Delivers Solid Q3 Results; Continues to Outperform Prior Cycles

Third Quarter 2024 Highlights

• GAAP EPS from continuing operations of $3.25 compared to $3.44 in prior year
• Comparable EPS (non-GAAP) from continuing operations of $3.44, 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 businesses
• Total revenue of $3.2 billion compared to $2.9 billion in prior year
• Operating revenue (non-GAAP) of $2.6 billion, up 9%, reflecting recent acquisitions

Full-Year 2024 Forecast

• Reaffirming Adjusted ROE (ROE) of 16% - 16.5%
• Comparable EPS (non-GAAP) of $11.90 - $12.10
• Reaffirming operating revenue (non-GAAP) expected to increase by approximately 8%
• Reaffirming 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) reported results for the three months ended September 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 September 30 were as follows:

CEO Comment

"Ryder’s solid third-quarter performance reflects continued execution of our balanced growth strategy," says Ryder Chairman and CEO Robert Sanchez. "Earnings growth in our contractual lease, dedicated, and supply chain businesses remains the key driver of outperformance relative to prior cycles. ROE of 16% continues to demonstrate the increased resilience of our transformed business model and is consistent with our expectations for the latter stage of a freight-cycle downturn. Although we did not see a recovery of market conditions in used vehicle sales and rental during the quarter, we delivered comparable EPS in line with our forecast.

"We saw double-digit earnings growth in our contractual businesses. Higher ChoiceLease results from our pricing and maintenance initiatives benefited FMS. Stronger operating performance and cost-management actions benefited SCS. DTS delivered strong earnings growth, demonstrating the resiliency of our legacy business. Each of the segments also benefited from recent acquisitions.

"The earnings power of our contractual businesses is also increasing our capital deployment capacity, enabling us to invest in profitable growth and strategic initiatives while also returning capital to shareholders. Our board authorized a new discretionary two-million-share repurchase program that replaces a recently completed program. In addition, our strong balance sheet has allowed us to fund organic growth, complete strategic acquisitions, and increase our dividend.

"The long-term secular growth trends remain intact for all of our contractual businesses, although we are experiencing near-term sales headwinds that reflect the extended freight downturn and overall economic uncertainty. We remain well positioned to benefit from the expected cycle upturn and to grow with our customers as conditions improve."

Third 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 decreased 1% and operating revenue increased 1%
  • Total revenue reflects lower fuel services revenue passed through to customers, partially offset by higher operating revenue
  • Operating revenue reflects higher ChoiceLease revenue, partially offset by lower rental demand
• FMS EBT of $132 million, down 22%
  • Weaker rental demand and lower used vehicle gains due to lower volumes and pricing
  • Higher ChoiceLease performance and benefits from maintenance cost-savings initiatives
  • Used truck and tractor pricing declined 19% and 22%, respectively, from prior year
  • Sequentially, used truck pricing was up 4%; tractor pricing was down 12%, partially due to sale of newer units in the second quarter
  • Rental power-fleet utilization was 71%, compared to 75% in prior year, on a 7% smaller average power fleet

Supply Chain Solutions: Solid Earnings Reflect Better Operating Performance

• SCS total revenue and operating revenue both increased 10%
  • Growth primarily driven by recent acquisitions
• SCS EBT grew to $93 million, up 14%
  • EBT growth primarily driven by stronger omnichannel retail performance and lower overhead spending

Dedicated Transportation Solutions: Strong Operating Performance and Acquisition Benefits

• DTS total revenue increased 41% and operating revenue grew 49%
  • Increases due to acquisition
• DTS EBT of $36 million, up 31%
  • Increase due to improved operating performance and acquisition benefits

Corporate Financial Information

Tax Rate

Our effective income tax rate from continuing operations was 24.0%, as compared to 25.2% in the prior year. Our comparable effective income tax rate (a non-GAAP measure) from continuing operations was 23.9%, compared to 27.0% in the prior year, due to discrete tax benefits.

Capital Expenditures, Cash Flow, and Leverage

Year-to-date capital expenditures decreased to $2.0 billion in 2024 compared to $2.6 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 $1.7 billion compared to $1.8 billion in 2023, primarily reflecting higher working capital needs. Free cash flow (non-GAAP) of $218 million compared to $32 million in 2023, reflects reduced capital expenditures partially offset by lower proceeds from sales of used vehicles and property.

Debt-to-equity as of September 30, 2024 was 249%, compared to 232% at year-end 2023, and was slightly below the company's long-term target of 250% to 300%.

Outlook

"Our transformed business model has delivered solid results through this extended freight recession," says Ryder Chief Financial Officer John Diez. "Year-over-year earnings comparisons continue to improve, and we now expect earnings growth in the fourth quarter driven by our high-performing contractual portfolio. Our current forecast does not contemplate a recovery in freight conditions this year. We remain confident that ongoing execution of our balanced growth strategy will further enhance returns and that all segments, particularly FMS, are well positioned to benefit from the expected cycle upturn."

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, the freight environment, used vehicle sales and rental demand, and performance 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; 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; performance of our contractual portfolio; 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 October 24, 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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RYDER SYSTEM, INC. AND SUBSIDIARIES

APPENDIX - NON-GAAP FINANCIAL MEASURE RECONCILIATIONS - UNAUDITED

This press release and accompanying tables include “non-GAAP financial measures” as defined by SEC rules. As required by SEC rules, we provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP.

Specifically, the following non-GAAP financial measures are included in this press release: