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

Robert Sanchez: Yes. It’s generally performing with plan. I would tell you the first half of last year, we did really well. We’re now kind of seeing this thing through a cycle. So as we got to December, we saw volumes slow down a little bit or actually nice since they slowdown, not grow as much as we would seasonally expect. So as we go into this year, we’re probably a little cautious in how we’re forecasting it. We want to make sure that we see this thing perform over the cycle. But we’re very excited about the opportunities there. The growth opportunities as more and more customers are looking for help around e-commerce fulfillment and omni-channel. We’re very well positioned with that capability.

Allison Poliniak: Great! Thank you.

Robert Sanchez: Thanks Allison.

Operator: And our next question comes from Todd Fowler at KeyBanc Capital Markets. Please go ahead.

Todd Fowler: Great! Thanks and good morning. Hey Robert! Hey John! Maybe just to get an idea of how you’re thinking about the shape of the year. If I look at the first quarter guidance, you know it’s really about 25% at the midpoint of the full year guidance and it sounds like that there’s some moving parts with the timing of lease vehicles coming in and expectations for rental. So, just how are you thinking about the cadence of the quarters this year and some of the moving parts with what we should see for gains throughout the year and rental utilization?

Robert Sanchez: Yes, I would let John give you a little bit more color. But generally we’re assuming for the transactional parts of the business, rental and used vehicles, we’re assuming the market conditions continue to deteriorate throughout the year, right? Things slow down throughout the year. I mean there’s a lot of talk about a potential shallow recession in the second half and we kind of built in that type of a really slowing type of environment as we go throughout the year. The offset of that is we’re expecting to see continued growth, especially in dedicated and supply chain, along with those earnings continuing to recover. And then depending on OEM deliveries, potentially, we could have some acceleration on the lease side. Right now, we’re assuming that doesn’t happen until the tail end of the year, which then would be earnings benefit more into 2024. John, anything?

John Diez: Yes Todd, I would just add, we do have the impact of UVS results and what we’re projecting for proceeds. So we are expecting declining proceeds throughout the year. So, that will put a little bit of pressure, offset some of the growth that we’re seeing in other parts of the business and some of the momentum that we’re building, both from a lease growth perspective, dedicated as well as supply chain, which we do expect supply chain in the second half to be better. So you just got to balance those things out and that’s how we’re projecting the year to come about.

Robert Sanchez: I mean if you look at it on average, we’re expecting as we said, a normalized – on average, a normalized environment for used trucks and rental. So, if you think about the discussions we’ve had over the last several quarters about core earnings and seeing that continue to grow, this is it, this is how we expect it to play out, right. We expect the outsized earnings from used vehicles and rental to come down. We expect the core earnings to continue to hold and move up as we grow those businesses. So obviously, an important year for us and our strategy as we continue to execute on that.