Ryder System, Inc. Chicago Industrials Summit

Thank you. Great to be here.

Sure. I will give you a little bit of background and an introduction to Ryder. We are a $13 billion business. We are organized around three segments. We are in the outsourced transportation logistics business. All of our business is B2B, and 90% of it is contractual in nature, and it is organized around the three segments: Fleet Management, which is our truck leasing and rental business. That accounts for about 40% of the portfolio. Then you have got our Supply Chain business, which is end-to-end supply chain logistics capabilities. Warehousing is the predominant service that we provide there, but we also provide transportation and integrated transportation and warehousing solutions to our customers. Our Dedicated business is the smallest of the three, just over 20% of the business, and that is where you elect to outsource your transportation.

We do the delivery for our customers to their customers, or if it's a middle mile solution to their distribution site. All three businesses operate in North America, and we don't operate outside of North America. I think the big thing for Ryder to take stock of is we've gone through a transformation that began in 2019, 2020. The transformation was aimed at doing three things. One was to de-risk our lease portfolio. Second was to increase and enhance the margin for the business. Third, really diversify the business portfolio and accelerate the growth of our Supply Chain Dedicated business. Fast-forward from 2019 to 2020, I think by and large, we're fairly complete with our transformation. If you look at our lease portfolio, we reduced the residual values. What that translated into was increased price to our customers. We had to reprice the lease portfolio.

That's been very successful over that period of time. If you look at our Supply Chain Dedicated business, that used to be 44% of our overall revenue base. Now it's 60% of our revenue base, so a highly diversified business. Most important for us is cash flow from operations has improved 60%. Profitability has more than doubled over that period of time. If you look at kind of the earnings power of the business is substantially greater. You can look at our return on equity metric, which we're looking at guiding 18% return on equity today and kind of just coming off the bottom of the cycle. In 2018, at the peak of the cycle, we were doing 13% return on equity. So that's a quick overview. As far as market conditions, I touched on it a little bit. We are seeing a freight recovery.

It's a supply-driven freight recovery, which benefits parts of our business. What we haven't seen is kind of an acceleration in demand. We are seeing that conditions are improving across the business. We see it in our sales activity and FMS, DTS, and our Supply Chain business. We are seeing used vehicle pricing. We started seeing in first quarter and second quarter, they're starting to go up and lifting from where they were a year ago. So that's a quick summary on Ryder and what we're seeing early in 2026.

Yeah. So we started seeing improving conditions at the beginning of the year. Capacity has been taken out of the market, both from a regulation, enforcement of that regulation, as well as kind of non-domiciled driver activity. What you saw is the spot rate market started recovering late last year, and obviously that is also a function of capacity being taken out.

UVS pricing, we saw sequential improvements from Q4 into the beginning of the year. Q1 was better than the prior year, slightly better, and Q2 was currently sequentially better than what we saw in Q1. Our expectations and what we've seen thus far this year is a 5% improvement on year-over-year pricing.