Ryder (R.N): R2Q Preview: D/G to Neut. on limited risk/reward with val. likely pricing in R‘s targeted upturn peak

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Ryder (R.N): R2Q Preview: D/G to Neut. on limited risk/reward with val. likely pricing in R‘s targeted upturn peak

Ryder (R.N)

10 July 2026 Citi Research

Key Drivers & Key Debates

Rate hike implications: Ryder benefits from an element of pass-through as it

prices its cost of funding into its lease rates. As it deploys CapEx, it accumulates

commercial paper and typically when its aggregate commercial paper reaches

$300-500 million, the company would refinance with investment grade bonds to

match its lease terms. Its leases typically feature escalators tied to interest rates,

with the relatively concentrated truck leasing market structure supportive of price

discipline. The company also uses interest rate swaps to manage the floating rate

mix of its total effective debt, typically towards the lower end of 20-40%. We note

in Figure 1 below that, historically, rate hikes have been a headwind on UVS (used

vehicle sales) net gains, rental utilization, and rental rates, necessitating

management’s actions to counter these headwinds on an ongoing basis. But R has

been successful in driving revenue and earnings growth through these periods,

with the strength since 2019 in large part stemming from its transformation in

driving core EPS from improving SCS (warehousing business)/DTS (trucking

business) mix to reduce reliance on FMS UVS and improving FMS lease

pricing/residuals.

AMZN’s push into warehousing: We recently published a note on Ryder’s SCS

business’s resilience facing Amazon’s Supply Chain offering. We note the news on

AMZN was a repackaging of its business, with Ryder shares having rebounded from

an initial dip. The majority of Ryder’s SCS business does not overlap with AMZN, as

Ryder’s offering is highly-engineered, featuring single-client, highly-customized