Ryder System, Inc. (NYSE:R) Q4 2022 Earnings Call Transcript

Robert Sanchez: Yes, I guess a couple of things. Around the breakout of the dollar, it is €“ right now, it’s primarily going to be on the gain side. We had $400 million of gains this year. So we’re expecting that to come down. But again, I would say it’s just €“ again, this is a forecast. So you got a buck in there primarily of gains, but also some rental. Rental, you’re right and that it’s more trucks now. I think now our rental fleet is like 55% trucks, and it used to be 47% trucks. So, we’ve already seen the movement there, which is a positive in terms of we believe that trucks are less cyclical, and certainly less dependent on the freight cycle than tractors. But again, that remains to be seen. And by the way, truck utilization is typically a little bit lower than tractors because tractors are typically taken out for a longer period of time versus the truck is used more local type deliveries and that can come back and forth.

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

Brian Ossenbeck: Okay, thank you. Very helpful. I appreciate it Robert.

Robert Sanchez: By the way, the important point there is lower utilization, but still getting a better return. So because of the rates you are able to get better returns with lower utilization. Thank you Brian.

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

Allison Poliniak: Hi! Good morning. Just want to go back to supply chain services on the EBIT margin percentage. I know the amortization or the client situation, the intangibles from the acquisitions as well. Could you maybe walk through €“ are you kind of at that target at this point, excluding those for ’23? How far are we along with the pricing actions that are there, you know if we’re not in terms of trying to get there? Any growth headwinds that you’re starting to see just because of the outsized growth that you’re getting in that business as well? Thanks.

Robert Sanchez: Yes. I would tell you, without the amortization in 2023, we would expect to be at the target. Other, we’ve got the lift of the growth and getting margins back, improving. In terms of any headwinds that we see, I would tell you e-commerce growth. We saw a little bit of a €“ I wouldn’t say a slowdown in e-commerce, but we saw less of an uptick in December than what we would have expected seasonally, so you’re seeing that. As we go into this year, we maybe have taken a little bit of a cautious view on that. Let’s see how it works out. It could be a little bit better depending on how e-commerce goes. We also have built in there as I mentioned. We have some additional costs associated with potential risk on that additional customers. So again, without amortization, we’d be at the target in our forecast. In addition to that, you have the opportunity to even do better with these other items that I mentioned, if those don’t play out in a negative fashion.

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