Ryder System, Inc. (R) Earnings Call Transcript & Summary

My name is Ben Mohr. I cover transportation equipment, shipping and transportation at Citigroup. I am very delighted and honored to host Robert Sanchez, CEO and Chairman of Ryder. We also have CFO, Cristy Gallo-Aquino of Ryder; and Ryder's Head of IR, Calene Candela here. So Robert, thank you for joining us at Citi's Industrial Conference. I'd like to explain to kind of newcomers to Ryder that Ryder is not your mom or dad's Ryder anymore. So Robert, if you could introduce yourself and kind of intro Ryder, especially your very favorable transformation over the last few years, that would be great.

Okay. Great. Well, my name is Robert Sanchez, as Ben mentioned, Chairman and CEO of Ryder. So thank you for having us, and welcome all to Miami. This is our hometown. So Calene, Cristy and I had probably the shortest commute of anybody to get here and glad to be here. So a little bit about Ryder. Ryder has been around for a long time, founded in 1933 right here in Miami by a gentleman named Jim Ryder, one man and one truck, built the company into a publicly traded company. We went public in 1960, 1955, I think it was. We traded under the stock symbol R. We're one of the longest tenured publicly traded companies, at least part of the NYSE. I think we're in the top 5% in terms of tenure. We're just under -- just under $13 billion of revenue. We are an outsourced transportation logistics provider here in North America. What that means that everything we do for a company, a company could do up their own. We operate in 3 segments. Our fleet -- I'd like to divide it as the outsourcing of a truck, the outsourcing of a truck and a driver and the outsourcing of broader supply chain activities. So the outsourcing of the truck is our fleet management solutions business, represents about 43% of the revenues of the company. We have a fleet of just under 240,000 vehicles that are in that segment. And if you think about it, if you own a business and you need a fleet of trucks to deliver your product, whether you're a baker or you're a food distributor or you're in some type of industrial type business and you need a fleet of trucks to deliver your product and pick it from your suppliers. You can go out and buy that fleet of trucks. You can figure out what you need, which is complicated. You can order them through a dealer, and then you can worry about the maintenance and keeping up with all the regulatory issues that occurred during the life of a vehicle. And then at the end, you can try to resell it yourself or you can come to Ryder and we'll do all that for you for a flat monthly fee and a mileage fee. We have a network of just about 800 maintenance locations where we full service all the vehicles that our customers lease from us. The next is the outsourcing of the truck and the driver. That's about 19% of the revenue. So that's -- not only do you want Ryder to take over the truck, but we'll also provide the drivers. We have about 13,000 professional drivers who work for Ryder and run these operations for us and these customers. So you'll see in these types of operations, you won't know it's a Ryder truck. It has a customer's logo on it, but it's got a -- it's our driver and it's our truck actually running that private fleet for the customer. And then the third one is Supply Chain Solutions, which is the outsourcing of broader supply chain activities, mostly warehousing operations. It could be transportation networks will act as a traffic department for a customer. We have over 330 warehouses, over 100 million square feet of warehouse space that we operate for customers, optimize and run those operations. And then we also have a final mile delivery business of big and bulky product and an e-commerce fulfillment business that we -- that we brought into the fold a few years ago, where we're doing e-commerce fulfillment for companies. And then more recently, we purchased a co-manufacturing, co-packaging operation, mostly in the CPG business that's part of that also. So those are the services we provide. They're mostly contractual. 90% of our revenues are contractual, multiyear contracts, so relatively sticky and stable. And again, operating here in North America. So you mentioned the transformation over the last several years. In 2019, we pivoted towards what we call balanced growth strategy that was really focused on 3 things. The first one was really trying to derisk our business model. We've been around for 90-plus years. A big part of that business, the outsourcing of the truck where we basically buy a truck and we full service lease it to the customer. We make an assumption on that residual value, what it's going to sell for in 6 years in determining a lease just like you would for your car lease, along with all the maintenance costs. That residual value for many years, we had been determining it by doing a 5-year, 6-year look back at what we've been selling used trucks for and assuming that in 6 years, that vehicle is going to sell for about that price, inflation adjusted. Kind of had worked for a long time. But coming out of the Great Recession, the volatility of used trucks started to move up and down a lot more due to several factors. And we realized that, that was after being really the used truck market being below our residual assumptions for multiple years decided this probably wasn't good. We were very reliant on that final sale of that vehicle in order to make our targeted returns. So we made the decision to lower the residual assumptions on all of our new leases going forward and that was really going to derisk that lease. So we knew that unless the used truck market really collapsed for a long period of time, we were going to at least make the returns that we had targeted and most likely do better. So we started doing that in 2019, derisking the business, got out of some businesses that we had and services that we were providing that were profitable. So different geographies we exited really focused in North America and then also got out of some services that were less profitable. So derisked the business, improving the returns then. We raised the -- not only do we lower the residual value of the leases, but we raised the prices on the leases above and beyond it to improve the spread. We lowered our -- we optimized our maintenance operations. We had initially targeted $100 million of savings from our maintenance initiatives and have well exceeded that. And really found ways of optimizing the operations better and improving the returns. And then the last -- the third piece of it, so you had derisking the business, improving the returns. And the third piece was that we wanted to accelerate the growth in our more asset-light businesses, our supply chain and dedicated businesses, not only through organic growth but also through acquisitions. So what you see on this page is really the tale of the tape of what happened pre-transformation to today. So if you look at the revenue mix in 2018, our asset-intensive business was 56% of the revenues. This year, it's -- I'm sorry, last year, it was 38% of the revenue. So a lot more -- the majority of the revenue now comes from our more asset-light Supply Chain and Dedicated businesses. In 2018, which was a peak in the freight market, our comparable earnings per share was just under $6. So that was the peak earnings that we had in that cycle. In 2025, which is more of a trough in the freight cycle, we did just under $13 a share. So again, a significant improvement in the earnings profile of the company. Return on equity at a peak of 2018 was 13%. And in 2025, when it's more trough like is 17%, and we're targeting low 20s ROE over the cycle. So certainly high -- mid-20s when we get into more of a peak and averaging somewhere in the low 20s. And then you can see what happened with operating cash flow. So overall, this is kind of the tale of the tape of the transformation we've been through. But as we like to say, there's more to come. This year, we have in those initiatives that I talked about, -- we had announced in 2024 that we had $150 million target for initiatives over multiple years. We've actually upsized that on this last earnings call from $150 million to $170 million with the last $70 million of that really being delivered here in 2026. So we feel really good about that. We also have identified $250 million -- over $250 million of earnings lift as the market recovers. So as the freight market improves, we're going to start to see that in our rental and used vehicle segments, which have really been impacted by the used truck -- by the soft freight market. So as those really begin to improve, between now and when they get to the next peak, we're expecting $250 million plus of earnings -- pretax earnings benefit from that. And that will be just a matter of the improvement in the market. We also have a couple of other things as the driver market tightens, we expect more growth in Dedicated and also some optimization of our omnichannel network. And then last but not least is the overall growth opportunities of our contractual businesses. We had a really strong sales year in our Supply Chain segment in contractual sales, but there's still opportunities in '25 that's going to start to bleed in '26. But our lease, contractual lease business and Dedicated have both been below their targets. So as all those start to achieve their targets, there's certainly an earnings -- ongoing earnings benefit from growth in those contractual businesses.

Wonderful. Thank you. Fantastic. What a great overview. Ryder is very much a different business as you were in 2018. Maybe starting with direction and management. At the end of this month, Robert, you'll remain as Executive Chair and John Diez will take over as CEO. What have you done to set Ryder in the right course?

Well, first of all, we've got the right team in place. I think that's really important. And I've been with the company for 33 years, been the CEO now for 13 -- and I feel really proud of the team that we've put together, not just John, but the whole leadership team and the culture that we've set. I think really being in 3 contractual segments and businesses focused in North America in the outsourcing of transportation and logistics is a really good market to be in right now as more industrial business start coming back to the U.S., I think that's going to be very helpful. So I think we're well positioned from a market standpoint. But I think we also have -- one of the things that we've changed, I think, over the last several years in addition to the things we talked about is having more of an innovation mindset. We have Ryder Ventures, where we invest in start-ups, being able to take new ideas and bring those into the company and being able to develop new services and new products as the market changes, I think, is an important part of the future of Ryder. So I feel really good about the handoff to John. He's been with the company for over 20 years. I've worked with him for over 20 years. He makes great decisions, and he's a great leader for the company going forward. A real focus around innovation and technology as the market continues to evolve. And I think he's going to take -- he's going to really write Ryder's next chapter.

Wonderful. What inning would you say are Ryder is in, in terms of your overall transformation? You've got your mix of your asset-light, that's 62% SCS, the Supply Chain and DTS, the Dedicated trucking business and 38% your traditional leasing, Fleet Management, FMS -- what about in terms of capital intensity, CapEx, free cash flow? Where are you in terms of inning for your transformation there?

Yes. I think there's still a lot of room to go. There's still -- whether it's the fifth inning or the sixth inning, I don't know. But we're -- we've gotten through some of the heavy lifting of making the shift towards more supply chain and dedicated, but those businesses and those markets are evolving. So more automation, the need for those services is really expanding. And I think there's going to be a lot of work and a lot of evolution there. Now what happens with the percentages, I think as rental comes back, as the freight market comes back, you'll see the fleet management business grow a little bit more and maybe take a little bit more percent. But it's probably in that range where it's in now in that 60-40 is a good place and until the next chapter comes and we make decisions on what else we want to do.

Great. Can we go through kind of a rapid fire section with each of your 3 businesses. We'll take a look at where you are in revenue, where you are in margins. So starting with FMS, your Fleet Management Systems segment, which is your traditional leasing. Your long-term target is mid-single digits growth. You guided to below that target. We're seeing pressured lease sales, rental fleet downsizing. Last year, it was flattish. We and consensus are flattish for this year. What's your view for FMS revenue? Could it be higher? What's the potential range?

Yes. It's really -- at this point, it's more dependent on the freight market. So as the freight market comes back, that's going to drive up rental revenue, and it's going to drive up lease sales. So as the freight market comes back, we expect that to move up and cycle back up to the target range.

Great. And within the same segment, FMS, the margin, EBT as a percentage of operating revenue, your long-term target is low teens. You've guided to slightly below target. And it's being supported by stronger rental utilization as you downsize your rental fleet, your maintenance lease pricing initiative is benefiting that. Last year, the margin was about 10%. We and consensus are roughly there at 10% for this year. What are some puts and takes? What could bring it above, below?

Again, it's the same thing, freight market, right? So as the freight market tightens, you're going to get benefits in rental and used vehicle sales, which are going to improve the margin.

Great. Great. How about kind of affecting your FMS is your used truck gain on sale. You've guided to '26 being flattish to '25. The level was about $22 million in 2025. You've had more retail mix over wholesale in 4Q, so that's helped even though retail used prices are declining. You've guided 1Q to be more challenged, then it gets better throughout the balance of the year. What's your sense now? And what are some puts and takes?

Yes. I think as we said on the call, we're not expecting a big improvement in the used truck market. It's going to remain down and maybe a slight uplift towards the end of the year, but flattish year-over-year. Again, that's our assumption when we put out the guidance. What happens will depend on what happens in the market. And if used truck market comes -- if the freight market comes back sooner and the used truck market follows, there could be upside on that.

And what are you seeing in terms of the 3 kind of key policies affecting your used truck sales, the non-domiciled CDL, all the kind of the driver type policies, number two, truck tariffs; and then number three, EPA 27.

Right. So those are all -- those should all be -- well, the non-domiciled theoretically could put a little bit of pressure on used trucks, but could tighten up the market, which would actually benefit. On the EPA side, will there be a prebuy? There could be. There's going to be some increase in pricing as we get into 2027. But we haven't seen it yet. I mean we certainly haven't seen a lot of fleets rushing to prebuy yet, but that could happen. And I think overall, there's been a lot of excitement over the PMI and is the PMI an indicator that the freight market is coming back. It could be. We also follow active truck utilization that FTR puts out, that's been above 95%, which is nice, too. That's usually a pretty good indicator. Spot markets are good. So those are external leading indicators that we look at that say could be, but 1 month or reading doesn't make a trend. And typically, there is a lag of, let's say, 6 months between when the freight market really starts to pick up as the spot market picks up and we start to see people needing to come into red trucks or buy used trucks. So we'll see.

How about we'll transition to the real growth engine, your SCS segment, supply chain, which is contract warehousing. Your long-term target is low double-digits growth year-over-year. You guided to accelerating through the year with wins weighted to second quarter and third quarter. And so our view, we're modeling you at kind of low double-digit growth to exit the year, averaging maybe up 3%, up 5%, 7% is where consensus is. What's your view on kind of the cadence of SCS revenue?

Generally, that's the expectation, right, that we know we signed a lot of contracts in 2025. Those contracts start to bleed in, in 2026. So our expectation as we exit the year is that we'd be approaching that target double-digit growth rate towards the end of the year.

Maybe as a follow-up, SCS is really where you have the hugest TAM. What are you doing to win share there? What are you doing differently than other contract warehousers?

Yes. I think our -- we've been in that business for a while, and I think our key is our specialization and our ability to execute. We have a long track record of being able to take on these projects and execute them very well and drive continuous improvement for our customers. Automation has become a more important component in some of those verticals. I think if you go back 2 or 3 years ago, automation was more specific to certain applications has become more broadly available now and applicable. So we've got a big expertise in that, too, and being able to implement that automation. And that's really, I think, what helps us win accounts is -- what helps us win accounts is our ability to execute well for our customers and continue to drive continuous improvement.

And I've had the privilege along with some of our investors here to tour your Chicago SCS facility for a major consumer packaged goods company. I was kind of very pleasantly surprised at your cadence in kind of getting one facility with that customer as a foothold, doing a good job, they'll award you with the next facility and then the next and the next. Can you talk about that sort of structure or cadence of winning a new client then growing by providing good service with your multiple clients?

Yes, it's not unusual. Typically, what will happen is that most of the clients in our supply chain are large, call it, Fortune 500 type companies that have operations, they start to outsource some. And those are the ones we like where they'll outsource one facility maybe to us, and we can kind of prove ourselves against the execution of other facilities, and that allows us to start picking up more locations over time. And again, it's our process and our rigor around executing and running these facilities and always trying to find more efficiencies so that we can bring savings to the customer and over time, pick up more business.

SCS, your margin has been very resilient even in this downturn. Your long-term target is high single digits. You've guided to at target. And last year, you were at 8.7%. We and consensus are roughly 9% for this year. How have you been able to be so resilient with your SCS margin? And what's your view for this year? Could it step up?

Yes. If you think about that business, it's contractual, right? So it should be steady. It should be -- what can create issues typically is something that wasn't picked up in the contract or an execution issue. So I think when you look at the steadiness of our margin in that business, it's a reflection of the execution of our operations and our ability to continue to deliver and drive efficiencies for our customers and without hiccups that create those margin changes.

Great. Moving on to DTS, dedicated trucking. The industry has gone through a lot of changes. There's a lot of opportunities in terms of government action driving out capacity, and we've seen 11, 12 weeks of consecutive year-over-year increases of mid- to high single digits for the spot rate. Your business is completely -- pretty much entirely dedicated. Your long-term target for revenue -- operating revenue growth for DTS, high single digits. You guided to below target. There's still uncertainty over volumes and pricing cycle improvement. It's still kind of early innings when it comes to the spot rate coming up. Last year, it was down 1.6%. We and consensus roughly flattish for this year. What's your view on that relative to the spot rates being fairly strong?

Yes. I think in Dedicated, just like any of our businesses, the more complicated it becomes, the more difficult it becomes, it's really good for Ryder. So when the driver market is soft and it's easy to hire a truck driver. That's not great for Dedicated. We like it better when it's hard to hire a truck driver because that way, private fleets are more likely to outsource. So as the driver market tightens with some of these things that you mentioned, I think that's where you'll start to see sales improve in Dedicated, new sales improve in Dedicated, some of the lost business improves. And then you'll see that get back towards its target growth...

Great. And then margin for DTS, your long-term guide is high single digits. You've guided to at target. So your margins are still very resilient despite headwinds on the top line side. You're roughly through all of your Cardinal synergies for '25, not much left for '26 there. You have sort of a balance here with a headwind from the government action we talked about tightening the driver market that could raise your labor costs in DTS. And there's your contract revenue that's lagging the spot rate coming up, but that can be roughly fully offset maybe by tailwind of tighter driver conditions, higher spot rates that drive more outsourcing in DTS. Can you talk about kind of the dynamics there? Last year, your margin was 7.6%. We and consensus roughly 8%.

So you can have a little bit of volatility, but our contracts, especially after COVID, we really tightened up our Dedicated contracts so that as there's wage increases are required to retain drivers, we can more easily pass those through to the customer because we typically will not -- we typically work very closely with the customer when we have to give wage increases. And by not giving them, you get more turnover. So we've created -- I think the contracts are much tighter now around it. So I wouldn't expect significant margin volatility, but I would expect us to see improved top line growth as the market tightens and our prospects are needing help with finding drivers and maybe want to hand that off to somebody that does it for a living, and we're there to pick that up. The other thing we're seeing, too, is around running your own private fleet, driver hiring is one of the complexities. Safety is another complexity that private fleets are dealing with and insurance claims and those types of things. And as companies continue to go through those types of challenges, we are seeing more companies looking for companies like Ryder to help us to help them.

Wonderful. We'll bring it all together and kind of point to your EPS guide and puts and takes there. But before going there, I wanted to get your sense of what customers are saying in your conversations with them, how they differ between your 3 segments, your FMS, SCS and DTS. How are customers viewing this year maybe a little differently than each segment?

I think on the supply chain side, again, those are the large, more Fortune 500 type companies. We're seeing companies making decisions moving forward with projects and plans and what they need to do. In our dedicated and lease business, which are more small to midsized companies, we're still seeing hesitation. Now that could be because they're small to midsize and they're more hesitant. Also, those are also the parts of the business that are more tied to the freight market and the freight market is the one that continues to be soft. So -- or has continued to be soft. So those dynamics are the same. We're seeing the large companies moving forward with projects, and we're seeing really good sales on the supply chain side. But on the small to midsize, we're still seeing more -- we're seeing pipelines grow, but decisions being put off.

Great. And so I said we'll bring it all together for your EPS guide, your midpoint reflects roughly an 8% year-over-year growth for 2026, which is roughly equivalent to the 8% growth you had in '27. The range is between 4% to 12%. You've noted on your earnings call, the top and bottom end, you assume no macro support. With the top end, you're assuming some modest improvement in used gains and rental utilization and a higher benefit from your maintenance organization and omnichannel optimization initiatives. The lower end, kind of the reverse of each of those things. What could you say about sort of are we -- am I being accurate in characterizing that? Can you offer any additional puts and takes?

No, I think you've got it right. I think we didn't assume any improvement in the macro environment. I think if it does improve, you should see -- we could -- I have to be careful what I do since I'm retiring. I could really make all kinds of commitments here that I wouldn't have to keep. But I'm sticking to what we said on the call that we did not assume any macro improvement. We talk about the $250 million of earnings benefit when the macro improves. And that benefit will accrue between now and when the market begins to turn up and the next peak. So certainly, pieces of that could be delivered as the market improves. And that was not contemplated. I'm looking at the CFOs and have to live with this. That was not contemplated in the guide for '26. So I think short term, that's the piece that could be upside.

And if you're growing at 8% midpoint in a challenged market, what's your view on what it could be in a more normalized market?

Right. That, again, all kinds of dangerous things I could say there. But look, I think what we've shown in the last 3 years is an ability to deliver significant earnings improvement on initiatives. And I don't expect that's going to end. I think you will always find ways to improve. Quantifying it, I can't. You have $250 million that we've talked about of just rising tide lifts all boats. And I think that we do have line of sight once the things improve. We'll make some investments in our rental fleet, too. That doesn't all come free. I have to buy some trucks, but we know that there's opportunities for that to come in. And then organic growth, organic growth, as we hit our targets across our contractual businesses, that should deliver $50 million plus of earnings each year. So that one just keeps accumulating each year that we're at our target contractual growth rate. So just hitting our target earnings number and our target growth rate should deliver 50-plus on top of that. So put all that together, it's a nice number.

Great. I've got many other questions, but I want to open up the floor to any audience members who might have questions for Robert. I'd like to maybe go back to management and direction, going back to John Diez. Can you talk to John's achievements? He'll be your new CEO at the end of next month, especially his achievements in Ryder's transformation over the last year.

So we had over 50,000 employees at Ryder. So getting to the position that John is in, he's been -- there's been a lot of a lot of tests and cross-training, I think, that has happened over the last 20-plus years at John. John was -- started our finance organization, ran our rental business for a period of time, ran asset management, ran our dedicated business for 5 years and really helped to transform that model, took over our lease business, our fleet management business as we began the transformation, so played a key role in some of the important things that were done in the fleet management business around the maintenance initiatives, around the lease pricing, which Cristy also played a big role in. So John has been in the heart of all the activity that we've done has been the Chief Financial Officer and more recently, the COO. So he's intimately familiar with the operations of our business. And I am confident he's going to do a great job. He's a good friend, and I know he's a good leader who's really well supporting the organization. I'd say above and beyond that, we've got a great management team lineup as part of that, that collaborates and works really well together. And I think that cohesiveness is also an important factor for the success we've had over the last 6 years, and I expect that will continue.

It seems like the 3 of you, you, John and Cristy have been very much involved with the transformation over the last 6 years.

Absolutely. Yes. John and Cristy, and I'd add Steve Sensing and many of the folks on the leadership team, their fingerprints are all over this work.

Great. Capital allocation. You've guided to $700 million, $800 million of free cash flow this year with a step-up in your CapEx. Can you talk about free cash flow and your capital allocation plan for '26? What are you going to do with all that cash? What is John going to do with all that?

What's John going do with all...

Or Cristy?

Well, first of all, organic growth is the #1 priority. So if things do pick up strongly and heavily and we say, boy, there's an incredible need for rental or we sign up new lease contracts, you could have more of it going to organic growth. We've always talked about acquisitions. We're always in the market looking for companies like Cardinal, things that are -- companies that are well run that we could bring into the Ryder fold, whether it's a tuck-in in our lease business, a tuck-in in our dedicated business or new services for our supply chain business, we're in the market for those and have plenty of capacity to do that. Then you're going to see us, obviously, dividend payment is important and continue to work that. And then ultimately, buybacks. I think keeping our leverage to within our -- close to our target range is important for capital efficiency and continuing to buy back. I think we bought back 23% of the company over the last 5 years. That's also part of the value that we create by giving money back to shareholders and keeping our leverage where it needs to be.

Wonderful. We'll open it up for the floor for any questions from audience members. Otherwise, we'll continue AI. We've seen AI to be a real disruptor in industrials and transports lately. And I know that Ryder is no stranger to AI. You've incorporated it in a lot of areas of your business. Can you talk about the ramp-up of the use of AI for driving revenue and margin growth?

Yes. So I'd say in several places. One is customer-facing. So we have systems that we have created, RyderShare, RyderGyde. RyderShares in our supply chain and Dedicated business, RyderGydes in our FMS business. These are proprietary systems that we run that we are incorporating AI to bring efficiencies to the way we operate for our accounts and also bring efficiencies to our customers, getting them data so that they can manage their business better. So we've got some initial applications in those customer-facing systems. We then have AI that we're building into or that we're investing in through a company we purchased Baton. So Baton was a technology company that we invested through RyderVentures. And I guess it was 4 years ago now, we acquired the whole company. This was a company that was working on an optimization software for truckload carriers. We invested them through RyderVentures and felt they had a good product, but maybe the wrong application. So we decided to buy the company and bring it in-house and have those -- all those smart people and a lot more that we've hired since then work on optimizing for Ryder for our accounts and across our accounts. So that group is now -- it was originally -- I always said we bought 5 guys. Now we've got about 40, 50 people out in the valley that are working on this stuff and working on software for us. They're incorporating AI into the software that they're building for us and for our accounts. And we're excited about that work. And then ultimately, we're also leveraging our partners. So back-office type systems, whether it's call centers that we run today that we're incorporating AI into to make the -- either the agents more efficient or actually replacing some of the agents as part of that also. So really opportunities across those 3 different areas.

Wonderful. I was very much amazed, I think, along with some of the investors that toured with me your Chicago SCS and FMS facilities for your FMS, your leasing business, you show your real-time KPIs for each mechanic. And I thought that was very much a value driver. And then for your SCS, your contract warehousing, you're making great use of fully automated robotic forklifts. Can you talk about kind of outside of tech, just kind of broader tech implementation along those lines?

So the first one that you mentioned in FMS, when we talk about these maintenance initiatives that delivered now, I think, $150 million of annual savings, that's been part of it, right, is we employ just over 4,500 technicians who work on our trucks, highly valued, best technicians in the industry. And we learned that they -- we weren't utilizing them to their capabilities. They were spending too much time in front of the computer, doing things that were not what they really like to do and are intended to do. So those boards that you saw, we basically took away all the computer terminals and work that they needed to -- that they were spending time in front of that actually hated being in front of and said, your job is to work on those trucks and here you go, and we're just going to give you a display says what job you're on and what your time is and how that's going and kind of a gamification of that. And that's generated significant productivity improvements in our shop. Around automation in the warehouses, as I mentioned, if you go back 5 years ago, I would say a very small percentage of our warehouses had automation because there wasn't really a business case for it. Automation was too expensive for the value we're getting. That has shifted. And there's more warehouses now and there's more operations where automation does create value. And where that's happening, we are implementing that and have an expertise. We have an entire engineering group that focuses on finding those automation systems that apply well to each of the different verticals that we operate in and implement them for our customers.

Wonderful. So to summarize, smooth transition with the management change, FMS very much levered to the macro. SCS, a very strong growth engine. And DTS has some sort of puts and takes from spot rates and supply and demand. Can I ask you to give us a summary and a closing statement, Robert?

No, I think as we started, Ryder has been around a long time. We're going to be around for a long time. There's not too many companies that are 93 years old that are -- that have the growth spurts that we've had over the last several years. And as I told everybody as I'm transitioning out that I am confident that the best years of this company are ahead of us with the need for the services that we provide really accelerating and the team that we have that can deliver.

Great. Thank you very much, Robert. Thanks, everyone.

Thank you.