growth, strategic acquisitions and innovative technology, we have shifted our revenue mix towards supply chain and dedicated with 60% of 2025 revenue expected to come from these asset light businesses compared to 44% in 2018. 2025 comparable earnings per share is expected to be between $12.85 and $13.30, more than double 2018 comparable earnings per share of $5.95. ROE is expected to be approximately 17%, up from 13% generated during the 2018 cycle peak.

As a result of profitable growth in our contractual lease, dedicated and supply chain businesses, operating cash flow is expected to increase to $2,800,000,000 up approximately 65% from 2018. As shown here, in 2025, the business is expected to continue to outperform prior cycles even when comparing the pre transformation peak to the current market environment. We're proud of the strong performance of our transformed business model and believe that executing on our balanced growth strategy will continue to deliver higher highs and higher lows over the cycle. I'll now turn the call over to Kristi to review our second quarter performance.

Thanks, Robert. Total company results for the second quarter are on Page six. Operating revenue of $2,600,000,000 in the second quarter, up 2% from prior year, primarily reflects contractual revenue growth in SCS and FMS. Comparable earnings per share from continuing operations were $3.32 in the second quarter, up 11% from $3 in the prior year. The increase reflects higher contractual earnings and share repurchases.

Return on equity, as Robert previously mentioned, our primary financial metric, was 17%, up from prior year, primarily reflecting higher contractual earnings. The ROE benefit from share repurchases was offset by used vehicle sales and rental performance. Year to date, free cash flow increased to 461,000,000 from 71,000,000 in the prior year, reflecting lower working capital needs and reduced capital expenditures. The benefit in working capital reflects lower tax payments and the timing of vendor payments. Turning to fleet management results on page seven.

Fleet Management Solutions operating revenue increased 1% driven by ChoiceLease revenue, which was up 2%. Pretax earnings in fleet management were a $126,000,000 down year over year, reflecting weaker freight market conditions. Higher choice lease performance driven by pricing and maintenance cost savings initiatives partially offset lower used vehicle sales results. We continue to see progress on our pricing and maintenance cost initiatives and remain on track to achieve the benefits targeted for this year. Used vehicle sales results in the second quarter were negatively impacted by the decisions we made to exit out of some aged inventory by utilizing our wholesale channels.

We do not plan on executing this level of wholesale trades going forward. And given that we are not expecting any significant change to market conditions for the second half, we expect used vehicle sales results to be in line with first quarter levels for the next two quarters. Rental results for the quarter reflect market conditions that remain weak. The sequential increase in rental demand for the quarter was in line with prior year and below historical trends as contemplated in our prior forecast. Rental utilization on the power fleet was 70%, up from 69% in the prior year on an average active power fleet that was 7% smaller.

Although utilization remains below our target range of mid seventies, year over year comparisons improved for the first time since the third quarter of twenty twenty two. Rental power fleet pricing was up 4% year over year. Fleet management EBT as a percent of operating revenue was 9.7% in the second quarter, below our long term target of low teens over the cycle. Page eight highlights used vehicle sales results for the quarter. Year over year, used tractor and truck pricing both declined 17%.

On a sequential basis, pricing for tractors increased 3%, and pricing for trucks decreased 10%. Pricing in the second quarter reflects increased wholesale volumes to manage aged inventory. Approximately 50% of our sales volume went through retail sales channels this quarter compared to 65% in the prior year. Pricing in our retail sales channel increased sequentially with tractor tractor retail pricing up 10% and truck retail pricing up 4%. During the quarter, we sold 6,200 used vehicles, up sequentially and versus prior year.

Used vehicle inventory of 9,600 vehicles was slightly above our targeted inventory range. Used vehicle pricing remained above residual value estimates used for depreciation purposes. Slide 19 in the appendix provides historical sales proceeds and current residual value estimates for used tractors and trucks for your information. Although used vehicle sales results were negatively impacted by higher wholesale volumes, lower levels of aged inventory position us to increase our use of the retail sales channel where we realize higher pricing. As such, we expect a higher retail sales mix in the balance of the year compared to current levels.

Turning to supply chain on page nine. Operating revenue increased 3% driven by new business as well as higher customer volumes and pricing. Supply chain earnings increased 16% from prior year, reflecting operating revenue growth and improved performance from our initiative to optimize our omnichannel retail network. Supply chain EBT as a percent of operating revenue was 9.7% in the quarter, at the high end of the segment's long term target of high single digits. Moving to dedicated on page 10.

Operating revenue decreased 3% due to lower fleet count reflecting the prolonged freight downturn. Dedicated EBT increased 1% year over year, reflecting acquisition synergies and prior year integration costs that were partially offset by lower operating revenue. DTS results continued to benefit from strong performance of our legacy dedicated business, reflecting pricing discipline as well as favorable market conditions for recruiting and retaining professional drivers. Dedicated EBT as a percent of operating revenue was 7.9 percent in the quarter at the segment's long term high single digit target. I'll now turn the call over to John to review capital spending and capital deployment capacity.

Turning to Slide 11. Year to date lease capital spending of $832,000,000 was below prior year, reflecting delayed OEM deliveries in the prior year. Rental capital spending of $268,000,000 was also below prior year levels. For full year 2025, lease spending is now expected to be 1,800,000,000.0 down $300,000,000 from our prior forecast, reflecting lower lease sales activity. Lease spending is expected to be down $200,000,000 from prior year, reflecting delayed OEM deliveries in 2024.

We expect the ending lease fleet to remain fairly consistent with current levels by year end. Forecasted rental capital spending remains at approximately $300,000,000 down from prior year. Our ending rental fleet is expected to decrease 12% by year end, and our average rental fleet is expected to be down 5%. The rental fleet remains well below peak levels as we manage through an extended market downturn. In rental, we've continued to shift capital spending to trucks versus tractors.

As of the second quarter, trucks represented approximately 60% of our rental fleet. Our full year 2025 gross capital expenditures forecast of approximately $2,300,000,000 is below prior year. We expect approximately 500,000,000 in proceeds from the sale of used vehicles in 2025, and full year 2025 net capital expenditures are expected to be approximately $1,800,000,000 Turning to Page 12. In addition to increasing the earnings and return profile of the business, our transformed contractual portfolio is also generating significant operating cash flow. Improving the overall cash generation profile of the business is one of the essential elements of our balanced growth strategy.

Better earnings performance is driving higher cash flow generation and, in turn, is delevering our balance sheet at a more rapid pace. This momentum is creating incremental debt capacity given our target leverage range of between 2.5 and 3x. As shown on the slide, over a three year period, we now expect to generate approximately GBP 10,500,000,000.0 from operating cash flow and used vehicle sales proceeds. Our operating cash flow will benefit from the permanent reinstatement of tax bonus depreciation and improving contractual earnings. This creates approximately $3,500,000,000 of incremental debt capacity, resulting in $14,000,000,000 available for capital deployment.

Over the same three year period, we estimate approximately 9,000,000,000 will be deployed for the replacement of lease and rental vehicles and for dividends, leaving around $5,000,000,000 of capital available for flexible deployment to support growth and return capital to shareholders. We estimate about half of this capacity will be used for growth CapEx and the remaining to be available for discretionary share repurchases and strategic acquisitions and investments. Our capital allocation priorities remain unchanged and are focused on supporting our strategy to drive long term profitable growth and return capital to shareholders. Our top priority is to invest in organic growth. We've taken a balanced approach to investing and since 2021 have invested approximately GBP 1,100,000,000.0 in strategic M and A and have deployed approximately GBP 1,100,000,000.0 for discretionary share repurchases, reducing our share count by 21%.

Our balance sheet remains strong with leverage of 251% at quarter end, at the low end of our target range and continues to provide ample capacity to fund our capital allocation priorities. With that, I'll turn the call back over to Robert to discuss our outlook.

Turning to our outlook on Page 13. Our full year 2025 comparable EPS forecast is updated to a range of $12.85 to $13.3 above prior year of 12 as higher contractual earnings and the benefits from our strategic initiatives more than offset the impact from market conditions in rental and used vehicle sales. Our updated forecast continues to reflect contractual earnings growth with a more muted second half recovery in used vehicle sales. Although sales pipelines remain strong, the prolonged freight downturn and economic uncertainty continue to cause some customers and prospects in lease and dedicated to delay decisions. These near term contractual sales headwinds are consistent with current market conditions.

We are, however, encouraged by robust sales and pipeline activity in SCS. Our 2025 ROE forecast is revised to 17% from a range of 16.5% to 17.5%. The revised forecast remains in line with our expectations given current market conditions. As mentioned earlier, we increased our free cash flow forecast by $500,000,000 to a range of $900,000,000 to $1,000,000,000 to reflect lower capital expenditures and the permanent reinstatement of tax bonus depreciation. Our third quarter comparable EPS forecast range is 3.45% to 3.65% versus the prior year of 3.44%.

Turning to page 14. The key driver of expected earnings growth in 2025 is incremental benefits from multiyear strategic initiatives that are well underway and related to our contractual lease, dedicated and supply chain businesses. We have good visibility of these initiatives. They represent structural changes that we're making to the business and are not dependent on a cycle upturn. Upon completion, we expect these initiatives to generate annual pretax earnings benefits of approximately $150,000,000 which will be a key component to achieving our long term ROE target of low 20s over the cycle.

In FMS, we expect to realize an incremental annual benefit of approximately $20,000,000 in 2025 from our lease pricing initiative. This results in a total of $125,000,000 benefit relative to our 2018 run rate, reflecting portfolio pricing under the new model. We expect $50,000,000 in benefits over multiple years from our maintenance cost savings initiative announced in mid-twenty twenty four. In DTS, we expect to realize 40,000,000 to $60,000,000 in annual synergies from the Cardinal acquisition at full implementation. The majority of these synergies are related to maintenance efficiencies and replacing third party operating leases with the benefits from rider ownership and asset management.

In SCS, we are focused on optimizing our omnichannel retail warehouse network through continuous improvement efforts, driving operational efficiencies and better aligning our footprint with the demand environment. Since the second half of twenty twenty four, we have seen improved productivity in this vertical as a result of these actions and expect incremental benefits throughout 2025. By year end 2025, we expect to realize approximately $100,000,000 from these initiatives benefiting all three business segments. Approximately $70,000,000 of these benefits are incremental to 2024. In addition to continuing to increase the return profile of our contractual businesses, we are also focused on ensuring the business is well positioned to benefit from the eventual cycle upturn.

As such, we expect an annual pretax earnings benefit of approximately $200,000,000 by the next cycle peak and expect to begin to realize these benefits during the upturn. Although over 90% of our operating revenue is supported by long term contracts that generate relatively stable and predictable operating cash flows over the cycle, each business segment has meaningful opportunities to benefit from the cycle upturn. We expect the majority of the $200,000,000 benefit to come from the cyclical recovery of rental and used vehicle sales in FMS. In dedicated, improved driver availability and lower recruiting and turnover costs are benefiting earnings but have been a headwind to new sales and revenue growth. As freight capacity tightens and driver availability becomes more challenging, we expect to see incremental sales opportunities and improved revenue growth in DTS as private fleets seek solutions to address this pain point.

In supply chain, muted volumes in our omnichannel retail vertical have been a headwind to revenue and earnings. We expect supply chain results to benefit as volumes from these services recover and our optimized warehouse footprint is leveraged. We've been pleased by the business' resilience and performance during the prolonged freight market downturn and are confident each of our business segments is appropriately positioned to benefit from the cycle upturn. Turning to Page 15. Our transformed business model continues to deliver value to our customers and our shareholders.

We continue to outperform prior cycles, and our results are benefiting from consistent execution and the strength of our contractual portfolio. We continue to see significant opportunities for profitable growth, supported by secular trends, our operational expertise and ongoing momentum from multiyear strategic initiatives. We remain committed to investing in products, capabilities and technologies that will deliver value to our customers and our shareholders. That concludes our prepared remarks. Please note that we expect to file our 10 Q later today.

At this time, I'll turn it over to the operator to open the call for questions.

Thank We'll now take our first question from Ravi Shanker with Morgan Stanley.

Great, thanks. Good morning, everyone. So great to see the dry powder on the balance sheet here. Are you confident kind of of deploying that now? Or do you think you need to wait for the up cycle and maybe a little more clarity before you decide where to go there?

Hey, Robbie. Yeah. I look. I think, obviously, we feel really good about the dry powder. We've got, repurchase programs in place already.

We are always looking for acquisition opportunities. And, and then obviously, as we get into the freight up cycle, we're gonna be investing organically in vehicles, not only for lease but for rental. So we feel really good about where we're at. We think we've got a great balance as you saw on that page that John took us through. And, I really feel we've got, the the dry powder we need to do all of the things that we wanna do, across each of those areas.

Great. Thank you. If I can squeeze, follow quick follow-up here. Noted on the retail versus wholesale mix in the back half. But how are you thinking about the different scenarios on whether your truck values in the back half of the year just given the uncertainty around the cycle?

What we're thinking about on the pricing?

Yeah. Look. As we look at the back half, what we've seen and what probably many of you have seen is that tractor pricing has begun to move up. Our tractor pricing, as as we showed, even with the additional wholesaling activity we did, was still up 3%. If you look at retail only, it was up 10%.

So we would expect that trend to continue. We did bring down the top end of our guidance, primarily because we don't expect the increase to be as significant as we originally did, so more muted increase. But we would expect a steady increase, especially in the fourth quarter as we get into the fourth quarter in terms of tractor. We're very encouraged by what we're seeing in the used tractor market.

If you find that your question has been answered, you may remove yourself from the queue by pressing the star key followed by the digit two. We'll now take our next question from Scott Group with Wolfe Research.

Thanks. Just just a follow-up there. So just maybe a little bit more on on why the we went to losses on sales in in q two and why it goes back to gains right away in q three. I I don't know that we've seen it, you know, inflect so quickly in the past. And then just maybe if that's right, though, that we get this uplift from 20¢ or so of of of gains, we typically see just the core earnings get a little bit better q two to q three.

So are there other offsets to think about in in the in the guide for q three?

Yeah. I think the the the reason we went to a loss was was really driven by the fact that we had this incremental wholesaling activity of aged inventory. We talked about it on the last call. We said we're gonna do it. We did.

We actually did a little more than we had originally expected. So that probably cost us about $10,000,000 in the quarter. There was about a thousand units that we did there incremental to what we had done in the first quarter. So that's really why we know as going forward, we still have some wholesaling to do, but we don't expect to do anywhere near that magnitude of it. And that's what would get us back to more of the gains levels that you saw in in q one.

I don't I don't know if you had other thoughts on, like, the the the other part of the question just about, you know, if we get that 10,000,000 or whatever uplift in in in used, are there other offsets to think about in in the guidance for q three?

No. I think we're expecting if you if you think about towards the high end of our our guidance, we said at the beginning of the year we had about 70,000,000 in, earnings improvement from initiatives. That comes out to like a buck 20. So we were at $12 last year With the the initiatives that we have, that gets us to $13.20. I guess it's pretty close to the high end.

The the incremental earnings are really coming from the contractual parts of the business more than offsetting some incremental challenges that we have in rental and used vehicle sales. Right? We we lowered our range, last quarter because of rental. We lowered it a little bit. And this year this quarter, we're lowering a little bit because of used vehicle sales.

So those transactional parts just haven't really come back. As you know, the market hasn't come back with all the uncertainty. I think this quarter is a little less uncertainty than there was a quarter ago. And hopefully, quarter, there's a little less uncertainty than this quarter, and things continue to improve. But those are really it.

I I would tell the only other headwind is just obviously contractual sales. Contractual sales with the uncertainty has been more muted, especially in our lease and dedicated businesses. So we need that business. We need customers to get to the point where they they're making decisions, and we get that those sales back on track. Because that will create that does create some, you know, headwind in terms of of the growth of earnings as as that comes back.

We are pleased, though. We have seen a pickup in sales on the on the supply chain side. Got some larger customers that are making decisions, and we're very pleased with what's going on there. But we haven't seen that yet on the dedicated and, leasing side.

And maybe just if I can ask one more just to that point. Like, I I get the cash flow benefit to you from the bill, but how do you think it changes customer behavior? Is there more buying instead of leasing? Is it a risk to you? Is it are you seeing because of the cash flow benefit maybe or or is there any sort of reason why leasing activity would pick up? Just any any thoughts there.

I I think historically, when you've seen we feel like we've had bonus depreciation for a long time, but when you go way back when bonus appreciation would get turned on and off, typically, you would see an increase in overall business spending. And that is good for us because that means there's more activity in the marketplace. We get more, opportunities to pitch our leases and and our services. So, yes, it does provide a free cash flow benefit for us going forward, at least for the next several years. But it also more importantly stimulates the economy and gets our customers to feel better about making investments, whether it's, you know, buying additional equipment or leasing and signing contracts for additional equipment.

We'll now take our next question from David Salzula with Barclays.

I guess we've talked a little bit about the 3Q portion of the guide. Given 3Q and full year, we can back into what is going on in 4Q. Can you maybe talk early assumptions on what you're expecting in 4Q from an FMS perspective, leasing environment? Any thoughts you have into that portion of the guide?

So so if you if you look at the range of the guide, on the on the top end of the range, it's primarily we're expecting, historical sequential trends in rental. And then on the used vehicle side, we're expecting some increase or kind of flattish in in q three and then some increase, mild increase, modest increase, if you will, in used vehicle pricing in q four. On the low end of the range, however, we're expecting flat rental with no seasonal pickup and actually continued decline declines in used vehicle pricing in q three and q four. So that gives you kind of an idea of the the goalpost that we've got out there in terms of what what could happen. The contractual businesses is, you know, more consistent.

We're expecting that to continue to to perform the way it it has been. And then, obviously, we we expect to continue to execute well on our on our initiatives, and we're we're certainly on track with achieving the the 70,000,000 that we originally targeted.

Thanks. And if I could just ask about OEM delays and some of the drivers behind the CapEx change. Are those things that you're expecting to kind of reverse in 2026? And do you yeah. Early, do you expect an environment that would, you know, warrant increased capital spending on your part in '26?

Yeah. Look. I think the tax bill is certainly gonna be helpful. We need the freight market to finish correcting. I keep saying we're closer to the end than the beginning.

I I still think we're way closer to the end than the beginning after three years of this. We are seeing an early sign just with what's happening with used tractor pricing. We're still seeing rental though soft and it's kind of flattish. And then we're the lease miles per unit are are kind of bumping along, you know, flattish too. So we still haven't seen the big pickup.

I think there's there's still certainly lingering uncertainty around, tariffs. And hopefully, that gets resolved here in the next month or so, mostly resolved. And then, and then it's a matter of that freight market rebalancing, and and we're we're back off to the races. So, yeah, that could turn around certainly, next year. The CapEx decline is primarily just not having the lease, and rental CapEx that we would normally see as we start building the business back up.

So, yes, some of that, just you should start to see that come back in 2026.

We'll now take our next question from Harrison Bauer with Susquehanna.

Great. Thank you for taking my questions. Maybe could you walk us through about how you're thinking about the margin cadence in the back half of the year, really across your different segments and for FMS, on an ex gain basis? And then as you take a step back, considering all your segment margins, including FMS ex gains are at or approaching their long term guides. In 2026, as you pivot to growth more, do you think there might be some margin pressure that comes with that?

Let me let me hand it over to Chris so she can give you a little color around the margin expectations, and then we can talk about what what, would happen as we start to grow.

Yeah. So on the hi, Harrison. On the on the margin side, for the SMS business, we are expecting q three and q four to have growth, in in those, periods also because we're catching the tail on some of the deterioration that we saw last year from from rental. And now with rental stabilizing, that should get better. But regardless of that, we're obviously benefiting from the initiative in SMS related to, pricing and maintenance, so that is continuing to provide benefit in our in our margins for those periods.

On the supply chain side, it's more of the same of what you've seen. You know, we've we've had good, growth there as well as our initiative around the omnichannel retail network. So we are also expecting, margin growth in in those periods. And then with dedicated, we've talked about that. One, we do have the benefits from the Cardinal synergies, but we are, seeing lower fleet count, and that will impact our, you know, comparable, comparable earning comparisons year over year.

So that that will put some pressure on that. But overall, you know, as we said, we expect earning earnings growth, and and we should continue to benefit from these initiatives and all the the stuff we've done to the contractual business to really make it as resilient as it can be.

Yeah. Look. And and I think you mentioned that the the segments are all, at or near their target margins. Yeah. If you look at supply chain and dedicated are at their target margins, FMS is not at the target margins right now.

They're at the high single digits, low double digits. We want them to be in the low teens. And that's going to be it's going to get to the low teens as as we start to see the market recover. As you start to get rental and used vehicle sales really contributing, that's how, you start to see that come back. So hopefully, that's happening already next year, and we start to see that improvement.

But that's really the missing piece, if you will, to the puzzle. The only other thing I would add to what Christie said is on the supply chain side, you will as we go into the second half of the year, they've really been on a tear in terms of the growth and the and the consecutive quarters of earnings growth. We're gonna expect we expect to see that in in '3 and four. However, you do catch the tail of some of the earnings improvement that we had last year. And then you also could have some we've we've got a lot of new business that has been signed, you could have some lumpiness around when that starts to come in.

But as we get into the fourth quarter, we expect to really start to see growth on the top line accelerate and then the bottom line also begin to grow.

Great. Thanks for all that color. And then maybe just a quick follow-up on your trucks, your truck and tractor mix, as Don alluded to in the rental business. But maybe could you update us on the differences you're seeing in demand in your lease and rental on tractors versus trucks? Thank you.

I can I'll I'll start with I'll start with lease. I know you can you can see that we've had some headwinds on the lease fleet growth year over year. But when you strip that out and look at the different classes, trucks are actually up year over year about 2,000 units. And the business headwinds are in the tractor trailer classes, which is where you might expect it to be with the transport challenges that we're seeing in the market in general. So I think that's a generally good trend from a truck perspective and we expect tractor trailers to come back at some point as Roberts mentioned as the market improves.

On rental, I think John hit it in his opening comments. We have continued to invest in the truck fleets and it sits at about 60% of the rental fleet today. We expect that to continue through this year. As the market does improve, would expect that we would invest in some tractors in the rental fleet probably in 2026, but we'll wait to see as the market improves before we do that and grow that tractor fleet again.

We'll now take our next question from Jordan Alliger with Goldman Sachs.

Yes. Hi. I'm just sort of curious on the used truck markets. It's great. We're seeing the sequential increase. You indicated you expect that trend to continue. What underpins that?

Is it more a function of new truck prices or higher orders are down, but people still need high quality trucks? Or is it a function perhaps of maybe supply getting a little firmer in the overall trucking market?

Yeah. I I think that it's it's probably all of those things that you mentioned. You know, we are getting to a point where the this this freight recession has been going on for a while, and you're starting to see, you know, some some other people, I guess, that are looking to replace vehicles that they have, used vehicles, and and, the vehicles that that we have are are attracted to that. I don't know, Tom, if you wanna give them.

Yeah. The the only thing I I might add is if you look at the sleeper classes in particular is where you're seeing the most price uplift in in used vehicle sales. And I think our inventory, probably mirrors the overall general inventory of used vehicles. Our sleeper inventory is is actually relatively low. And I think that's what's what's driving the the pricing.

So it's, I I think, an indication that you're getting closer to equilibrium at least on on that class. Hopefully, the others will follow soon.

And these are I mean, these are high quality vehicles that are really the pricey, if you look at the historical charts that we have, they're they've come down to pretty low levels. And that's where, you know, you start to see, some folks coming in to replace units.

And and then just as a follow-up, you know, the supply chain margins continue to be, at target despite the difficulty in closing deals and maybe revenue growth being operating revenue growth below target. I mean, is that how it should work like going forward? What underpins the strength in the margins despite perhaps the less than optimal revenue growth?

Yeah. Look. I think it's it's an indication of the of the the value prop of the work that we do But let let me let me hand it over to Steve to give a little more color.

Yeah, Jordan. I think, you know, first of all, I wanted to thank the team for focusing on the business and and our customers. You know, there's three or four things that we've been focused on. You remember a few years ago, we focused on investing in our start up effectiveness teams. We continue to do that.

So as Robert said, as we bring on new business, we've got the right approach and and execution on that. Teams also focused on continuous improvement in the business. We've been very disciplined, I think, on the overhead structure and our pricing on new contracts. And I think diversification of the port to door capabilities and service offerings is attractive to our customers. As Robert said, we're off to a good start.

We should expect as we exit Q4 to be in that mid single digit range.

Yes. The only thing I'd add to that is that as we get through this uncertainty, what was really holding up decisions in supply chain has been the uncertainty because it's not all just tied to the freight market. And and, we're starting to see some of that loosen up now. But we're really encouraged about the opportunities to continue to grow that business, especially as if you start to see more industrial manufacturing pick up in The US and more industrial manufacturing come to The US, I think we're really well positioned to, to play in that space.

Ryder System (R) Q2 2025 Earnings Call Transcript

Company Participants