Balanced Growth Strategy Delivers Strong Returns in Challenging Freight Environment

Fourth Quarter 2023 Highlights

GAAP EPS from continuing operations of $2.74 compared to $4.06 in prior year
Comparable EPS (non-GAAP) from continuing operations of $2.95, as compared to $3.89 in prior year, reflecting weaker market conditions in used vehicle sales and rental, partially offset by improved Supply Chain Solutions (SCS) results
Total revenue of $3.0 billion compared to $3.1 billion in prior year
Operating revenue (non-GAAP) of $2.4 billion, up 2%

Full-Year 2023 Highlights

GAAP EPS from continuing operations of $8.73, which includes a non-cash UK exit currency translation charge of $3.93, compared to $16.96 in prior year
Comparable EPS (non-GAAP) from continuing operations of $12.95 compared to $16.37 in prior year, reflecting weaker used vehicle sales and rental market conditions, partially offset by improved Dedicated Transportation Solutions (DTS) and SCS results
Adjusted return on equity (ROE) of 19%, compared to 29% in prior year
Total revenue of $11.8 billion compared to $12.0 billion in prior year
Operating revenue (non-GAAP) of $9.5 billion, up 2%
Full-year 2023 net cash provided by operating activities from continuing operations of $2.4 billion and free cash flow (non-GAAP) of negative $54 million

Full-Year 2024 Outlook

ROE of 15% – 16.5%
Comparable EPS (non-GAAP) of $11.50 – $12.50
Operating revenue (non-GAAP) expected to increase by approximately 13%, including recent acquisitions
Net cash provided by operating activities from continuing operations of $2.4 billion and free cash flow (non-GAAP) of negative $275 – $375 million

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

(In millions, except EPS)	Earnings Before Taxes			Earnings			Diluted Earnings Per Share
		2023	2022		2023	2022		2023	2022
Continuing operations (GAAP)	$	160	292	$	124	200	$	2.74	4.06
Comparable (non-GAAP)	$	172	267	$	134	192	$	2.95	3.89

Total and operating revenue for the three months ended December 31 were as follows:

(In millions)	Total Revenue					Operating Revenue (non-GAAP)
		2023	2022	Change			2023	2022	Change
Total	$	3,023	3,088	(2	)%	$	2,447	2,410	2	%
Fleet Management Solutions (FMS)	$	1,481	1,595	(7	)%	$	1,271	1,321	(4	)%
Supply Chain Solutions (SCS)	$	1,301	1,251	4	%	$	972	883	10	%
Dedicated Transportation Solutions (DTS)	$	443	456	(3	)%	$	324	320	1	%

CEO Comment

“Ryder delivered strong results in the fourth quarter and throughout 2023 reflecting continued execution of our balanced growth strategy,” says Ryder Chairman and CEO Robert Sanchez. “While the freight environment remained challenging, the transformative actions we’ve taken to de-risk the model, enhance returns, and drive profitable growth have meaningfully improved business model resilience. Our ability to generate ROE of 19% against the backdrop of weakening market conditions in used vehicle sales and rental demonstrates the effectiveness of these changes.

“As part of our balanced growth strategy, we continue to focus on growing our contractual lease, dedicated, and supply chain businesses at targeted returns. We’re excited about our acquisition of Cardinal Logistics earlier this month, which will increase scale and network density, driving operating efficiencies and enabling us to provide even greater value to our newly combined customer base. We are pleased to be a leader in the attractive customized solutions segment of dedicated transportation and remain confident in the long-term secular growth trends for this business.

“Our enhanced asset management playbook continued to generate improved returns in FMS over prior cycles. Throughout 2023, we maintained rental utilization at target levels by actively redeploying vehicles into longer-term lease, dedicated, and supply chain applications. In used vehicle sales, we continued to leverage our expanded retail sales capacity while also using wholesale channels in order to optimize sales proceeds and maintain inventory levels within our target range.

“We’ve delivered strong returns throughout 2023. These results and our strong balance sheet provided us with ample capacity for organic growth, strategic acquisitions, and returning capital to shareholders through share repurchases and dividends. We are confident that the transformative changes we’ve made to the business will continue to drive outperformance versus prior cycles while positioning us well for the cycle upturn.”

Fourth Quarter 2023 Segment Review

Fleet Management Solutions: Strong Earnings Despite Weaker Used Vehicle Sales and Rental Market Conditions

(In millions)		4Q23	4Q22	Change
Total Revenue	$	1,481	1,595	(7)%
Operating Revenue ⁽¹⁾	$	1,271	1,321	(4)%

Earnings Before Tax (EBT)	$	134	256	(48)%
EBT as a % of total revenue		9.1%	16.0%	(690) bps
EBT as a % of operating revenue ⁽¹⁾		10.6%	19.4%	(880) bps

Full-year EBT as % of total and operating revenue	FY23		FY22	Change
EBT as a % of total revenue		11.2%	16.7%	(550) bps
EBT as a % of operating revenue ⁽¹⁾		13.2%	20.3%	(710) bps

⁽¹⁾ Non-GAAP financial measure excluding fuel service revenue.

FMS total revenue and operating revenue decreased 7% and 4%, respectively
- Total revenue reflects lower fuel costs passed through to customers and lower operating revenue
- Operating revenue reflects lower rental demand, partially offset by higher ChoiceLease revenue
FMS EBT of $134 million
- Reflects lower used vehicle sales and rental results
- Lower used vehicle gains due to a 33% and 39% decrease in used truck and tractor pricing, respectively, partially offset by higher volumes; sequentially from third quarter of 2023, used truck and tractor pricing decreased 11% and 12%, respectively
- Rental power-fleet utilization was 75%, down from 82% in prior year on a 11% smaller average power fleet
FMS EBT as a percentage of FMS operating revenue is within the company’s long-term target of low double digits for the fourth quarter and at the high end of the target for full-year 2023

Supply Chain Solutions: Higher Earnings Reflect Operating Revenue Growth In Automotive and Industrial Verticals

(In millions)		4Q23	4Q22	Change
Total Revenue	$	1,301	1,251	4%
Operating Revenue ⁽¹⁾	$	972	883	10%

Earnings Before Tax (EBT)	$	57	42	35%
EBT as a % of total revenue		4.4%	3.4%	100 bps
EBT as a % of operating revenue ⁽¹⁾		5.8%	4.8%	100 bps

Full-year EBT as % of total and operating revenue	FY23		FY22	Change
EBT as a % of total revenue		4.7%	4.6%	10 bps
EBT as a % of operating revenue ⁽¹⁾		6.4%	6.7%	(30) bps

⁽¹⁾ Non-GAAP financial measure excluding fuel and subcontracted transportation.

SCS total revenue and operating revenue increased 4% and 10%, respectively
- Total revenue reflects higher operating revenue, partially offset by lower subcontracted transportation and fuel costs passed through to customers
- Increase in operating revenue driven by organic growth from new business, increased pricing, and higher volumes, as well as the acquisition of Impact Fulfillment Services, LLC
SCS EBT grew 35%
- Increase due to higher operating revenue in the automotive and industrial verticals
- Year-over-year comparisons in the omnichannel retail vertical benefited from a prior year $20 million asset impairment charge, which was offset by lower volumes
SCS EBT as a percentage of SCS operating revenue is below the company’s long-term target of high single digits for the fourth quarter and full-year 2023

Dedicated Transportation Solutions: Strong Earnings Results Despite Weak Freight Environment

(In millions)		4Q23	4Q22	Change
Total Revenue	$	443	456	(3)%
Operating Revenue ⁽¹⁾	$	324	320	1%

Earnings Before Tax (EBT)	$	31	31	(1)%
EBT as a % of total revenue		6.9%	6.8%	10 bps
EBT as a % of operating revenue ⁽¹⁾		9.4%	9.7%	(30) bps

Full-year EBT as % of total and operating revenue	FY23		FY22	Change
EBT as a % of total revenue		6.8%	5.8%	100 bps
EBT as a % of operating revenue ⁽¹⁾		9.3%	8.3%	100 bps

⁽¹⁾ Non-GAAP financial measure excluding fuel and subcontracted transportation.

DTS total revenue decreased 3% and operating revenue grew 1%
- Total revenue reflects lower fuel costs and subcontracted transportation passed through to customers, partially offset by higher operating revenue
- Operating revenue increased due to inflationary cost recovery
DTS EBT remained strong and generally in line with prior year
DTS EBT as a percentage of DTS operating revenue is at the high end of the company’s long-term target of high single digits for the fourth quarter and full-year 2023

Corporate Financial Information

Unallocated Central Support Services (CSS)

Unallocated CSS costs declined to $17 million from $21 million in the prior year, primarily due to lower professional fees and incentive-based compensation costs.

Income Taxes

Our effective income tax rate from continuing operations was 22.5% as compared to 31.4% in the prior year. Our comparable effective income tax rate (a non-GAAP measure) from continuing operations was 22.1%, as compared to 28.2% in the prior year. The decreases in the fourth quarter 2023 effective income tax rates primarily reflect changes in the geographic mix of earnings from a tax perspective. The prior year effective income tax rate was impacted by higher U.S. tax on foreign earnings related to exit activities of our UK FMS business.

Capital Expenditures, Cash Flow, and Leverage

Full-year capital expenditures increased to $3.3 billion in 2023, compared to $2.7 billion in 2022, reflecting higher investments in the lease fleet and timing of OEM deliveries, partially offset by lower investments in commercial rental.

Full-year net cash provided by operating activities from continuing operations was $2.4 billion, consistent with the prior year. Free cash flow (non-GAAP) of negative $54 million, compared to $921 million in 2022, primarily reflects an increase in capital expenditures and prior-year proceeds of approximately $400 million from the FMS UK exit.

Debt-to-equity as of December 31, 2023 was 232%, compared to 216% at year-end 2022, and remains below the company’s long-term target of 250% to 300%.

Outlook

“We expect our transformed business model to continue to deliver strong returns,” says Ryder Chief Financial Officer John Diez. “In 2024, we expect to generate ROE in the mid-teens, in line with our target during trough used vehicle sales and rental market conditions. Historically the first quarter has been our lowest earnings quarter, and in 2024 we expect that it will also represent the most challenging year over year comparison because of where we are in the cycle. For 2024, our contractual lease, dedicated, and supply chain businesses are expected to deliver earnings growth while all our businesses remain well positioned to benefit from the cycle upturn.”

	Full Year 2024
Total Revenue Growth	~13%
Operating Revenue Growth (non-GAAP)	~13%
FY24 GAAP EPS	$10.70 – $11.70
FY24 Comparable EPS (non-GAAP)	$11.50 – $12.50

Adjusted ROE ⁽¹⁾	15% – 16.5%
Net Cash from Operating Activities from Continuing Operations	~$2.4B
Free Cash Flow (non-GAAP)	$(275) – $(375)M
Capital Expenditures	~$3.3B
Debt-to-Equity	~240%

	First Quarter 2024
1Q24 GAAP EPS	$1.28 – $1.53
1Q24 Comparable EPS (non-GAAP)	$1.55 – $1.80
———————————— ⁽¹⁾ The non-GAAP elements of this calculation have been reconciled to the corresponding GAAP measures. A numerical reconciliation of net earnings to adjusted net earnings and average shareholders’ equity to adjusted average equity is provided in the Appendix – Non-GAAP Financial Measures Reconciliations at the end of this release.

Supplemental Company Information

Fourth Quarter Net Earnings

(In millions, except EPS)	Earnings			Diluted EPS
		2023	2022		2023		2022
Earnings from continuing operations	$	124	200	$	2.74		4.06
Discontinued operations		—	6		(0.01	)	0.12
Net earnings	$	124	206	$	2.72		4.18


Full-Year Operating Results
	For the year ended December 31,
(In millions, except EPS)		2023	2022	Change
Total revenue	$	11,783	12,011	(2	)%
Operating revenue (non-GAAP)	$	9,497	9,280	2	%


Earnings from continuing operations	$	406	863	(53	)%
Comparable earnings from continuing operations (non-GAAP)	$	602	833	(28	)%
Net earnings	$	406	867	(53	)%


Earnings per common share (EPS) – Diluted
Continuing operations	$	8.73	16.96	(49	)%
Comparable (non-GAAP)	$	12.95	16.37	(21	)%
Net earnings	$	8.73	17.04	(49	)%

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, 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 Impact Fulfillment Services and Cardinal Logistics; 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 https://investors.ryder.com.

CONFERENCE CALL AND WEBCAST INFORMATION

Ryder’s earnings conference call and webcast is scheduled for February 14, 2024 at 11:00 a.m. ET. To join, click here.

LIVE AUDIO VIA PHONE

Toll Free Number: 888-204-4368

USA Toll Number: 323-994-2093

Audio Passcode: Ryder

Conference Leader: Calene Candela

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.

ryder-financial

RYDER SYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS – UNAUDITED

(In millions, except per share amounts)	Three months ended December 31,					For the year ended December 31,
	2023			2022		2023			2022
Lease & related maintenance and rental revenues	$	996		1,055		$	3,937		4,174
Services revenue		1,898		1,860			7,297		7,118
Fuel services revenue		129		173			549		719
Total revenues		3,023		3,088			11,783		12,011

Cost of lease & related maintenance and rental		683		696			2,684		2,774
Cost of services		1,628		1,630			6,266		6,153
Cost of fuel services		122		164			534		694
Selling, general and administrative expenses		368		362			1,421		1,415
Non-operating pension costs, net		10		3			40		11
Used vehicle sales, net		(22	)	(94	)		(196	)	(450	)
Interest expense		84		63			296		228
Miscellaneous income, net		(11	)	(9	)		(47	)	(32	)
Currency translation adjustment loss		—		—			188		—
Restructuring and other items, net		1		(19	)		(21	)	2
		2,863		2,796			11,165		10,795

Earnings from continuing operations before income taxes		160		292			618		1,216
Provision for income taxes		36		92			212		353
Earnings from continuing operations		124		200			406		863
Earnings from discontinued operations, net of tax		—		6			—		4
Net earnings	$	124		206		$	406		867

Earnings (loss) per common share — Diluted
Continuing operations	$	2.74		4.06		$	8.73		16.96
Discontinued operations		(0.01	)	0.12			(0.01	)	0.08
Net earnings	$	2.72		4.18		$	8.73		17.04

Weighted average common shares outstanding — Diluted		45.4		49.3			46.5		50.9

Diluted EPS from continuing operations	$	2.74		4.06		$	8.73		16.96
Non-operating pension costs, net		0.16		0.04			0.68		0.14
FMS U.K. exit		—		(0.49	)		(0.68	)	(1.61	)
Currency translation adjustment loss		—		—			3.93		—
Other, net		0.03		(0.07	)		0.01		(0.02	)
Tax adjustments, net		0.02		0.35			0.28		0.90
Comparable EPS from continuing operations ⁽¹⁾	$	2.95		3.89		$	12.95		16.37
———————————— ⁽¹⁾ Non-GAAP financial measure. A reconciliation of GAAP EPS from continuing operations to comparable EPS from continuing operations is set forth in this table. Note: Amounts may not be additive due to rounding.