RYDER SYSTEM INC
For the period ended Mar 31, 2025. Filed Apr 23, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Apr 23, 2025
R$266.39-1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-24.
0000085961-24-000156
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-04-23.
0000085961-25-000053
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 213 previous paragraphs and 203 current paragraphs.
126 unchanged; 56 reworded; 20 added; 30 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 40 previous and 37 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
•Diluted EPS from continuing operations of $2.29, up 21% from prior year
Current report
•Total revenue of $3.1 billion, up 1%
Current report
•Operating revenue (a non-GAAP measure) of $2.6 billion, up 2%, reflecting prior year acquisition and contractual revenue growth in Supply Chain Solutions (SCS) and Fleet Management Solutions (FMS), partially offset by lower commercial rental revenue
Current report
In our FMS business, strong lease performance was driven by our lease pricing and maintenance cost savings initiatives which delivered improved portfolio returns. Rental demand and used vehicle pricing declined from the prior year with rental utilization at 66% during the three months ended March 31, 2025 and 2024, on a smaller fleet in 2025. We do not anticipate significant improvement in the current freight market conditions for the remainder of the year.
Current report
Our SCS business had improved operating performance from the optimization of the omnichannel retail network and new business. DTS continued to benefit from synergies related to the prior year acquisition of Cardinal Logistics. We expect to realize further benefits from the acquisition for the remainder of 2025.
Current report
EBT and comparable EBT (a non-GAAP measure) increased in the first quarter of 2025, primarily due to higher contractual earnings in all segments, partially offset by weaker market conditions in rental and used vehicle sales.
Current report
Services gross margin and gross margin as a percentage of revenue increased in the first quarter of 2025, primarily due to improved operating efficiency from strategic initiatives and acquisition synergies.
Current report
Fuel Services
Current report
Miscellaneous Loss (Income), net
Current report
Our effective tax rate on continuing operations was 26.8% in the first quarter of 2025 compared to 25.4% in the prior year. The effective income tax rate increase was due to the shift in the mix of earnings subject to different tax jurisdictions and discrete tax items unique to the first quarter. The comparable effective tax rate on continuing operations was consistent with prior year.
Current report
FMS EBT decreased 6% in the first quarter of 2025, primarily from weaker commercial rental demand and lower gains on used vehicle sales, partially offset by higher ChoiceLease results driven by pricing and maintenance cost initiatives. Lower gains on used vehicle sales reflect a 17% and 16% decrease in used truck and tractor pricing, respectively. Rental power fleet utilization was 66% in the first quarter, consistent with prior year, on a 5% smaller average power fleet.
Current report
SCS total revenue increased 2% in the first quarter of 2025, reflecting higher operating revenue (a non-GAAP measure excluding subcontracted transportation and fuel). SCS operating revenue increased 3% in the first quarter of 2025, driven by new business and higher customer volumes.
Current report
SCS EBT grew to $87 million in the first quarter of 2025, primarily reflects improved operating performance from strategic initiatives and new business.
Current report
DTS EBT increased 50% in the first quarter of 2025, due to acquisition synergies as well as prior year integration costs. EBT also continues to benefit from the strong performance of the legacy business.
Current report
Total CSS costs increased 9% in the first quarter of 2025, primarily due to lower performance on investments, higher incentive-based compensation costs and higher strategic investments in marketing. Unallocated CSS increased in the first quarter of 2025, primarily due to lower performance on investments.
Current report
In April 2025, we amended and restated our corporate revolving credit facility, which supports U.S. and Canadian commercial paper programs, with a syndicate of eleven incumbent lending institutions. The facility's committed borrowing capacity was increased to $1.6 billion and it now expires in April 2030. The credit facility is primarily used for general corporate purposes and can also be used to issue up to $150 million in letters of credit. As of March 31, 2025, there were no letters of credit outstanding against the facility.
Current report
In April 2025, we extended the trade receivables financing program for an additional year to April 2026.
Current report
Note: Amounts may not be additive due to rounding.
Current report
Note: Amounts may not be additive due to rounding.
Current report
•our expectations regarding prior acquisitions;
Removed paragraphs (30)
Previous report
General
Previous report
We operate in highly competitive markets. Our customers select us based on numerous factors, including service quality, price, technology and service offerings. As an alternative to using our services, customers may choose to provide these services for themselves, or may choose to obtain similar or alternative services from other third-party vendors. Our customer base includes enterprises operating in a variety of industries including food and beverage service, retail and consumer goods, transportation and logistics, automotive, industrial, housing, technology, and business and personal services.
Previous report
•Diluted EPS from continuing operations of $3.25 in the third quarter of 2024 compared to $3.44 in prior year
Previous report
•Total revenue of $3.2 billion in the third quarter of 2024, compared to $2.9 billion in prior year
Previous report
•Operating revenue (a non-GAAP measure) of $2.6 billion in the third quarter of 2024, up 9%, reflecting recent acquisitions
Previous report
In our Fleet Management Solutions (FMS) business, rental demand and used vehicle pricing declined from the prior year. We now anticipate that market conditions, including a freight recessionary environment, will remain weak through the end of 2024 for rental and used vehicle sales. Our maintenance cost savings initiatives continue to benefit earnings, and our lease pricing initiatives are delivering improved portfolio returns. We expect to continue to realize incremental earnings benefits as our remaining portfolio is renewed at higher returns.
Previous report
In our SCS business, the acquisition of IFS as well as brokerage and logistics business from the acquisition of Cardinal Logistics drove total SCS revenue and operating revenue (a non-GAAP measure) growth during the nine months ended September 30, 2024. The dedicated business from the Cardinal Logistics acquisition drove operating revenue growth in DTS during the nine months ended September 30, 2024, and we expect this acquisition to continue to significantly benefit DTS revenue for the remainder of 2024.
Previous report
EBTdecreased to$188 millioninthe third quarter largely reflecting weaker rental demand and lower gains on used vehicle sales due to lower volumes and pricing in FMS. EBT increased to $480 million in the nine months ended September 30, 2024, due to a 2023 one-time, non-cash $188 million currency translation adjustment loss related to the FMS U.K. business exit, partially offset by lower comparable EBT (a non-GAAP measure). Comparable EBTdecreased 12% and 20% in thethird quarter andnine months ended September 30, 2024, respectively, primarily due to decreased commercial rental results and reduced gains on used vehicles sold in FMS, partially offset by higher ChoiceLease results in FMS as well as SCS and DTS earnings.
Previous report
Services gross margin increased 17% in the third quarter and increased 23% for the nine months ended September 30, 2024 primarily driven by recent acquisitions in DTS and SCS. Services gross margin increase for the nine months ended September 30, 2024, also reflects an SCS asset impairment charge in the prior year.
Previous report
Fuel
Previous report
Miscellaneous Income, net
Previous report
Currency Translation Adjustment Loss
Previous report
Refer to Note 10, "Accumulated Other Comprehensive Loss" for a discussion on the Currency translation adjustment loss.
Previous report
Refer to Note 13, "Other Items Impacting Comparability" in the Notes to Condensed Consolidated Financial Statements for a discussion of restructuring charges and other items.
Previous report
Our effective tax rate on continuing operations was 24.0% in the third quarter of 2024, compared to 25.2% in the prior year, and 26.2% for the nine months ended September 30, 2024, compared to 38.5% in the prior year. The higher effective tax rate in the nine months ended September 30, 2023 is primarily due to the second quarter 2023 one-time, nondeductible cumulative currency translation adjustment loss from the FMS U.K. business exit. Our comparable tax rate, which excludes the impact of the prior year currency translation adjustment loss, was lower at 23.9% in the third quarter of 2024 compared to 27.0% in the prior year, and 26.1% for the nine months ended September 30, 2024, compared to 27.2% in the prior year. The decrease in the comparable tax rate was due to discrete tax benefits during the third quarter of 2024.
Previous report
(3)Refer to Note 13, "Other Items Impacting Comparability," and below for a discussion of items excluded from our primary measure of segment performance.
Previous report
Vehicles acquired from Cardinal Logistics are included in FMS revenue earning equipment. Our FMS segment leases these vehicles and also provides maintenance services to our DTS segment. EBT related to inter-segment equipment and services on these acquired vehicles billed to DTS drove the increase in DTS equipment contribution in the third quarter and nine months ended September 30, 2024.
Previous report
FMS EBT decreased 22% in the third quarter and 31% in the nine months ended September 30, 2024, reflecting weaker rental demand and lower gains on used vehicle sales due to lower volumes and pricing, partially offset by higher ChoiceLease performance and benefits from maintenance cost savings initiatives. Lower gains on used vehicle sales reflect a 19% and 22% decrease in used truck and tractor pricing, respectively, in the third quarter of 2024 and a 25% and 25% decrease in used truck and tractor pricing, respectively, in the nine months ended September 30, 2024. Rental power fleet utilization decreased to 71% in the third quarter and 69% in the nine months ended September 30, 2024, as compared to 75% in both the third quarter and the nine months ended September 30, 2023. The average power fleet was 7% smaller in the third quarter of 2024 and 11% smaller in the nine months ended September 30, 2024.
Previous report
SCS total revenue increased 10% in the third quarter of 2024 and 11% in the nine months ended September 30, 2024, primarily as a result of higher operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation). SCS operating revenue increased 10% in the third quarter of 2024 and 11% for the nine months ended September 30, 2024, driven primarily by recent acquisitions. SCS operating revenue in the nine months ended September 30, 2024 also benefited from organic growth across industry verticals.
Previous report
SCS EBT increased 14% in the third quarter of 2024 primarily reflecting stronger omnichannel retail performance and lower overhead spending. SCS EBT increased 39% in the nine months ended September 30, 2024, primarily reflecting a prior year $30 million asset impairment charge, stronger automotive performance and lower overhead spending.
Previous report
Thefollowing table summarizes the components of the change in revenue on a percentage basis versus the prior years:
Previous report
DTS EBT increased 31% in the third quarter of 2024, due to improved operating performance and the Cardinal Logistics' acquisition. DTS EBT increased 1% for the nine months ended September 30, 2024, due to improved operating performance partially offset by the Cardinal Logistics' acquisition integration and other related costs.
Previous report
Total CSS costs in the third quarter and in the nine months ended September 30, 2024 were consistent with the prior year.
Previous report
Unallocated CSS costs decreased 13% in the third quarter of 2024 and decreased 2% in the nine months ended September 30, 2024, primarily reflecting lower incentive-based compensation and professional fees.
Previous report
(1)In August 2024, the rating outlook was upgraded to positive.
Previous report
(1)Refer to Note 13, “Other Items Impacting Comparability,” in the Notes to Condensed Consolidated Financial Statements for additional information.
Previous report
(1)Refer to the table above in the Operating Results by Segment for a discussion on items excluded from our comparable measures and their classification within our Condensed Consolidated Statements of Earnings and Note 13,"Other Items Impacting Comparability," in the Notes to Condensed Consolidated Financial Statements for additional information.
Previous report
(1)Refer to Note 13, "Other Items Impacting Comparability," in the Notes to Condensed Consolidated Financial Statements for additional information.
Previous report
•our expectations regarding recent acquisitions, including Cardinal Logistics;
Previous report
◦Regulatory changes affecting pension estimates, accruals and expenses.
Reworded paragraphs (56)
Previous wording
•Comparable EPS (a non-GAAP measure) from continuing operations of $3.44 in the third quarter of 2024, as compared to $3.58 in prior year, reflecting weaker market conditions in rental and used vehicle sales, partially offset by higher earnings in contractual lease, supply chain, and dedicated transportation businesses
Current wording
•Comparable EPS (a non-GAAP measure) from continuing operations of $2.46, up 15% from prior year, reflecting higher contractual earnings in all segments, partially offset by weaker market conditions in rental and used vehicle sales
Previous wording
•Adjusted Return on Equity (ROE) (a non-GAAP measure) of 16% for the trailing twelve months ended September 30, 2024
Current wording
•Adjusted Return on Equity (ROE) (a non-GAAP measure) of 17% for the trailing twelve months ended March 31, 2025
Previous wording
•Net cash provided by operating activities from continuing operations of $1.7 billion and free cash flow (a non-GAAP measure) of $218 million in the nine months ended September 30, 2024
Current wording
•Net cash provided by operating activities from continuing operations of $651 million and free cash flow (a non-GAAP measure) of $259 million in the three months ended March 31, 2025
Previous wording
During the three and nine months ended September 30, 2024, market conditions for used vehicle sales and commercial rental remained weak. Although we are experiencing near-term sales headwinds that reflect the extended freight downturn and overall economic uncertainty, we continue to benefit from favorable long-term secular trends in logistics and transportation solutions. These secular trends provide long-term growth opportunities for our Supply Chain Solutions (SCS) and Dedicated Transportation Solutions (DTS) business segments.
Current wording
During the three months ended March 31, 2025, the strength and diversification of our contractual portfolio in lease, supply chain and dedicated and execution of strategic initiatives helped mitigate the impact of weak market conditions on commercial rental demand and used vehicle sales. We continue to benefit from favorable long-term secular trends in logistics and transportation solutions; however, we are experiencing near-term sales headwinds that reflect the extended freight downturn and overall economic uncertainty. The favorable secular trends provide long-term revenue and earnings growth opportunities for all of our business segments.
Previous wording
While we are experiencing positive momentum from long-term secular trends in our businesses, other unknown effects from inflationary cost pressures, labor interruptions, disruptions in vehicle and vehicle part production and the higher interest rate environment may negatively impact demand for our business, financial results and significant judgments and estimates.
Current wording
While we are experiencing positive momentum in our businesses, other unknown effects from inflationary cost pressures, labor interruptions, extended disruptions in vehicle and vehicle part production, introduction of tariffs and taxes and the higher interest rate environment may negatively impact demand for our business, financial results and significant judgments and estimates.
Previous wording
Total revenue was$3.2 billion in the third quarter of 2024, ascompared to $2.9 billion in the prior year, and $9.4 billion in the nine months ended September 30, 2024, as compared to $8.8 billion in the prior year, primarily reflecting higher operating revenue and higher subcontracted transportation. Operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation) increased 9% in the third quarter of 2024 and 8% in thenine months ended September 30, 2024, reflecting recent acquisitions and contractual revenue growth in FMS and SCS, partially offset by lower commercial rental revenue in FMS.
Current wording
Total revenue increased 1% in the first quarter of 2025 due to higher operating revenue, partially offset by lower fuel revenue. Operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation) increased 2% in the first quarter of 2025, reflecting prior year acquisition and contractual revenue growth in SCS and FMS, partially offset by lower commercial rental revenue.
Previous wording
Services revenue represents all the revenue associated with our SCS and DTS business segments, including subcontracted transportation and fuel, as well as SelectCare and fleet support services associated with our FMS business segment. Services revenue increased 17% in the third quarter and 16% in the nine months ended September 30, 2024, due to increases in DTS and SCS revenue primarily driven by recent acquisitions.
Current wording
Services revenue represents all the revenue associated with our SCS and DTS business segments, including subcontracted transportation and fuel, as well as SelectCare revenue associated with our FMS business segment. Services revenue increased 2% in the first quarter of 2025, primarily driven by the prior year acquisition, new business and higher customer volumes.
Previous wording
Cost of services represents the direct costs related to services revenue and is primarily comprised of salaries and employee-related costs, subcontracted transportation (purchased transportation from third parties), fuel, vehicle liability costs and maintenance costs. Cost of services increased 16% in the third quarter of 2024 reflecting higher revenue. Cost of services increased 15% for the nine months ended September 30, 2024 reflecting higher revenue, partially offset by a $30 million SCS asset impairment charge in the prior year.
Current wording
Cost of services represents the direct costs related to services revenue and is primarily comprised of salaries and employee-related costs, subcontracted transportation (purchased transportation from third parties), fuel, equipment and maintenance costs. Cost of services increased 2% in the first quarter of 2025, from growth in revenue.
Previous wording
Lease & related maintenance and rental revenue represent revenue from our ChoiceLease and commercial rental product offerings within our FMS business segment. Revenue decreased 3% in the third quarter and nine months ended September 30, 2024, reflecting lower rental demand partially offset by ChoiceLease growth.
Current wording
Lease & related maintenance and rental revenue represent revenue from our ChoiceLease and commercial rental product offerings within our FMS business segment. Revenue increased 1% in the first quarter of 2025, primarily due to ChoiceLease revenue growth, partially offset by lower rental demand.
Previous wording
Cost of lease & related maintenance and rental represents the direct costs related to Lease & related maintenance and rental revenue and are comprised of depreciation of revenue earning equipment, maintenance costs (primarily repair parts and labor), and other costs such as licenses, insurance and operating taxes. Cost of lease & related maintenance and rental excludes interest costs from vehicle financing, which are reported within "Interest expense" in our Condensed Consolidated Statements of Earnings. Cost of lease & related maintenance and rental decreased 3% in the third quarter and 2% in the nine months ended September 30, 2024, reflecting lower operating costs on a 10% smaller average commercial rental fleet, lower maintenance costs on a younger fleet and maintenance cost savings initiatives.
Current wording
Cost of lease & related maintenance and rental represents the direct costs related to Lease & related maintenance and rental revenue and are comprised of depreciation of revenue earning equipment, maintenance costs (primarily repair parts and labor), and other costs such as licenses, insurance and operating taxes. Cost of lease & related maintenance and rental excludes interest costs from vehicle financing, which are reported within "Interest expense" in our Condensed Consolidated Statements of Earnings. Cost of lease & related maintenance and rental decreased 3% in the first quarter of 2025, primarily reflecting maintenance cost savings initiatives.
Previous wording
Lease & related maintenance and rental gross margin decreased in the third quarter and in the nine months ended September 30, 2024, primarily due to lower rental demand. Lease & related maintenance and rental gross margin percentage increased in the third quarter due to higher rate in Choicelease and decreased in the nine months ended September 30, 2024 primarily due to lower rental utilization.
Current wording
Lease & related maintenance and rental gross margin increased 11% in the first quarter of 2025, primarily due to higher ChoiceLease pricing and lower maintenance costs, partially offset by lower commercial rental demand. Lease & related maintenance and rental gross margin percentage increased to 31% in the first quarter of 2025, primarily due to higher ChoiceLease pricing and lower maintenance costs.
Previous wording
Fuel services revenue represents fuel services provided to our FMS customers. Fuel services revenue decreased 20% in the third quarter and 15% in the nine months ended September 30, 2024, primarily reflecting lower fuel prices passed through to customers.
Current wording
Fuel services revenue represents fuel services provided to our FMS customers. Fuel services revenue decreased 15% in the first quarter of 2025, primarily reflecting lower fuel prices passed through to customers.
Previous wording
Cost of fuel services includes the direct costs associated with providing our customers with fuel. These costs include fuel, salaries and employee-related costs of fuel island attendants, and depreciation of our fueling facilities and equipment. Cost of fuel services decreased 21% in the third quarter and 17% in the nine months ended September 30, 2024, as a result of lower market fuel prices.
Current wording
Cost of fuel services includes the direct costs associated with providing our customers with fuel. These costs include fuel, salaries and employee-related costs of fuel island attendants and depreciation of our fueling facilities and equipment. Cost of fuel services decreased 14% in the first quarter of 2025, as a result of lower fuel prices.
Previous wording
Fuel services gross margin increased in the third quarter and the nine months ended September 30, 2024. Fuel services gross margin as a percentage of revenue increased compared to prior year for the third quarter and nine months ended September 30, 2024. Fuel is largely a pass-through to customers for which we realize minimal changes in margin during periods of steady market fuel prices. However, fuel services margin is impacted by sudden increases or decreases in market fuel prices during a short period of time, as customer pricing for fuel is established based on current market fuel costs. Fuel services gross margin for the third quarter and nine months ended September 30, 2024, was not significantly impacted by these price change dynamics as fuel prices fluctuated during the periods.
Current wording
Fuel services gross margin and gross margin as a percentage of revenue was relatively consistent in the first quarter of 2025, compared to prior year. Fuel is largely a pass-through to customers for which we realize minimal changes in margin during periods of steady market fuel prices. However, fuel services margin is impacted by sudden increases or decreases in market fuel prices during a short period of time, as customer pricing for fuel is established based on current market fuel costs. Fuel services gross margin for the first quarter of 2025, was not significantly impacted by these price change dynamics as fuel prices fluctuated during the period.
Previous wording
SG&A expenses increased 6% in the third quarter of 2024 and 6% in the nine months ended September 30, 2024. The increase in the third quarter primarily reflects higher incentive-based compensation expenses and the increase in the nine months ended September 30, 2024 primarily reflects the impact from recent acquisitions, partially offset by lower advertising expense. SG&A expenses as a percentage of total revenue remained at 12% for the third quarter and for the nine months ended September 30, 2024.
Current wording
SG&A expenses decreased 3% in the first quarter of 2025. The decrease in SG&A expenses in the first quarter of 2025 primarily reflects lower incentive compensation-related expenses, acquisition synergies and prior year integration costs, partially offset by higher investments in information technology. SG&A expenses as a percentage of total revenue remained at 12% for the first quarter of 2025.
Previous wording
Non-operating pension costs, net include the amortization of net actuarial loss and prior service cost, interest cost and expected return on plan assets components of pension and postretirement benefit costs, as well as any significant charges for settlements or curtailments if recognized.
Current wording
Non-operating pension costs, net include the amortization of net actuarial loss and prior service cost, interest cost and expected return on plan assets components of pension and postretirement benefit costs, as well as any significant charges for settlements or curtailments if recognized. Non-operating pension costs, net decreased in the first quarter of 2025, primarily due to higher expected return on plan assets.
Previous wording
Used vehicle sales, net includes gains or losses from sales of used vehicles, selling costs associated with used vehicles and write-downs of vehicles held for sale to fair market values (referred to as "valuation adjustments"). Used vehicle sales, net decreased in the third quarter due to lower proceeds per unit on sales of used vehicles and decreased in the nine months ended September 30, 2024, due to lower proceeds per unit on sales of used vehicles partially offset by higher volumes.
Current wording
Used vehicle sales, net includes gains or losses from sales of used vehicles, selling costs associated with used vehicles and write-downs of vehicles held for sale to fair market values (referred to as "valuation adjustments"). Used vehicle sales, net decreased in the first quarter of 2025, due to lower pricing and volume of used vehicles sold.
Previous wording
Average proceeds per unit decreased in the third quarter and for the nine months ended September 30, 2024. The following table presents the average used vehicle pricing changes for North America compared to the prior year:
Current wording
Average proceeds per unit decreased in the first quarter of 2025. The following table presents the average used vehicle proceeds per unit changes, using constant currency, compared to the prior year:
Previous wording
Interest expense increased 31% in the third quarter and 35% for the nine months ended September 30, 2024, reflecting higher market interest rates on new debt issuances and refinancings, as well as increased debt borrowings to fund recent acquisitions and share repurchases.
Current wording
Interest expense increased 9% in the first quarter of 2025, primarily reflecting higher market interest rates on new debt issuances and refinancings.
Previous wording
Miscellaneous income, net consists of investment income, interest income, gains on sales of operating property, foreign currency transaction remeasurement and other non-operating items. Miscellaneous income, net increased to $10 million in the third quarter of 2024, primarily due to higher investment income offset by lower gains on sales of properties. Miscellaneous income, net decreased to $29 million for the nine months ended September 30, 2024, due to lower gains on sales of properties, offset by higher investment income.
Current wording
Miscellaneous loss (income), net consists of investment income on securities used to fund certain benefit plans, interest income, gains on sales of operating property, foreign currency transaction remeasurement and other non-operating items. Miscellaneous loss (income), net was $6 million loss in the first quarter of 2025, compared to $15 million of income in prior year, primarily due to lower performance on investments.
Previous wording
As part of management's evaluation of segment operating performance, we define the primary measurement of our segment financial performance as segment "Earnings from continuing operations before income taxes" (EBT), which includes an allocation of Central Support Services (CSS), and excludes Non-operating pension costs, net, intangible amortization expense, and certain other items as discussed in Note 13, "Other Items Impacting Comparability," in the Notes to Condensed Consolidated Financial Statements. CSS represents those costs incurred to support all business segments, including finance and procurement, corporate services, human resources, information technology, public affairs, legal, marketing and corporate communications.
Current wording
As part of management's evaluation of segment operating performance, we define the primary measurement of our segment financial performance as segment "Earnings from continuing operations before income taxes" (Segment EBT), which includes an allocation of Central Support Services (CSS) and excludes Non-operating pension costs, net, intangible amortization expense, and certain other significant items that are not representative of our business operations and vary from period to period. CSS represents those costs incurred to support all business segments, including information technology, finance, marketing, human resources, legal, and safety.
Previous wording
The objective of the EBT measurement is to provide clarity on the profitability of each business segment and, ultimately, to hold leadership of each business segment accountable for their allocated share of CSS costs. Segment results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented. Certain corporate costs are not attributable to any segment and remain unallocated in CSS, including costs for investor relations, public affairs and certain executive compensation.
Current wording
The objective of the Segment EBT measurement is to provide clarity on the profitability of each business segment and, ultimately, to hold leadership of each business segment accountable for their allocated share of CSS costs. Segment results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented. Certain corporate costs are not attributable to any segment and remain unallocated in CSS, including costs for investor relations, public affairs and certain executive compensation.
Previous wording
The following table sets forth the benefits from equipment contribution included in EBT for our SCS and DTS business segments:
Current wording
The following table sets forth the benefits from equipment contribution included in Segment EBT for our SCS and DTS business segments:
Previous wording
(1)For the three months ended September 30, 2024 and 2023, rental revenue from lease customers in place of a lease vehicle represented 30% and 34% of commercial rental revenue, respectively. For the nine months ended September 30, 2024 and 2023, rental revenue from lease customers in place of a lease vehicle represented 32% and 35% of commercial rental revenue, respectively.
Current wording
(1)For the three months ended March 31, 2025 and 2024, rental revenue from lease customers in place of a lease vehicle represented 31% and 35% of commercial rental revenue, respectively.
Previous wording
FMS total revenue decreased 1%in the third quarter and in the nine months ended September 30, 2024 due to lower fuel services revenue passed through to customers partially offset by higher operating revenue (a non-GAAP measure excluding fuel services revenue). FMS operating revenue increased 1% in the third quarter and inthe nine months ended September 30, 2024, due to higher ChoiceLease revenue, including the inter-segment lease revenue with DTS from the Cardinal Logistics acquisition. The increase in FMS operating revenue in both periods was partially offset by lower rental demand.
Current wording
FMS total revenue decreased 1% in the first quarter of 2025, due to lower fuel costs passed through to customers. FMS operating revenue (a non-GAAP measure excluding fuel) increased 1% in the first quarter of 2025, due to higher ChoiceLease revenue, partially offset by lower commercial rental demand.
Previous wording
Our North America fleet of owned and leased revenue earning equipment and SelectCare vehicles, including vehicles under on-demand maintenance, is summarized as follows (number of units rounded to the nearest hundred):
Current wording
Our fleet of owned and leased revenue earning equipment and SelectCare vehicles, including vehicles under on-demand maintenance, is summarized as follows (number of units rounded to the nearest hundred):
Previous wording
The following table provides information on our North America active ChoiceLease fleet (number of units rounded to nearest hundred) and our commercial rental power fleet (excludes trailers):
Current wording
The following table provides information on our active ChoiceLease fleet (number of units rounded to nearest hundred) and our commercial rental power fleet (excludes trailers):
Previous wording
DTS total revenue increased 41% in the third quarter of 2024 and 36% for the nine months ended September 30, 2024, primarily due to higher operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation). DTS operating revenue increased 49% in the third quarter of 2024 and 43% in the nine months ended September 30, 2024, due to the Cardinal Logistics acquisition.
Current wording
DTS total revenue increased 7% in the first quarter of 2025, primarily due to higher operating revenue (a non-GAAP measure excluding subcontracted transportation and fuel). DTS operating revenue increased 8% in the first quarter of 2025, due to the prior year acquisition completed February 2024.
Previous wording
Net cash provided by operating activities from continuing operations were $1.7 billion for the nine months ended September 30, 2024, compared to $1.8 billion in the prior year period, primarily reflecting higher working capital needs, including a $50 million prefunding of future required pension contribution. Net cash used in investing activities from continuing operations was $1.8 billion for the nine months ended September 30, 2024, consistent with 2023, reflecting the acquisition of Cardinal Logistics and decreased cash proceeds from sales of used vehicles and property, partially offset by lower cash paid for capital expenditures. Net cash provided by financing activities from continuing operations increased to $65 million for the nine months ended September 30, 2024, compared with cash used of $126 million in 2023, primarily reflecting higher borrowing needs.
Current wording
Net cash provided by operating activities from continuing operations was $651 million for the three months ended March 31, 2025, compared to $526 million in the prior year, primarily reflecting lower working capital needs. Net cash used in investing activities from continuing operations decreased to $393 million for the three months ended March 31, 2025, compared with $810 million in 2024, primarily reflecting the prior year acquisition of Cardinal Logistics and lower capital expenditures. Net cash used in financing activities from continuing operations was $261 million for the three months ended March 31, 2025, compared with cash provided by financing activities from continuing operations of $316 million in 2024, primarily reflecting net debt repayments and higher share repurchases.
Previous wording
Free cash flow (a non-GAAP measure) increased to $218 million for the nine months ended September 30, 2024, compared to $32 million in 2023, reflecting reduced capital expenditures partially offset by lower cash from operating activities and proceeds from sales of used vehicles and property.
Current wording
Free cash flow (a non-GAAP measure) increased to $259 million for the three months ended March 31, 2025, compared to $13 million in 2024, primarily reflects reduced capital expenditures.
Previous wording
Gross capital expenditures decreased to $2.0 billion for the nine months ended September 30, 2024, compared to $2.6 billion in 2023, primarily reflecting reduced investments in the ChoiceLease fleet due to lower sales activity.
Current wording
Gross capital expenditures decreased to $536 million for the three months ended March 31, 2025, compared to $716 million in 2024, primarily reflecting reduced investments in the ChoiceLease due to lower sales activity.
Previous wording
Cash and cash equivalents totaled $162 million as of September 30, 2024. As of September 30, 2024, $98 million was held outside the U.S. and is available to fund operations. Our intention is to permanently reinvest the earnings of our foreign subsidiaries, with the exception of our non-operating U.K. subsidiary where the assertion was removed in 2021. Federal, state and foreign income taxes, withholding taxes and the tax impact of foreign currency exchange gains or losses were considered on the remaining U.K. undistributed earnings as of September 30, 2024, and there was no impact to deferred taxes.
Current wording
Cash and cash equivalents totaled $151 million as of March 31, 2025. As of March 31, 2025, $114 million was held outside the U.S. and is available to fund operations and other growth of non-U.S. subsidiaries. We consider our U.K. earnings to be no longer indefinitely reinvested. We consider the historical earnings of Mexico, along with our remaining foreign jurisdictions to be permanently reinvested. Federal, state and foreign income taxes, withholding taxes and the tax impact of foreign currency exchange gains or losses were considered on the remaining U.K. undistributed earnings as of March 31, 2025, and there was no impact to deferred taxes.
Previous wording
In February 2024, we issued two tranches of unsecured medium-term notes with aggregate principal amounts of $350 million and $550 million, bearing annual interest of 5.30% and 5.38%, respectively, and maturing on March 15, 2027 and March 15, 2029, respectively. In May 2024, we issued an unsecured medium-term note with aggregate principal amount of $300 million, bearing annual interest of 5.50%, and maturing on June 1, 2029. In August 2024, we issued an unsecured medium-term note with aggregate principal amount of $300 million, bearing annual interest of 4.95%, and maturing on September 1, 2029.
Current wording
In February 2025, we issued an unsecured medium-term note with aggregate principal amount of $300 million, bearing annual interest of 5.00%, and maturing on March 15, 2030.
Previous wording
Refer to Note 8, "Debt," in the Notes to Condensed Consolidated Financial Statements for additional information on our global revolving credit facility, trade receivables financing program, medium-term notes and asset-backed financing obligations.
Current wording
Refer to Note 9, "Debt," in the Notes to Condensed Consolidated Financial Statements for additional information on our corporate revolving credit facility, trade receivables financing program, medium-term notes and asset-backed financing obligations.
Previous wording
Our ability to access unsecured debt in the capital markets is impacted by both our short-term and long-term debt ratings. These ratings are intended to provide guidance to investors in determining the credit risk associated with our particular securities based on current information obtained by the rating agencies from us or from other sources. Ratings are not recommendations to buy, sell or hold our debt securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Lower ratings generally result in higher borrowing costs, as well as reduced access to unsecured capital markets. A significant downgrade of our short-term debt ratings would impair our ability to issue commercial paper and likely require us to rely on alternative funding sources. A significant downgrade would not affect our ability to borrow amounts under our global revolving credit facility described below, assuming ongoing compliance with the terms and conditions of the credit facility.
Current wording
Our ability to access unsecured debt in the capital markets is impacted by both our short-term and long-term debt ratings. These ratings are intended to provide guidance to investors in determining the credit risk associated with our particular securities based on current information obtained by the rating agencies from us or from other sources. Ratings are not recommendations to buy, sell or hold our debt securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Lower ratings generally result in higher borrowing costs, as well as reduced access to unsecured capital markets. A significant downgrade of our short-term debt ratings would impair our ability to issue commercial paper and likely require us to rely on alternative funding sources. A significant downgrade would not affect our ability to borrow amounts under our corporate revolving credit facility described below, assuming ongoing compliance with the terms and conditions of the credit facility.
Previous wording
In accordance with our funding philosophy, we attempt to align the aggregate average remaining re-pricing life of our debt with the aggregate average remaining re-pricing life of our vehicle assets. We utilize both fixed-rate and variable-rate debt to achieve this alignment and generally targeta mix of 20% - 40% variable-rate debt as a percentage of total debt outstanding. The variable-rate portion of our total debt (including notional value of swap agreements) was 20% and 16% as of September 30, 2024 and December 31, 2023, respectively.
Current wording
In accordance with our funding philosophy, we attempt to align the aggregate average remaining re-pricing life of our debt with the aggregate average remaining re-pricing life of our vehicle assets. We utilize both fixed-rate and variable-rate debt to achieve this alignment and generally targeta mix of 20% - 40% variable-rate debt as a percentage of total debt outstanding. The variable-rate portion of our total debt (including notional value of swap agreements) was 14% and 18% as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
Our debt-to-equity ratio was 249% and 232% as of September 30, 2024 and December 31, 2023, respectively. The debt-to-equity ratio represents total debt divided by total equity.
Current wording
Our debt-to-equity ratio was 259% and 250% as of March 31, 2025 and December 31, 2024, respectively. The debt-to-equity ratio represents total debt divided by total equity.
Previous wording
The following table provides a reconciliation of GAAP earnings before taxes (EBT), earnings, and earnings per diluted share (Diluted EPS) from continuing operations to comparable EBT, comparable earnings, and comparable EPS. Certain items included in EBT, earnings, and Diluted EPS from continuing operations have been excluded from our comparable EBT, comparable earnings and comparable EPS measures. The following table lists a summary of these items, which are discussed in more detail throughout our MD&A and within the Notes to Condensed Consolidated Financial Statements:
Current wording
The following table provides a reconciliation of GAAP Earnings from continuing operations before income taxes (EBT), Earnings from continuing operations, and Earnings from continuing operations per common share — Diluted (Diluted EPS) to comparable EBT, comparable earnings, and comparable EPS. Certain items included in EBT, Earnings from continuing operations, and Diluted EPS have been excluded from our comparable EBT, comparable earnings and comparable diluted EPS measures. The following table lists a summary of these items, which are discussed in more detail throughout our MD&A and within the Notes to Condensed Consolidated Financial Statements:
Previous wording
(1)The effective tax rate on continuing operations and comparable tax rate are based on EBT and comparable EBT, respectively, found on the previous table.
Current wording
(1)The effective tax rate on continuing operations and comparable tax rate are based on EBT and comparable EBT, respectively, found above.
Previous wording
(2)Refer to the table above for more information on tax adjustments. Income tax effects of non-GAAP adjustments are calculated based on the marginal tax rates to which the non-GAAP adjustments are related.
Current wording
(2)Income tax effects of non-GAAP adjustments are calculated based on the marginal tax rates to which the non-GAAP adjustments are related.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
•the anticipated impact of fuel and energy prices;
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•the anticipated impact of inflationary pressures;