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1Q 2017 Ryder Earnings Presentation

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First Quarter Earning Presentation slide deck

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1Q 2017 Ryder Earnings Presentation

  1. 1. Proprietary and Confidential First Quarter 2017 Earnings Conference Call April 25, 2017
  2. 2. @ 2017 Ryder System, Inc. All Rights Reserved 2 Safe Harbor and Non-GAAP Financial Measures Note Regarding Forward-Looking Statements: Certain statements and information included in this presentation are "forward-looking statements" under the Federal Private Securities Litigation Reform Act of 1995, including our expectations regarding market conditions, earnings performance, revenue in our business segments, fleet size, demand and pricing trends in commercial rental and used vehicle sales, cash flow measures, capital expenditures, debt, adjusted ROC and our 2017 outlook. Accordingly, these forward-looking statements should be evaluated with consideration given to the many risks and uncertainties inherent in our business that could cause actual results and events to differ materially from those in the forward-looking statements. Important factors that could cause such differences include, among others, lower than expected lease sales, further decreases in commercial rental demand or poor acceptance of rental pricing, our ability to right-size our commercial rental fleet in line with demand, availability of labor to maintain our fleet at normalized levels, ability to redeploy and prepare vehicles for sale in a cost-efficient manner, worsening of market demand for used vehicles or greater than expected negative effects of excess inventory levels impacting current pricing, residual values and our anticipated proportion of retail versus wholesale sales, lack of customer demand for on-demand maintenance, higher than expected maintenance costs from new engine technology or lower than expected benefits from maintenance initiatives, decreases in freight demand or volumes, poor operational execution particularly with start-ups and new product launches, our ability to obtain adequate profit margins for our services, our inability to maintain current pricing levels due to soft economic conditions, uncertainty and instability in the global economic market, business interruptions or expenditures due to severe weather or natural occurrences, competition from other service providers and new entrants, customer retention levels, loss of key customers, driver and technician shortages resulting in higher procurement costs and turnover rates, unexpected bad debt reserves or write- offs, changes in customers’ business environments that will limit their ability to commit to long-term vehicle leases, a decrease in credit ratings, increased debt costs, adequacy of accounting estimates, reserves and accruals particularly with respect to pension, taxes, depreciation, insurance and revenue, sudden or unusual changes in fuel prices, unanticipated currency exchange rate fluctuations, our ability to manage our cost structure, and the risks described in our filings with the Securities and Exchange Commission. The risks included here are not exhaustive. New risks emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risks on our business. Accordingly, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Note Regarding Non-GAAP Financial Measures: This presentation includes certain non-GAAP financial measures as defined under SEC rules, including: Comparable Earnings Measures, which consist of comparable earnings from continuing operations, comparable earnings per share from continuing operations (as well as forecasts), comparable earnings before income tax and comparable tax rate. Additionally, our adjusted return on average capital (ROC) and adjusted return on capital spread (ROC spread) measures are calculated based on comparable earnings items. Operating Revenue Measures, which consist of operating revenue and operating revenue growth excluding foreign exchange for Ryder and its business segments, and segment EBT as a percentage of operating revenue. Cash Flow Measures, which consist of total cash generated and free cash flow. Debt Measures, including total obligations and total obligations to equity. Refer to Appendix - Non-GAAP Financial Measures, beginning on slide 28, for reconciliations of the non-GAAP financial measures contained in this presentation to the nearest GAAP measure. Additional information regarding non-GAAP financial measures as required by Regulation G and Item 10(e) of Regulation S-K can be found in our most recent Form 10-K, Form 10-Q and our Form 8-K filed with the SEC as of the date of this presentation, which are available at http://investors.ryder.com.
  3. 3. @ 2017 Ryder System, Inc. All Rights Reserved 3 Contents • First Quarter 2017 Results Overview • Used Vehicle Sales Update • EPS Forecast • Q & A
  4. 4. @ 2017 Ryder System, Inc. All Rights Reserved 4 1st Quarter Results Overview • Earnings per diluted share from continuing operations were $0.71 vs. $1.05 in 1Q16 ⎼ 1Q17 included non-operating pension costs of $0.08 and an operating tax adjustment of $0.03 ⎼ 1Q16 included non-operating pension costs of $0.07 • Comparable earnings per diluted share from continuing operations were $0.82 vs. $1.12 in 1Q16 ⎼ Lower used vehicle sales and commercial rental performance negatively impacted results by $0.44 • Total revenue increased 7% (up 8% excluding foreign exchange) and operating revenue increased 3% (up 4% excluding foreign exchange) vs. prior year ⎼ Total revenue benefited from higher operating revenue, increased subcontracted transportation and higher fuel, partially offset by foreign exchange (FX) ⎼ Operating revenue increased due to higher lease, supply chain and dedicated revenue, partially offset by lower commercial rental revenue and FX
  5. 5. @ 2017 Ryder System, Inc. All Rights Reserved 5 Key Financial Statistics First Quarter ($ Millions, Except Per Share Amounts) Note: Amounts throughout presentation may not be additive due to rounding. 2017 2016 %B/(W) Total Revenue $ 1,748.2 $1,629.7 7% Fuel and Subcontracted Transportation (303.1) (223.7) 35% Operating Revenue $ 1,445.1 $1,406.0 3% Earnings Per Share from Continuing Operations $ 0.71 $ 1.05 (32)% Comparable Earnings Per Share from Continuing Operations $ 0.82 $ 1.12 (27)% Memo: Average Shares (Millions) - Diluted 53.4 53.4 Tax Rate from Continuing Operations 36.2% 36.7% Comparable Tax Rate from Continuing Operations 36.4% 37.1% Adjusted Return on Capital vs. Cost of Capital (Trailing 12 Months) 0.3% 1.3%
  6. 6. @ 2017 Ryder System, Inc. All Rights Reserved 6 1st Quarter Results Overview – FMS • Fleet Management Solutions (FMS) total revenue up 3% and FMS operating revenue unchanged – ChoiceLease revenue up 5% – SelectCare revenue down 1% – Commercial rental revenue down 15% • FMS earnings declined due to lower used vehicle sales and commercial rental results, partially offset by higher ChoiceLease and SelectCare performance and lower overhead spending – Accelerated depreciation and higher operating costs on an older fleet also negatively impacted results • FMS earnings before tax (EBT) down 37% – FMS EBT percent of FMS total revenue down 300 basis points to 4.6% – FMS EBT percent of FMS operating revenue down 330 basis points to 5.4%
  7. 7. @ 2017 Ryder System, Inc. All Rights Reserved 7 1st Quarter Results Overview – DTS • Dedicated Transportation Solutions (DTS) total revenue up 9% and DTS operating revenue up 2% – DTS total revenue increased due to higher operating revenue, increased subcontracted transportation related to new business and higher fuel costs – DTS operating revenue increased due to higher pricing and increased volumes • DTS earnings declined primarily due to increased insurance costs and higher operating costs on an older fleet • DTS earnings before tax (EBT) down 21% – DTS EBT percent of DTS total revenue down 160 basis points to 4.2% – DTS EBT percent of DTS operating revenue down 170 basis points to 5.8%
  8. 8. @ 2017 Ryder System, Inc. All Rights Reserved 8 1st Quarter Results Overview – SCS • Supply Chain Solutions (SCS) total revenue up 19% and SCS operating revenue up 12% – SCS total revenue increased due to higher operating revenue and increased subcontracted transportation related to new business – SCS operating revenue increased due to increased volumes and new business • SCS earnings increased primarily due to revenue growth • SCS earnings before tax (EBT) up 39% – SCS EBT percent of SCS total revenue up 80 basis points to 5.9% – SCS EBT percent of SCS operating revenue up 150 basis points to 7.6%
  9. 9. @ 2017 Ryder System, Inc. All Rights Reserved 9 Capital Expenditures First Quarter ($ Millions) 2017 2016 2016 $ O/(U) 2015 ChoiceLease $ 316 $ 441 $ (125) Commercial Rental 93 33 60 Operating Property and Equipment 26 23 3 Gross Capital Expenditures 436 498 (62) Less: Proceeds from Sales (Primarily Revenue Earning Equipment) (97) (121) (24) Net Capital Expenditures $ 340 $ 377 $ (37)
  10. 10. @ 2017 Ryder System, Inc. All Rights Reserved 10 Cash Flow from Continuing Operations First Quarter ($ Millions) 1) Reflects revised reporting of vehicle gains on sale, net of vehicle valuation adjustments. 2) Included in cash flows from investing activities. 3) Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment. 4) Free Cash Flow excludes acquisitions and changes in restricted cash. 2017 2016 Earnings from Continuing Operations $ 38 $ 56 Depreciation 311 287 Gains on Used Vehicles, Net (1) (1) (19) Amortization and Other Non-Cash Charges, Net 14 11 Pension Contributions (4) (20) Changes in Working Capital and Deferred Taxes (27) 53 Cash Provided by Operating Activities 331 368 Proceeds from Sales (Primarily Revenue Earning Equipment)(2) 97 121 Collections of Direct Finance Leases & Other(2) 16 26 Total Cash Generated 444 514 Capital Expenditures (2), (3) (361) (575) Free Cash Flow (4) $ 83 $ (61)
  11. 11. @ 2017 Ryder System, Inc. All Rights Reserved 11 Debt to Equity Ratio 1) Represents debt to equity target of 225% to 275% while maintaining a solid investment grade rating. 2) Illustrates impact of accumulated net pension related equity charge on leverage. 3) Total Equity includes impact of accumulated net pension related equity charge of $622 million as of 3/31/2017, $627 million as of 12/31/2016 and $572 million as of 3/31/2016. ($ Millions) 3/31/2017 12/31/2016 3/31/2016 Total Debt 5,326 5,391 5,599 Total Equity (3) 2,080 2,052 2,045 Debt to Equity 256% 263% 274% (2) (1)
  12. 12. @ 2017 Ryder System, Inc. All Rights Reserved 12 Contents • First Quarter 2017 Results Overview • Used Vehicle Sales Update • EPS Forecast • Q & A
  13. 13. @ 2017 Ryder System, Inc. All Rights Reserved 13 • Units held for sale, as reported, were 6,700 at quarter end, down from 8,600 units in the prior year – Units held for sale exclude an elevated number of lease vehicles (1,700) being prepared for sale – Including these vehicles in units held for sale results in a decrease of 200 vehicles vs. prior year and a decrease of 300 vehicles sequentially • Sold 4,500 used vehicles during the first quarter, down 4% from the prior year – Units sold were consistent with the fourth quarter of 2016 • Proceeds per unit were down 16% for tractors and down 20% for trucks in the first quarter compared with prior year (excluding the FX impact) – Proceeds per unit were up 1% for tractors and down 2% for trucks, sequentially – Proceeds per unit were down 25% for tractors and down 18% for trucks, compared to the second quarter 2015 peak Global Used Vehicle Sales Update
  14. 14. @ 2017 Ryder System, Inc. All Rights Reserved 14 Contents • First Quarter 2017 Results Overview • Used Vehicle Sales Update • EPS Forecast • Q & A
  15. 15. @ 2017 Ryder System, Inc. All Rights Reserved 15 EPS Forecast – Continuing Operations ($ Earnings Per Share) • Lowering full year EPS forecast to $3.90 to $4.20 from $4.78 to $5.08 • Lowering full year Comparable EPS forecast to $4.25 to $4.55 from $5.10 to $5.40 • Current forecast is as follows: Second Quarter 2017 Full Year 2017 EPS Forecast $0.79 to $0.89 $3.90 to $4.20 Comparable EPS Forecast $0.87 to $0.97 $4.25 to $4.55 Second Quarter 2016 Full Year 2016 EPS $1.38 $4.94 Comparable EPS $1.56 $5.42
  16. 16. @ 2017 Ryder System, Inc. All Rights Reserved 16 Q&A
  17. 17. @ 2017 Ryder System, Inc. All Rights Reserved 17 Appendix ChoiceLease Vehicle Count Business Segment Detail Central Support Services Balance Sheet Capital Expenditures, Cash Flow and Leverage Return on Capital Spread Asset Management Non-GAAP Financial Measures & Reconciliations
  18. 18. @ 2017 Ryder System, Inc. All Rights Reserved 18 ChoiceLease Vehicle Count (A) (A) The ChoiceLease fleet count includes an elevated number of vehicles being prepared for sale in 3Q16 (1,500 vehicles), 4Q16 (1,200 vehicles) and 1Q17 (1,700 vehicles). Note: Represents end of period vehicle count. 1Q16 2Q16 3Q16 4Q16 1Q17 1Q17 O/(U) 1Q16 End of Period ChoiceLease Vehicles (as reported) 133,300 134,300 136,600 136,500 137,900 4,600 UK Trailers 3,700 3,400 3,500 3,300 3,000 (700) ChoiceLease Vehicles - excluding UK 129,600 130,900 133,100 133,200 134,900 5,300 2Q16 O/(U) 1Q16 3Q16 O/(U) 2Q16 4Q16 O/(U) 3Q16 1Q17 O/(U) 4Q16 Sequential Change ChoiceLease Vehicles (as reported) 1,000 2,300 (100) 1,400 UK Trailers (300) 100 (200) (300) ChoiceLease Vehicles - excluding UK 1,300 2,200 100 1,700
  19. 19. @ 2017 Ryder System, Inc. All Rights Reserved 19 Business Segments (1) Our primary measure of segment financial performance excludes unallocated CSS, non-operating pension costs, restructuring and other charges, net and other items. ($ Millions) First Quarter Memo: Operating Revenue 2017 2016 % B/(W) 2017 2016 % B/(W) Total Revenue: Fleet Management Solutions $ 1,132.5 $ 1,097.9 3% $ 962.2 $ 962.3 —% Dedicated Transportation Solutions 266.7 244.8 9% 193.4 190.3 2% Supply Chain Solutions 462.7 388.7 19% 361.8 322.4 12% Eliminations (113.7) (101.8) (12)% (72.2) (69.0) (5)% Total $ 1,748.2 $ 1,629.7 7% $ 1,445.1 $ 1,406.0 3% Segment Earnings Before Tax: (1) Fleet Management Solutions $ 52.1 $ 83.3 (37)% Dedicated Transportation Solutions 11.3 14.3 (21)% Supply Chain Solutions 27.4 19.8 39% Eliminations (11.2) (11.7) 4% 79.6 105.6 (25)% Central Support Services (Unallocated Share) (10.2) (10.0) (2)% Non-operating Pension Costs (7.2) (6.9) (5)% Other Items (2.2) — NM Earnings Before Income Taxes $ 60.0 $ 88.7 (32)% Provision for Income Taxes 21.7 32.5 33% Earnings from Continuing Operations $ 38.3 $ 56.2 (32)% Comparable Earnings from Continuing Operations $ 44.2 $ 60.1 (26)%
  20. 20. @ 2017 Ryder System, Inc. All Rights Reserved 20 Fleet Management Solutions (FMS) First Quarter ($ Millions) Revenue 2017 2016 % B/(W) ChoiceLease $ 656.3 $ 622.9 5% SelectCare 113.6 114.4 (1)% Commercial Rental 174.0 204.8 (15)% Other 18.3 20.2 (10)% FMS Operating Revenue 962.2 962.3 —% Fuel Services Revenue 170.3 135.6 26% FMS Total Revenue $ 1,132.5 $ 1,097.9 3% FMS Earnings Before Tax FMS Earnings Before Tax (EBT) $ 52.1 $ 83.3 (37)% FMS EBT as a % of FMS Total Revenue 4.6% 7.6% FMS EBT as a % of FMS Operating Revenue 5.4% 8.7% In 2016, Ryder renamed the full service lease and contract maintenance products ChoiceLease and SelectCare, respectively. In 2017, FMS began reporting revenues using these new names. In addition, the historical Contract-Related Maintenance product will be included in SelectCare. Historical reclassified financial amounts were shown in the 4Q16 earnings call presentation and may also be found on Ryder's investor website at www.investors.ryder.com
  21. 21. @ 2017 Ryder System, Inc. All Rights Reserved 21 Dedicated Transportation Solutions (DTS) ($ Millions) First Quarter Revenue 2017 2016 % B/(W) DTS Operating Revenue $ 193.4 $ 190.3 2% Subcontracted Transportation 45.3 31.2 45% Fuel 28.0 23.3 20% DTS Total Revenue $ 266.7 $ 244.8 9% Earnings Before Tax DTS Earnings Before Tax (EBT) $ 11.3 $ 14.3 (21)% DTS EBT as a % of DTS Total Revenue 4.2% 5.8% DTS EBT as a % of DTS Operating Revenue 5.8% 7.5%
  22. 22. @ 2017 Ryder System, Inc. All Rights Reserved 22 Supply Chain Solutions (SCS) ($ Millions) First Quarter Revenue 2017 2016 % B/(W) Automotive $ 148.3 $ 129.1 15% Technology & Healthcare 62.9 57.4 10% CPG & Retail 114.1 108.6 5% Industrial & Other 36.5 27.3 34% SCS Operating Revenue 361.8 322.4 12% Subcontracted Transportation 82.5 52.0 59% Fuel 18.5 14.3 29% SCS Total Revenue $ 462.7 $ 388.7 19% Earnings Before Tax SCS Earnings Before Tax (EBT) $ 27.4 $ 19.8 39% SCS EBT as a % of SCS Total Revenue 5.9% 5.1% SCS EBT as a % of SCS Operating Revenue 7.6% 6.1%
  23. 23. @ 2017 Ryder System, Inc. All Rights Reserved 23 Central Support Services (CSS) First Quarter ($ Millions) 2017 2016 % B/(W) Allocated CSS Costs $ 48.5 $ 48.7 —% Unallocated CSS Costs 10.2 10.0 (2)% Total CSS Costs $ 58.7 $ 58.7 —%
  24. 24. @ 2017 Ryder System, Inc. All Rights Reserved 24 Balance Sheet ($ Millions) March 31, 2017 December 31, 2016 Current Assets $ 1,113 $ 1,102 Revenue Earning Equipment, Net 8,171 8,148 Operating Property and Equipment, Net 754 746 Other Assets 935 907 Total Assets $ 10,974 $ 10,902 Current Liabilities $ 1,005 $ 953 Total Debt 5,326 5,391 Other Non-Current Liabilities (including Deferred Income Taxes) 2,563 2,506 Shareholders' Equity 2,080 2,052 Total Liabilities and Shareholders' Equity $ 10,974 $ 10,902
  25. 25. @ 2017 Ryder System, Inc. All Rights Reserved 25 Capital Expenditures, Cash Flow and Leverage (1) Gross Capital Expenditures ($ Millions) Debt to Equity / Total Obligations to Equity (2) (1) Free Cash Flow and Gross Capital Expenditures exclude acquisitions. Total Obligations to Equity includes acquisitions. (2) The debt to equity metric was not revised in years prior to 2012 to reflect the change in accounting treatment of certain sale-leaseback transactions as debt. (3) Illustrates impact of accumulated net pension related equity charge on leverage. (4) Represents debt to equity target of 225% to 275% while maintaining solid investment grade credit rating. Free Cash Flow 614 258 (257) (488) (340) (315) (728) 194 250 Debt to Equity 175% 196% 257% 272% 227% 260% 277% 263% 240% Pension Impact (3) Lease Commercial Rental PP&E/Other (4)
  26. 26. @ 2017 Ryder System, Inc. All Rights Reserved 26 Adjusted Return on Capital Spread (1) Adjusted Total Capital represents Adjusted Average Total Capital in billions. (2) Includes pension settlement charges of $69M, primarily buyouts, which impacted Return on Equity by 360 basis points. Adj ROC O/(U) COC 0.8% 0.8% (2.2)% (1.3)% 0.2% 0.9% 1.0% 1.1% 1.4% 0.5% (0.1)% Return on Equity 14.2% 11.2% 4.4% 8.4% 11.9% 14.9% 14.9% 11.3% 16.1% 12.8% 10.7% Adjusted Total Capital (1) $4.8 $4.8 $4.2 $4.0 $4.6 $5.2 $5.6 $6.6 $7.1 $7.6 $7.4 (2) Adjusted Return on Capital (ROC) Cost of Capital (COC)
  27. 27. @ 2017 Ryder System, Inc. All Rights Reserved 27 (a) Current year statistics may exclude some units due to a lag in reporting (b) Excludes early terminations where customer purchases vehicle (a)(b) Redeployments – Vehicles coming off-lease or in Rental with useful life remaining are redeployed in the Ryder fleet (SCS, or with another Lease customer). Redeployments exclude units transferred into the Rental product line. Extensions – Ryder re-prices lease contract and extends maturity date. Early terminations – Customer elects to terminate lease prior to maturity. Depending on the remaining useful life, the vehicle may be redeployed in the Ryder fleet (Commercial Rental, SCS, other Lease customer) or sold by Ryder. Asset Management Update (US Only)
  28. 28. @ 2017 Ryder System, Inc. All Rights Reserved 28 Non-GAAP Financial Measures This presentation includes “non-GAAP financial measures” as defined by SEC rules. As required by SEC rules, we provide a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. Specifically, the following non-GAAP financial measures are included in this presentation: Non-GAAP Financial Measure Comparable GAAP Measure Reconciliation & Additional Information Presented on Slide Titled Page Operating Revenue Measures: Operating Revenue Total Revenue Key Financial Statistics 5 FMS Operating Revenue, DTS Operating Revenue and SCS Operating Revenue FMS Total Revenue, DTS Total Revenue and SCS Total Revenue Fleet Management Solutions (FMS), Dedicated Transportation Solutions (DTS) and Supply Chain Solutions (SCS) 20-22 Operating Revenue Growth ex-Foreign Exchange Total Revenue Foreign Exchange Impact on Operating Revenue Growth 29 FMS EBT as a % of FMS Operating Revenue, DTS EBT as a % of DTS Operating Revenue and SCS EBT as a % of SCS Operating Revenue FMS EBT as a % of FMS Total Revenue, DTS EBT as a % of DTS Total Revenue and SCS EBT as a % of SCS Total Revenue Fleet Management Solutions (FMS), Dedicated Transportation Solutions (DTS) and Supply Chain Solutions (SCS) 20-22 Comparable Earnings Measures: Comparable Earnings and Comparable EPS Earnings and EPS from Continuing Operations Earnings and EPS from Continuing Operations Reconciliation 30 Comparable EPS Forecast EPS Forecast from Continuing Operations EPS Forecast – Continuing Operations 31 Comparable Earnings Before Income Tax and Comparable Tax Rate Earnings Before Income Tax and Tax Rate Earnings and Tax Rate from Continuing Operations Reconciliation 32 Adjusted Return on Capital (ROC) and Adjusted ROC Spread 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 total debt and average shareholders' equity to adjusted average total capital is provided. Adjusted Return on Capital Reconciliation 33-34 Cash Flow Measures: Total Cash Generated and Free Cash Flow Cash Provided by Operating Activities Cash Flow from Continuing Operations 35-36 Debt Measures: Total Obligations and Total Obligations to Equity Balance Sheet Debt and Debt to Equity Debt to Equity Reconciliation 37
  29. 29. @ 2017 Ryder System, Inc. All Rights Reserved 29 Foreign Exchange Impact on Revenue Growth (1) Foreign exchange impact was calculated by dividing the results for the current and prior year periods by the exchange rates in effect on March 31, 2016, which was the last day of the prior year period, rather than the actual exchange rates in effect as of March 31, 2017. First Quarter YOY Growth Fx Impact (1) YOY Growth excl Fx Total Revenue 7% (1)% 8% Operating Revenue 3% (1)% 4% FMS Total Revenue 3% (1)% 4% FMS Operating Revenue —% (1)% 1% ChoiceLease Revenue 5% (1)% 6% Commercial Rental Revenue (15)% (1)% (14)% SCS Total Revenue 19% (1)% 20% SCS Operating Revenue 12% (1)% 13%
  30. 30. @ 2017 Ryder System, Inc. All Rights Reserved 30 Earnings and EPS from Continuing Operations Reconciliation (1) ($ Millions or $ Earnings Per Share) 1Q17 1Q17 1Q16 1Q16 Earnings EPS Earnings EPS GAAP $ 38.3 $ 0.71 $ 56.2 $ 1.05 Non-operating pension costs 4.2 0.08 4.0 0.07 Operating tax adjustment 1.7 0.03 $ — $ — Comparable $ 44.2 $ 0.82 $ 60.1 $ 1.12 (1) The reconciliation of the EBT and Tax Rate for these items are included on slide 38.
  31. 31. @ 2017 Ryder System, Inc. All Rights Reserved 31 EPS from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) Second Quarter 2017 Full Year 2017 EPS forecast $0.79 to $0.89 $3.90 to $4.20 Non-operating pension costs, net of tax 0.08 0.32 Operating tax adjustment — 0.03 Comparable EPS forecast $0.87 to $0.97 $4.25 to $4.55 Second Quarter 2016 Full Year 2016 EPS $1.38 $4.94 Non-operating pension costs, net of tax 0.09 0.33 Restructuring — 0.06 Pension-related adjustments 0.09 0.09 Comparable EPS $1.56 $5.42
  32. 32. @ 2017 Ryder System, Inc. All Rights Reserved 32 EBT and Tax Rate from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) 1Q17 1Q17 1Q17 EBT Tax Tax Rate GAAP $ 60.0 $ 21.7 36.2% Non-operating pension costs 7.2 3.0 Operating tax adjustment 2.2 0.5 Comparable (1) $ 69.4 $ 25.2 36.4% 1Q16 1Q16 1Q16 EBT Tax Tax Rate GAAP $ 88.7 $ 32.5 36.7% Non-operating pension costs 6.9 2.9 Comparable (1) $ 95.6 $ 35.4 37.1% (1) The comparable provision for income taxes 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 statutory tax rates of the jurisdiction to which the non- GAAP adjustments relate.
  33. 33. @ 2017 Ryder System, Inc. All Rights Reserved 33 Adjusted Return on Capital Reconciliation(1) ($ Millions) (1) Non-GAAP elements of this calculation have been reconciled to the corresponding GAAP measures. A numerical reconciliation of net earnings to adjusted net earnings and average total debt and average shareholders' equity to adjusted average total capital is provided on this slide. (2) Earnings calculated based on a 12-month rolling period. (3) Interest expense includes interest on off-balance sheet vehicle obligations. (4) Income taxes were calculated by excluding taxes related to comparable earnings items and interest expense. (5) The average is calculated based on the average GAAP balances. (6) Represents comparable earnings items for those periods. 2007 2008 2009 2010 2011 2012 Net earnings (2) $ 254 $ 200 $ 62 $ 118 $ 170 $ 210 Restructuring and other charges, net and other items 1 70 30 6 6 17 Income taxes 152 150 54 61 108 91 Adjusted earnings before income taxes 407 420 146 185 284 317 Adjusted interest expense (3) 169 165 150 133 135 144 Adjusted income taxes (4) (220) (230) (122) (124) (157) (167) Adjusted net earnings [A] $ 356 $ 355 $ 174 $ 194 $ 262 $ 294 Average total debt(5) $ 2,848 $ 2,882 $ 2,692 $ 2,512 $ 3,079 $ 3,778 Average off-balance sheet debt(5) 150 171 142 114 78 2 Average total shareholders' equity(5) 1,791 1,778 1,396 1,402 1,428 1,406 Average adjustments to shareholders' equity (6) 1 10 16 2 4 (3) Adjusted average total capital [B] $ 4,789 $ 4,841 $ 4,245 $ 4,030 $ 4,588 $ 5,182 Adjusted return on capital [A]/[B] 7.4% 7.3% 4.1% 4.8% 5.7% 5.7% Weighted average cost of capital 6.6% 6.5% 6.3% 6.1% 5.5% 4.8% Adjusted return on capital spread 0.8% 0.8% (2.2)% (1.3)% 0.2% 0.9%
  34. 34. @ 2017 Ryder System, Inc. All Rights Reserved 34 Adjusted Return on Capital Reconciliation(1) ($ Millions) (1) Non-GAAP elements of this calculation have been reconciled to the corresponding GAAP measures. A numerical reconciliation of net earnings to adjusted net earnings and average total debt and average shareholders' equity to adjusted average total capital is provided on this slide. (2) Earnings calculated based on a 12-month rolling period. (3) Interest expense includes interest on off-balance sheet vehicle obligations. (4) Income taxes were calculated by excluding taxes related to comparable earnings items and interest expense. (5) The average is calculated based on the average GAAP balances. (6) Represents comparable earnings items for those periods. 2013 2014 2015 2016 1Q16 1Q17 2017 Forecast Net earnings (2) $ 238 $ 218 $ 305 $ 262 $ 308 $ 245 $ 223 Restructuring and other charges, net and other items - 115 18 13 16 15 2 Income taxes 126 118 164 142 165 131 125 Adjusted earnings before income taxes 363 451 486 417 489 390 350 Adjusted interest expense (3) 141 145 151 148 152 145 144 Adjusted income taxes (4) (177) (214) (224) (198) (226) (187) (177) Adjusted net earnings [A] $ 327 $ 383 $ 413 $ 366 $ 416 $ 349 $ 316 Average total debt(5) $ 4,015 $ 4,653 $ 5,177 $ 5,549 $ 5,358 $ 5,497 $ 5,329 Average off-balance sheet debt(5) 1 2 1 1 2 1 — Average total shareholders' equity(5) 1,594 1,926 1,895 2,052 1,945 2,065 2,095 Average adjustments to shareholders' equity (6) (2) 8 11 2 3 1 2 Adjusted average total capital [B] $ 5,608 $ 6,589 $ 7,084 $ 7,605 $ 7,308 $ 7,564 $ 7,427 Adjusted return on capital [A]/[B] 5.8% 5.8% 5.8% 4.8% 5.7% 4.6% 4.3% Weighted average cost of capital 4.8% 4.7% 4.4% 4.3% 4.4% 4.3% 4.4% Adjusted return on capital spread 1.0% 1.1% 1.4% 0.5% 1.3% 0.3% (0.1)%
  35. 35. @ 2017 Ryder System, Inc. All Rights Reserved 35 Cash Flow Reconciliation (1) Included in cash flows from investing activities. (2) Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment. (3) Non-GAAP financial measure. We refer to the net amount of cash generated from operating activities and investing activities (excluding changes in restricted cash and acquisitions) from continuing operations as “free cash flow”. We calculate free cash flow as the sum of net cash provided by operating activities and net cash provided by the sale of revenue earning equipment and operating property and equipment, collections on direct finance leases and other cash inflows from investing activities, less purchases of property and revenue earning equipment. (4) Includes adjustment to reclassify losses from fair value adjustments on our used vehicles to “Gains on Used Vehicles, Net”. ($ Millions) 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 Cash Provided by Operating Activities from Continuing Operations $ 985 $ 1,028 $ 1,042 $ 1,160 $ 1,252 Proceeds from Sales (Primarily Revenue Earning Equipment)(1) 216 235 337 413 452 Collections of Direct Finance Leases(1) 65 62 62 72 71 Other, net(1) — 3 — — 8 Total Cash Generated 1,266 1,328 1,442 1,645 1,783 Capital Expenditures (1), (2) (652) (1,070) (1,699) (2,133) (2,123) Free Cash Flow (3) $ 614 $ 258 $ (257) $ (488) $ (340) Memo: Depreciation Expense (4) $ 829 $ 808 $ 863 $ 944 $ 967 Net cash used in financing activities (542) 78 504 438 347 Net cash used in investing activities (449) (982) (1,657) (1,635) (1,604)
  36. 36. @ 2017 Ryder System, Inc. All Rights Reserved 36 Cash Flow Reconciliation ($ Millions) (1) Included in cash flows from investing activities. (2) Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment. (3) Non-GAAP financial measure. We refer to the net amount of cash generated from operating activities and investing activities (excluding changes in restricted cash and acquisitions) from continuing operations as “free cash flow”. We calculate free cash flow as the sum of net cash provided by operating activities and net cash provided by the sale of revenue earning equipment and operating property and equipment, collections on direct finance leases and other cash inflows from investing activities, less purchases of property and revenue earning equipment. (4) Includes adjustment to reclassify losses from fair value adjustments on our used vehicles to “Gains on Used Vehicles, Net”. 12/31/2014 12/31/2015 12/31/2016 3/31/2016 3/31/2017 2017 Forecast Cash Provided by Operating Activities from Continuing Operations $ 1,383 $ 1,442 $ 1,601 $ 368 $ 331 $ 1,700 Proceeds from Sales (Primarily Revenue Earning Equipment)(1) 497 427 421 121 97 390 Collections of Direct Finance Leases (1) 66 71 77 26 16 80 Other, net (1) (1) — — — — Total Cash Generated 1,944 1,940 2,099 514 444 2,170 Capital Expenditures (1), (2) (2,259) (2,668) (1,905) (575) (361) (1,920) Free Cash Flow (3) $ (315) $ (728) $ 194 $ (61) $ 83 $ 250 Memo: Depreciation Expense (4) $ 1,047 $ 1,122 $ 1,187 $ 287 $ 311 $ 1,270 Net cash provided by (used in) financing activities 312 731 (186) 61 (106) (250) Net cash used in investing activities (1,705) (2,161) (1,406) (429) (247) $ (1,450)
  37. 37. @ 2017 Ryder System, Inc. All Rights Reserved 37 Debt to Equity Reconciliation(1) Note: Amounts may not recalculate due to rounding. ($ Millions) (1) The debt to equity metric was not revised in years prior to 2012 to reflect the change in accounting treatment of certain sale-leaseback transactions as debt. (2) For years beginning in 2012, sale-leaseback transactions that were previously accounted for as off-balance sheet are now included in GAAP balance sheet debt. The Company does not reconcile total obligations to equity for these years as this metric is the same as the debt to equity metric. 12/31/2009 % to Equity 12/31/2010 % to Equity 12/31/2011 % to Equity Debt $ 2,498 175% $ 2,747 196% $ 3,382 257% PV of minimum lease payments and guaranteed residual values under operating leases for vehicles 119 100 64 Total Obligations (2) $ 2,617 183% $ 2,847 230% $ 3,446 261%
  38. 38. @ 2017 Ryder System, Inc. All Rights Reserved 38

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