Used vehicle prices have always played a significant role at profitability for Ryder System as well as providing guidance on where the broader market stands. The company’s second quarter earnings report was no different.
With Ryder (NYSE: R) taking a conservative outlook in making its outlook for the remainder of the year–its forecast is earnings per share of $12.85 – $13.30, down from an earlier projection of $12.85 – $13.60–used vehicle pricing’s fortunes aren’t seen as being that much different: stability with some hope for an increase.
The one positive number the company provided in its earnings report was that Ryder’s used tractor pricing rose 3% sequentially from the first quarter, even as Ryder’s used truck prices overall fell 10% compared to the first three months of the year.
The year-on-year comparison was weaker, with average sales prices of both tractors and trucks declining 17% from the corresponding quarter of 2024.
In the question and answer session with analysts, Ryder CEO Robert Sanchez specifically highlighted the sequential increase in tractor pricing. He noted that the 3% sequential increase in tractor pricing includes a one-time shift to more sales through wholesale channels. If retail sales only were measured, he said, the gain was 10%.
“So we would expect that trend to continue,” Sanchez said. “We’re very encouraged by what we’re seeing in the used tractor market.”
Thomas Havens, the president of Fleet Management Solutions at Ryder, which does the buying and selling of vehicles at the company, said tractors with sleeper berths are “where you’re seeing the most price uplift in used vehicle sales.” He also said the company’s inventory of used sleeper tractors for sale is “relatively low.”
“And that’s what’s driving the pricing,” he said. “I think it’s an indication that you’re getting closer to equilibrium, at least on that class.”
Wholesale vs. retail
In her prepared remarks to the company’s conference call with analysts, Cristina Gallo-Aquino, the company’s CFO, said the results of Ryder’s used vehicle sales in the quarter were “negatively impacted” by its decision to move a lot of its inventory out the door through wholesale channels, which historically brings in less revenue per vehicle than selling through retail outlets.
But it was a one-time development, she added. “We do not plan on executing this level of wholesale trades going forward,” she said.
Ryder’s used vehicle sales through retail outlets were about 50% of volume in the quarter, Gallo-Aquino said. A year earlier, that number was 65%, she added.
That leaves the rest of the year, which Gallo-Aquino said Ryder expects to not have “any significant change to market conditions.” The company’s sales levels are expected to be in line with the first quarter for the remainder of the year. Ryder sold 5,100 used vehicles in the first quarter, rising to 6,200 in the second quarter when the wholesale sales channels were heavily utilized.
Two other key metrics for Ryder’s used vehicle inventory are its inventory levels and realized prices versus residual values that are baked into the company’s asset valuation. Gallo-Aquino said at 9,600, the company’s inventory of used vehicles “was slightly above our targeted inventory range.” The prices it is obtaining in its sales are above residual values, she added.
Ryder also is a buyer of vehicles. Sanchez said trucks at Ryder are about 60% of its rental fleet, and the company has been investing in those vehicles.
He was more cautious about Ryder’s planned purchase of tractors, saying the company “(expects) that we would invest in some tractors in the rental fleet probably in 2026, but we’ll wait to see as the market improves before we do that and grow that tractor fleet again.”
On a separate issue, Ryder president and COO John Diez reviewed several data points on the call about the company’s balance sheet, including higher cash flow generation and a concurrent deleveraging that he said is “creating incremental debt capacity.”
The result of those changes, he said, would be about $3.5 billion of new debt capacity, which results in about $14 billion “available for capital deployment.” About $9 billion of that will be for equipment replacement and dividends, which leaves about $5 billion that in part could be used for “strategic acquisitions and investments.”
That brought a question from Ravi Shanker of Morgan Stanley, who said it was “great to see the dry powder on the balance sheet here.”
Sanchez in response said the company was “always looking for acquisition opportunities.”
What it would buy
He elaborated later on Ryder’s acquisition strategy.
“I want to buy companies that are well run,” he said. “We’re not looking for turnaround situations, and we want to buy companies that are certainly within our core businesses. So we’re in the market always.”
Ryder’s two most recent acquisitions, both mentioned by Sanchez on the call, were of Cardinal Logistics, which led to a major growth in the company’s Dedicated division, and IFS, which slotted into its contract logistics Supply Chain Services segment.
Coming back to Shanker’s description of the balance sheet, Sanchez said of acquisitions: “We’ve got plenty of dry powder now to do it, and we’re going to continue to look until we find the right ones.”
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