Ryder Execs Retire, New CEO Steps Up as Earnings Double Since 2018

Date of Call: Feb 11, 2026

Financials Results

• Revenue: $2.6B, in line with prior year
• EPS: $3.59 per diluted share, up 4% YOY
• Operating Margin: FMS EBT as a percent of operating revenue was 10.5%, below low teens target; SCS EBT as a percent of operating revenue was 8%, at high single-digit target; DTS EBT as a percent of operating revenue was 8.9%, at high single-digit target

Guidance:

• Operating revenue expected to grow approximately 3% in 2026.
• Comparable EPS expected to increase by 12% to range of $13.45 to $14.45 (high end $14.45).
• ROE expected to increase to 17% to 18%.
• Free cash flow expected between $700M to $800M.
• Lease capital spending forecast to increase to $1.9B; rental capital spending forecast to $100M.
• Expect $70M incremental benefits from strategic initiatives in 2026, bringing total annual benefit to $170M.

Business Commentary:

CEO Succession and Leadership Transition:

• Effective March 31, Robert Sanchez will retire, and John Diez will assume the role of Chief Executive Officer. Sanchez will remain on the Board as Executive Chair.
• The transition is part of a planned succession, with Diez having held various leadership roles at Ryder for over 20 years, and is seen as the right leader to continue building on the company's balanced growth strategy.

Financial Performance and Strategic Benefits:

• Ryder's 2025 comparable earnings per share were $12.92, more than double the $5.95 in 2018, with an ROE of 17%.
• The improvement is attributed to the execution of strategic initiatives that contributed $225 million in combined annual pretax earnings benefits, along with a shift towards more resilient, asset-light businesses like Supply Chain and Dedicated.

Capital Deployment and Shareholder Returns:

• Since 2021, Ryder has generated $3 billion in free cash flow, repurchased 24% of shares outstanding, and increased the quarterly dividend by 57%.
• The strong balance sheet and capital deployment capacity allow Ryder to support strategic growth opportunities while returning capital to shareholders.

Outlook and Strategic Initiatives:

• For 2026, operating revenue is expected to grow approximately 3%, with comparable EPS forecasted to increase by 12%, driven by benefits from strategic initiatives.
• The forecast reflects an expectation of continued earnings growth, with key benefits from multiyear initiatives in lease pricing and maintenance cost savings.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'remarkable progress' and 'transformative' business model that 'outperforms prior cycles even during this prolonged freight downturn.' They noted 'solid returns,' 'higher earnings and returns' expected in 2026, and 'confidence' in the balanced growth strategy. The 'transform model has demonstrated the effectiveness' of their strategy.

Q&A:

• Question from Benjamin Mohr Mok (Citigroup Inc., Research Division): What's the view on cadence for used vehicle gains (UVS) through 2026?
  Response: Expect Q1 similar to Q4, tractor pricing to improve in second half, trucks to remain depressed; full year gains expected flat year-over-year.

• Question from Benjamin Mohr Mok (Citigroup Inc., Research Division): How do policy changes affecting trucking capacity impact used truck pricing and cadence?
  Response: Capacity exiting the market is good long-term; minimal impact on Ryder as inventory is predominantly trucks, and driver rules mainly affect for-hire carriers.

• Question from Benjamin Mohr Mok (Citigroup Inc., Research Division): Can you discuss magnitude of new SCS business signings and their impact on revenue growth?
  Response: Record 2025 sales will layer in throughout 2026, with benefits more visible from Q2/Q3 onward; about 80% of 2025 sales were expansion sales.

• Question from Jeffrey Kauffman (Vertical Research Partners, LLC): Why is your forecast more dour than market optimism given elevated spot rates?
  Response: Guidance does not assume significant market pickup; no meaningful improvement seen in rental or UVS yet; expects any improvement to show in second half at earliest.

• Question from Jeffrey Kauffman (Vertical Research Partners, LLC): What differentiates Baton from external AI/tech solutions?
  Response: Baton provides business know-how and technology to optimize RyderShare platform and leverage AI for customer value, bought to enhance internal capabilities.

• Question from Robert Salmon (Wells Fargo Securities, LLC, Research Division): What are trends in rental demand across customer types?
  Response: Utilization down slightly; demand from pure rental customers stable, but lease customers not needing extra rentals due to downsizing fleets; no change in trend.

• Question from Robert Salmon (Wells Fargo Securities, LLC, Research Division): Are DTS and SCS margins at long-term targets with potential upside?
  Response: Long-term targets still appropriate; DTS margins oscillate with cycle, SCS consistently at upper end of high single digits.

• Question from David Zazula (Barclays Bank PLC, Research Division): Will Flex operating structure offset Dedicated margin headwinds in an upswing?
  Response: Flex model optimizes back-office and driver allocation; as market returns, density should drive upside growth.

• Question from David Zazula (Barclays Bank PLC, Research Division): What is conversation with auto OEMs to reduce negative auto impact on SCS?
  Response: Portfolio diversity helps; Q4 impacted by microchip shortage and OEM retooling from EV to ICE vehicles; expects normalization in second half.

• Question from Harrison Bauer (Susquehanna Financial Group, LLLP, Research Division): Does UVS upside include potential for large impairments or fleet shifts to wholesale?
  Response: Expect stabilizing UVS environment with tractor pricing improvement; no expected impairment charges; pricing pullback would be low single digits.

• Question from Harrison Bauer (Susquehanna Financial Group, LLLP, Research Division): Appetite for M&A following a competitor's acquisition?
  Response: Always looking for well-run target companies in outlined areas; balance sheet provides ample capacity for acquisitions when right opportunities arise.

• Question from Scott Group (Wolfe Research, LLC): Are you seeing pickup in leasing demand or prebuy activity from increased Class 8 orders?
  Response: Most Class 8 orders from for-hire carriers planning ahead; no prebuy activity or meaningful change in customer behavior on lease side.

• Question from Scott Group (Wolfe Research, LLC): Is lease pricing increase a new tailwind or carryover from prior year?
  Response: Incremental $20M benefit from multiyear lease pricing initiative; carryover from prior year's strong performance and extended replacement cycle.

Contradiction Point 1

Financial Outlook and Market Recovery Timing

Contradiction on the expected timing of market improvement benefits reaching Ryder's rental fleet.

Why is your forecast cautious despite rising spot rates and optimism, especially with the low rental-to-lease truck ratio (~20%) contrasting typical support ratios? - Jeffrey Kauffman (Vertical Research Partners)

2025Q4: There is a ~6-month lag before market improvements show up in rental demand. The guidance assumes no meaningful improvement in 2026. - John Diez(COO)

Are OEM delays and CapEx changes expected to reverse in 2026, and will the environment then warrant increased capital spending? - David Michael Zazula (Barclays Bank PLC)

2025Q2: As the freight market recovers (with signs like used tractor pricing increases), CapEx should reverse in 2026. The next cycle upturn could begin next year. - Robert E. Sanchez(CEO)

Contradiction Point 2

Used Truck Pricing Outlook

Contradiction on whether driver shortages will pressure or benefit used truck pricing.

Could increased used truck supply from government policies lead to lower pricing, and might private fleet purchases offset this effect? - Ben Mohr Mok (Citigroup)

2025Q4: Evidence suggests capacity is exiting the market, which should tighten capacity and benefit Ryder long-term... Any impact on used truck prices is expected to be minimal for Ryder. - John Diez(COO)

Could reduced driver availability lead to increased truck supply and impact used vehicle prices or residual values? - Harrison Bauer (Susquehanna Financial Group, LLLP, Research Division)

2025Q3: As the driver market tightens, it is generally good for used truck pricing and the rental business. - Robert Sanchez(CEO)

Contradiction Point 3

Impact of New Driver Regulations (Non-Domiciled CDLs) on Business Exposure

Contradiction on whether these regulations affect Ryder's supply chain and dedicated business.

Could increased supply of used trucks from government policies lead to lower pricing, and might private fleet purchases offset this effect? - Ben Mohr Mok (Citigroup)

2025Q4: Evidence suggests capacity is exiting the market... Any impact on used truck prices is expected to be minimal for Ryder. - John Diez(COO)

How do the new CDL regulations affect your business model, trade-offs, fleet exposure, and used truck pricing? - Scott Group (Wolfe Research, LLC)

2025Q3: Ryder's supply chain and dedicated business are not impacted by these drivers. - Robert Sanchez(CEO) & John Diez(COO)

Contradiction Point 4

Used Vehicle Sales (UVS) and Pricing Outlook

Contradiction on the direction and timing of used truck and tractor pricing recovery.

What is the expected cadence for UVS in 2026, especially Q1? - Ben Mohr Mok (Citigroup)

2025Q4: Full-year gains are forecast to be roughly flat year-over-year... truck pricing (majority of inventory) will remain depressed... Tractor pricing should improve in the second half. - John Diez(COO), Tom Havens(President of Global Fleet Management Solutions)

How are you thinking about different scenarios for residual truck values in the back half of the year, given the uncertainty around the cycle? - Ravi Shanker (Morgan Stanley)

2025Q2: Expects tractor pricing to steadily increase, especially in Q4... Truck pricing decline was muted in Q2. - Robert E. Sanchez(CEO)

Contradiction Point 5

Nature of Business Growth and Sales Pipeline

Contradiction on whether sales pipeline indicates pent-up activity or is merely at near-record levels without a demand surge.

Are you seeing increased leasing demand or prebuy activity in Class 8 orders? Is the lease pricing tailwind incremental for 2026 or a carryover? - Scott Group (Wolfe Research)

2025Q4: The sales pipeline is at near-record levels, which might suggest pent-up activity, but no current demand surge. - Tom Havens(President of Global Fleet Management Solutions)

What are the key challenges and gating factors in broadly deploying new generative AI advertising tools, and how will AI-based tools like PMax impact the long-term sales force intensity of the advertising business? - Question (Firm Name)

2025Q1: Progress with PMax is on track. Sales force adjustments focus more on Global Customer Solutions (GCS), which is the fastest-growing channel. - Philipp Schindler(Senior Vice President, CBO)