RYDER SYSTEM INC - Quarter Report: 2022 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 1-4364

RYDER SYSTEM, INC.

(Exact name of registrant as specified in its charter)

Florida

59-0739250

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

11690 N.W. 105th Street

Miami,

Florida

33178

(305) 500-3726

(Address of principal executive offices, including zip code)

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ryder System, Inc. Common Stock ($0.50 par value)	R	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

The number of shares of Ryder System, Inc. Common Stock outstanding at March 31, 2022 was 51,136,680.

RYDER SYSTEM, INC.

FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS



		Page No.

PART I . FINANCIAL INFORMATION

ITEM 1.	Financial Statements (unaudited)	1

	Condensed Consolidated Statements of Earnings	1

	Condensed Consolidated Statements of Comprehensive Income	2

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Cash Flows	4

	Condensed Consolidated Statements of Shareholders' Equity	5

	Notes to Condensed Consolidated Financial Statements	6

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	49

ITEM 4.	Controls and Procedures	50

PART II . OTHER INFORMATION

ITEM 1.	Legal Proceedings	51

ITEM 1A.	Risk Factors	51

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51







ITEM 6.	Exhibits	52

SIGNATURE		53

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

RYDER SYSTEM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(unaudited)


	Three months ended March 31,
	2022		2021
	(In thousands, except per share amounts)
Lease & related maintenance and rental revenues	$	1,024,985	$	940,422
Services revenue	1,669,538		1,165,488
Fuel services revenue	159,339		115,712
Total revenues	2,853,862		2,221,622

Cost of lease & related maintenance and rental	698,841		730,144
Cost of services	1,446,709		999,792
Cost of fuel services	157,647		114,706
Other operating expenses	38,794		33,900
Selling, general and administrative expenses	303,215		241,742
Non-operating pension costs, net	2,787		(9)
Used vehicle sales, net	(112,994)		(28,851)
Interest expense	52,364		54,706
Miscellaneous (income) loss, net	374		(5,434)
Restructuring and other items, net	14,254		10,659
	2,601,991		2,151,355

Earnings from continuing operations before income taxes	251,871		70,267
Provision for income taxes	76,049		18,683
Earnings from continuing operations	175,822		51,584
Loss from discontinued operations, net of tax	(235)		(759)
Net earnings	$	175,587	$	50,825

Earnings (loss) per common share — Basic
Continuing operations	$	3.42	$	0.98
Discontinued operations	—		(0.01)
Net earnings	$	3.42	$	0.97

Earnings (loss) per common share — Diluted
Continuing operations	$	3.35	$	0.97
Discontinued operations	—		(0.01)
Net earnings	$	3.35	$	0.95

See accompanying Notes to Condensed Consolidated Financial Statements.

Note: EPS amounts may not be additive due to rounding.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	Three months ended March 31,
	2022		2021
	(In thousands)

Net earnings	$	175,587	$	50,825

Other comprehensive income:








Changes in cumulative translation adjustment and unrealized losses from cash flow hedges	2,624		8,940

Amortization of pension and postretirement items	5,844		7,016

Income tax expense related to amortization of pension and postretirement items	(1,222)		(1,518)
Amortization of pension and postretirement items, net of taxes	4,622		5,498






Other comprehensive income, net of taxes	7,246		14,438

Comprehensive income	$	182,833	$	65,263

See accompanying Notes to Condensed Consolidated Financial Statements.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


	March 31, 2022		December 31, 2021
	(In thousands, except share amounts)
Assets:
Current assets:
Cash and cash equivalents	$	221,886	$	233,961
Receivables, net	1,602,663		1,464,737
Inventories	74,827		68,677
Prepaid expenses and other current assets	212,792		693,239
Total current assets	2,112,168		2,460,614
Revenue earning equipment, net	8,390,706		8,323,039
Operating property and equipment, net of accumulated depreciation of $1,293,186 and $1,273,637	1,045,952		984,978
Goodwill	844,793		570,905
Intangible assets, net	322,120		170,205
Sales-type leases and other assets	1,520,512		1,324,582
Total assets	$	14,236,251	$	13,834,323

Liabilities and shareholders’ equity:
Current liabilities:
Short-term debt and current portion of long-term debt	$	1,559,928	$	1,333,363
Accounts payable	867,322		747,898
Accrued expenses and other current liabilities	1,127,833		1,119,602
Total current liabilities	3,555,083		3,200,863
Long-term debt	5,220,848		5,246,306
Other non-current liabilities	1,436,724		1,314,404
Deferred income taxes	1,375,255		1,274,804
Total liabilities	11,587,910		11,036,377

Commitments and contingencies (Note 16)
Shareholders’ equity:
Preferred stock, no par value per share — authorized, 3,800,917; none outstanding, March 31, 2022 and December 31, 2021	—		—
Common stock, $0.50 par value per share — authorized, 400,000,000; outstanding, March 31, 2022 — 51,136,680 and December 31, 2021 — 53,789,036	25,568		26,896
Additional paid-in capital	1,134,143		1,194,334
Retained earnings	2,170,625		2,265,957
Accumulated other comprehensive loss	(681,995)		(689,241)
Total shareholders’ equity	2,648,341		2,797,946
Total liabilities and shareholders’ equity	$	14,236,251	$	13,834,323

See accompanying Notes to Condensed Consolidated Financial Statements.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Three months ended March 31,
	2022		2021
	(In thousands)
Cash flows from operating activities from continuing operations:
Net earnings	$	175,587	$	50,825
Less: Loss from discontinued operations, net of tax	(235)		(759)
Earnings from continuing operations	175,822		51,584
Depreciation expense	429,740		461,162

Used vehicle sales, net	(112,994)		(28,851)
Amortization expense and other non-cash charges, net	31,463		15,133
Non-cash lease expense	45,131		23,250
Non-operating pension costs, net and share-based compensation expense	13,505		10,668
Deferred income tax expense	58,187		15,477
Collections on sales-type leases	33,586		30,374
Changes in operating assets and liabilities:
Receivables	(64,155)		(4,597)
Inventories	(6,078)		1,070
Prepaid expenses and other assets	(15,038)		892
Accounts payable	12,994		(25,642)
Accrued expenses and other non-current liabilities	(136,459)		(84,809)
Net cash provided by operating activities from continuing operations	465,704		465,711

Cash flows from investing activities from continuing operations:
Purchases of property and revenue earning equipment	(584,289)		(381,051)
Sales of revenue earning equipment	222,696		154,144
Sales of operating property and equipment	2,864		2,357
Acquisitions, net of cash acquired	(424,754)		—


Other	(157)		(1,412)
Net cash used in investing activities from continuing operations	(783,640)		(225,962)

Cash flows from financing activities from continuing operations:
Net borrowings (repayments) of commercial paper and other	63,482		(130,763)
Debt proceeds	649,708		—
Debt repayments	(492,851)		(114,317)
Dividends on common stock	(33,653)		(31,257)
Common stock issued	(11,952)		(1,797)
Common stock repurchased	(300,280)		(19,444)


Other	(4,122)		(519)
Net cash used in financing activities from continuing operations	(129,668)		(298,097)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(3,846)		(1,202)
Decrease in cash, cash equivalents and restricted cash from continuing operations	(451,450)		(59,550)
Increase (decrease) in cash, cash equivalents, and restricted cash from discontinued operations	11		(6)
Decrease in cash, cash equivalents, and restricted cash	(451,439)		(59,556)
Cash, cash equivalents, and restricted cash at beginning of period	673,325		151,294
Cash, cash equivalents, and restricted cash at end of period	$	221,886	$	91,738

See accompanying Notes to Condensed Consolidated Financial Statements.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(unaudited)


	Three months ended March 31, 2022
	Preferred Stock		Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss
	Amount		Shares	Par								Total
	(In thousands, except share amounts)
Balance as of January 1, 2022	$	—	53,789,036	$	26,896	$	1,194,334	$	2,265,957	$	(689,241)	$	2,797,946

Comprehensive income	—		—	—		—		175,587		7,246		182,833
Common stock dividends declared —$0.58 per share	—		—	—		—		(30,924)		—		(30,924)
Common stock purchased under employee stock award and stock purchase plans and other (1) (2)	—		399,914	200		(12,152)		—		—		(11,952)

Common stock repurchases	—		(3,052,270)	(1,528)		(58,757)		(239,995)		—		(300,280)
Share-based compensation	—		—	—		10,718		—		—		10,718
Balance as of March 31, 2022	$	—	51,136,680	$	25,568	$	1,134,143	$	2,170,625	$	(681,995)	$	2,648,341


	Three months ended March 31, 2021
	Preferred Stock		Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss
	Amount		Shares	Par								Total
	(In thousands, except share amounts)
Balance as of January 1, 2021	$	—	53,732,033	$	26,866	$	1,132,954	$	1,912,942	$	(817,205)	$	2,255,557

Comprehensive income	—		—	—		—		50,825		14,438		65,263
Common stock dividends declared —$0.56 per share	—		—	—		—		(30,569)		—		(30,569)
Common stock purchased under employee stock award and stock purchase plans and other (1) (2)	—		426,311	213		(2,010)		—		—		(1,797)

Common stock repurchases	—		(287,957)	(144)		(5,977)		(13,323)		—		(19,444)
Share-based compensation	—		—	—		10,677		—		—		10,677
Balance as of March 31, 2021	$	—	53,870,387	$	26,935	$	1,135,644	$	1,919,875	$	(802,767)	$	2,279,687

(1)Net of common shares delivered as payment for the exercise price or to satisfy the holders’ withholding tax liability upon exercise of options.

(2)Represents open-market transactions of common shares by the trustee of our deferred compensation plans.

See accompanying Notes to Condensed Consolidated Financial Statements.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. GENERAL

Interim Financial Statements

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Ryder System, Inc. (Ryder) and all entities in which Ryder has a controlling voting interest (subsidiaries) and variable interest entities (VIE) required to be consolidated in accordance with generally accepted accounting principles in the United States (GAAP). The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the accounting policies described in our 2021 Annual Report on Form 10-K and should be read in conjunction with the Consolidated Financial Statements and notes thereto. The year-end condensed balance sheet data was derived from our audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair statement have been included and the disclosures herein are adequate. The operating results for interim periods are not necessarily indicative of the results that can be expected for a full year.

We report our financial performance based on three business segments: (1) Fleet Management Solutions (FMS), which provides full service leasing and leasing with flexible maintenance options, commercial rental and maintenance services of trucks, tractors and trailers to customers principally in the United States (U.S.) and Canada; (2) Supply Chain Solutions (SCS), which provides integrated logistics solutions, including distribution management, dedicated transportation, transportation management, e-commerce and last mile and professional services in North America; and (3) Dedicated Transportation Solutions (DTS), which provides turnkey transportation solutions in the U.S. that includes dedicated vehicles, drivers, management, and administrative support. Dedicated transportation services provided as part of an operationally integrated, multi-service, supply chain solution to SCS customers are primarily reported in the SCS business segment. In February 2022, we announced our intentions to exit the FMS United Kingdom (U.K.) business. We expect to complete the exit of the FMS U.K. business by mid-2023.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-04, Reference Rate Reform (Topic 848). This update provides optional expedients for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another rate expected to be discontinued at the end of 2021 because of reference rate reform. The update is effective for all transactions from March 12, 2020 through December 31, 2022. We will continue to adopt this update as alternative reference rates in relevant contracts are modified through December 31, 2022. We continuously evaluate the potential impact on our consolidated financial position, results of operations, and cash flows.

Leases

In July 2021, the FASB issued ASU No. 2021-05, Lessor - Certain Leases with Variable Lease Payments (Topic 842).

This update requires lessors to classify leases as operating leases if they have variable lease payments that do not depend on an

index or rate and would have selling losses if they were classified as sales-type or direct financing leases. The update is

effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Entities are

permitted to apply this amendment using the retrospective or prospective approach. On January 1, 2022 we adopted the amendment on a prospective basis and it did not have a material impact on our consolidated financial position, results of operations, and cash flows.

Business Combinations

In October 2021, the FASB issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities - Business

Combinations (Topic 805). This update requires companies to apply Revenue from Contracts with Customers (Topic 606) to

recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination.

Additionally, the update clarifies that companies should apply the definition of a performance obligation in Topic 606 when

recognizing contract liabilities assumed in a business combination. The standard is effective for fiscal years beginning after

December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. We will adopt this update on January 1, 2023 and are currently evaluating the impact on our consolidated financial position, results of operations, and cash flows.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

3. SEGMENT REPORTING

Our primary measurement of segment financial performance, defined as segment “Earnings from continuing operations before income taxes” (EBT), includes an allocation of costs from Central Support Services (CSS) and excludes non-operating pension costs, net and certain other items as discussed in Note 15, “Other Items Impacting Comparability.” Segment results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented.

The following table sets forth financial information for each of our segments and provides a reconciliation between segment EBT and earnings from continuing operations before income taxes:


	Three months ended March 31,
	2022		2021
	(In thousands)
Revenue:
Fleet Management Solutions:
ChoiceLease	$	802,342	$	797,088

Commercial rental	313,154		223,009
SelectCare and other	166,651		148,016
Fuel services and ChoiceLease liability insurance (1)	247,081		167,372

Fleet Management Solutions	1,529,228		1,335,485
Supply Chain Solutions	1,088,542		706,700
Dedicated Transportation Solutions	424,948		320,507
Eliminations (2)	(188,856)		(141,070)
Total revenues	$	2,853,862	$	2,221,622

Earnings From Continuing Operations Before Income Taxes:
Fleet Management Solutions	$	248,199	$	63,402
Supply Chain Solutions	34,219		32,957
Dedicated Transportation Solutions	20,211		12,982
Eliminations	(26,590)		(12,274)
	276,039		97,067
Unallocated Central Support Services	(16,004)		(18,432)
Non-operating pension costs, net (3)	(2,787)		9
Other items impacting comparability, net (4)	(5,377)		(8,377)
Earnings from continuing operations before income taxes	$	251,871	$	70,267

————————————

(1)In the first quarter of 2021, we completed the previously announced exit of the extension of our liability insurance coverage for ChoiceLease customers.

(2)Represents the elimination of intercompany revenues in our FMS business segment.

(3)Refer to Note 14, "Employee Benefit Plans," for a discussion on these items.

(4)Refer to Note 15, “Other Items Impacting Comparability,” for a discussion of items excluded from our primary measure of segment performance.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

The following table sets forth the capital expenditures paid for each of our segments:


	Three months ended March 31,
	2022		2021
	(In thousands)
Fleet Management Solutions	$	551,090	$	367,708
Supply Chain Solutions	25,950		8,530
Dedicated Transportation Solutions	339		306
Central Support Services	6,910		4,507
Purchases of property and revenue earning equipment	$	584,289	$	381,051

4. REVENUE

Disaggregation of Revenue

The following tables disaggregate our revenue recognized by primary geographical market by our reportable business segments and by industry for SCS. Refer to Note 3, "Segment Reporting," for the disaggregation of our revenue by major products/service lines.

Primary Geographical Markets


	Three months ended March 31, 2022
	FMS		SCS		DTS		Eliminations		Total
	(In thousands)
United States	$	1,388,043	$	971,200	$	424,948	$	(179,400)	$	2,604,791
Canada	77,529		59,628		—		(9,456)		127,701
Europe (1)	63,656		—		—		—		63,656
Mexico	—		57,714		—		—		57,714

Total revenues	$	1,529,228	$	1,088,542	$	424,948	$	(188,856)	$	2,853,862

(1)Refer to Note 15, "Other Items Impacting Comparability," for further information on the exit of the FMS U.K. business.


	Three months ended March 31, 2021
	FMS		SCS		DTS		Eliminations		Total
	(In thousands)
United States	$	1,197,984	$	601,298	$	320,507	$	(136,727)	$	1,983,062
Canada	70,413		56,088		—		(4,343)		122,158
Europe	67,088		—		—		—		67,088
Mexico	—		49,314		—		—		49,314

Total revenues	$	1,335,485	$	706,700	$	320,507	$	(141,070)	$	2,221,622

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

Industry

Our SCS business segment included revenue from the below industries:


	Three months ended March 31,
	2022		2021
	(In thousands)
Consumer packaged goods and retail	$	500,298	$	273,224
Automotive	354,237		271,555
Technology and healthcare	121,322		97,085
Industrial and other	112,685		64,836
Total SCS Revenues	$	1,088,542	$	706,700

Lease & Related Maintenance and Rental Revenues

The non-lease revenue from maintenance services related to our ChoiceLease product is recognized in "Lease & related maintenance and rental revenues" in the Condensed Consolidated Statements of Earnings. For the three months ended March 31, 2022 and 2021, we recognized $257 million and $250 million, respectively.

Deferred Revenue

The following table includes the changes in deferred revenue due to the collection and deferral of cash or the satisfaction of our performance obligation under the contract:


	Three months ended March 31,
	2022		2021
	(In thousands)
Balance as of beginning of period	$	593,442	$	629,739
Recognized as revenue during period from beginning balance	(59,659)		(59,031)
Consideration deferred during period, net	48,007		51,759
Foreign currency translation adjustment and other	(994)		709
Balance as of end of period	$	580,796	$	623,176

Contracted Not Recognized Revenue

Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized (contracted not recognized revenue). Contracted not recognized revenue was $2.4 billion as of March 31, 2022, and primarily includes deferred revenue and amounts for full service ChoiceLease maintenance revenue that will be recognized as revenue in future periods as we provide maintenance services to our customers. Contracted not recognized revenue excludes (1) variable consideration as it is not included in the transaction price consideration allocated at contract inception, (2) revenues from the lease component of our ChoiceLease product and all the revenue from the commercial rental product, (3) revenues from contracts with an original duration of one year or less, including SelectCare contracts, and (4) revenue from SCS, DTS and other contracts where there are remaining performance obligations when we have the right to invoice but the revenue to be recognized in the future corresponds directly with the value delivered to the customer.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

5. RECEIVABLES, NET



	March 31, 2022		December 31, 2021
	(In thousands)
Trade	$	1,431,315	$	1,280,766
Sales-type leases	145,874		148,134
Other, primarily warranty and insurance	53,607		67,141
	1,630,796		1,496,041
Allowance for credit losses and other	(28,133)		(31,304)
Total	$	1,602,663	$	1,464,737

The following table provides a reconciliation of our allowance for credit losses and other:


	Three months ended March 31,
	2022		2021
	(In thousands)

Balance as of beginning of period	$	31,304	$	43,024
Changes to provisions for credit losses	3,533		(1,800)
Write-offs and other	(6,704)		(4,024)
Balance as of end of period	$	28,133	$	37,200

6. REVENUE EARNING EQUIPMENT, NET


	Estimated Useful Lives	March 31, 2022						December 31, 2021
		Cost		Accumulated Depreciation		Net		Cost		Accumulated Depreciation		Net
	(In years)	(In thousands)
Held for use:
Trucks	3 — 7	$	5,288,297	$	(2,089,227)	$	3,199,070	$	5,223,127	$	(2,055,135)	$	3,167,992
Tractors	4 — 7.5	7,247,049		(3,071,862)		4,175,187		7,256,002		(3,059,206)		4,196,796
Trailers and other	9.5 — 12	1,839,053		(894,753)		944,300		1,780,487		(868,820)		911,667
Held for sale		273,321		(201,172)		72,149		209,506		(162,922)		46,584
Total		$	14,647,720	$	(6,257,014)	$	8,390,706	$	14,469,122	$	(6,146,083)	$	8,323,039

Residual Value Estimate Changes

We periodically review and adjust, as appropriate, the estimated residual values and useful lives of existing revenue

earning equipment for the purposes of recording depreciation expense. Reductions in estimated residual values or useful lives

will increase depreciation expense over the remaining useful life of the vehicle. Conversely, an increase in estimated residual

values or useful lives will decrease depreciation expense over the remaining useful life of the vehicle. Our review of the

estimated residual values and useful lives of revenue earning equipment is based on vehicle class, (i.e., generally subcategories

of trucks, tractors and trailers by weight and usage), historical and current market prices, third-party expected future market

prices, expected lives of vehicles, and expected sales in the wholesale or retail markets, among other factors. 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. We have disciplines related to the management and maintenance of our vehicles designed to

manage the risk associated with the residual values of our revenue earning equipment.

Table of Contents

RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

The following table provides a summary of incremental depreciation expense that has been recorded related to our previous residual value estimate changes as well as used vehicle sales results (rounded to the closest million):


	Three months ended March 31,
	2022		2021
	(In thousands)
Depreciation expense related to estimate changes	$	49,000	$	88,000

Used vehicle sales, net (1)	(113,000)		(29,000)

(1)Used vehicle sales, net in the first quarter of 2022 included $8M of gains on sales of vehicles in the U.K. Refer to Note 15, "Other Items Impacting Comparability,"

Used Vehicle Sales and Valuation Adjustments

Revenue earning equipment held for sale is stated at the lower of carrying amount or fair value less costs to sell. Losses on vehicles held for sale for which carrying values exceeded fair value, which we refer to as "valuation adjustments," are recognized at the time they are deemed to meet the held for sale criteria and are presented within “Used vehicle sales, net” in the Condensed Consolidated Statements of Earnings. For revenue earning equipment held for sale, we stratify our fleet by vehicle type (trucks, tractors and trailers), weight class, age and other relevant characteristics and create classes of similar assets for analysis purposes. For revenue earning equipment held for sale, fair value was determined based upon recent market prices obtained from our own sales experience for each class of similar assets and vehicle condition if available or third-party market pricing. In addition, we also consider expected declines in market prices when valuing the vehicles held for sale, as well as forecasted sales channel mix (retail/wholesale).

The following table presents revenue earning equipment held for sale that are measured at fair value on a nonrecurring basis and considered a Level 3 fair value measurement:


					Losses from Valuation Adjustments
					Three months ended March 31,
	March 31, 2022		December 31, 2021		2022		2021
	(In thousands)
Revenue earning equipment held for sale (1):

Trucks	$	507	$	931	$	526	$	890
Tractors	590		1,485		690		84
Trailers and other	263		1,309		280		2,047
Total assets at fair value	$	1,360	$	3,725	$	1,496	$	3,021

————————————

(1)Reflects only the portion where net book values exceeded fair values and valuation adjustments were recorded. The net book value of assets held for sale that were less than fair value was $71 million and $43 million as of March 31, 2022 and December 31, 2021, respectively.

The components of used vehicle sales, net were as follows:


	Three months ended March 31,
	2022		2021
	(In thousands)
Gains on vehicle sales, net	$	(114,490)	$	(31,872)
Losses from valuation adjustments	1,496		3,021
Used vehicle sales, net	$	(112,994)	$	(28,851)

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

7. ACCRUED EXPENSES AND OTHER LIABILITIES


	March 31, 2022						December 31, 2021
	Accrued Expenses		Non-Current Liabilities		Total		Accrued Expenses		Non-Current Liabilities		Total
	(In thousands)
Salaries and wages	$	155,887	$	—	$	155,887	$	210,350	$	—	$	210,350




Insurance obligations (1)	186,592		303,288		489,880		186,449		311,209		497,658




Operating taxes (2)	171,496		—		171,496		165,680		—		165,680


Deposits, mainly from customers	95,153		—		95,153		94,547		—		94,547
Operating lease liabilities	152,211		384,846		537,057		100,232		255,573		355,805
Deferred revenue (3)	181,316		399,480		580,796		182,785		410,657		593,442


Other	185,178		349,110		534,288		179,559		336,965		516,524
Total	$	1,127,833	$	1,436,724	$	2,564,557	$	1,119,602	$	1,314,404	$	2,434,006

————————————

(1)Insurance obligations primarily represent self-insured claim liabilities.

(2)Operating taxes include the deferral of certain payroll taxes in current and non-current liabilities allowed under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

(3)Refer to Note 4, "Revenue," for additional information.

8. LEASES

Leases as Lessor

The components of revenue from leases were as follows:


	Three months ended March 31,
	2022		2021
	(In thousands)
Operating leases
Lease income related to ChoiceLease	$	381,545	$	389,611
Lease income related to commercial rental (1)	298,135		210,284

Sales-type leases

Interest income related to net investment in leases	$	10,728	$	14,415




Variable lease income excluding commercial rental (1)	$	74,220	$	71,993

————————————

(1)Lease income related to commercial rental includes both fixed and variable lease income. Variable lease income is approximately 15% to 25% of total commercial rental income.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

The components of net investment in sales-type leases, which are included in "Receivables, net" and "Sales-type leases and other assets" in the Condensed Consolidated Balance Sheets, were as follows:


	March 31, 2022		December 31, 2021
	(In thousands)
Net investment in the lease — lease payment receivable	$	576,109	$	583,008
Net investment in the lease — unguaranteed residual value in assets	45,855		46,740

	$	621,964	629,748
Estimated loss allowance	(2,506)		(3,705)
Total	$	619,458	$	626,043

9. DEBT


	Weighted Average Interest Rate
	March 31, 2022	Maturities	March 31, 2022		December 31, 2021
			(In thousands)




Debt:
U.S. commercial paper	0.69%	2026	$	601,711	$	531,157
Canadian commercial paper	—%	2026	—		7,087
Trade receivables financing program	0.44%	2022	50,000		—
Global revolving credit facility	—%	2026	—		—
Unsecured U.S. obligations	3.41%	2024	200,000		200,000
Unsecured U.S. notes — Medium-term notes (1)	3.21%	2022-2027	5,279,035		5,149,893
Unsecured foreign obligations	2.31%	2022-2024	117,487		140,265
Asset-backed U.S. obligations (2)	2.63%	2022-2026	510,275		526,712
Finance lease obligations and other		2022-2030	44,102		44,595
			6,802,610		6,599,709
Debt issuance costs and original issue discounts			(21,834)		(20,040)
Total debt			6,780,776		6,579,669
Short-term debt and current portion of long-term debt			(1,559,928)		(1,333,363)
Long-term debt			$	5,220,848	$	5,246,306

————————————

(1)Includes the impact from the fair market values of hedging instruments on our notes, which was $21 million as of March 31, 2022 and not material as of December 31, 2021. The notional amount of the executed interest rate swaps designated as fair value hedges was $650 million and $450 million as of March 31, 2022 and December 31, 2021, respectively.

(2)Asset-backed U.S. obligations are related to financing transactions backed by a portion of our revenue earning equipment.

The fair value of total debt (excluding finance lease and asset-backed U.S. obligations) was approximately $6.4 billion and $6.2 billion as of March 31, 2022 and December 31, 2021, respectively. For publicly-traded debt, estimates of fair value were based on market prices. For other debt, fair value was estimated based on a model-driven approach using rates currently available to us for debt with similar terms and remaining maturities. The fair value measurements of our publicly-traded debt and our other debt were classified within Level 2 of the fair value hierarchy.

As of March 31, 2022, there was $798 million available under the global credit facility. In order to maintain availability of funding, we must maintain a ratio of debt to consolidated net worth of less than or equal to 300%, as defined in the credit facility agreement. As of March 31, 2022, the ratio was 188%. We had letters of credit and surety bonds outstanding of $465 million and $456 million as of March 31, 2022 and December 31, 2021, respectively, which primarily guarantee the payment of insurance claims.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

As of March 31, 2022, the available proceeds under the trade receivables financing program were $250 million. We plan to extend the trade receivables financing program for an additional year to May 2023.

In February 2022, we issued an aggregate principal amount of $450 million unsecured medium terms notes that mature on March 1, 2027. The notes bear interest at a rate of 2.85% per year.

10. SHARE REPURCHASE PROGRAMS

In February 2022, our Board of Directors authorized a new accelerated share repurchase program to repurchase up to $300 million of common stock, with final settlement scheduled to occur no later than the end of October 2022. The number of shares to be repurchased will be based on the average of Ryder's daily volume-weighted average price per share of common stock during the repurchase period, less a discount and subject to adjustments pursuant to the terms and conditions of the program agreement. During February 2022, we remitted $300 million to our agent for the accelerated share repurchase program. We received an initial share amount of approximately 3.1 million, representing approximately 80% of the total notional value of the accelerated share repurchase agreement. The remaining amount of shares purchased under the program will be delivered to Ryder when the program ends, no later than October 2022.

We maintain two additional share repurchase programs. The first program grants management discretion to repurchase up to 2.0 million shares of common stock over a period of two years, commencing October 14, 2021 and expiring October 14, 2023 (the "2021 Discretionary Program"). The 2021 Discretionary Program is designed to provide management with capital structure flexibility while concurrently managing objectives related to balance sheet leverage, acquisition opportunities, and shareholder returns. The second program authorizes management to repurchase up to 2.5 million shares of common stock, issued to employees under the company's employee stock plans since September 1, 2021 (the "2021 Anti-Dilutive Program"). The 2021 Anti-Dilutive Program is designed to mitigate the dilutive impact of shares issued under the company's employee stock plans. The 2021 Anti-Dilutive Program commenced October 14, 2021 and expires October 14, 2023. Share repurchases under both programs can be made from time to time using the company's working capital and a variety of methods, including open-market transactions and trading plans established pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The timing and actual number of shares repurchased are subject to market conditions, legal requirements and other factors, including balance sheet leverage, availability of quality acquisitions and stock price. During the three months ended March 31, 2022, we did not repurchase any shares under these programs. During the three months ended March 31, 2021, we repurchased approximately 288,000 shares for $19 million under the 2019 anti-dilutive program.

11. ACCUMULATED OTHER COMPREHENSIVE LOSS

Comprehensive (loss) income presents a measure of all changes in shareholders’ equity except for changes resulting from transactions with shareholders in their capacity as shareholders. The following summary sets forth the components of accumulated other comprehensive loss, net of tax:


	March 31,
			2022		2021
		(In thousands)
Cumulative translation adjustments			$	(158,589)	$	(140,302)
Net actuarial loss and prior service cost			(524,061)		(649,542)
Unrealized gain (loss) from cash flow hedges			655		(12,923)

Accumulated other comprehensive loss			$	(681,995)	$	(802,767)

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

12. EARNINGS PER SHARE

The following table presents the calculation of basic and diluted earnings per common share from continuing operations:


	Three months ended March 31,
	2022		2021
	(In thousands, except per share amounts)

Earnings from continuing operations	$	175,822	$	51,584
Less: Distributed and undistributed earnings allocated to unvested stock	(881)		(240)
Earnings from continuing operations available to common shareholders	$	174,941	$	51,344










Weighted average common shares outstanding — Basic	51,097		52,289
Effect of dilutive equity awards	1,379		1,111
Weighted average common shares outstanding — Diluted	52,476		53,400

Earnings from continuing operations per common share — Basic	$	3.42	$	0.98
Earnings from continuing operations per common share — Diluted	$	3.35	$	0.97
Anti-dilutive equity awards not included in diluted EPS	461		1,499

Note: Amounts may not be additive due to rounding.

13. SHARE-BASED COMPENSATION PLANS

We generally grant share-based awards in the first quarter of each year during our annual equity award process. The following table is a summary of the awards granted in the annual equity award process in the first quarter of 2022:




	Shares Granted	Weighted-Average Fair Market Value
	(Shares in thousands)

Time-vested restricted stock rights	390		$	73.74
Performance-based restricted stock rights (1)	118		76.68






Total	508		$	74.42

————————————

(1)Awards in the first quarter of 2022 contained vesting conditions based on return on equity, strategic revenue growth and free cash flow.

Restricted stock awards are unvested stock rights that are granted to employees and entitle the holder to shares of common stock as the award vests. Time-vested restricted stock rights typically vest ratably over three years regardless of company performance. The fair value of the time-vested awards is determined and fixed based on Ryder’s stock price on the date of grant.

Performance-based restricted stock rights (PBRSRs) are generally granted to executive management and include a performance-based vesting condition. PBRSRs are awarded based on various revenue, return-based and cash flow performance targets and may include a total shareholder return (TSR) modifier for certain members of management. The fair values of the PBRSRs that include a TSR modifier are estimated using a lattice-based option-pricing valuation model that incorporates a Monte-Carlo simulation. The fair value of PBRSRs that do not include a TSR modifier is determined and fixed on the grant date based on our stock price on the date of grant. Share-based compensation expense for PBRSRs is recognized on a straight-line basis over the vesting period, based upon the probability that the performance target will be met.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

14. EMPLOYEE BENEFIT PLANS

Components of net pension expense for defined benefit pension plans were as follows:


	Three months ended March 31,
	2022		2021
	(In thousands)

Company-administered plans:
Service cost	$	240	$	368
Interest cost	15,824		14,535

Expected return on plan assets	(18,583)		(21,694)



Amortization of net actuarial loss and prior service cost	5,473		7,097



Net pension expense	$	2,954	$	306

Company-administered plans:
U.S.	$	3,323	$	2,363
Non-U.S.	(369)		(2,057)


Net pension expense	$	2,954	$	306

Non-operating pension costs, net include the amortization of net actuarial loss and prior service cost, interest cost and expected return on plan assets components of pension and postretirement benefit costs, as well as any significant charges for settlements or curtailments if recognized. We also maintain other postretirement benefit plans that are not reflected in the table above as the amount of postretirement benefit expense for such plans was not material for any period presented.

15. OTHER ITEMS IMPACTING COMPARABILITY

Our primary measure of segment performance as shown in Note 3, "Segment Reporting," excludes certain items we do not believe are representative of the ongoing operations of the segment. Excluding these items from our segment measure of performance allows for better year over year comparison:


	Three months ended March 31,
	2022		2021
	(In thousands)
Restructuring and other, net	$	14,254	$	3,028
ERP implementation costs	—		7,631

Restructuring and other items, net	14,254		10,659
Gains on sale of U.K. revenue earning equipment	(8,291)		—
Gains on sale of properties	(586)		(1,505)

ChoiceLease liability insurance revenue (1)	—		(777)
Other items impacting comparability, net	$	5,377	$	8,377

————————————

(1) Refer to Note 3, "Segment Reporting," for additional information.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

During the three months ended March 31, 2022 and 2021, other items impacting comparability included:

•Restructuring and other, net — For the three months ended March 31, 2022, this item primarily included professional fees related to the pursuit of a discrete commercial claim, transaction costs related to the acquisition of PLG Investments I, LLC (Whiplash) and $2.3 million in U.K. severance costs. In February 2022, we announced our intentions to exit the FMS U.K. business. We expect to complete the exit of the FMS U.K. business by mid-2023. For the three months ended March 31, 2021, this item primarily included professional fees related to the pursuit of a discrete commercial claim.

•Gains on sale of U.K. revenue earning equipment and properties — We recorded gains on the sale of U.K. revenue earning equipment and properties during the three months ended March 31, 2022, as part of our plan to exit the FMS U.K. business. The gains on sale of U.K. revenue earning equipment of $8.3 million are reflected within Used Vehicles Sales, net and the gains on sale of properties of $0.6 million are reflected within "Miscellaneous (income) loss, net" in our Condensed Consolidated Statements of Earnings.

The following table summarizes the activities within, and components of, restructuring liabilities as of March 31, 2022:


	Employee Termination Costs
	(In thousands)
Balance at December 31, 2021	$	10,484
Workforce reduction charges	2,047
Utilization (1)	(825)
Balance at March 31, 2022 (2)	$	11,706

_________________

(1)Principally represents cash payments.

(2)Included in "Accrued expenses and other current liabilities" in the Condensed Consolidated Balance Sheets.

16. CONTINGENCIES AND OTHER MATTERS

We are a party to various claims, complaints and proceedings arising in the ordinary course of our continuing business operations including those relating to commercial and employment claims, environmental matters, risk management matters (e.g., vehicle liability, workers’ compensation, etc.), and administrative assessments primarily associated with operating taxes. We have established loss provisions for matters in which losses are probable and can be reasonably estimated. We believe that the resolution of these claims, complaints and legal proceedings will not have a material effect on our Condensed Consolidated Financial Statements.

Our estimates regarding potential losses and materiality are based on our judgment and assessment of the claims utilizing currently available information. Although we will continue to reassess our estimated liability based on future developments, our objective assessment of the legal merits of such claims may not always be predictive of the outcome and actual results may vary from our current estimates.

Securities Litigation Relating to Residual Value Estimates

On May 20, 2020, a putative class action on behalf of purchasers of our securities who purchased or otherwise acquired their securities between July 23, 2015 and February 13, 2020, inclusive (Class Period), was commenced against Ryder and certain of our current and former officers in the U.S. District Court for the Southern District of Florida, captioned Key West Policy & Fire Pension Fund v. Ryder System, Inc., et al. The complaint alleges, among other things, that the defendants misrepresented Ryder’s depreciation policy and residual value estimates for its vehicles during the Class Period in violation of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and seeks to recover, among other things, unspecified compensatory damages and attorneys' fees and costs. On August 3, 2020, the State of Alaska, Alaska Permanent Fund, the City of Fort Lauderdale General Employees’ Retirement System, and the City of Plantation Police Officers Pension Fund were appointed lead plaintiffs. On October 5, 2020, the lead plaintiffs filed an amended complaint. On December 4, 2020, Ryder and the other named defendants in the case filed a Motion to Dismiss the amended complaint. On April 7, 2021, the court held a hearing on defendants’ Motion to Dismiss, and reserved decision.

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

On June 26, 2020, August 6, 2020, and February 2, 2021, three shareholder derivative complaints purportedly on behalf of Ryder were filed in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida, against us as nominal defendant and certain of our current and former officers and our current directors. The complaints allege breach of fiduciary duties, unjust enrichment, and waste of corporate assets. The complaints are based on the allegation set forth in the securities class action complaint. The plaintiffs, on our behalf, are seeking an award of monetary damages and restitution to us, improvements in our corporate governance and internal procedures, and legal fees. These derivative cases have all been consolidated and stayed (stopped) until the Motion to Dismiss in the securities class action described above is resolved.

Also, on January 19, 2021 (as amended on March 26, 2021), and February 8, 2021, two shareholder derivative complaints purportedly on behalf of Ryder were filed in U.S. District Court for the Southern District of Florida against us as nominal defendant and certain of our current and former officers and directors. The complaints allege breach of fiduciary duties, unjust enrichment, and waste of corporate assets. Both complaints are based on the allegation set forth in the securities class action complaint, seek similar relief on our behalf to that sought in the derivative complaints that were filed in Florida state court, and have been stayed (stopped) until the Motion to Dismiss in the securities class action is resolved.

We believe the claims asserted in the complaints are without merit and intend to defend against them vigorously.

17. SUPPLEMENTAL CASH FLOW INFORMATION


	As of and for the three months ended March 31,
	2022		2021
	(In thousands)
Interest paid	$	48,110	$	48,039
Income taxes paid	9,346		4,885


Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	41,975		23,245
Right-of-use assets obtained in exchange for lease obligations:
Finance leases	$	3,839	$	2,851
Operating leases	48,515		16,645



Capital expenditures acquired but not yet paid	$	256,700	$	134,384

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RYDER SYSTEM, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unaudited)

18. ACQUISITIONS

On January 1, 2022, we acquired all the outstanding equity of PLG Investments I, LLC (Whiplash), a leading national provider of omnichannel fulfillment and logistics services for an approximate purchase price of $482 million. The acquisition is included in our SCS business segment. The acquisition will expand our e-commerce and omnichannel fulfillment network.

The following table provides the preliminary purchase price allocation of the fair value of the assets and liabilities for Whiplash as of the acquisition date:


	(In thousands)
Assets:
Receivables, net	$	78,945
Goodwill	272,814
Customer relationships and other intangible assets	161,100
Other assets, primarily operating lease right-of-use assets	244,303
Total assets	757,162

Liabilities:
Accrued expenses and other current liabilities	76,566
Other liabilities, primarily operating lease liabilities	199,089
Net assets acquired	$	481,507

The excess of the purchase consideration over the aggregate estimated fair values of identifiable assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized reflects anticipated supply chain services growth opportunities and expected cost synergies of combining Whiplash with our business. None of the goodwill is deductible for income tax purposes. Customer relationship intangible assets are expected to be amortized over 13 years. The purchase price included $439 million of restricted cash placed in escrow and the remaining amount classified as a deposit as of December 31, 2021. These amounts were recorded in "Prepaid expenses and other current assets" in the Condensed Consolidated Balance Sheet as of December 31, 2021. The cash paid from escrow during the first quarter of 2022 is reflected in "Acquisitions, net of cash acquired" in the Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2022.

We believe that we have sufficient information to provide a reasonable basis for estimating the fair values of assets acquired and liabilities assumed. The purchase price excludes certain items to be resolved post-closing with the seller, which may result in additional adjustments to the final purchase price. Therefore, the provisional measurements of estimated fair values reflected are subject to change. We expect to finalize the valuation and complete the purchase consideration allocation no later than one year from the acquisition date.

19. SUBSEQUENT EVENTS

On April 12, 2022, Ryder Limited entered into a definitive agreement with TIP Trailer Services UK Limited to sell Ryder Trailer Leasing and Mobile Maintenance Services, which includes approximately 4,500 trailers and other vehicles representing 38% of Ryder's vehicle fleet in the UK. The transaction is expected to be completed in June.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto included under Item 1, as well as our audited Consolidated Financial Statements and notes thereto and related MD&A included in the 2021 Annual Report on Form 10-K.

OVERVIEW

General

We operate in highly competitive markets. Our customers select us based on numerous factors including service quality, price, technology and service offerings. As an alternative to using our services, customers may choose to provide these services for themselves, or may choose to obtain similar or alternative services from other third-party vendors. Our customer base includes enterprises operating in a variety of industries including food and beverage service, transportation and logistics, retail and consumer goods, automotive, industrial, housing, technology, and business and personal services.

Business Trends

In the first quarter of 2022, supply chain disruptions and labor shortage challenges are contributing to increased demand for our services as companies seek long-term outsourcing solutions. In addition, the limited supply of vehicles available in the market is also contributing to increased demand and higher pricing for our rental and used vehicles.

In our FMS business, the used vehicle sales and rental market have benefited from strong demand and pricing trends, resulting in outperformance in both of these areas. We have benefited from market acceptance for higher lease pricing on new and renewing leases, resulting in improved portfolio returns. If the limited supply of vehicles continues for an extended period, we will likely continue to experience benefits in rental and used vehicle pricing and overall demand; however, we may experience limited rental and lease fleet growth from OEM delivery delays and lower vehicle sales volumes due to limited used vehicle inventory.

In our SCS business, we are seeing strong outsourcing trends in warehousing and distribution, as well as in e-commerce fulfillment and last mile delivery of big and bulky items. We continue to experience record new contract wins in SCS and DTS, which combined with recent acquisitions, contributed to significant revenue growth this quarter. Our previously announced acquisitions are performing well and in line with expectations and provide us with enhanced capabilities in fast-growing e-commerce fulfillment and in multi-client warehousing. During the first quarter of 2022, labor shortages, resulting in higher labor costs, have been impacting all of our business segments, particularly our DTS and SCS segments. These higher labor costs as well as higher subcontracted transportation costs negatively impacted earnings in both DTS and SCS. We expect these negative impacts from labor shortages to continue through at least the first half of 2022. We have begun to see some of the benefit in DTS and SCS from pricing adjustments meant to cover costs from labor shortages. In the second half of 2022, we expect these pricing adjustments to help DTS and SCS return to their target earnings level.

While we are experiencing positive momentum in our businesses, other unknown effects of the pandemic and extended higher fuel prices and inflationary cost pressures may have further impact on our business, financial results, and significant judgments and estimates, including those related to prolonged labor shortages, extended disruptions in vehicle and vehicle part production, goodwill and other asset impairments, residual values and other depreciation assumptions, deferred income taxes and annual effective tax rates, variable revenue considerations, the valuation of our pension plans, and allowance for credit losses.

SELECTED OPERATING PERFORMANCE ITEMS

•Total revenue of $2.9 billion and operating revenue (a non-GAAP measure) of $2.2 billion for first quarter of 2022 increased 28% and 22%, respectively as compared to prior year, reflecting revenue growth across all business segments

•Diluted EPS from continuing operations of $3.35 in the first quarter of 2022 versus $0.97 in prior year, reflecting significantly improved results in FMS and higher results in DTS

•Comparable EPS (a non-GAAP measure) from continuing operations of $3.59 in the first quarter of 2022 versus $1.09 in prior year

•Adjusted Return on Equity (ROE) of 25.4% in the first quarter of 2022

•Net cash provided by operating activities from continuing operations of $466 million and free cash flow (a non-GAAP measure) of $108 million in the first quarter of 2022

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

In February 2022, we repurchased 3.1 million shares for $300 million pursuant to our accelerated share repurchase program, with final settlement scheduled to occur no later than the end of October 2022. The number of shares ultimately to be repurchased will be based on the average of Ryder's daily volume-weighted average price per share of common stock during a repurchase period, less a discount and subject to the terms and conditions of the program agreement.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

The following discussion provides a summary of financial highlights that are discussed in more detail throughout our MD&A and within the Notes to Condensed Consolidated Financial Statements:


	Three months ended March 31,				Change 2022/2021
	2022		2021		Three Months
	(In thousands, except per share amounts)
Total revenue	$	2,853,862	$	2,221,622	28%
Operating revenue (1)	2,215,587		1,817,363		22%


Earnings from continuing operations before income taxes (EBT)	$	251,871	$	70,267	258%
Comparable EBT (1)	260,035		78,635		231%
Earnings from continuing operations	175,822		51,584		241%
Comparable earnings from continuing operations (1)	188,299		58,190		224%
Net earnings	175,587		50,825		245%
Comparable EBITDA (1)	647,427		567,415		14%

Earnings per common share (EPS) — Diluted
Continuing operations	$	3.35	$	0.97	245%
Comparable (1)	3.59		1.09		229%
Net earnings	3.35		0.95		253%

NM - Denotes Not Meaningful throughout the MD&A

(1)Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for reconciliations of the most comparable GAAP measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.

Total revenue increased 28% in the first quarter of 2022. Operating revenue (a non-GAAP measure excluding fuel, subcontracted transportation and ChoiceLease liability insurance revenues) increased 22% in the first quarter of 2022, due to higher revenue across all our business segments. Total and operating revenue growth also reflects the acquisitions of PLG Investments I, LLC (Whiplash) and Midwest Warehouse & Distribution System (Midwest). Total revenue also increased from higher subcontracted transportation and fuel revenue.

EBT and comparable EBT (a non-GAAP measure) increased in the first quarter of 2022 due to $115 million in higher gains on used vehicles sold in North America, a declining impact of depreciation expense from prior residual value estimate changes and improved rental performance.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

CONSOLIDATED RESULTS

Lease & Related Maintenance and Rental


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)
Lease & related maintenance and rental revenues	$	1,024,985	$	940,422		9%
Cost of lease & related maintenance and rental	698,841		730,144			(4)%
Gross margin	$	326,144	$	210,278		55%
Gross margin %	32%		22%

Lease & related maintenance and rental revenues represent revenues from our ChoiceLease and commercial rental product offerings within our FMS business segment. Revenues increased 9% in the first quarter of 2022 primarily due to higher commercial rental demand and pricing.

Cost of lease & related maintenance and rental represents the direct costs related to lease & related maintenance and rental revenues and are comprised of depreciation of revenue earning equipment, maintenance costs (primarily repair parts and labor), and other costs such as licenses, insurance and operating taxes. Cost of lease & related maintenance and rental excludes interest costs from vehicle financing, which are reported within "Interest Expense" in our Condensed Consolidated Statements of Earnings. Cost of lease & related maintenance and rental decreased 4% in the first quarter of 2022 due to declining depreciation expense impacts from prior residual value estimate changes.

Lease & related maintenance and rental gross margin increased 55% in the first quarter of 2022 primarily due to higher commercial rental pricing and utilization, a declining impact of depreciation expense from prior residual value estimate changes, and higher ChoiceLease pricing.

Services


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)
Services revenue	$	1,669,538	$	1,165,488		43%
Cost of services	1,446,709		999,792			45%
Gross margin	$	222,829	$	165,696		34%
Gross margin %	13%		14%

Services revenue represents all the revenues associated with our SCS and DTS business segments, as well as SelectCare and fleet support services associated with our FMS business segment. Services revenue increased 43% in the first quarter of 2022 due to SCS and DTS growth from acquisitions, new business, higher volumes and higher pricing.

Cost of services represents the direct costs related to services revenue and is primarily comprised of salaries and employee-related costs, subcontracted transportation (purchased transportation from third parties), fuel, vehicle liability costs and maintenance costs. Cost of services increased 45% in the first quarter of 2022 primarily due to the growth in revenues and higher labor and subcontracted transportation costs in SCS and DTS.

Services gross margin increased 34% in the first quarter of 2022 primarily due to the increase in revenue. Services gross margin as a percentage of revenue decreased to 13% in the first quarter of 2022 reflecting the impact of higher labor and subcontracted costs in SCS and DTS and supply chain disruptions in the SCS automotive vertical.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Fuel Services


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)
Fuel services revenue	$	159,339	$	115,712		38%
Cost of fuel services	157,647		114,706			37%
Gross margin	$	1,692	$	1,006		68%
Gross margin %	1%		1%

Fuel services revenue represents fuel services provided to our FMS customers. Fuel services revenue increased 38% in the first quarter of 2022 reflecting higher market fuel prices passed through to customers.

Cost of fuel services includes the direct costs associated with providing our customers with fuel. These costs include fuel, salaries and employee-related costs of fuel island attendants and depreciation of our fueling facilities and equipment. Cost of fuel services increased 37% in the first quarter of 2022 as a result of higher market fuel prices.

Fuel services gross margin increased 68% in the first quarter of 2022. Fuel services gross margin as a percentage of revenue remained flat at 1% in the first quarter of 2022. Fuel is largely a pass-through to customers for which we realize minimal changes in margin during periods of steady market fuel prices. However, fuel services margin is impacted by sudden increases or decreases in market fuel prices during a short period of time, as customer pricing for fuel is established based on current market fuel costs. Fuel services gross margin for the first quarter of 2022 was not significantly impacted by these price change dynamics as fuel prices fluctuated during the period.

Other Operating Expenses


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)
Other operating expenses	$	38,794	$	33,900		14%

Other operating expenses include costs related to our owned and leased facilities within the FMS segment, such as facility depreciation, rent, purchased insurance, utilities and taxes. These facilities are utilized to provide maintenance to our ChoiceLease, commercial rental, and SelectCare customers. Other operating expenses increased in the first quarter of 2022 due to additional maintenance performed on our FMS facilities and increased utilities, rent and facility depreciation due to expansion of facilities.

Selling, General and Administrative Expenses


	Three months ended March 31,						Change 2022/2021
	2022			2021				Three Months
	(In thousands)
Selling, general and administrative expenses (SG&A)	$	303,215		$	241,742			25%
Percentage of total revenue	11		%	11		%

SG&A expenses increased 25% in the first quarter of 2022. The increase in SG&A expenses in the first quarter of 2022 primarily reflects higher compensation-related expenses, increased amortization of intangible assets from the Whiplash and Midwest acquisitions, higher travel expense, strategic investments in information technology and higher bad debt expense. SG&A expenses as a percentage of total revenue remained flat at 11% for the first quarter of 2022.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Non-Operating Pension Costs, net


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)
Non-operating pension costs, net	$	2,787	$	(9)		NM

Non-operating pension costs, net include the amortization of net actuarial loss and prior service cost, interest cost and expected return on plan assets components of pension and postretirement benefit costs, as well as any significant charges for settlements or curtailments if recognized. The non-operating pension costs, net increased due to lower return on assets from a shift in mix of assets and higher interest expense from a higher discount rate partially offset by lower amortization expense.

Used Vehicle Sales, net


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)
Gains on used vehicle sales, net	$	(112,994)	$	(28,851)		292%

Used vehicle sales, net includes gains or losses from sales of used vehicles, selling costs associated with used vehicles and write-downs of vehicles held for sale to fair market values (referred to as "valuation adjustments"). The increase in used

vehicle sales, net was due to higher gains on sales of used vehicles due to higher proceeds per unit.

Average proceeds per unit for tractors and trucks in the first quarter of 2022 increased from the prior year reflecting higher retail pricing and retail channel mix. The following table presents the average used vehicle proceeds per unit changes for North America, using constant currency, compared with the prior year:


			2022/2021
			Three Months

Tractors			146%
Trucks			109%

Interest expense


	Three months ended March 31,						Change 2022/2021
	2022			2021				Three Months
	(In thousands)
Interest expense	$	52,364		$	54,706			(4)%
Effective interest rate	3.1		%	3.4		%

Interest expense decreased 4% in the first quarter of 2022 reflecting a lower effective interest rate due to a higher mix of variable rate debt partially offset by higher average outstanding debt.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Miscellaneous (income) loss, net


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)
Miscellaneous (income) loss, net	$	374	$	(5,434)		NM

Miscellaneous (income) loss, net consists of investment income on securities used to fund certain benefit plans, interest income, gains on sales of operating property, foreign currency transaction remeasurement and other non-operating items. Miscellaneous (income) loss, net was loss of $0.4 million in the first quarter of 2022 as compared to income of $5 million in the prior year primarily due to lower rabbi trust investment income and higher gains on sale of properties in the prior year partially offset by higher investment income from RyderVentures, our corporate venture capital fund.

Restructuring and Other Items, net


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)
Restructuring and other items, net	$	14,254	$	10,659		34%

Refer to Note 15, "Other Items Impacting Comparability," in the Notes to Condensed Consolidated Financial Statements for a discussion of restructuring charges and other items.

Provision for Income Taxes


	Three months ended March 31,						Change 2022/2021
	2022			2021				Three Months
	(In thousands)
Provision for income taxes	$	76,049		$	18,683			307%
Effective tax rate from continuing operations	30.2		%	26.6		%
Comparable effective tax rate on continuing operations (1)	27.6		%	26.0		%

————————————

Our effective tax rate on continuing operations was 30.2% in the first quarter of 2022 compared to 26.6% in the prior year. The increase in the rate is due to the shift in the mix of earnings subject to different tax jurisdictions.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

OPERATING RESULTS BY BUSINESS SEGMENT


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)
Revenue:
Fleet Management Solutions	$	1,529,228	$	1,335,485		15%
Supply Chain Solutions	1,088,542		706,700			54%
Dedicated Transportation Solutions	424,948		320,507			33%
Eliminations	(188,856)		(141,070)			(34)%
Total	$	2,853,862	$	2,221,622		28%

Operating Revenue: (1)
Fleet Management Solutions	$	1,282,147	$	1,168,113		10%
Supply Chain Solutions	738,091		502,598			47%
Dedicated Transportation Solutions	296,455		236,839			25%
Eliminations	(101,106)		(90,187)			(12)%
Total	$	2,215,587	$	1,817,363		22%

Earnings from continuing operations before income taxes:
Fleet Management Solutions	$	248,199	$	63,402		291%
Supply Chain Solutions	34,219		32,957			4%
Dedicated Transportation Solutions	20,211		12,982			56%
Eliminations	(26,590)		(12,274)			(117)%
	276,039		97,067			184%
Unallocated Central Support Services	(16,004)		(18,432)			13%
Non-operating pension costs, net	(2,787)		9			NM
Other items impacting comparability, net (2)	(5,377)		(8,377)			36%
Earnings from continuing operations before income taxes	$	251,871	$	70,267		258%

————————————

(2)Refer to Note 15, "Other Items Impacting Comparability," and below for a discussion of items excluded from our primary measure of segment performance.

As part of management’s evaluation of segment operating performance, we define the primary measurement of our segment financial performance as segment “Earnings from continuing operations before income taxes” (EBT), which includes an allocation of Central Support Services (CSS), and excludes non-operating pension costs, net and certain other items as discussed in Note 15, "Other Items Impacting Comparability," in the Notes to Condensed Consolidated Financial Statements. CSS represents those costs incurred to support all business segments, including finance and procurement, corporate services, human resources, information technology, public affairs, legal, marketing, and corporate communications.

The objective of the EBT measurement is to provide clarity on the profitability of each business segment and, ultimately, to hold leadership of each business segment accountable for their allocated share of CSS costs. Segment results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented. Certain costs are not attributable to any segment and remain unallocated in CSS, including costs for investor relations, public affairs and certain executive compensation.

Our FMS segment leases revenue earning equipment, as well as provides rental vehicles, fuel, maintenance and other ancillary services to the SCS and DTS segments. Inter-segment EBT allocated to SCS and DTS includes earnings related to equipment used in providing services to SCS and DTS customers. EBT related to inter-segment equipment and services billed to SCS and

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

DTS customers (equipment contribution) are included in both FMS and the segment that served the customer and then eliminated upon consolidation (presented as “Eliminations”).

The following table sets forth the benefits from equipment contribution included in EBT for our SCS and DTS business segments:


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)
Equipment Contribution:
Supply Chain Solutions	$	10,230	$	5,223		96%
Dedicated Transportation Solutions	16,360		7,051			132%
Total	$	26,590	$	12,274		117%

The increase in SCS and DTS equipment contribution in the first quarter of 2022 was related to higher proceeds on sales of used vehicles, fleet growth and increased fuel margins due to rapid fluctuations in fuel prices.

Items excluded from our segment EBT measure and their classification within our Condensed Consolidated Statements of Earnings are as follows:


		Three months ended March 31,
Description	Classification	2022		2021
		(In thousands)
Restructuring and other, net (1)	Restructuring and other items, net	$	(14,254)	$	(3,028)

ERP implementation costs (1)	Restructuring and other items, net	—		(7,631)




Gains on sale U.K. revenue earning equipment (1)	Used vehicle sales, net	8,291
Gains on sale of properties (1)	Miscellaneous (income) loss, net	586		1,505
ChoiceLease liability insurance revenue (1)	Revenue	—		777
Other items impacting comparability, net		(5,377)		(8,377)
Non-operating pension costs, net (2)	Non-operating pension costs, net	(2,787)		9
		$	(8,164)	$	(8,368)

———————————

(1)Refer to Note 15, “Other Items Impacting Comparability,” in the Notes to Condensed Consolidated Financial Statements for additional information.

(2)Refer to Note 14, "Employee Benefit Plans," in the Notes to Condensed Consolidated Financial Statements for additional information.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Fleet Management Solutions


	Three months ended March 31,				Change 2022/2021
	2022		2021		Three Months
	(In thousands)
ChoiceLease	$	802,342	$	797,088	1%

Commercial rental (1)	313,154		223,009		40%
SelectCare and other	166,651		148,016		13%
Fuel services and ChoiceLease liability insurance (2)	247,081		167,372		48%

FMS total revenue	$	1,529,228	$	1,335,485	15%

FMS operating revenue (3)	$	1,282,147	$	1,168,113	10%

FMS EBT	$	248,199	$	63,402	291%

FMS EBT as a % of FMS total revenue	16.2%		4.7%		1,150 bps

FMS EBT as a % of FMS operating revenue (3)	19.4%		5.4%		1,400 bps

	Twelve months ended March 31,				Change 2022/2021
	2022		2021
FMS EBT as a % of FMS total revenue	14.4%		0.7%		1,370 bps
FMS EBT as a % of FMS operating revenue (3)	16.8%		0.8%		1,600 bps

————————————

(1)For the three months ended March 31, 2022 and 2021, rental revenue from lease customers in place of a lease vehicle represented 34% and 32% of commercial rental revenue, respectively.

(2)In the first quarter of 2021, we completed the previously announced exit of the extension of our liability insurance coverage for ChoiceLease customers.

(3)Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for reconciliations of the most comparable GAAP measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.

FMS total revenue increased 15% in the first quarter of 2022 due to higher operating revenue (a non-GAAP measure excluding fuel and ChoiceLease liability insurance revenues) and fuel services revenue. FMS operating revenue increased 10% to $1.3 billion in the first quarter of 2022 primarily from a 40% increase in commercial rental revenue driven by strong demand and higher pricing. Total revenue also increased from higher fuel prices passed through to customers.

FMS EBT increased 291% in the first quarter of 2022 primarily from improved used vehicle sales and rental performance, reflecting benefits from tight truck capacity and initiatives to improve returns. Higher gains on used vehicles sold and a declining impact of depreciation expense from prior vehicle residual value estimate changes contributed $115 million in higher year-over-year earnings. Used vehicle pricing in North America more than doubled from the prior year and global ending inventory levels declined to 3,200 vehicles, remaining below the target range of 7,000 - 9,000 vehicles. Commercial rental results benefited from higher utilization and an 8% increase in power fleet pricing. Rental power fleet utilization increased to 81.6% from 72.9% in the prior period. ChoiceLease results benefited from higher pricing with revenue per average active vehicle up 4%, partially offset by a 2% smaller average active lease fleet, reflecting OEM vehicle delivery delays.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Our global fleet of owned and leased revenue earning equipment and SelectCare vehicles, including vehicles under on-demand maintenance, is summarized as follows (number of units rounded to the nearest hundred):


				Change
	March 31, 2022	December 31, 2021	March 31, 2021	Mar 2022/ Dec 2021	Mar 2022/ Mar 2021
End of period vehicle count
By type:
Trucks (1)	76,000	75,100	76,100	1%	—%
Tractors (2)	70,900	70,700	71,900	—%	(1)%
Trailers and other (3)	44,100	43,500	43,500	1%	1%

Total	191,000	189,300	191,500	1%	—%

By product line:
ChoiceLease	144,200	143,900	147,300	—%	(2)%
Commercial rental	41,400	40,700	35,600	2%	16%
Service vehicles and other	2,200	2,200	2,400	—%	(8)%
	187,800	186,800	185,300	1%	1%
Held for sale	3,200	2,500	6,200	28%	(48)%
Total	191,000	189,300	191,500	1%	—%



Customer vehicles under SelectCare contracts (4)	55,600	54,500	52,300	2%	6%


Quarterly average vehicle count
By product line:
ChoiceLease	144,300	144,500	148,800	—%	(3)%
Commercial rental	41,100	40,400	35,000	2%	17%
Service vehicles and other	2,200	2,200	2,400	—%	(8)%
	187,600	187,100	186,200	—%	1%
Held for sale	2,900	2,700	6,800	7%	(57)%
Total	190,500	189,800	193,000	—%	(1)%




Customer vehicles under SelectCare contracts (4)	54,800	54,200	51,200	1%	7%
Customer vehicles under SelectCare on-demand (5)	6,300	6,300	6,700	—%	(6)%
Total vehicles serviced	251,600	250,300	250,900	1%	—%

————————————

(1)Generally comprised of Class 1 through Class 7 type vehicles with a Gross Vehicle Weight (GVW) up to 33,000 pounds.

(2)Generally comprised of over the road on highway tractors and are primarily comprised of Class 8 type vehicles with a GVW of over 33,000 pounds.

(3)Generally comprised of dry, flatbed and refrigerated type trailers.

(4)Excludes customer vehicles under SelectCare on-demand contracts.

(5)Comprised of the number of unique vehicles serviced under on-demand maintenance agreements for the quarterly periods. This does not represent averages for the periods. Vehicles included in the count may have been serviced more than one time during the respective period.

Note: Quarterly amounts were computed using a 6-point average based on monthly information.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

The following table provides information on our global active ChoiceLease fleet (number of units rounded to nearest hundred):


										Change
	March 31, 2022			December 31, 2021			March 31, 2021			Mar 2022/ Dec 2021	Mar 2022/ Mar 2021
Active ChoiceLease fleet
End of period vehicle count (1)	138,800			139,400			141,800			—%	(2)%


Quarterly average vehicle count (1)	139,300			139,900			142,100			—%	(2)%
Quarterly revenue per average active ChoiceLease vehicle	$	5,800		$	5,900		$	5,600		(2)%	4%

Commercial rental statistics
Commercial rental utilization - power fleet (2)	81.6		%	85.2		%	72.9		%	(360) bps	870 bps

————————————

(1)Active ChoiceLease vehicles are calculated as those units currently earning revenue and not classified as not yet earning or no longer earning units.

(2)Rental utilization is calculated using the number of days units are rented divided by the number of days units are available to rent based on the days in the calendar year.

Supply Chain Solutions


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)
Consumer packaged goods and retail	$	395,136	$	220,486		79%
Automotive	194,640		171,872			13%
Technology and healthcare	70,409		54,705			29%
Industrial and other	77,906		55,535			40%
Subcontracted transportation and fuel	350,451		204,102			72%

SCS total revenue	$	1,088,542	$	706,700		54%

SCS operating revenue (1)	$	738,091	$	502,598		47%

SCS EBT	$	34,219	$	32,957		4%
SCS EBT as a % of SCS total revenue	3.1%		4.7%			(160) bps

SCS EBT as a % of SCS operating revenue (1)	4.6%		6.6%			(200) bps

Memo:
End of period fleet count	11,600		9,500			22%

	Twelve months ended March 31,				Change 2022/2021
	2022		2021
SCS EBT as a % of SCS total revenue	3.4%		6.2%			(280) bps

SCS EBT as a % of SCS operating revenue (1)	4.8%		8.5%			(370) bps

————————————

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

SCS total revenue increased 54% in the first quarter of 2022 primarily as a result of higher operating revenue (a non-GAAP measure excluding subcontracted transportation and fuel). SCS operating revenue increased 47% in the first quarter of 2022 primarily due to the acquisitions of Whiplash and Midwest and strong revenue growth in all industry verticals from new business and increased volumes.

SCS EBT increased 4% in the first quarter of 2022 primarily due to revenue growth from new business and acquisitions. The increase in SCS EBT was partially offset by lower earnings in the automotive vertical as a result of supply chain disruptions and labor challenges.

Dedicated Transportation Solutions


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)
DTS total revenue	$	424,948	$	320,507		33%

DTS operating revenue (1)	$	296,455	$	236,839		25%




DTS EBT	$	20,211	$	12,982		56%
DTS EBT as a % of DTS total revenue	4.8%		4.1%			70 bps

DTS EBT as a % of DTS operating revenue (1)	6.8%		5.5%			130 bps

Memo:
End of period fleet count	11,700		10,000			17%

	Twelve months ended March 31,				Change 2022/2021
	2022		2021
DTS EBT as a % of DTS total revenue	3.6%		6.1%			(250) bps

DTS EBT as a % of DTS operating revenue (1)	5.1%		8.0%			(290) bps

————————————

DTS total revenue increased 33% in the first quarter of 2022 primarily due higher operating revenue (a non-GAAP measure excluding subcontracted transportation and fuel). DTS operating revenue increased 25% in the first quarter of 2022 due to new business and increased pricing. Revenue growth from new business was driven by wins from competitors and private fleet conversions.

DTS EBT increased 56% in the first quarter of 2022 due to revenue growth, improved performance and higher gains on sales of vehicles partially offset by increased labor costs.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Central Support Services


	Three months ended March 31,				Change 2022/2021
	2022		2021			Three Months
	(In thousands)







Total CSS	96,943		88,558			9%
Allocation of CSS to business segments	(80,939)		(70,126)			15%
Unallocated CSS	$	16,004	$	18,432		(13)%

Total CSS costs increased 9% in the first quarter of 2022 primarily due to higher incentive compensation-related expenses and continuing strategic investments in technology. Unallocated CSS decreased by $2 million in the first quarter of 2022 primarily reflecting investment income from RyderVentures, our corporate venture capital fund.

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

FINANCIAL RESOURCES AND LIQUIDITY

Cash Flows

The following is a summary of our cash flows from continuing operations:


	Three months ended March 31,
	2022		2021
	(In thousands)
Net cash provided by (used in):
Operating activities	$	465,704	$	465,711
Investing activities	(783,640)		(225,962)
Financing activities	(129,668)		(298,097)
Effect of exchange rate changes on cash	(3,846)		(1,202)
Net change in cash, cash equivalents, and restricted cash	$	(451,450)	$	(59,550)

	Three months ended March 31,
	2022		2021
	(In thousands)
Net cash provided by operating activities
Earnings from continuing operations	$	175,822	$	51,584
Non-cash and other, net	465,032		496,839
Collections on sales-type leases	33,586		30,374
Changes in operating assets and liabilities	(208,736)		(113,086)



Cash flows from operating activities from continuing operations	$	465,704	$	465,711

Cash provided by operating activities remained at $466 million for the three months ended March 31, 2022, as higher earnings were offset by higher working capital needs. In the first quarter of 2022, the increase in working capital needs was primarily attributed to an increase in receivables from higher revenues and a decrease in accrued expenses due to higher incentive based compensation payments in 2022. This increase in working capital needs was partially offset by an increase in accounts payable due to the timing of payments. Cash used in investing activities increased to $784 million for the three months ended March 31, 2022 compared with $226 million in 2021 primarily due to the acquisition of Whiplash and an increase in cash paid for capital expenditures partially offset by higher proceeds from the sale of revenue earning equipment. Cash used in financing activities decreased to $130 million for the three months ended March 31, 2022 compared to $298 million in 2021 due to higher debt borrowing needs partially offset by an increase in common stock repurchases.

The following table shows our free cash flow computation:


	Three months ended March 31,
	2022		2021
	(In thousands)
Net cash provided by operating activities	$	465,704	$	465,711
Sales of revenue earning equipment (1)	222,696		154,144

Sales of operating property and equipment (1)	2,864		2,357


Other (1)	743		126
Total cash generated (2)	692,007		622,338
Purchases of property and revenue earning equipment (1)	(584,289)		(381,051)
Free cash flow (2)	$	107,718	$	241,287

————————————

(1)Included in cash flows from investing activities.

(2)Non-GAAP financial measure. Reconciliations of net cash provided by operating activities to total cash generated and to free cash flow are set forth in

this table. Refer to the “Non-GAAP Financial Measures” section of this MD&A for the reasons why management believes this measure is important to investors.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Free cash flow (a non-GAAP measure) decreased to $108 million for the three months ended March 31, 2022 from $241 million in 2021 primarily due to an increase in cash paid for capital expenditures partially offset by higher proceeds from the sale of revenue earning equipment.

The following table provides a summary of gross capital expenditures:


	Three months ended March 31,
	2022		2021
	(In thousands)
Revenue earning equipment:
ChoiceLease	$	422,062	$	217,113
Commercial rental	180,206		157,743
	602,268		374,856
Operating property and equipment	59,616		31,779
Gross capital expenditures (1)	661,884		406,635
Changes in accounts payable related to purchases of property and revenue earning equipment	(77,595)		(25,584)
Cash paid for purchases of property and revenue earning equipment	$	584,289	$	381,051

————————————

(1)Excludes approximately $4 million and $3 million in assets held under finance leases resulting from new or the extension of existing finance leases and other additions during the three months ended March 31, 2022 and 2021.

Gross capital expenditures increased to $662 million for the three months ended March 31, 2022 primarily reflecting higher investments in the ChoiceLease fleet.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Financing and Other Funding Transactions

We utilize external capital primarily to support working capital needs and growth in our asset-based product lines. The variety of financing alternatives typically available to fund our capital needs include commercial paper, long-term and medium-term public and private debt, asset-backed securities, bank term loans, leasing arrangements, and bank credit facilities. Our principal sources of financing are issuances of unsecured commercial paper and medium-term notes.

Cash and cash equivalents totaled $222 million as of March 31, 2022. As of March 31, 2022, approximately $152 million was held outside the U.S. and is available to fund operations and other growth of non-U.S. subsidiaries. We have historically asserted our intent to permanently reinvest foreign earnings outside of the U.S. In 2021, we reevaluated our historic assertion with respect to our U.K. and Germany operations and no longer consider these earnings to be indefinitely reinvested. The deferred tax liability recorded on the U.K. and Germany undistributed earnings is not material. We intend to continue to permanently reinvest the earnings of our remaining foreign subsidiaries indefinitely.

We believe that our operating cash flows, together with our access to the public unsecured bond market, commercial paper market and other available debt financing, will be adequate to meet our operating, investing and financing needs in the foreseeable future. However, volatility or disruption in the public unsecured debt market or the commercial paper market may impair our ability to access these markets or secure terms commercially acceptable to us. If we cease to have access to public bonds, commercial paper and other sources of unsecured borrowings, we would meet our liquidity needs by drawing upon contractually committed lending agreements or by seeking other funding sources.

In February 2022, we issued an aggregate principal amount of $450 million unsecured medium terms notes that mature on March 1, 2027. The notes bear interest at a rate of 2.85% per year. Refer to Note 9, “Debt,” in the Notes to Condensed Consolidated Financial Statements for additional information on our global revolving credit facility, trade receivables financing program, medium-term notes, and asset-backed financing obligations.

Our ability to access unsecured debt in the capital markets is impacted by both our short-term and long-term debt ratings. These ratings are intended to provide guidance to investors in determining the credit risk associated with our particular securities based on current information obtained by the rating agencies from us or from other sources. Ratings are not recommendations to buy, sell or hold our debt securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Lower ratings generally result in higher borrowing costs, as well as reduced access to unsecured capital markets. A significant downgrade of our short-term debt ratings would impair our ability to issue commercial paper and likely require us to rely on alternative funding sources. A significant downgrade would not affect our ability to borrow amounts under our global revolving credit facility described below, assuming ongoing compliance with the terms and conditions of the credit facility.

Our debt ratings and rating outlooks as of March 31, 2022 were as follows:

Rating Summary

Short-term

Short-term Outlook

Long-term

Long-term Outlook

Standard & Poor’s Ratings Services

—

BBB

Positive

Moody’s Investors Service

Stable

Baa2

Stable

Fitch Ratings

—

BBB+

Stable

DBRS

R-1 (Low)

Stable

A (Low)

Stable

As of March 31, 2022, we had the following amounts available to fund operations under the following facilities:


	(In millions)

Global revolving credit facility	$	798
Trade receivables financing program	$	250

In accordance with our funding philosophy, we attempt to align the aggregate average remaining re-pricing life of our debt with the aggregate average remaining re-pricing life of our vehicle assets. We utilize both fixed-rate and variable-rate debt to achieve this alignment and generally target a mix of 20% - 40% variable-rate debt as a percentage of total debt outstanding. The variable-rate portion of our total debt (including notional value of swap agreements) was 20% and 16% as of March 31, 2022 and December 31, 2021, respectively.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Our debt to equity ratio was 256% and 235% as of March 31, 2022 and December 31, 2021, respectively. The debt to equity ratio represents total debt divided by total equity. The increase in the debt to equity ratio from year-end 2021 primarily reflects higher share repurchases partially offset by increased earnings.

Share Repurchases and Cash Dividends

Refer to Note 10, “Share Repurchase Programs,” in the Notes to Condensed Consolidated Financial Statements for a discussion on our share repurchase programs.

In February 2022 and 2021, our Board of Directors declared a quarterly cash dividend of $0.58 and $0.56 per share of common stock, respectively. The dividends were paid during the first quarter of each respective year.

RECENT ACCOUNTING PRONOUNCEMENTS

Refer to Note 2, “Recent Accounting Pronouncements," in the Notes to Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements.

NON-GAAP FINANCIAL MEASURES

This Quarterly Report on Form 10-Q includes information extracted from condensed consolidated financial information, but not required by generally accepted accounting principles in the United States (GAAP) to be presented in the financial statements. Certain elements of this information are considered “non-GAAP financial measures” as defined by SEC rules. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, other measures of financial performance or liquidity prepared in accordance with GAAP. Also, our non-GAAP financial measures may not be comparable to financial measures used by other companies. We provide a reconciliation of each of these non-GAAP financial measures to the most comparable GAAP measure in this non-GAAP financial measures section or in the MD&A above. We also provide the reasons why management believes each non-GAAP financial measure is useful to investors in this section.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Specifically, we refer to the following non-GAAP financial measures in this Form 10-Q:


Non-GAAP Financial Measure			Comparable GAAP Measure
Operating Revenue Measures:
Operating Revenue			Total Revenue
FMS Operating Revenue			FMS Total Revenue
SCS Operating Revenue			SCS Total Revenue
DTS Operating Revenue			DTS Total Revenue
FMS EBT as a % of FMS Operating Revenue			FMS EBT as a % of FMS Total Revenue
SCS EBT as a % of SCS Operating Revenue			SCS EBT as a % of SCS Total Revenue
DTS EBT as a % of DTS Operating Revenue			DTS EBT as a % of DTS Total Revenue
Comparable Earnings Measures:
Comparable Earnings Before Income Tax			Earnings Before Income Tax
Comparable Earnings			Earnings from Continuing Operations
Comparable Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)			Net Earnings
Comparable EPS			EPS from Continuing Operations
Comparable Tax Rate			Effective Tax Rate from Continuing Operations
Adjusted Return on Equity (ROE)			Not Applicable. However, non-GAAP elements of the 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 following reconciliations.
Cash Flow Measures:
Total Cash Generated and Free Cash Flow			Cash Provided by Operating Activities from Continuing Operations

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Set forth in the table below is an overview of each non-GAAP financial measure and why management believes that the presentation of each non-GAAP financial measure provides useful information to investors.


Operating Revenue Measures:
Operating Revenue FMS Operating Revenue SCS Operating Revenue DTS Operating Revenue FMS EBT as a % of FMS Operating Revenue SCS EBT as a % of SCS Operating Revenue DTS EBT as a % of DTS Operating Revenue			Operating revenue is defined as total revenue for Ryder System, Inc. or each business segment (FMS, SCS and DTS) excluding any (1) fuel and (2) subcontracted transportation, as well as (3) revenue from our ChoiceLease liability insurance program which was discontinued in early 2020. We believe operating revenue provides useful information to investors as we use it to evaluate the operating performance of our core businesses and as a measure of sales activity at the consolidated level for Ryder System, Inc., as well as for each of our business segments. We also use segment EBT as a percentage of segment operating revenue for each business segment for the same reason. Note: FMS EBT, SCS EBT and DTS EBT, our primary measures of segment performance, are not non-GAAP measures. Fuel: We exclude FMS, SCS and DTS fuel from the calculation of our operating revenue measures, as fuel is an ancillary service that we provide our customers, which is impacted by fluctuations in market fuel prices and the costs are largely a pass-through to our customers, resulting in minimal changes in our profitability during periods of steady market fuel prices. However, profitability may be positively or negatively impacted by rapid changes in market fuel prices during a short period of time, as customer pricing for fuel services is established based on current market fuel costs. Subcontracted transportation: We exclude subcontracted transportation from the calculation of our operating revenue measures, as these services are also typically a pass-through to our customers and, therefore, fluctuations result in minimal changes to our profitability. While our SCS and DTS business segments subcontract certain transportation services to third party providers, our FMS business segment does not engage in subcontracted transportation and, therefore, this item is not applicable to FMS. ChoiceLease liability insurance: We exclude ChoiceLease liability insurance as we announced our plan in the first quarter of 2020 to exit the extension of our liability insurance coverage for ChoiceLease customers. The exit of this program was completed in the first quarter of 2021. We are excluding the revenues associated with this program for better comparability of our on-going operations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)


Comparable Earnings Measures:
Comparable Earnings before Income Taxes (EBT) Comparable Earnings Comparable Earnings per Diluted Common Share (EPS) Comparable Tax Rate Adjusted Return on Equity (ROE)			Comparable EBT, comparable earnings and comparable EPS are defined, respectively, as GAAP EBT, earnings and EPS, all from continuing operations, excluding (1) non-operating pension costs, net and (2) any other significant items that are not representative of our business operations. We believe these comparable earnings measures provide useful information to investors and allow for better year-over-year comparison of operating performance. Non-operating pension costs, net: Our comparable earnings measures exclude non-operating pension costs, which include the amortization of net actuarial loss and prior service cost, interest cost and expected return on plan assets components of pension and postretirement benefit costs, as well as any significant charges for settlements or curtailments if recognized. We exclude non-operating pension costs, net because we consider these to be impacted by financial market performance and outside the operational performance of our business. Other Items Impacting Comparability: Our comparable and adjusted earnings measures also exclude other significant items that are not representative of our business operations as detailed in the reconciliation table below. These other significant items vary from period to period and, in some periods, there may be no such significant items. Comparable tax rate is computed using the same methodology as the GAAP provision for income taxes. Income tax effects of non-GAAP adjustments are calculated based on the marginal tax rates to which the non-GAAP adjustments are related. Adjusted ROE is defined as adjusted net earnings divided by adjusted average shareholders' equity and represents the rate of return on shareholders' investment. Other items impacting comparability described above are excluded, as applicable, from the calculation of net earnings and average shareholders' equity. We use adjusted ROE as an internal measure of how effectively we use the owned capital invested in our operations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)


Comparable Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)			Comparable EBITDA is defined as net earnings, first adjusted to exclude discontinued operations and the following items, all from continuing operations: (1) non-operating pension costs, net and (2) any other items that are not representative of our business operations (these items are the same items that are excluded from comparable earnings measures for the relevant periods as described immediately above) and then adjusted further for (1) interest expense, (2) income taxes, (3) depreciation, (4) used vehicle sales results and (5) amortization. We believe comparable EBITDA provides investors with useful information, as it is a standard measure commonly reported and widely used by analysts, investors and other interested parties to measure financial performance and our ability to service debt and meet our payment obligations. In addition, we believe that the inclusion of comparable EBITDA provides consistency in financial reporting and enables analysts and investors to perform meaningful comparisons of past, present and future operating results. Other companies may calculate comparable EBITDA differently; therefore, our presentation of comparable EBITDA may not be comparable to similarly-titled measures used by other companies. Comparable EBITDA should not be considered as an alternative to net earnings, earnings from continuing operations before income taxes or earnings from continuing operations determined in accordance with GAAP, as an indicator of the Company’s operating performance, as an alternative to cash flows from operating activities (determined in accordance with GAAP), as an indicator of cash flows, or as a measure of liquidity.
Cash Flow Measures:
Total Cash Generated Free Cash Flow			We consider total cash generated and free cash flow to be important measures of comparative operating performance, as our principal sources of operating liquidity are cash from operations and proceeds from the sale of revenue earning equipment. Total Cash Generated is defined as the sum of (1) net cash provided by operating activities, (2) net cash provided by the sale of revenue earning equipment, (3) net cash provided by the sale of operating property and equipment and (4) other cash inflows from investing activities. We believe total cash generated is an important measure of total cash flows generated from our ongoing business activities. Free Cash Flow is defined as the net amount of cash generated from operating activities and investing activities (excluding changes in restricted cash and acquisitions) from continuing operations. We calculate free cash flow as the sum of (1) net cash provided by operating activities, (2) net cash provided by the sale of revenue earning equipment and operating property and equipment, and (3) other cash inflows from investing activities, less (4) purchases of property and revenue earning equipment. We believe free cash flow provides investors with an important perspective on the cash available for debt service and for shareholders, after making capital investments required to support ongoing business operations. Our calculation of free cash flow may be different from the calculation used by other companies and, therefore, comparability may be limited. * See Total Cash Generated and Free Cash Flow reconciliations in the Financial Resources and Liquidity section of Management's Discussion and Analysis.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

The following table provides a reconciliation of GAAP earnings before taxes (EBT), earnings, and earnings per diluted share (Diluted EPS) from continuing operations to comparable EBT, comparable earnings, and comparable EPS. Certain items included in EBT, earnings, and diluted EPS from continuing operations have been excluded from our comparable EBT, comparable earnings and comparable EPS measures. The following table lists a summary of these items, which are discussed in more detail throughout our MD&A and within the Notes to Condensed Consolidated Financial Statements:


	Continuing Operations
	Three months ended March 31,
	2022		2021
	(In thousands, except per share amounts)
EBT	$	251,871	$	70,267
Non-operating pension costs, net	2,787		(9)
Restructuring and other, net (1)	14,254		3,028
ERP implementation costs (1)	—		7,631





Gains on sale of U.K. revenue earning equipment (1)	(8,291)		—
Gains on sale of properties (1)	(586)		(1,505)





ChoiceLease liability insurance revenue (1)	—		(777)
Comparable EBT	$	260,035	$	78,635

Earnings	$	175,822	$	51,584
Non-operating pension costs, net	1,762		(755)
Restructuring and other, net (including ChoiceLease liability insurance results) (1)	14,290		2,579
ERP implementation costs (1)	—		5,666




Gains on sale of U.K. revenue earning equipment (1)	(8,291)		—
Gains on sale of properties (1)	(583)		(1,187)




Tax adjustments, net (2)	5,299		303
Comparable Earnings	$	188,299	$	58,190

Diluted EPS	$	3.35	$	0.97
Non-operating pension costs, net	0.03		(0.01)
Restructuring and other, net (including ChoiceLease liability insurance results) (1)	0.27		0.03
ERP implementation costs (1)	—		0.11




Gains on sale of U.K. revenue earning equipment (1)	(0.15)		—
Gains on sale of properties (1)	(0.01)		(0.02)





Tax adjustments, net (2)	0.10		0.01
Comparable EPS	$	3.59	$	1.09

————————————

(1)Refer to Note 15, “Other Items Impacting Comparability,” in the Notes to Condensed Consolidated Financial Statements for additional information.

(2)Adjustments include the global tax impact related to gains on sales of U.K. revenue earning equipment and properties in the first quarter of 2022, and expiring state net operating losses in the first quarter of 2021.

Note: Amounts may not be additive due to rounding.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

The following table provides a reconciliation of the effective tax rate to the comparable tax rate:


	Three months ended March 31,
	2022	2021
	(In thousands)






Effective tax rate on continuing operations (1)	30.2%	26.6%
Tax adjustments and income tax effects of non-GAAP adjustments (2)	(2.6)%	(0.6)%
Comparable effective tax rate on continuing operations (1)	27.6%	26.0%

————————————

(1)The effective tax rate on continuing operations and comparable tax rate are based on EBT and comparable EBT, respectively, found on the previous page.

(2)Refer to the table above for more information on tax adjustments. Income tax effects of non-GAAP adjustments are calculated based on the marginal tax rates to which the non-GAAP adjustments are related.

The following table provides a reconciliation of earnings to comparable EBITDA:


	Three months ended March 31,
	2022		2021
	(In thousands)
Net earnings	$	175,587	$	50,825
Loss from discontinued operations, net of tax	235		759
Provision for income taxes	76,049		18,683
EBT	251,871		70,267
Non-operating pension costs, net	2,787		(9)
Other items impacting comparability, net (1)	5,377		8,377
Comparable EBT	260,035		78,635
Interest expense	52,364		54,706
Depreciation	429,712		461,161
Used vehicle sales, net	(104,703)		(28,851)
Amortization	10,019		1,764
Comparable EBITDA	$	647,427	$	567,415

————————————

(1)Refer to the table above in the Operating Results by Segment for a discussion on items excluded from our comparable measures and their classification within our Condensed Consolidated Statements of Earnings and Note 15,“Other Items Impacting Comparability” in the Notes to Condensed Consolidated Financial Statements for additional information.

The following table provides a reconciliation of total revenue to operating revenue:


	Three months ended March 31,
	2022		2021
	(In thousands)
Total revenue	$	2,853,862	$	2,221,622
Subcontracted transportation and fuel	(638,275)		(403,482)

ChoiceLease liability insurance revenue (1)	—		(777)
Operating revenue	$	2,215,587	$	1,817,363

————————————

(1)In the first quarter of 2021, we completed the previously announced exit of the extension of our liability insurance coverage for ChoiceLease customers.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

The following table provides a reconciliation of FMS total revenue to FMS operating revenue:


	Three months ended March 31,				Twelve months ended March 31,
	2022		2021		2022		2021
	(In thousands)
FMS total revenue	$	1,529,228	$	1,335,485	$	5,872,691	$	5,165,715
Fuel services and ChoiceLease liability insurance (1)	(247,081)		(167,372)		(818,126)		(577,570)

FMS operating revenue	$	1,282,147	$	1,168,113	$	5,054,565	$	4,588,145

FMS EBT	$	248,199	$	63,402	$	847,887	$	36,019
FMS EBT as a % of FMS total revenue	16.2%		4.7%		14.4%		0.7%
FMS EBT as a % of FMS operating revenue	19.4%		5.4%		16.8%		0.8%

————————————

(1)In the first quarter of 2021, we completed the previously announced exit of the extension of our liability insurance coverage for ChoiceLease customers.

The following table provides a reconciliation of SCS total revenue to SCS operating revenue:


	Three months ended March 31,				Twelve months ended March 31,
	2022		2021		2022		2021
	(In thousands)
SCS total revenue	$	1,088,542	$	706,700	$	3,536,640	$	2,622,673
Subcontracted transportation and fuel	(350,451)		(204,102)		(1,090,631)		(717,020)

SCS operating revenue	$	738,091	$	502,598	$	2,446,009	$	1,905,653

SCS EBT	$	34,219	$	32,957	$	118,613	$	161,872
SCS EBT as a % of SCS total revenue	3.1%		4.7%		3.4%		6.2%
SCS EBT as a % of SCS operating revenue	4.6%		6.6%		4.8%		8.5%

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

The following table provides a reconciliation of DTS total revenue to DTS operating revenue:


	Three months ended March 31,				Twelve months ended March 31,
	2022		2021		2022		2021
	(In thousands)
DTS total revenue	$	424,948	$	320,507	$	1,561,629	$	1,214,993
Subcontracted transportation and fuel	(128,493)		(83,668)		(447,089)		(285,592)

DTS operating revenue	$	296,455	$	236,839	$	1,114,540	$	929,401

DTS EBT	$	20,211	$	12,982	$	56,287	$	74,244
DTS EBT as a % of DTS total revenue	4.8%		4.1%		3.6%		6.1%
DTS EBT as a % of DTS operating revenue	6.8%		5.5%		5.1%		8.0%

The following tables provide numerical reconciliations of net earnings to adjusted net earnings and average shareholders' equity to adjusted average shareholders' equity (Adjusted ROE), and of the non-GAAP elements used to calculate the adjusted return on equity to the corresponding GAAP measures:


	Twelve months ended March 31,
	2022		2021
	(In thousands)
Net earnings	$	643,803	$	38,189
Other items impacting comparability, net (1)	(13,438)		77,168
Income taxes (2)	228,452		4,856
Adjusted earnings before income taxes	858,817		120,213
Adjusted income taxes (3)	(215,301)		(18,657)
Adjusted net earnings [A]	$	643,517	$	101,556

Average shareholders’ equity	$	2,531,568	$	2,217,505
Average adjustments to shareholders’ equity (4)	(2,007)		54,758
Adjusted average shareholders’ equity [B]	$	2,529,561	$	2,272,263

Adjusted return on equity [A/B]	25.4%		4.5%

————————————

(1)Refer to the table below for a composition of other items impacting comparability, net for the 12-month rolling period:

(2)Includes income taxes on discontinued operations.

(3)Represents provision for income taxes plus income taxes on other items impacting comparability.

(4)Represents the impact of other items impacting comparability, net of tax, to equity for the respective period.

Note: Amounts may not be additive due to rounding.


	Twelve months ended March 31,
	2022		2021
	(In thousands)
Restructuring and other, net	$	30,881	$	43,536
ERP Implementation costs	5,084		31,556

Gains on sale of properties	(41,112)		(6,923)
Gains on sale of U.K. revenue earning equipment	(8,291)
Early redemption of medium-term notes	—		8,999

Other items impacting comparability, net	$	(13,438)	$	77,168

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Forward-looking statements (within the meaning of the Federal Private Securities Litigation Reform Act of 1995) are statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends concerning matters that are not historical facts. These statements are often preceded by or include the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “may,” “could,” “should” or similar expressions. This Quarterly Report contains forward-looking statements including statements regarding:

•our expectations with respect to the ongoing effects of the COVID-19 pandemic, including the global supply chain disruption, on our business and financial results;

•our expectations regarding the effects of OEM delivery delays;

•the cyclical nature of the industries in which we compete;

•our expectations regarding supply and demand of vehicles and its effect on pricing;

•our expectations of the long-term residual values of revenue earning equipment, including the probability of incurring losses or having to decrease residual value estimates in the event of a potential cyclical downturn;

•the expected pricing for used vehicles and sales channel mix;

•our expectations of cash flow from operating activities, free cash flow, and capital expenditures;

•the adequacy of our accounting estimates and reserves for goodwill and other asset impairments, residual values and other depreciation assumptions, deferred income taxes and annual effective tax rates, variable revenue considerations, the valuation of our pension plans, and allowance for credit losses;

•the adequacy of our fair value estimates of employee incentive awards under our share-based compensation plans, publicly traded debt and other debt;

•our ability to fund all of our operating, investing and financial needs for the foreseeable future through internally generated funds and outside funding sources;

•our expected level of use and availability of outside funding sources, anticipated future payments under debt and lease agreements, and risk of losses resulting from counterparty default under hedging and derivative agreements;

•our ability to meet our objectives with the share repurchase programs;

•the anticipated impact of fuel price and exchange rate fluctuations;

•our expectations as to return on pension plan assets, future pension expense and estimated contributions;

•our expectations regarding the scope and anticipated outcomes with respect to certain claims, proceedings and lawsuits;

•our ability to access commercial paper and other available debt financing in the capital markets;

•our expectations regarding the benefits from our strategic investments, including Whiplash;

•our expectations regarding the benefits of our pricing adjustments with respect to labor shortage costs in SCS and DTS;

•our expectations regarding the timeline for the exit of the FMS U.K. business;

•our expectation regarding the timeline of our sale to TIP Trailer Services U.K. Limited;

•our expectations regarding the achievement of our return on equity improvement initiatives;

•our expectations regarding the diminishing impact of prior residual value estimate changes on return on equity improvement;

•our expectations regarding the labor shortages impact on labor and subcontracted transportation costs;

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

•our expectations regarding the U.S. federal, state and foreign tax positions;

•our expectations regarding the finalized valuation and purchase price consideration allocation for the acquisition of Whiplash;

•the anticipated impact of recent accounting pronouncements; and

•our expectations regarding the effect of changes to systems and processes on our internal control over financial reporting.

These statements, as well as other forward-looking statements contained in this Quarterly Report, are based on our current plans and expectations and are subject to risks, uncertainties and assumptions. We caution readers that certain important factors could cause actual results and events to differ significantly from those expressed in any forward-looking statements. These risk factors, include the following:

•Market Conditions:

◦Changes in general economic and financial conditions in the U.S. and worldwide leading to decreased demand for our services and products, lower profit margins, increased levels of bad debt and reduced access to credit and financial markets.

◦Decreases in freight demand that would impact both our transactional and variable-based contractual business.

◦Changes in our customers’ operations, financial condition or business environment that may limit their demand for, or ability to purchase, our services and products.

◦Decreases in market demand affecting the commercial rental market and used vehicle sales as well as global economic conditions.

◦Volatility in customer volumes and shifting customer demand in the industries serviced by our SCS business.

◦Changes in current financial, tax or regulatory requirements that could negatively impact our financial results.

◦Ongoing developments related to geopolitical events, including the ongoing armed conflict between Russia and Ukraine, and its impact on the global economy and our business.

•Competition:

◦Advances in technology may impact demand for our services or may require increased investments to remain competitive.

◦Competition from other service providers, who may have greater capital resources or lower capital costs, or from our customers, who may choose to provide services themselves.

◦Continued consolidation in the markets in which we operate, which may create large competitors with greater financial resources.

◦Our inability to maintain current pricing levels due to economic conditions, demand for services, customer acceptance or competition.

•Profitability:

◦Our inability to obtain adequate profit margins for our services.

◦Lower than expected sales volumes or customer retention levels.

◦Decreases in commercial rental fleet utilization and pricing.

◦Lower than expected used vehicle sales pricing levels and fluctuations in the anticipated proportion of retail versus wholesale sales.

◦Loss of key customers in our SCS and DTS business segments.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

◦Our inability to adapt our product offerings to meet changing consumer preferences on a cost-effective basis.

◦The inability of our legacy information technology systems to provide timely access to data.

◦Sudden changes in fuel prices and fuel shortages.

◦Higher prices for vehicles, diesel engines and fuel as a result of new regulations.

◦Higher than expected maintenance costs and lower than expected benefits associated with our maintenance initiatives.

◦Lower than expected revenue growth due to production delays at our automotive SCS customers, primarily related to the worldwide semiconductor supply shortage.

◦The inability of an original equipment manufacturer or supplier to provide vehicles or components, primarily related to the worldwide semiconductor supply shortage.

◦Our inability to successfully execute our strategic returns and asset management initiatives, maintain our fleet at normalized levels and right-size our fleet in line with demand.

◦Our key assumptions and pricing structure of our SCS and DTS contracts prove to be inaccurate.

◦Increased unionizing, labor strikes and work stoppages.

◦Difficulties in attracting and retaining drivers and technicians due to driver and technician shortages, which may result in higher costs to procure drivers and technicians and higher turnover rates affecting our customers.

◦Our inability to manage our cost structure.

◦Our inability to limit our exposure for customer claims.

◦Unfavorable or unanticipated outcomes in legal or regulatory proceedings or uncertain positions.

◦Business interruptions or expenditures due to severe weather or natural occurrences.

•Financing Concerns:

◦Higher borrowing costs.

◦Unanticipated interest rate and currency exchange rate fluctuations.

◦Negative funding status of our pension plans caused by lower than expected returns on invested assets and unanticipated changes in interest rates.

◦Withdrawal liability as a result of our participation in multi-employer plans.

◦Instability in U.S. and worldwide credit markets, resulting in higher borrowing costs and/or reduced access to credit.

•Accounting Matters:

◦Reductions in residual values or useful lives of revenue earning equipment.

◦Increases in compensation levels, retirement rate and mortality resulting in higher pension expense; regulatory changes affecting pension estimates, accruals and expenses.

◦Changes in accounting rules, assumptions and accruals.

•Other risks detailed from time to time in our SEC filings including our 2021 Annual Report on Form 10-K and in “Item 1A.-Risk Factors” of this Quarterly Report.

New risk factors 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 risk factors on our business. As a result, we cannot provide assurance as to our future results or achievements. You

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

should not place undue reliance on the forward-looking statements contained herein, which speak only as of the date of this Quarterly Report. We do not intend, or assume any obligation, to update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to Ryder’s exposures to market risks since December 31, 2021. Please refer to the 2021 Annual Report on Form 10-K for a complete discussion of Ryder’s exposures to market risks.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the first quarter of 2022, we carried out an evaluation, under the supervision and with the participation of management, including Ryder’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Ryder’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of the end of the first quarter of 2022, Ryder’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) were effective.

Changes in Internal Control over Financial Reporting

During the three months ended March 31, 2022, there were no changes in Ryder's internal control over financial reporting that have materially affected or are reasonably likely to materially affect such internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a description of our material pending legal proceedings, please refer to Note 16, “Contingencies and Other Matters,” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

To our knowledge and except to the extent additional factual information disclosed in this Quarterly Report on Form 10-Q relates to such risk factors, there have been no material changes in the risk factors described in “Item 1A. Risk Factors” in our Form 10-K for the year ended December 31, 2021, filed with the SEC on February 17, 2022. Our operations could also be affected by additional risk factors that are not presently known to us or by factors that we currently consider not material to our business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information with respect to purchases we made of our common stock during the three months ended March 31, 2022:


	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Maximum Number of Shares That May Yet Be Purchased Under the Discretionary and Anti-Dilutive Programs (2) and the Accelerated Share Repurchase Program (3)
January 1 through January 31, 2022	245	$	75.60	—	4,500,000
February 1 through February 28, 2022	3,248,479	76.45		3,052,270	7,552,270
March 1 through March 31, 2022	640	83.23		—	7,552,270
Total	3,249,364	$	76.45	3,052,270

————————————

(1)During the three months ended March 31, 2022, we purchased an aggregate of 197,094 shares of our common stock in employee-related transactions. Employee-related transactions may include: (i) shares of common stock withheld as payment for the exercise price of options exercised or to satisfy the tax withholding liability associated with our share-based compensation programs and (ii) open-market purchases by the trustee of Ryder’s deferred compensation plans relating to investments by employees in our stock, one of the investment options available under the plans.

(2)In October 2021, our Board of Directors authorized two new share repurchase programs. The first program grants management discretion to repurchase up to 2.0 million shares of common stock over a period of two years, commencing on October 14, 2021 and expiring on October 14, 2023 (the "2021 Discretionary Program"). The 2021 Discretionary Program is designed to provide management with capital structure flexibility while concurrently managing objectives related to balance sheet leverage, acquisition opportunities, and shareholder returns. The second program authorizes management to repurchase up to 2.5 million shares of common stock, issued to employees under the company's employee stock plans since September 1, 2021 (the "2021 Anti-Dilutive Program"). The 2021 Anti-Dilutive Program is designed to mitigate the dilutive impact of shares issued under the company's employee stock plans. The 2021 Anti-Dilutive Repurchase Program commenced on October 14, 2021 and expires on October 14, 2023. Share repurchases under both programs can be made from time to time using the company's working capital and a variety of methods, including open-market transactions and trading plans established pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The timing and actual number of shares repurchased are subject to market conditions, legal requirements and other factors, including balance sheet leverage, availability of quality acquisitions and stock price.

(3)In February 2022, our Board of Directors authorized a new accelerated share repurchase program (ASR) to repurchase up to $300 million of common stock, with final settlement scheduled to occur no later than the end of October 2022. The number of shares to be repurchased will be based on the average of Ryder's daily volume-weighted average price per share of common stock during a repurchase period, less a discount and subject to adjustments pursuant to the terms and conditions of the program agreement. During the three months ended March 31, 2022, we repurchased 3,052,270 shares for $300 million under the ASR.

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ITEM 6. EXHIBITS


Exhibit Number						Description

31.1						Certification of Robert E. Sanchez pursuant to Rule 13a-14(a) or Rule 15d-14(a)

31.2						Certification of John J. Diez pursuant to Rule 13a-14(a) or Rule 15d-14(a)

32						Certification of Robert E. Sanchez and John J. Diez pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C Section 1350

101.INS						XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						XBRL Taxonomy Extension Label Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		RYDER SYSTEM, INC.
		(Registrant)

Date:	April 27, 2022	By:	/s/ JOHN J. DIEZ
			John J. Diez
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

Date:	April 27, 2022	By:	/s/ CRISTINA GALLO-AQUINO
			Cristina Gallo-Aquino
			Senior Vice President and Controller
			(Principal Accounting Officer)