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

Good morning, and welcome to the Ryder System Second Quarter 2026 Earnings Release Conference Call. [Operator Instructions]. Today's call is being recorded. If you have any objections, please disconnect at this time. I would now like to introduce Ms. Counce Vice President, Investor Relations for Ryder. Mr. Candela, you may begin.

Thank you. Good morning, and welcome to Ryder's Second Quarter 2026 Earnings Conference Call. I'd like to remind you that during this presentation, you'll hear some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive, market, political and regulatory factors. More detailed information about these factors and a reconciliation of each non-GAAP financial measure to the nearest GAAP measure is contained in this morning's earnings release, earnings call presentation and in Ryder's filings with the Securities and Exchange Commission, which are available on Ryder's website. Presenting on today's call are John Diez, Chief Executive Officer, and Cristy Gallo-Aquino, Executive Vice President and Chief Financial Officer. Additionally, Tom Havens, President of Fleet Management Solutions; and Steve Sensing, President of Supply Chain Solutions and Dedicated Transportation Solutions, are on the call today and available for questions following the presentation. At this time, I'll turn the call over to John.

Good morning, everyone, and thanks joining us. The Ryder team delivered our seventh consecutive quarter of comparable EPS growth. Solid results were primarily driven by consistent execution on our strategic initiatives. Improving market conditions in used vehicle sales also contributed to our higher results. I'll begin today's call by providing an update on our balanced growth strategy, and we'll then provide you with key highlights from our second quarter performance. Cristy will provide you with an overview of our segment performance and discuss our capital spending and capital deployment capacity. I'll then review our outlook for 2026. Let's begin with a strategic update. Consistent execution of our balanced growth strategy has demonstrated the resiliency of our transform model and has enabled Ryder to outperform prior cycles. By executing on our strategy, the Ryder team built a solid foundation that reflects actions taken to de-risk the portfolio, enhance returns and cash flow and shift to less capital-intensive, more resilient business mix. Building on this transform foundation, our strategic priorities remain focused on executing relentlessly, investing in the future and growing contractual customer relationships. These priorities are aimed at creating value for our customers as well as our shareholders. Operational excellence is where we stand out and what enables us to leverage our full end-to-end capabilities to solve our customers' toughest logistics and transportation challenges. Investing in customer-centric innovation that enables a proactive supply chain gives our customers a competitive advantage. In RyderShare and RyderGyde, we're embedding Agentic AI in order to enhance capabilities and drive the evolution of these proprietary platforms. We're also leveraging AI across the company, including FMS Customer Service and Roadside Assistance, where Agentic AI is enhancing the customer experience while improving effectiveness. Additionally, we continue to deploy automation and robotics in our warehouses to drive operating efficiencies. We're focused on profitably growing our contractual relationships by increasing customer engagement across our portfolio of port-to-door solutions. Over 90% of our revenue is generated by long-term contracts. Our high-quality contractual base has proven to be a key driver of business model resilience over the cycle, and reflects the actions taken to de-risk the model and enhance returns. Our transport model has delivered meaningful out-performance relative to prior cycles, demonstrating the effectiveness of our balanced growth strategy. Our 3 complementary business segments are leaders in North America logistics and transportation with secular trends that support further growth opportunities. Finally, we're encouraged by the earnings power and resilient performance of our Transform business model and believe that it positions us well to benefit from a cycle upturn. Turning to Page 5. Key financial and operating metrics have improved since 2018, reflecting the execution of our strategy. In 2018, prior to the implementation of our balanced growth strategy, the majority of our $8.4 billion of revenue was from FMS. Ryder generated comparable EPS of $5.95 and return on equity of 13%. Operating cash flow was $1.7 billion. This was during peak freight cycle conditions. Now let's look at Ryder today. Our revenue mix has shifted towards Supply Chain and Dedicated with approximately 60% of 2026 expected revenue generated by these asset-light businesses compared to 44% in 2018. As a result of organic growth, strategic acquisitions and innovative technology. Our increased 2026 comparable EPS forecast range of $14.40 to $14.80 is more than double 2018 comparable EPS of $5.95. Our return on equity forecast of 18% is also well above the 13% generated during the 2018 cycle peak. As a result of profitable growth in our Contractual Lease, Dedicated and Supply Chain businesses, forecasted operating cash flow of $2.7 billion is up $1 billion or approximately 60% from 2018. In 2026, the business is expected to significantly outperform prior cycles, even when comparing the pre-transformation peak to the current market environment. Moving to key performance highlights from the second quarter. Comparable EPS for the quarter was up 12%, making it our seventh consecutive quarter of comparable EPS growth. Results reflect the strength of our contractual portfolio, benefits from strategic initiatives as well as improving market conditions in used vehicle sales. Return on equity was solid at 17% in line with our expectations given where we are in the freight cycle. We remain on track to deliver $70 million in incremental benefits from strategic initiatives during 2026. These initiatives are part of a $170 million multiyear program launched in 2024. Consistent execution on these initiatives is the key driver of expected earnings growth this year. And finally, we're encouraged to see continued momentum from improving freight cycle conditions. Contractual sales activity was strong across all 3 segments, reflecting customer confidence. We continue to see improved Fleet Management and Dedicated sales activity, which have been experiencing sales headwinds due to the extended freight downturn. Supply Chain continued to generate strong sales activity with record sales in 2025 and year-to-date 2026, reflecting the value of our solutions. Used vehicle sales results were higher year-over-year and retail pricing improved sequentially for both trucks and tractors. Commercial rental utilization returned to target levels of 75%, driven by our planned asset management actions. That said, market conditions remain below normalized levels, and geopolitical and macroeconomic factors continue to influence the pace and durability of the recovery. I'll now turn the call over to Cristy to further review our second quarter performance.

Thanks, John. Total company operating revenue of $2.7 billion in the second quarter increased 3% from prior year, reflecting contractual revenue growth in Supply Chain. Comparable earnings per share from continuing operations were $3.73 in the second quarter, up 12% from prior year, reflecting benefits from share repurchases and higher earnings in Fleet Management. Return on equity, our primary financial metric, was 17%, in line with the prior year. Free cash flow increased to $684 million from $461 million in the prior year, reflecting reduced capital expenditures. In Fleet Management Solutions, operating revenue increased, reflecting contractual revenue growth partially offset by lower rental demand. Earnings before taxes were $150 million, up 20% versus prior year, reflecting benefits from strategic initiatives on ChoiceLease results as well as strengthening used vehicle market conditions. Used vehicle results reflect a year-over-year improvement and better-than-expected performance. In rental, utilization returned to our targeted level of 75% on a 15% smaller average fleet. Although demand remained below prior year levels and historical seasonal trends, it was the strongest sequential increase we've seen in 4 years. Rental pricing was up 1% year-over-year. Fleet Management EBT as a percent of operating revenue was 11.5% in the second quarter, up from prior year, but below our long-term target of low teens over the cycle. In used vehicle sales, year-over-year used tractor pricing increased 3% and truck pricing increased 6%. Year-over-year results benefited from a higher retail mix due to elevated wholesaling activity in the prior year to manage aged inventory. In the second quarter, 56% of our sales volume went through our retail channel, up from 50% in the prior year and down from 61% in the first quarter. On a sequential basis, overall pricing was stable for both tractors and trucks, reflecting a lower retail sales mix. However, retail pricing for trucks improved 7% and for tractors improved 3%. During the quarter, we sold 5,100 used vehicles up 500 units sequentially and down 1,100 units versus prior year, largely reflecting the prior year's elevated wholesaling activity. Used vehicle inventory of 8,500 vehicles declined and is within our targeted inventory range. Used vehicle pricing remained above residual value estimates used for depreciation purposes. Slide 20 in the appendix provides historical sales proceeds and current residual value estimates for used tractors and trucks for your information. In Supply Chain, operating revenue increased 7%, driven by new business, partially offset by lost business in automotive. Earnings before taxes decreased 7% from prior year due to lower automotive results and, to a lesser extent, productivity of new business ramping up, partially offset by benefits from the optimization of our omnichannel retail network. Year-over-year comparisons were challenging in Supply Chain due to record results in the prior year. Supply Chain EBT as a percent of operating revenue was 8.4% in the quarter, at the segment's long-term target of high single digits. In Dedicated, operating revenue decreased 3% due to lower fleet count, partially offset by higher pricing. Earnings before taxes were below prior year, reflecting lower operating revenue and adverse development of prior year insurance claims, partially offset by benefits from strategic initiatives. Dedicated EBT as a percent of operating revenue was 7.9% in the quarter at the segment's long-term high single-digit target. Next, let me cover capital expenditures. Year-to-date, Lease capital spending of $605 million was below prior year, reflecting the timing of replacement activity. Our 2026 forecast for Lease spending is $1.9 billion, reflecting higher replacement activity versus prior year. Year-to-date rental capital spending of $94 million was below prior year as expected. Our 2026 forecast for rental spending is $200 million. We expect our average rental fleet to be down 11%, consistent with our prior forecast. Our fleet remains well below peak levels. We continue to execute asset management actions that can provide us with flexibility to modestly increase rental capacity in the second of the year if market conditions were to accelerate. In the short term, we can deploy vehicles that are coming off lease or in our dedicated fleet to rental. And in the long term, we can increase our rental capital spending later this year, which would primarily benefit earnings in 2027 and beyond. At quarter-end, trucks represented approximately 60% of our rental fleet, reflecting our shift in spending towards trucks versus tractors in recent years. As trucks have historically benefited from relatively stable demand and pricing trends. Our full year 2026 capital expenditures forecast at approximately $2.4 billion is above prior year. We expect approximately $500 million in proceeds from the sale of used vehicles in 2026, in line with prior year. Full year 2026 net capital expenditures are expected to be approximately $1.9 billion. Our high-quality contractual base is generating higher earnings and cash flow which is de-levering our balance sheet at a more rapid pace than prior to our business model transformation. This momentum is creating incremental debt capacity given our target leverage range of between 2.5x and 3x. As shown on the slide, over a 3-year period, we expect to generate approximately $10.5 billion from operating cash flow and used vehicle sales proceeds. This creates approximately $3.5 billion of incremental debt capacity, resulting in $14 billion available for capital deployment. Over the same 3-year period, we estimate approximately $9.5 billion will be deployed for the replacement of lease and rental vehicles and for dividends. This leaves around $4.5 billion, which equates to approximately 45% of our quarter-end market cap available for flexible deployment to support growth and return capital to shareholders. We estimate about half of our flexible deployment capacity will be used for growth CapEx, and the remaining will be available for discretionary share repurchases and strategic acquisitions and investments. Our capital allocation priorities remain focused on profitable growth, strategic investments and returning capital to our shareholders. Our top priority is to invest in organic growth. Aligned with these priorities, year-to-date, we funded lease and rental replacement CapEx of approximately $700 million and returned $406 million to shareholders through buybacks and dividends. Additionally, earlier in the quarter, our Board authorized a new discretionary 2 million share repurchase program that replaced a program that was largely completed during the quarter. And more recently, our Board approved an 11% increase to our quarterly dividend, marking the fourth consecutive year with a double-digit increase. Our balance sheet remains strong, with leverage of 259% at quarter-end in our target range and continues to provide ample capacity to fund our capital allocation priorities. With that, I'll turn the call over to John to discuss our outlook.

Thanks, Christie. Turning to our outlook on Page 14. We've raised our full year 2026 comparable EPS forecast by increasing the low end of the range to $14.40 from $14.05 while maintaining the high end at $14.80. Our forecast continues to expect strong earnings performance in our Contractual Lease, Dedicated and Supply Chain businesses. The increase to our forecast largely reflects an improved outlook and reduced downside related to used vehicle sales, with gains now expected to be approximately $40 million for the full year, up $10 million from our prior forecast. This benefit is partially offset by the timing of new business onboarding in Supply Chain. Our 2026 return on equity forecast is revised to 18% from a range of 17% to 18%. This forecast remains in line with our expectations given current market conditions. Our free cash flow forecast of $700 million to $800 million is unchanged and reflects higher replacement capital expenditures versus prior year. Our third quarter comparable EPS forecast range is $4 to $4.20, above prior year of $3.57. Turning to Page 15. Our Transform model is well positioned for earnings growth. We continue to expect 2026 earnings growth to be driven by incremental benefits from multiyear strategic initiatives. These initiatives represent structural changes we're making to the business and are not dependent on a cycle upturn. In 2024 and 2025, we realized $100 million in benefits leaving $70 million of incremental benefits expected in 2026. This year's benefits will reflect our lease pricing and maintenance cost saving initiatives in Fleet Management. Our margin improvement actions related to our Flex operating structure in Dedicated and optimization of our omnichannel network in Supply Chain. In addition to driving outperformance relative to prior cycles, our Transform model also provides a solid foundation for the business to meaningfully benefit from the cycle upturn. By the next cycle peak, we estimate this potential benefit could be $250 million with the majority expected to come from the cyclical recovery of rental and used vehicle sales in Fleet Management with additional benefits from higher omnichannel retail volumes, leveraging our rationalized footprint. We expect to recognize these benefits over time as freight market conditions improve. We now expect to realize approximately $20 million of upturn benefits in 2026, primarily from higher used vehicle sales results, up from $10 million in our prior forecast. In addition to benefiting our transactional businesses, we also expect additional opportunities for profitable contractual growth as freight conditions normalize and customers seek safe, efficient and reliable capacity. We've been pleased by the business's resilience and performance of the cycle and are confident each of our business segments is well positioned to benefit from the cycle upturn. In closing, our Transform business model continues to deliver value to our customers and shareholders. We continue to outperform prior cycles, and our results are benefiting from consistent execution and the strength of our contractual portfolio. We continue to see significant opportunity for profitable growth, supported by secular trends, our operational expertise and ongoing momentum for multiyear strategic initiatives. We remain committed to investing in the future with products, capabilities and technologies that will deliver value to our customers and our shareholders. We're confident our Transform model provides a solid foundation for Ryder to meaningfully benefit from the cycle upturn. That concludes our prepared remarks. Please note, we expect to file our 10-Q later today. At this time, I'll turn it over to the operator to open the call for questions.

[Operator Instructions] And your first question comes from the line of Bascome Majors with Stephens.

I would hope you could focus on the Supply Chain business a bit. A few months ago, the announcement of Amazon competing, and I know we've heard your initial comments on that. But big picture, as they've been in that market, maybe repackaging their offering a bit more formally for a few more months. What have you heard from your salespeople? Are they approaching the market differently? Do you still think it is a sort of shared warehouse, retail focused approach to the market? Or is there some intent or desire to compete more in the Dedicated site stand up that you think would have more of a competitive response?

Yes, let me make a few comments, and then I'll turn over to Steve who could provide deeper insights here. Clearly, from a Supply Chain perspective right now, that business, and we've seen it now for the last 18 months continued to perform really well when it comes to the sales side of the house. So we haven't seen any sort of impact with regards to the businesses that we're looking to engineer, design and hopefully launch with customers. I would tell you, the Supply Chain pipeline continues to be strong and evidence of that pipeline changing or moving it's only moving in one direction and continues to get stronger and stronger. So that gives you a little bit of a backdrop of what we're seeing today, but I'll let Steve give you more of forward-looking view of the business.

Yes. I think your comments around the focus of where they're looking is more on the retail side, I would say. As I think about our business, I have not seen us go up against them yet in any RFQs or any opportunities. We don't have clear visibility to who we're competing with at all times, but haven't heard their name yet. Remember, our solutions are highly customized, as John said. So these are typically a single box dedicated to a single customer. And remember, 60% of our revenue comes from customers that use more than one service. So typically, we'll run warehouse, again, highly engineered and then offer an additional service from our port-to-door capability.

[Operator Instructions]. The next question comes from the line of Jordan Alliger with Goldman Sachs.

Just curious on Dedicated, what you may be seeing in terms of contract renewals there, retention as well as the pipeline of new business in the context of a tighter trucking markets with drivers, is that flowing additional opportunity to you? Or will it? And then just on supply chain. I know you touched on it briefly, but when does the productivity catch up with the new ramp that you could start to see margins improve again in that sector? Like what's the timing of it or sequencing?

Yes. Thank you, Jordan. Let me address the DTS side of your question. On the Dedicated side, we continue to see the capacity at the market, and we're seeing more and more opportunities come forward. We highlighted last quarter and we continue to see strong activity. Our pipelines are at record levels for us right now. We've seen a number of opportunities come back where customers have been running their transportation with 4 hire carriers, and they're looking for Dedicated capacity and coming back to us. More importantly for us on the Dedicated side, most of what we do is specialized in nature. So 70% of our revenue base in Dedicated is still specialized. And I would say the value prop there continues to resonate with our customers. Secular trends continue to favor outsourcing on the dedicated side, whether it's rising costs, tighter driver capacity or rising insurance costs, all of which bode well for us. So on the Dedicated side, I would tell you, we saw an improvement in the year-over-year comps from a revenue perspective. That will continue as we finish the year, and our expectations are to continue to see kind of growth when we get into 2027 with the activity we continue to see. On the Supply Chain side, you did highlight we have had a number of projects that we've launched. They've taken a little bit longer to get to full ramp up. Volumes haven't been there, which has put a drag on kind of our expectations. We also highlighted in our prepared remarks that we thought some of these projects that we had expected to launch later in the year are also going to be extended into 2027. So that's impacting a little bit of our guide for the second half of 2026. But I'll let Steve provide you a little bit more color on the Supply Chain ramps?

Jordan, I would just kind of remind you, last year, Q2, 9.7% EBT was a record Q2 for us. This quarter, we're in at 8.4%. I think a bigger driver of the quarter was the lost automotive business that we talked about earlier this year. And then we're still seeing plants continue to retool for EV and ICE vehicles here in the quarter. So as John said, some of these take us a little more time to work out of. And once these volumes bounce back, I think we'll be in pretty decent shape.

The next question comes from the line of Robert Salmon with Wells Fargo.

You had talked -- so it sounds like the pipeline is getting better. When I look at the FMS fleet, the active units were roughly flat, but we had seen a sequential decline in the ending units overall. Could you talk a little bit how we should be thinking about the active units and kind of what the dynamics were that caused those to diverge?

Sure. Robert. And I'll turn it over to Tom to give you a little bit more color here. But we have seen a good, strong sales activity on the Fleet Management side to start the year. The number of customers that are coming forward, the closing rates on those opportunities has increased. And obviously, the pipeline continues to get stronger and stronger. So we are seeing sales and that should translate into higher fleets going forward. That takes a while because our sales cycles typically take 3 to 6 months. So you should see that kind of that decline in the active fleet abate. And then as we exit the year, that should continue to turn positive for us. But I'll let Tom provide you additional color.

Yes. I think you're right, John, its really just timing of the sales activity and when those trucks actually hit the fleet when you signed a new deal with a new vehicle. We do have to have the truck on order, takes a little bit of time, 1 quarter or 2 before the sales results really flow into your actual fleet count. So I will say that we've seen 2 straight consecutive quarters of positive net sales in the first quarter and then here again in the second quarter. Obviously, very good signs for us that things are starting to change a little bit from a sales perspective and really from a customer confidence level to add that fleet back. But like John said, we do -- you might see a slight reduction in the fleet still until that timing comes in, but we certainly expect that fleet to grow near the end of the year and into 2027 based on what we're seeing in sales.

Really helpful. And John, in your prepared remarks, something jumped-out at me is you were talking about we're back at the commercial rental utilization target levels. But with below normal demand. Should we think about this as the normalized level has been raised given some of the internal company initiatives? Or is this unique just because we're still shrinking the fleet and we're getting to those normalized levels despite suboptimal demand?

Yes. I think as we thought, I think this cycle feels and it's shaping to feel a little bit different than some of the others. It's kind of a capacity-driven recovery. So we've taken the actions ourselves to reduce the fleet. I think we -- in the prepared remarks, we highlighted we're going to be down 11% of average fleet in the rental side for the year. So what you're seeing there is a combination of a little better demand activity, more seasonally oriented than we have seen over the last couple of years. And then the actions we've taken to de-fleet primarily in the second half of last year and into the first half. We do expect demand to continue to hopefully build, and we're going to look to grow the fleet slightly in the second half. That was part of our plan all along, and how we were taking in our replacement units in the second half. So it's a little bit of that. I would tell you from a demand perspective, we have seen -- unlike other cycles, we have seen demand shock on the Lease and Dedicated side, where folks are coming forward. Typically, we would see rental be the leader there and see an acceleration on rental. We have seen, as I mentioned, a rental uptick there. And that's our expectation that we'll continue to build. But we would love to see rental demand accelerate. And clearly, we're ready for it. As soon as that starts taking off, we could add fleet and take advantage of the good returns that, that product line provides us.

The next question comes from the line of Ravi Shanker with Morgan Stanley.

This is Nancy on for Ravi. I was curious what you would need to see in the cycle to start sizing the fleet up significantly? And then I also saw that there was pretty solid improvement year-over-year in truck pricing during the quarter. What further benefit would you even see there as well to increase that used vehicle sales outlook? And what have you seen with buying patterns as we approach any changes going into 2027 with the EPA rules?

Yes. So thank you for the question. First, on the used vehicle side, the second part of your question, we continue to see good momentum there. Second quarter where we've seen year-over-year improvements in our used vehicle performance. As you called out, we saw sequential improvement in our retail pricing on trucks of 7%, tractors was 3%. That continues to move up. We do expect and in our guide, we do expect second half continued improvement. I think when we see an acceleration from kind of the mid-single digits, at that point, then we could feel confident in lifting that guide further. And certainly going into 2027, we would expect year-over-year that pricing will continue to accelerate to that double-digit range. As far as rental on the rental fleet, as I mentioned, with regards to this cycle, it does feel a little bit different in that the recovery has been kind of a capacity-driven recovery. We typically see demand accelerate in rental first. I think we're still waiting for that to happen. As soon as that happens, then we could add equipment and add fleet and really capitalize on the momentum of that product line. So we don't have that in our guide clearly with regards to rental. That's something that we're still waiting for. And as soon as we see it, we'll take advantage of.

The next question comes from the line of Harrison Bauer with Susquehanna.

Great. I'm curious kind of building off some of the fleet and capital allocation discussion. How much visibility do you have into your capital plans for this year? For example, I mean, are all of the lease purchases planned for the year? Or what's the opportunity for upside if leasing activity continues to improve? And you gave a little bit of color on how you're thinking about your rental and leasing fleet for the year, but maybe some thought about where Dedicated fleet might shake out exiting the year? And what's the opportunity for growth for that is into next year?

Yes, Harrison, a little bit on visibility for capital forecast. I would say 75% of the year from a capital perspective is probably good. I think we're still -- as we navigate through the third quarter and how conditions change there, we may see a change in our full year outlook when we get -- when we exit Q3 into Q4. I would tell you, rental is one that we continue to monitor closely, because that's the one that we're probably going to need to add fleet as you saw in the results, utilization kind of returned to normalized levels. We still have some utilization capacity that we could service more demand some. But we do expect, as demand starts picking up, we're going to need to go out and add fleet to our rental fleet. So that hasn't happened. But clearly, as we see kind of conditions change, we may we may take actions between now and the end of the year. With regards to Dedicated and the fleet there, look, sales had a great in Dedicated to start the year. We are seeing evidence of tighter driver capacity. We've seen it in some of our measures. Turnover has ticked up. We are seeing the number of days that it takes to find drivers. That has ticked up a little bit. So we are seeing that momentum build. Our pipeline shows that. Our sales activity shows that. So I would suspect we're going to continue to see good strong sales here for the balance of the year. We do expect the fleet to start flipping positive as we get into the second half of the year, probably in Q4 and into Q1. So that's probably when you're going to see it. And then if we do see demand pop on both Lease, Dedicated and rental, we obviously have access to OEM slots that we could take advantage of and and ready to capitalize on the opportunities as we see them there. But rentals one that we have an eye on with CapEx. And clearly, if lease continues to be strong, we can add more fleet there as well.

Great. And maybe as a follow-up on used vehicle sales. The rental versus wholesale mix percentage of rental that fell back a little bit sequentially. What do you expect the rest of the year on some of your -- or sorry, rental retail rather, we expect for the rest of the year on your retail versus wholesale pricing. Where do you want that to be? And how much control does the team have in terms of driving more retail versus wholesale sales to capitalize off of some better pricing?

Yes. I think our [ UBS ] retail wholesale mix in Q2 was probably the low end of what we would expect for the full year. It just came down 500 basis points from Q1, if I recall the numbers, I think moving forward, we're still going to be in that high 50s, low 60s range as we navigate through the inventory. The inventory did fall -- so as the inventory continues to fall, we have less actions we need to take and should see that retail wholesale mix rise. Ideally for us, we're not even where we want to be long term. I think once the market really starts heating up, you should see us get back into the 70s range in that retail wholesale mix, and that's ideally where we want to operate at. .

The next question comes from the line of Brandon Oglenski with Barclays.

Yes. Maybe this is for John or Christy, but when you guys show the 3-year outlook for about $4.5 billion capital available for flexible deployment, how do you balance the growth CapEx versus, say, acquisitions when you look out there and maybe what are priorities when you think about M&A in the future?

Sure. I'll let Cristy address that.

Brandon, yes, so look, our priorities remain on profitable growth. So the organic growth in our fleet is always going to be the top priority. But with the capital that we have available, we mentioned $4.5 billion available for flexible deployment. That's more than enough available to also provide for acquisitions. We're always looking for well-run companies that are going to complement our existing capabilities or add service -- expand our existing services. So we have more than enough. We estimate that of the $4.5 billion over this 3-year period, maybe half of that is growth related and the other half is for acquisition and repurchase related activity.