Delivers Solid Q2 Results; Continues to Outperform Prior Cycles

Second Quarter 2024 Highlights

• GAAP EPS from continuing operations of $2.83 compared to $(0.39) in prior year, which reflected a non-cash FMS U.K. business exit charge
• Comparable EPS (non-GAAP) from continuing operations of $3.00, as compared to $3.61 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 businesses
• Total revenue of $3.2 billion compared to $2.9 billion in prior year
• Operating revenue (non-GAAP) of $2.6 billion, up 10%, reflecting recent acquisitions

Full-Year 2024 Forecast

• Adjusted ROE (ROE) of 16% - 16.5%
• Comparable EPS (non-GAAP) of $11.90 - $12.40
• Operating revenue (non-GAAP) expected to increase by approximately 8%
• Net cash provided by operating activities from continuing operations of $2.4 billion and free cash flow (non-GAAP) of positive $150 - $250 million

Ryder System, Inc. (NYSE: R), a leader in supply chain, dedicated transportation, and fleet management solutions, reported results for the three months ended June 30 as follows:

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Ryder is a leader in supply chain, dedicated transportation, and fleet management solutions. (Photo: Business Wire)

Total and operating revenue for the three months ended June 30 were as follows:

CEO Comment

"Ryder delivered solid second-quarter results and continued to outperform prior cycles," says Ryder Chairman and CEO Robert Sanchez. "Comparable EPS were above our forecast primarily reflecting better-than-expected ChoiceLease results. ROE of 16% demonstrated the increased resilience of our transformed business model and is in line with our expectations for the latter stage of a freight-cycle downturn.

"Our contractual lease, dedicated, and supply chain businesses generated higher year-over-year earnings. Higher ChoiceLease results and our maintenance cost-savings initiatives benefited FMS. Strong automotive performance benefited SCS. In DTS, integration of the Cardinal Logistics acquisition remains on track and we continue to expect to achieve planned synergies.

“Long-term secular growth trends remain intact for all of our contractual businesses, although we are experiencing near-term sales headwinds that include customer fleet reductions and delayed decision-making that reflect the extended freight downturn and overall economic uncertainty. We remain well positioned to grow with our customers as conditions improve.

"Our strong balance sheet and increased return profile provide us with ample capacity to support organic growth and strategic acquisitions as well as return capital to shareholders through share repurchases and dividends. We recently announced a 14% increase to our quarterly dividend which demonstrates our continued confidence in the earnings power of our transformed business model."

Second Quarter 2024 Segment Review

Fleet Management Solutions: Earnings Reflect Weaker Market Conditions in Rental and Used Vehicle Sales, Partially Offset by Higher ChoiceLease Performance

• FMS total revenue and operating revenue increased 1% and 2%, respectively.
  • Total revenue primarily reflects higher operating revenue
  • Operating revenue reflects higher ChoiceLease revenue, partially offset by lower rental demand
• FMS EBT of $133 million
  • Higher ChoiceLease performance and benefits from maintenance cost-savings initiatives
  • Lower used vehicle gains compared to elevated levels in prior year and weaker rental demand
  • Used truck and tractor pricing declined 27% and 19%, respectively from prior year, and declined 10% for trucks and increased 5% for tractors, sequentially from first quarter of 2024
  • Rental power-fleet utilization was 69%, down from 75% in prior year on a 11% smaller average power fleet

Supply Chain Solutions: Solid Earnings Reflect Continued Growth

• SCS total revenue and operating revenue both increased 14%
  • Total revenue primarily reflects increased operating revenue and higher subcontracted transportation costs passed through to customers
  • Increase in operating revenue driven by recent acquisitions and organic growth across all industry verticals
• SCS EBT grew to $85 million
  • EBT growth primarily reflects stronger automotive performance

Dedicated Transportation Solutions: Strong Operating Performance Partially Offset by Acquisition Costs

• DTS total revenue increased 44% and operating revenue grew 48%
  • Total and operating revenue increased due to the Cardinal Logistics acquisition
• DTS EBT of $37 million
  • Increase due to improved operating performance, partially offset by Cardinal Logistics acquisition integration and other related costs

Corporate Financial Information

Tax Rate

Our effective income tax rate from continuing operations was 29.1%, as compared to 140.8% in the prior year, due to the 2023 one-time, nondeductible cumulative currency translation adjustment loss from the FMS U.K. business exit. Our comparable effective income tax rate (a non-GAAP measure) from continuing operations, which excludes the impact of the prior year currency translation adjustment loss, was 29.0%, consistent with the 28.6% in the prior year.

Capital Expenditures, Cash Flow, and Leverage

Year-to-date capital expenditures decreased to $1.3 billion in 2024 compared to $1.8 billion in 2023, primarily reflecting reduced investments in the ChoiceLease fleet due to lower sales activity.

Year-to-date net cash provided by operating activities from continuing operations was $1.1 billion compared to $1.2 billion in 2023, primarily reflecting higher working capital needs. Free cash flow (non-GAAP) of $71 million compared to $16 million in 2023, reflects reduced capital expenditures partially offset by lower cash from operating activities and proceeds from sales of used vehicles and property.

Debt-to-equity as of June 30, 2024 was 245%, compared to 232% at year-end 2023, and remains below the company's long-term target of 250% to 300%.

Outlook

“Our high-performing contractual portfolio and transformed business model have enabled us to deliver solid results amid a challenging freight environment,” says Ryder Chief Financial Officer John Diez. “The business remains well positioned to benefit from the expected cycle upturn with ample capacity to fund growth, pay a reliable dividend, and return capital to shareholders. The high end of our full-year forecast range continues to assume a gradual recovery in rental and used vehicle sales in the second half, while the bottom end reflects ongoing weak conditions. We now expect to generate higher free cash flow for the year reflecting lower capital spending due to softer lease sales activity.”

Supplemental Company Information

Business Description

Ryder System, Inc. is a leading supply chain, dedicated transportation, and fleet management solutions company. Ryder's stock (NYSE: R) is a component of the Dow Jones Transportation Average and the S&P MidCap 400^® index. The company's financial performance is reported in the following three, inter-related business segments:

• Supply Chain Solutions – Ryder's SCS business segment optimizes logistics networks to make them more responsive and able to be leveraged as a competitive advantage. Globally-recognized brands in the automotive, consumer goods, food and beverage, healthcare, industrial, oil and gas, technology, and retail industries rely on Ryder's leading-edge technologies and world-class logistics engineers to help them deliver the goods that consumers use every day.
• Dedicated Transportation Solutions – Ryder's DTS business segment combines the best of Ryder's leasing and maintenance capabilities with the safest and most professional drivers in the industry. With a dedicated transportation solution, Ryder helps customers increase their competitive position, reduce risk, and integrate their transportation needs with their overall supply chain.
• Fleet Management Solutions – Ryder's FMS business segment provides a broad range of services to help businesses of all sizes, across virtually every industry, deliver for their customers. From leasing, maintenance, and fueling, to rental and used vehicle sales, customers rely on Ryder's expertise to help them lower their costs, redirect capital to other parts of their business, and focus on what they do best – so they can grow.

For more information on Ryder System, Inc., visit investors.ryder.com and ryder.com.

Note: Regarding Forward-Looking Statements

Certain statements and information included in this news release are "forward-looking statements" under the Federal Private Securities Litigation Reform Act of 1995, including: our forecast; our outlook; our expectations regarding market trends and economic environment, such as rental demand, economic growth, challenging freight environment, weakening used vehicle sales and rental, and declining volumes in our omnichannel retail vertical; our expectations regarding the freight cycle, including timing and the impact of the freight cycle on our businesses; our expectations regarding total and operating revenue, earnings per share, comparable earnings per share, adjusted ROE, earnings before income tax, net cash from operating activities from continuing operations, debt-to-equity, capital expenditures, operating cash flow and free cash flow, and the causes of change; our ability to execute our balanced growth strategy; the impact of inflationary pressures, such as inflationary cost recovery; our expectations regarding commercial rental demand and utilization and used vehicle sales volume and pricing; our expectations regarding long-term profitable growth and secular growth trends; our expectations with respect to our actions to increase returns and create long-term value; our expectations regarding used vehicle inventory and fleet size; our ability to outperform prior cycles; our ability to support organic growth, including growing our contractual lease, dedicated, and supply chain businesses at targeted returns; our expectations regarding strategic investments and acquisitions, including the acquisitions of Cardinal Logistics and Impact Fulfillment Services; and our expectations regarding our ability to return capital to shareholders, including through share repurchases and dividends. Our forward-looking statements also include our estimates of the impact of residual value estimates on earnings and depreciation expense that is based in part on our current assessment of the residual values and useful lives of revenue-earning equipment based on multi-year trends and our outlook for the expected near- and long-term used vehicle market. A variety of factors, many of which are outside of our control, could cause residual value estimates to differ from actual used vehicle sales pricing, such as changes in supply and demand of used vehicles; volatility in market conditions; changes in vehicle technology; competitor pricing; regulatory requirements; driver shortages; customer requirements and preferences; and changes in underlying assumption factors.

All of our forward-looking statements should be evaluated by considering the many risks and uncertainties inherent in our business that could cause actual results and events to differ materially from those in the forward-looking statements. Important factors that could cause such differences include: changes in general economic and financial conditions in the U.S. and worldwide; the ongoing supply chain and labor challenges and vehicle production constraints, including original equipment manufacturer delays; the effect of geopolitical events; our ability to adapt to changing market conditions, including lower than expected contractual sales, decreases in commercial rental demand or utilization, poor acceptance of rental pricing, declining market demand for or excess supply of used vehicles impacting current or estimated pricing, and our anticipated proportion of retail versus wholesale sales; declining customer demand for our services; higher than expected maintenance costs; lower than expected benefits from our cost-savings initiatives; our ability to effectively and efficiently integrate acquisitions into our business; lower than expected benefits from our sales, marketing, and new product initiatives; setbacks in the economic market or in our ability to retain profitable customer accounts; impact of changing laws and regulations; difficulty in obtaining adequate profit margins for our services; inability to maintain current pricing levels due to, for example, economic conditions, business interruptions, expenditures, labor disputes, and severe weather or other natural occurrences; competition from other service providers; changes in technology and new entrants; professional driver and technician shortages resulting in higher procurement costs and turnover rates; impact of supply chain disruptions; higher than expected bad debt reserves or write-offs; decrease in credit ratings; increased debt costs; adequacy of accounting estimates; our ability to effectively and efficiently integrate acquisitions into our business; higher than expected reserves and accruals particularly with respect to pension, taxes, insurance, and revenue; impact of changes in our residual value estimates and accounting policies, including our depreciation policy; unanticipated changes in fuel and alternative energy prices; unanticipated currency exchange rate fluctuations; fluctuations in inflation or interest rates; our ability to manage our cost structure; and the risks described in our filings with the Securities and Exchange Commission (SEC). The risks included here are not exhaustive. New risks emerge from time to time, and it is not possible for management to predict all such risk factors or to assess the impact of such risks on our business. Accordingly, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Note: Regarding Non-GAAP Financial Measures

This news release includes certain non-GAAP financial measures as defined under SEC rules. Refer to Appendix - Non-GAAP Financial Measure Reconciliations at the end of the tables following this press release for reconciliations of the most comparable GAAP measure to the non-GAAP financial measure and the reasons why management believes the measure is important to investors. Additional information regarding non-GAAP financial measures as required by Regulation G and Item 10(e) of Regulation S-K can be found in our most recent Form 10-K, Form 10-Q, and Form 8-K filed with the SEC as of the date of this release, which are available at investors.ryder.com.

CONFERENCE CALL AND WEBCAST INFORMATION

Ryder’s earnings conference call and webcast is scheduled for July 25, 2024 at 11:00 a.m. ET. To join, click here.

LIVE AUDIO VIA PHONE

WEBCAST REPLAY

An audio replay including the slide presentation will be available within four hours following the call. Click here then select Financials/Quarterly Results and the date.

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