Ryder Reports First Quarter 2024 Results

Delivers Solid Q1 Results; Raises Full-Year 2024 Forecast

First Quarter 2024 Highlights

• GAAP EPS from continuing operations of $1.89 compared to $2.95 in prior year
• Comparable EPS (non-GAAP) from continuing operations of $2.14, as compared to $2.81 in prior year, reflecting weaker market conditions in used vehicle sales and rental, partially offset by higher Supply Chain Solutions (SCS) and ChoiceLease results
• Total revenue of $3.1 billion compared to $3.0 billion in prior year
• Operating revenue (non-GAAP) of $2.5 billion, up 6%, reflecting recent acquisitions and contractual revenue growth, partially offset by lower commercial rental revenue in Fleet Management Solutions (FMS)

Full-Year 2024 Forecast

• ROE of 15.5% - 16.5%
• Comparable EPS (non-GAAP) of $11.75 - $12.50
• Operating revenue (non-GAAP) expected to increase by approximately 10%
• Net cash provided by operating activities from continuing operations of $2.4 billion and free cash flow (non-GAAP) of negative $175 - $275 million

Ryder System, Inc. 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

"Ryder delivered solid first-quarter results amid a challenging freight environment by continuing to execute on our balanced growth strategy," says Ryder Chairman and CEO Robert Sanchez. "The outperformance in the quarter was driven by better-than-expected used vehicle results and benefits from our ongoing maintenance cost savings initiative. The actions we've taken to de-risk the model, enhance returns, and drive profitable growth are delivering improved results relative to prior cycles. ROE was 17% and in line with our target, reflecting the transformation of our business model and increased resiliency.

"We remain focused on profitable growth of our contractual lease, supply chain, and dedicated businesses as part of our balanced growth strategy. Higher ChoiceLease results and our maintenance cost saving initiative benefited FMS results. Strong automotive performance as well as earnings from recent acquisitions benefited SCS. In DTS, integration of the Cardinal acquisition is on track and we expect to achieve planned synergies.

"Our strong balance sheet continues to provide us with capacity to fund organic growth, share repurchases, and strategic acquisitions.

"Throughout the current freight cycle downturn, our transformed business model has consistently outperformed prior cycles. We remain confident that the changes we've made to the business will continue to generate higher highs and higher lows while positioning us to benefit from the cycle upturn."

First Quarter 2024 Segment Review

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

• FMS total revenue and operating revenue decreased 3% and 1%, respectively
  • Total revenue reflects lower fuel costs passed through to customers and lower operating revenue
  • Operating revenue reflects lower commercial rental revenue, largely offset by higher ChoiceLease revenue
• FMS EBT of $100 million
  • Reflects lower used vehicle pricing compared to elevated levels in the prior year as well as weaker rental demand, partially offset by higher ChoiceLease results and maintenance cost savings initiatives
  • Lower used vehicle gains reflect decreases in used truck and tractor pricing of 30% and 34%, respectively, partially offset by higher volumes; sequentially from fourth quarter of 2023, used truck and tractor pricing decreased 3% and 4%, respectively
  • Rental power-fleet utilization was 66%, down from 75% in prior year on a 13% smaller average power fleet

Supply Chain Solutions: Earnings Reflect Better Operating Performance; Prior Year Impacted by Impairment Charge

• SCS total revenue and operating revenue increased 8% and 11%, respectively
  • Total revenue reflects increased operating revenue and higher subcontracted transportation costs passed through to customers
  • Increase in operating revenue driven primarily by recent acquisitions
• SCS EBT grew to $64 million
  • Year-over-year comparisons benefited from a prior-year $30 million asset impairment charge
  • Results also benefited from stronger automotive performance and recent acquisitions

Dedicated Transportation Solutions: Earnings Reflect Acquisition Integration Costs

• DTS total revenue increased 24% and operating revenue grew 33%
  • Total and operating revenue increased due to the Cardinal Logistics acquisition
• DTS EBT of $18 million
  • Decrease due to Cardinal Logistics' acquisition integration and other related costs, as well as higher insurance costs

Corporate Financial Information

Capital Expenditures, Cash Flow, and Leverage

First-quarter capital expenditures decreased to $716 million in 2024, compared to $802 million in 2023, primarily reflecting lower investments in commercial rental.

First-quarter net cash provided by operating activities from continuing operations was $526 million compared to $478 million in 2023, primarily reflecting lower working capital needs. Free cash flow (non-GAAP) of $13 million, compared to $101 million in 2023, reflects lower proceeds from sales of property and revenue-earning equipment.

Debt-to-equity as of March 31, 2024 was 246%, compared to 232% at year-end 2023, and remains below the company's long-term target of 250% to 300%.

Outlook

"As we look ahead, we are focused on the successful integration of our recent acquisitions and executing on our asset management playbook through this challenging freight environment," says Ryder Chief Financial Officer John Diez. "We are raising the lower end of our full-year forecast to reflect the outperformance in the quarter, partially offset by a more modest rental upturn than initially expected. We are also raising our free cash flow forecast and reducing our rental capital spending forecast by $100 million to align with this revised outlook."

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 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 April 23, 2024 at 11:00 a.m. ET. To join, click here.

LIVE AUDIO VIA PHONE

Toll Free Number: 888-394-8218

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.

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