Balanced Growth Strategy Delivers Strong Results in Weaker Freight Environment

First-Quarter 2023 Highlights

• GAAP EPS from continuing operations of $2.95 compared to $3.35 in prior year
• Comparable EPS (non-GAAP) from continuing operations of $2.81 down from $3.59 in prior year; strong but lower results in Fleet Management Solutions (FMS), as expected, and a Supply Chain Solutions (SCS) asset impairment partially offset by lower share count and better results in Dedicated Transportation Solutions (DTS)
• Total revenue of $3.0 billion and operating revenue (non-GAAP) of $2.3 billion, up 3% and 6%, respectively, primarily reflecting SCS revenue growth

Full-Year 2023 Forecast

• Increased low end of comparable EPS (non-GAAP) forecast to $11.30 - $12.05 from prior forecast of $11.05 - $12.05
• Adjusted ROE (ROE) forecast remains at 16% - 18%
• Operating revenue (non-GAAP) growth forecast remains at approximately 4%
• Net cash provided by operating activities from continuing operations forecast remains at $2.4 billion; free cash flow (non-GAAP) forecast remains at approximately $200 million

Ryder System, Inc. (NYSE: R), a leader in supply chain, dedicated transportation, and fleet management solutions, reported results for the three months ended March 31 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 March 31 were as follows:

CEO Comment

"Consistent with our expectations, we delivered strong first-quarter results in a challenging freight environment," says Ryder Chairman and CEO Robert Sanchez. "Results benefited from outperformance in used vehicle sales and dedicated, which were offset by an SCS asset impairment charge related to a customer bankruptcy. Based on modestly higher-than-expected used vehicle sales trends, we are raising the low end of our full-year comparable EPS forecast.

"Strong results also reflect the transformative actions we’re taking to increase returns and position the business to outperform prior cycles. Pricing actions benefited all segments, while revenue growth benefited earnings in dedicated and supply chain. As anticipated, earnings decreased from prior-year record levels as market conditions in used vehicle sales and rental continued to normalize.

"Continued revenue growth in SCS and DTS reflects favorable outsourcing trends and our initiatives to drive accelerated growth in these higher-return businesses. In FMS, revenue growth in North America, driven by SelectCare and ChoiceLease, was more than offset by the revenue impact from the UK exit.

"Longer-term secular trends including escalating demand for supply chain resiliency, nearshoring activity, and e-commerce fulfillment provide significant opportunities for future growth. Our strong balance sheet and solid investment-grade credit rating provide us with ample capacity to support organic growth, pursue strategic investments and acquisitions, and return capital to shareholders.

"I'm confident we're on the right path as continued execution of our balanced growth strategy positions us well for long-term profitable growth and increased shareholder value despite softer freight conditions."

First Quarter 2023 Segment Review

Fleet Management Solutions: Earnings Reflect Lower Used Vehicle Sales and Rental Results

• FMS total revenue and operating revenue decreased 2%
  • Operating revenue in North America increased 4% due to higher SelectCare and ChoiceLease, offset by 6% negative impact to operating revenue from UK exit
• FMS EBT decreased 27% to $182 million
  • Decrease reflects lower used vehicle sales and rental results
  • Lower gains due to a 16% and 35% decrease in used truck and tractor pricing, respectively, partially offset by higher volumes; sequentially from fourth quarter of 2022, used truck and tractor pricing decreased 7% and 10%, respectively
  • Used vehicle inventory levels increased sequentially to 5,100 vehicles
  • Lower rental results reflect decreased utilization partially offset by 3% increase in power-fleet pricing
  • Rental power-fleet utilization was 75%, down from record level of 82% in prior year, on 6% larger average power fleet
• FMS EBT as a percentage of FMS operating revenue is above company's long-term target of low double-digits for first quarter and trailing 12-month period

Supply Chain Solutions: Earnings Reflect Strong Revenue Growth More than Offset by Impairment Charge

• SCS total revenue grew 10% and operating revenue grew 19%
  • Increase due to strong revenue growth in all industry verticals primarily reflecting new business, higher volumes, and increased pricing
• SCS EBT down to $17 million
  • Decrease due to $30 million asset impairment charge related to a customer bankruptcy
  • Partially offset by revenue growth, primarily from automotive vertical performance
• SCS EBT as a percentage of SCS operating revenue is below company's long-term target of high single-digits for the first quarter and trailing 12-month period

Dedicated Transportation Solutions: Higher Earnings Driven by Increased Pricing

• DTS total revenue grew 7% and operating revenue grew 9%
  • Increase due to increased pricing and volumes
• DTS EBT grew 45% to $29 million
  • Increase primarily due to revenue growth and improved conditions for hiring professional drivers
• DTS EBT as a percentage of DTS operating revenue is in line with company's long-term target of high single-digits for first quarter and trailing 12-month period

Corporate Financial Information

Unallocated Central Support Services (CSS)

Unallocated CSS costs were $15 million as compared to $16 million in the prior year, primarily reflecting the gain from the sale of our corporate headquarters building offset by increased professional fees.

Capital Expenditures, Cash Flow, and Leverage

First-quarter capital expenditures increased to $802 million in 2023 compared to $662 million in 2022 due to higher planned investments in the lease fleet.

First-quarter net cash provided by operating activities from continuing operations increased to $478 million as compared to $466 million in the prior year, primarily reflecting higher cash earnings. Free cash flow (non-GAAP) of $101 million, compared to $108 million in 2022, was generally unchanged as an increase in cash paid for capital expenditures was largely offset by higher proceeds from the sale of operating property and equipment.

Debt-to-equity as of March 31, 2023 was 211% compared to 216% at year-end 2022 and remains below the company's long-term target of 250% to 300%.

Outlook

"We continue to expect strong but reduced earnings in 2023 as weak freight conditions throughout the year impact used vehicle sales and rental," says Ryder Chief Financial Officer John Diez. "Our contractual lease, dedicated, and supply chain businesses continue to improve based on our growth and return initiatives. For full-year 2023, we expect the business to achieve ROE in line with our high-teens target, reflecting the benefits of our initiatives."

Supplemental Company Information

First Quarter Net Earnings

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 capability 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; expectations regarding market trends and economic environment; expectations regarding total and operating revenue, earnings per share, comparable earnings per share, adjusted ROE, net cash provided by operating activities from continuing operations, debt-to-equity and free cash flow; impact of used vehicle sales and rental performance on earnings; expectations related to our strategic investments and initiatives, including our recent supply chain acquisitions and initiatives related to maintenance costs savings and improving returns; expected benefits in our contractual lease, dedicated and supply chain businesses; our ability to execute our balanced growth strategy; performance, including sales and revenue growth, in our product lines and segments; our expectations with respect to the effect of our actions to increase returns; our expectations relating to the exit of the UK business; our expectations with respect to the SCS asset impairment charge related to a customer bankruptcy; our ability to outperform prior cycles; our expectations regarding outsourcing trends in our supply chain and dedicated businesses, nearshoring, and e-commerce; our ability to support organic growth, make strategic investments and acquisitions, and return capital to shareholders; our ability to deliver strong but reduced earnings in 2023; and our ability to deliver increased shareholder value in a softer freight environment. Our forward-looking statements also include our estimates of the impact of our changes to residual value estimates on earnings and depreciation expense. The expected impact of the change in residual value estimates is based 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; ongoing supply chain and labor challenges and vehicle production constraints; 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, and 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 soft economic conditions, business interruptions or expenditures due to labor disputes, severe weather or 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 worldwide semiconductor shortage; higher than expected bad debt reserves or write-offs; decrease in credit ratings; increased debt costs; adequacy of accounting estimates; 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; unanticipated changes in fuel and alternative energy prices; unanticipated currency exchange rate fluctuations; increases 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 non-GAAP financial measures contained in this release to the nearest GAAP measure and why management believes that presentation of each measure provides useful information 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 our Form 8-K filed as of the date of this release with the SEC, which are available at http://investors.ryder.com.

CONFERENCE CALL AND WEBCAST INFORMATION

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