Business Overview and History Ryder System, Inc. (R) is a leading provider of innovative supply chain, dedicated transportation, and fleet management solutions in North America. With a rich history spanning over 85 years, Ryder has evolved from a traditional truck leasing company to a diversified logistics powerhouse, delivering mission-critical services to a wide range of industries.
Ryder was founded in 1933 as a small truck rental company in Miami, Florida, starting with just a single truck. Over the decades, the company has undergone a remarkable transformation, expanding its offerings and footprint across North America. In the 1950s, Ryder pioneered the concept of full-service truck leasing, providing customers with both vehicles and maintenance services. This innovative model laid the foundation for the company's growth into fleet management solutions and established Ryder as a pioneer in the fleet management industry.
Throughout the 1960s and 1970s, Ryder continued to grow both organically and through strategic acquisitions. In the 1980s and 1990s, the company faced challenges as it sought to balance its traditional truck leasing business with newer logistics and supply chain service offerings. This led Ryder to divest some non-core businesses and focus on its integrated logistics and transportation solutions to adapt to changing customer needs and evolving industry dynamics.
In the 2000s and 2010s, Ryder made significant investments to transform its business model, expanding its supply chain and dedicated transportation segments while enhancing its fleet management solutions with new technologies and services. This balanced growth strategy helped Ryder weather economic downturns and emerge as a more resilient and diversified company. Despite industry challenges like fluctuating used vehicle prices and regulatory changes, Ryder navigated these obstacles through operational excellence, disciplined capital allocation, and a focus on customer-centric innovation.
Today, Ryder is a global leader in logistics and transportation solutions, serving customers across diverse industries. The company's integrated offerings, spanning fleet leasing and maintenance, supply chain services, and dedicated transportation, have enabled it to establish long-term, recurring revenue streams and deliver sustainable financial performance. Ryder's transformation over the decades has positioned the company as a cycle-tested industry leader, known for its operational expertise, technological capabilities, and commitment to safety and environmental sustainability.
Financial Performance and Liquidity Ryder's financial performance has been resilient, showcasing the company's ability to navigate various economic cycles. In 2024, the company reported total revenue of $12.64 billion, with operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation) of $10.27 billion, representing an 8% year-over-year increase. This growth was primarily driven by recent acquisitions, such as the integration of Cardinal Logistics in 2024.
The company's profitability has also remained strong, with Ryder generating comparable earnings per share (a non-GAAP measure) of $12.00 in 2024, down from $12.95 in the prior year, reflecting weaker conditions in rental and used vehicle sales, partially offset by higher earnings in the contractual lease, supply chain, and dedicated businesses. Net income for 2024 was $489 million.
Ryder's balance sheet remains solid, with a debt-to-equity ratio of 2.50 as of December 31, 2024, well within the company's target range of 2.50 to 3.00. The company's strong cash flow generation, with $2.27 billion in net cash provided by operating activities in 2024, has enabled Ryder to fund its growth initiatives, make strategic acquisitions, and return capital to shareholders through dividends and share repurchases. Free cash flow for 2024 was $133 million.
As of December 31, 2024, Ryder had $154 million in cash and cash equivalents, with access to $532 million in revolving credit facilities and a $181 million trade receivables financing program. The company's current ratio and quick ratio both stood at 0.753, indicating a relatively tight liquidity position.
In the most recent quarter (Q4 2024), Ryder reported revenue of $3.207 billion and net income of $135 million. The company's performance by geographic markets shows that 93% of Ryder's revenue was generated in the United States in 2024, with the remaining 7% coming from operations in Canada and Mexico.
Balanced Growth Strategy and Resilience Ryder's strategic transformation over the past decade has strengthened the company's resilience and positioned it for long-term success. The implementation of a balanced growth strategy, focused on enhancing the return profile of its contractual businesses, has been a key driver of the company's performance.
The FMS segment, which includes full-service leasing, commercial rental, and maintenance services, continues to be a core pillar of Ryder's operations. In 2024, ChoiceLease revenue accounted for 59% of FMS total revenue, while commercial rental contributed 17% and SelectCare and other made up the remaining 11%. FMS total revenue decreased 1% in 2024, primarily due to lower fuel service revenue, partially offset by higher operating revenue. FMS earnings before income taxes (EBT) decreased 22% in 2024, reflecting weaker commercial rental demand and lower gains on used vehicle sales, partially offset by improved ChoiceLease performance and maintenance cost savings.
The company has made a concerted effort to grow its asset-light SCS and DTS segments, which now account for 61% of total revenue, up from 44% in 2018. This shift has reduced Ryder's exposure to the cyclicality of the rental and used vehicle sales markets, diversifying its revenue streams and earnings profile. SCS total revenue increased 9% in 2024, driven by higher operating revenue from recent acquisitions. SCS EBT grew 44% in 2024, primarily reflecting stronger performance in the omnichannel retail and automotive verticals, and benefits from a prior year asset impairment charge.
The DTS segment has also shown strong growth, with total revenue increasing 37% in 2024 and operating revenue growing 44%, primarily due to the Cardinal Logistics acquisition. DTS EBT increased 4% in 2024, reflecting improved operating performance and the benefits of the Cardinal Logistics acquisition.
Ryder's balanced growth strategy has enabled the company to outperform its prior cycle performance. In 2024, a year expected to represent trough freight cycle conditions, Ryder generated comparable earnings per share of $12.00, more than double the $5.95 recorded in 2018 during the previous cycle peak. Similarly, the company's return on equity (ROE) of 16% in 2024 surpassed the 13% achieved in 2018, demonstrating the enhanced quality and resilience of Ryder's transformed business model.
Secular Trends and Growth Opportunities Ryder is well-positioned to capitalize on several long-term secular trends that continue to favor outsourcing of logistics and transportation services. The increasing complexity of global supply chains, the rise of e-commerce and omnichannel retail, and the growing demand for specialized transportation solutions are all driving increased demand for Ryder's comprehensive service offerings.
In the FMS segment, the company's ChoiceLease product, which provides customers with bundled vehicle leasing and maintenance services, has experienced steady growth, reflecting the value proposition it offers in an environment of rising vehicle costs and regulatory complexity. Similarly, the DTS segment is benefiting from the ongoing need for dedicated transportation solutions as companies seek to address labor shortages and regulatory challenges in managing private fleets.
The SCS segment continues to see strong demand for its integrated logistics solutions, particularly in the omnichannel retail and consumer packaged goods verticals, as customers strive to optimize their supply chain operations and enhance their e-commerce fulfillment capabilities.
Ryder's strategic investments in customer-centric innovation, such as its RyderShare and RyderGyde technology platforms, have further strengthened the company's competitive edge and ability to deliver value-added solutions to its customers.
Risks and Challenges While Ryder has demonstrated resilience and adaptability, the company is not immune to the risks and challenges inherent in the transportation and logistics industry. Fluctuations in the broader economic environment, changes in customer demand, volatility in fuel and commodity prices, and labor shortages can all impact Ryder's financial performance.
The company also faces competitive pressures from other service providers, as well as the potential disruption from emerging technologies, such as autonomous vehicles and digital freight platforms. Ryder's ability to continually innovate and adapt its service offerings will be crucial in maintaining its competitive edge.
Additionally, Ryder is subject to a complex regulatory landscape, with various federal, state, and local regulations governing its operations. Compliance with these regulations, as well as potential changes in the regulatory environment, can present both opportunities and challenges for the company. Ryder's business is subject to oversight from agencies such as the Department of Transportation (DOT) and Environmental Protection Agency (EPA), which involves significant time and costs for compliance.
Ryder also faces challenges in hiring and retaining professional drivers, technicians, and other key personnel. The company has approximately 3,800 employees in the U.S. that are organized by labor unions, which adds complexity to labor relations and management.
Environmental and climate-related risks are becoming increasingly important for Ryder. The company's business may be affected by climate change regulations, such as vehicle emissions and zero-emission requirements. Additionally, Ryder's operations are susceptible to disruptions from extreme weather events, which could impact its ability to deliver services efficiently.
Outlook and Conclusion Ryder's balanced growth strategy and diversified business model have positioned the company to navigate the current market environment and capitalize on future growth opportunities. For 2025, the company expects to deliver comparable earnings per share in the range of $13 to $14, representing a 17% increase at the high end of the range compared to 2024.
This guidance reflects the continued strength of Ryder's contractual businesses, as well as the benefits of the company's strategic initiatives, such as the integration of recent acquisitions and the ongoing optimization of its SCS operations. Ryder anticipates return on equity to increase to a range of 17% to 18% in 2025, reflecting the continued growth in their contractual earnings.
Free cash flow is expected to be between $300 million and $400 million in 2025, up from the prior year, primarily due to lower vehicle capital expenditures and higher operating cash flow. For Q1 2025, Ryder has provided a comparable earnings per share forecast of $2.30 to $2.55, compared to $2.14 in the prior year Q1.
In terms of segment-level performance for 2025, Ryder expects: - Fleet Management Solutions (FMS) operating revenue growth in line with the mid-single-digit target, with FMS EBT as a percentage of operating revenue expected to be up year-over-year but below the low teens target. - Supply Chain Solutions (SCS) operating revenue growth below the low double-digit target range, with SCS EBT percentage at the high single-digit target range. - Dedicated Transportation Solutions (DTS) operating revenue growth below the high single-digit target, with DTS EBT percentage returning to the high single-digit target range.
While the company anticipates near-term headwinds in its transactional businesses, the strength of its diversified portfolio and the resilience of its transformed business model are expected to drive solid financial performance. Ryder's focus on de-risking and optimizing its business model, enhancing returns and free cash flow, and driving long-term profitable growth positions the company well to capitalize on the anticipated cycle upturn and continued growth opportunities in its contractual lease, supply chain, and dedicated transportation offerings.
As Ryder continues to execute on its balanced growth strategy, the company is poised to capitalize on the favorable long-term trends in the transportation and logistics industry. With its innovative solutions, operational expertise, and commitment to delivering value to its customers, Ryder is well-positioned to power the future of logistics and transportation.