COMPANY OVERVIEW. February 2019

Transcription

1 COMPANY OVERVIEW February

2 Safe Harbor and Non-GAAP Financial Measures Note Regarding Forward-Looking Statements: Certain statements and information included in this news release are forward-looking statements under the Federal Private Securities Litigation Reform Act of 1995, including our expectations regarding market trends and economic conditions, manufacturer production and delivery schedules, our financial condition, fleet growth, performance in our product lines and segments, the strength of our sales pipeline, demand, utilization and pricing trends in commercial rental, volumes and pricing trends in used vehicle sales, used vehicle inventory levels, residual values, return on capital spread, operating cash flow, free cash flow, capital expenditures, our ability to make investments in sales, marketing, IT and new product initiatives, benefits of our sales and marketing initiatives, maintenance costs on certain older model year vehicles, and the impact and adequacy of steps we have taken to address our cost structure, including our maintenance initiatives and zero-based budgeting process. Our forward-looking statements also include our expectations regarding the impact from the new lease accounting standard on our earnings, financial position, cash flow, leverage and the demand for our products and services. The expected impact on these items may differ due to changes in the distribution of lease fleet by age, the number of early terminations, vehicle type and lease terms, and the percentage of leases fulfilled with new versus used vehicles. All of these statements are based on our preliminary estimates and are subject to our continuing evaluation of our leases under the new lease accounting standard as well as necessary changes to accounting and business processes in order to implement the recognition and disclosure requirements of the new standard. All of our 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, our ability to adapt to changing market conditions, lower than expected contractual sales, decreases in commercial rental demand or poor acceptance of rental pricing, availability of rental vehicles to meet demand and availability of labor to maintain our fleet at normalized levels, worsening of market demand for used vehicles impacting current pricing and our anticipated proportion of retail versus wholesale sales, lack of customer demand for our services, higher than expected maintenance costs due to, among other things, lower than expected benefits from maintenance initiatives and a newer fleet, setbacks or uncertainty in the economic market, implementation or enforcement of regulations, decreases in freight demand or volumes, poor operational execution particularly with new accounts and product launches, our ability to obtain adequate profit margins for our services, our inability to maintain current pricing levels due to soft economic conditions, 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 writeoffs, 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, impact of changes in accounting policies, the 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 effective income tax rate, and comparable earnings before interest, taxes, depreciation and amortization. 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 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 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 2

3 Key Themes 3

4 Key Themes Summary Leader in transportation and logistics outsourcing with significant growth opportunity $1.3 trillion addressable market with ability to further penetrate given secular trends Large contractual revenue base supports long-term value creation through earnings and operating cash flow growth Industry leader in new product innovation to drive future earnings potential Increasing operating cash flow and counter-cyclical free cash flow supports strong balance sheet, strategic optionality, and increasing shareholder returns Executing on our strategy 4

5 1 Leader in Transportation and Logistics Outsourcing Solutions $ $ RYDER IS A FORTUNE 500 COMPANY WITH 8.4 Billion Annual Revenue (1) 306 Million 800+ Comparable Earnings (1,2) Maintenance Locations 272,100 Vehicles 55 Million Sq. Ft. Warehouse Space 39,600 Employees REVENUE BY SEGMENT (3) 61% 13% 26% Fleet Management Solutions (FMS) Supply Chain Solutions (SCS) Dedicated Transportation Solutions (DTS) More than 90% of revenue is generated in North America (1) These amounts result from continuing operations; (2) Net Earnings from Continuing Operations are $276 million, (3) % of 2018 Operating Revenue 5

6 1 Complementary Business Segments Provide Broad Range of Value-added Solutions FMS DTS SCS Solutions comprising two or more services: Vehicle Maintenance, Financing and Support Services Drivers, Routing, Scheduling and Administration Management of Outside Carriers Warehousing Integrated Logistics Solutions E-fulfillment / Last Mile Delivery Diversified customer base representing most industry segments 6

7 2 $1.3 Trillion Addressable Market Provides Significant Growth Opportunities RYDER MARKET SHARE <1% of $1.3 TRILLION MARKET FMS DTS SCS $200B Commercial Vehicle Market $50B $12B $800B Dedicated Transportation Market $400B $16B $1.1T Warehouse & Truck- Based Transportation Management Market $900B $127B Addressable DIY Market Highly Addressable DIY Market (Market Opportunity) Currently Outsourced Growth opportunity to penetrate large, non-outsourced ( DIY ) market Sources: Polk/HIS, Armstrong & Associates, Ryder estimates. 7

8 2 DIY Transportation and Logistics Market Faces Increasing Challenges from Secular Trends that Favor Outsourcing SECULAR TRENDS THAT SUPPORT OUTSOURCING DECISION Increased Vehicle Cost and Complexity; More Stringent Regulations Driver and Technician Shortage Dynamic Supply Chains Disruptive Technologies Purchase costs up 50-65% (1) Maintenance cost up % (1) Safety regulations may reduce freight capacity / productivity Current driver shortfall is 50k expected to be 175k by 2026 (2) Technician shortage 140k needed by 2022 (2) Growth in e-commerce and omni-channel More nearshoring / onshoring activity Low / zero-emission electrified powertrains Semi-autonomous control systems Asset sharing opportunities supported by technology platforms Ryder is well positioned to address challenges facing DIY transportation and logistics market (1) Compared with power vehicles with pre-2007 technology (2) American Trucking Association and U.S. Department of Labor 8

9 3 Majority of Revenue Comes from a Growing Base of Contractual Revenue % of 2018 Operating Revenue Contractual Revenue Growth (1) 14% FMS: Commercial Rental Transactional revenue 9% 11% 10% 86% FMS: ChoiceLease FMS: SelectCare DTS SCS Supported by 3-7 year customer contracts 1% 0% 1% PRE-GROWTH STRATEGY ( ) 5% 6% POST-GROWTH STRATEGY ( ) 5% 2019 FORECAST FMS DTS SCS Record contractual sales in 2017 and years of organic lease fleet growth Contractual revenue growth accelerated following implementation of Growth Strategy (1) CAGR is operating revenue ex-acquisitions. Growth in contractual revenue supports long term value creation 9

10 3 Contractual Revenue Provides More Stable Earnings and Operating Cash Flow Future Revenue Contracted as of Year-end ($B) % of Earnings before Tax from Contractual Revenues (1) $ % 85% 78% 49% 51% $ ChoiceLease locks in future revenue and cash flow over average 6-year life DTS & SCS - multi-year contracts with long-term customer retention Contractual revenue growth accelerated following implementation of growth strategy Smaller proportion of earnings coming from transactional used vehicle sales and rental businesses Growth in contractual revenue improves earnings stability and visibility (1) ChoiceLease, SelectCare, DTS and SCS 10

11 3 Overcoming Used Vehicle Downturn and Maintenance Headwinds Through Growth and Cost Management Negative Impact on Comparable EPS Comparable EPS Positive Impact on Comparable EPS Weak used vehicle pricing due to market downturn that began in mid Elevated maintenance costs on certain older model year vehicles that are expected to exit the operating fleet $6.10 $5.79 $5.43 $4.53 $ F * Beginning in 2018, earnings from revenue growth and cost management more than offset headwinds from used vehicle sales and elevated maintenance costs Earnings growth resumed in 2018 as earnings from growth and cost management more than offset headwinds (*) represents midpoint of FY19 forecast range of $ $

12 3 Actions to Further Minimize Future Earnings Variability USED VEHICLE SALES COMMERCIAL RENTAL De-risked new leases signed Reduced residual value assumptions below the 5-year rolling average to current market rates Grow rental fleet commensurate with lease fleet growth Y/E 2018 rental fleet = 24% of total fleet (1) vs. target of ~25% Expanded used truck retail capacity through direct marketing and inside sales to minimize use of wholesale channel De-fleet excess rental capacity into lease during cyclical downturn Fulfill lease contracts with mid-life rental vehicles Lowering accounting residual values using accelerated depreciation and the 5 year average methodology Assuming no market change, accounting residuals expected to be at market prices by the end of 2021 MAINTENANCE COSTS Exit of model year 2012 vehicles expected to reduce 2019 maintenance cost headwind to $11M vs. $30M headwind in 2018 Initiating a $75M multi-year effort to reduce maintenance costs - $20M benefit expected in 2019 (1) Power vehicles Actions taken on transactional businesses and maintenance costs are expected to further reduce earnings variability 12

13 4 Industry Leader in New Product Innovation to Drive Future Earnings Potential Description Environment Ryder s Approach Advanced Vehicle Technology the Tesla effect Low/zero emission electrified powertrains Semi- and fully autonomous control systems Speed of adoption and regulations uncertain Likely initial use cases: Electrified light-duty vehicles Autonomous drayage and long-haul applications Partnerships for deployment of new technologies Chanje, Workhorse and Nikola Signed customer deal for largest EV order in market (1k vehicles) Establish EV/AV maintenance standards with OEMs Asset Sharing the Uber effect Monetize underutilized trucks or freight capacity by providing access to another party with need Early stages of platform and marketplace Gain capacity visibility Launched COOP by Ryder TM, a peer-to-peer digital platform for commercial vehicle sharing Ongoing enhancements to RyderShare TM platform for freight visibility e-commerce the Amazon effect Movement of goods through parallel supply chains direct to customers B2B or B2C E-commerce growth accelerating, but only ~10% of market Big & bulky e-commerce is a growing category Provide omni-channel solutions addressing e-commerce needs MXD acquisition significantly expanded capabilities in e- commerce fulfillment and last mile delivery of big and bulky goods Ryder s new e-commerce fulfillment solution for large to small parcels direct to consumer 13

14 5 Understanding Ryder s Cash Flow Profile Contractual nature of business portfolio provides reliable, multi-year operating cash flow ChoiceLease growth requires upfront capital expenditure; not committed until a lease contract is signed with customer, while cash returns are generated over typical 5-7 year contract period Ryder s free cash flow is counter-cyclical with growth Lumpy replacement cycles can also drive uneven replacement capital for lease and rental Dedicated Transportation Solutions and Supply Chain Solutions provide solid positive Free Cash Flow throughout cycle Contractual growth drives higher, reliable, multi-year operating cash flow. Free cash flow will be negative during periods of rapid growth and positive during period of slower growth. 14

15 5 Impact of Growth Capital Growth Capital Total Cash Generated ($M) 1,700 1,587 ($M) 2,580 1,292 1,940 2,099 2,050 2, F F Free Cash Flow: (728) (944) (1,120) Free Cash Flow is impacted by growth capital in the period of initial vehicle investment and by variability in the timing of replacement capital Total Cash Generated increases following periods of growth as capital is priced into lease contracts and recovered over the contract term Growth capital investment positions Ryder for long term value creation 15

16 5 Balanced Capital Allocation Philosophy Leads to Attractive Shareholder Returns Capital Expenditures Dividend Growth Acquisitions Share Repurchases Organic growth: primarily vehicle capex for contractual lease fleet Growth reflects long-term earnings growth; 10% CAGR since 2005 FMS: tuck-ins drive operating leverage SCS/DTS: expand capabilities, industries served Anti-dilutive: offset dilution creep Discretionary: driven by balance sheet leverage Over $1.6B in Cash Returned to Shareholders Over The Last Decade ( ) $803 M $838 M $1.6B Dividends Share Repurchases 16

17 6 Execution Scorecard in 2018 Forecast (1) Results Lease Fleet Growth 6,500 vehicles 9,600 Operating Revenue Growth FMS DTS SCS 8% 9% 6% 9% 10% 17% Comparable EPS $5.40 $5.70 $5.79 FCF ($600M) ($944M) ROC Spread (2) 0 bps 10 bps Used Vehicle Inventory ~7,000 vehicles 6,900 Includes outperformance in contractual lease sales Delivered on our commitments while investing for long-term growth (1) Initial full-year forecast issued on February 16, 2018 (2) Rolling 12 months. 17

18 6 Progress Toward Three-year Financial Targets Target (1) 2018 Results 2019 Forecast (2) Operating Revenue Growth FMS DTS SCS 6 7% 9 10% 7 8% EBT as % of Op. Revenue FMS DTS SCS ROC Spread 10 12% 8 9% 8 9% bps Leverage (Debt-to-Equity) (1) Three-year targets provided on 2/16/18 (2) 2019 forecast provided on 2/14/19 (3) Reflects impact from new lease accounting standard 2018: % 2019: % (3) Met Modestly Below Significantly Below 18

19 Summary of Key Themes Leader in transportation and logistics Large addressable market Increasing market penetration given secular trends Contractual revenue base providing stable earnings growth Industry leader in product innovation Counter-cyclical cash generation Balance sheet strength Returning cash to shareholders 19

20 Strategy Overview 20

21 Our rich history provides a solid foundation for growth Years Company Founded 1930s Ryder Goes Public 1950s Fueling Growth 1970s Sharpening Our Focus 1990s JIM RYDER MAKES A $ 35 DOWN PAYMENT ON ONE TRUCK s s Growth in a Time of Turmoil 1940s 1990 s 2000 s 2010 s Establishing Our Brand 1960s New Horizons 1980s Driving Forward 2000s Grew rapidly by focusing on transportation solutions Trucking deregulation; diversified into non-core businesses Divested non-core businesses Improved performance through process changes Focus on Growth Focus on Growth TODAY 21

22 Ryder working behind the scenes in daily life DAY BEGINS 7:00 am W AKE UP 8:00 am BREAKFAST 8:30 am DRIVE TO W ORK DRIVE HOME 5:00 pm 12:00 pm LUNCH 9:00 am AT THE OFFICE 6:00 pm DINNER 8:00 pm EVENING DAY ENDS 22

23 Guided by our vision, mission and values VISION To bring compelling value through outsourcing MISSION Ryder provides innovative supply chain and fleet solutions that are reliable, safe and efficient, enabling our customers to deliver on their promises VALUES Trust Innovation Collaboration Expertise Safety We will crack the code on fleet and supply chain outsourcing by bringing compelling value propositions to our customers 23

24 Focused on our strategy and strategic priorities Strategy Profitably grow fleet management and supply chain outsourcing services by targeting private fleets (FMS/DTS) and key verticals (SCS) with innovative solutions, operational excellence, customer focus, best in class talent and information technology GROWTH EPS ROC Spread Operating Revenue Strategic Priorities 1. Operational Excellence - Continuous productivity and process improvement to solve customer problems, increase cost effectiveness and drive safety 2. Innovation - Develop new services connected to the core business that deliver value to targeted customer segments 3. Customer Focus - Accelerate growth rate through increased sales & marketing effectiveness and new product innovation Operational Excellence Customer Focus Innovation 4. Talent & Culture Attract, develop and retain the best talent in an environment where leaders Talent engage & their Culture people to innovate, Information pursue the vision Systems and build on our values Talent & Culture Information Technology 5. Information Technology Deploy technology to enable growth while improving operational efficiencies 24

25 Provider Capabilities Client Pain Points Addressing historical barriers to drive increased outsourcing Client Pain Points Overlap with Provider Capabilities Overcome Typical Outsourcing Barriers Non-core Process Increasing Complexity Technology Regulatory & Compliance Rising Costs Time Sensitivity Volatility Scale Economies (relative to client) Knowledge / Expertise (info asymmetry) Best Processes (existing, developed, refined) Greater Coverage (relative to client) Flexibility (options for client) Loss of Control Demonstrate industry specific expertise to build relationships and trust (Food / Beverage and Automotive) Cost Flexibility around value-added services and continuous improvement Commitment Provide on-ramps and transactional services Execution Risks Enhance operational excellence and be known for best execution Resulting in Outsourcing Ryder Industry expertise that builds relationships and trust with customers known for best execution Multiple on-ramps with varying levels of cost and commitment Flexible options for customers to choose value-added services Compelling Value Through Outsourcing New initiatives to address barriers combined with secular trends will allow us to realize stronger growth from outsourcing 25

26 Initiatives and progress overcoming barriers to outsourcing Outsourcing Barriers Progress Initiative Result 1 2 Operational Excellence Innovation LEAN roll out in SCS Uptime initiative Launch new products All major accounts Record-low breakdowns Flexible maintenance options (FMS) COOP by Ryder TM RyderShare TM Ryder Last Mile 3 Customer Focus Upsell FMS to DTS Total Cost of Ownership (TCO) sales tool Customer Satisfaction Index (CSI) Customer Advisory Boards Majority of new DTS sales 1/3 of lease growth from do-it-yourselfers CSI scores up across all segments Formalized customer feedback 4 5 Talent & Culture IT 2 employee engagement surveys Restructured recruiting process IT Transformation America s Best Employers list (Forbes) for 4 years Employee count up 20% since 2015 to 40k supports growth Foundational changes + customer facing technology 26

27 Driving growth with new products and capabilities Advanced Vehicle Technologies Leveraging our role as a transportation thought leader and world-class maintenance provider, Ryder is leading the way with electric and autonomous vehicles through strategic partnerships and targeted investments Digital Platform for Commercial Vehicle Sharing First of its kind, peer-to-peer asset-sharing platform to list and rent underutilized commercial vehicles Closed April 2018 Launched March 2018 Omni-Channel Fulfillment Capabilities MXD Group Acquisition Significantly expanded e-commerce fulfillment and last mile capabilities for big and bulky products RyderShare Supply Chain Visibility Tool Cloud-based, neutral integration platform that drives operating efficiencies and optimizes supply chain performance by providing real-time views across all transportation modes Flexible Maintenance Solutions Introduced a broader range of flexible, maintenance options through ChoiceLease Preventive and ChoiceLease On Demand and SelectCare On Demand Sales & Marketing Initiatives Building awareness for Ryder services and solutions and generating sales leads through targeted communications. Improving sales effectiveness through Total Cost of Ownership Tool and a better understanding of true fleet costs and the value generated by a Ryder outsourced solution. 27

28 Demonstrated lease fleet growth 11, will represent our 8th consecutive year of organic lease fleet growth 11,000 10,000 9,000 8,000 7,000 6,000 This sustained growth represents a significant improvement versus the prior decade when the lease fleet declined organically in 8 out of 10 years ( ) 6,800 9,600 5,000 4,000 3,000 3,200 4,100 4,100 2,000 1,000 1,200 1, Forecast Sustainable lease fleet growth results from ongoing macro trends that favor outsourcing and company specific initiatives to penetrate the private fleet market Note: Represents lease fleet growth excluding UK trailers; 2016 excludes a higher number of vehicles being prepared for sale (approximately 1,200) 28

29 Business Segment Overview 29

30 Comprehensive product and service offerings Segment / Product FMS: ChoiceLease Operating Revenue Margin (Earnings before Tax % Operating Revenue) Assets Number of Vehicles Adjusted Return on Capital (4) FY2018 FY2018 4Q2018 4Q2018 FY2018 $2.9B 149,300 FMS: Commercial Rental $1.0B 7.4% (1) (FMS Segment) $11.7B (FMS Segment) 42, % (FMS Segment) FMS: SelectCare $0.5B 56,300 FMS: SelectCare On-Demand Dedicated Transportation Solutions (DTS) Supply Chain Solutions (SCS) NA 8,600 (2) $0.9B 7.0% (1) $0.3B 9,500 (3) 14.2% $1.8B 7.6% (1) $1.1B 9,500 (3) 15.4% Ryder System, Inc. $6.7B 5.6% $13.0B 272, % (1) Segment earnings before tax excluded non-operating pension costs. (2) Represents number of vehicles serviced under SelectCare On Demand agreements. Units included in count may have been serviced more than once during the period. (3) Vehicles supporting DTS and SCS are provided by FMS and are also included in the FMS fleet count. (4) Rolling 12 months 30

31 FMS - Maximizing uptime for over 15,000 contractual customers Fleet Management Solutions (61% of RSI Operating Revenue) Commercial Rental (22% FMS revenue) ChoiceLease (65% FMS revenue) SelectCare (11% FMS revenue) Fleet Support Services (2% FMS revenue) Commercial vehicles for short-term customer needs Used by both lease and non-lease customers Complementary service offering for ChoiceLease customers Sample Clients: 2016 Launch 2016 Launch Long-term contractual agreement Includes vehicle procurement, flexible levels of maintenance services and used vehicle disposition Comprehensive package of fleet support services available ChoiceLease Full Service ChoiceLease Preventive ChoiceLease On Demand Comprehensive, preventive maintenance services Vehicles are owned by our clients or under third-party finance lease contracts SelectCare Comprehensive SelectCare Preventive SelectCare OnDemand Ancillary maintenance work on Ryder or customer owned vehicles not included in base contract 2015 Launch Fuel Insurance Safety Regulatory reporting Technology Note: Revenue percents based on segment operating revenue (excludes fuel). 31

32 FMS Operating in large, diverse market segments Diversified portfolio of customers represent many industries including: Transportation, Logistics & Transportation, Logistics Warehousing & Warehousing Food & Beverage Food & Beverage Construction Housing Construction & Housing Business Business & Personal & Personal Services Serv. Industrial Industrial Retail Stores & Apparel Retail Stores & Apparel Automotive Automotive Energy, Chemical & Plastic Energy, Chemical & Products Plastics Other Other 4% 4% 4% 8% 6% 9% 12% 22% 32% Current Customers Ryder has been successful in serving both large and small private fleets 15,300 ChoiceLease/ SelectCare contract customers 36,200 commercial rental customers 800+ operating locations (operates in U.S., Canada, U.K., Germany) 149,300 ChoiceLease and 56,300 SelectCare contract vehicles in service 42,600 commercial rental vehicles in service 23,200 customer vehicles serviced during 2018 under SelectCare ondemand maintenance Market Size The total commercial market addressable estimated to be 8 million power vehicles in the U.S. (additional market opportunity in the U.K. and Canada and with trailers) The highly addressable truck leasing, maintenance and rental market (excluding specialty vehicles, older vehicles and non-target segments) is estimated to be 2 million power vehicles in the U.S. The size of the outsourced truck leasing, maintenance and rental market is estimated to be 0.5 million power vehicles in the U.S. The remaining vehicles are owned and managed by customers themselves and represent a significant growth opportunity for FMS (% of 2017 U.S. Lease & Rental Revenue) 32

33 FMS Significant opportunities for growth Private Fleet & For-Hire Conversions / Product Innovation Largest opportunity for growth Leverage secular trends to drive outsourcing decision Vehicle cost Complexity of engine technology New emissions standards Residual risk exposures Capital redeployment Technician shortage Focus on product innovation and flexible options to target new customers ChoiceLease Preventive ChoiceLease On Demand SelectCare On Demand Leverage advanced vehicle technologies - electric and autonomous Strategic partnerships and targeted investments enable Ryder to offer new products and provide thought leadership to customers Share Gain Ability to leverage maintenance infrastructure enhances competitive position in existing outsourced rental/lease market in U.S., Canada and U.K. Customer / Economic Expansion Fleet additions with existing customers by expanding geographies served and/or resulting from customer growth Acquisitions Supplement to organic growth where mutual interest exists Focused on accretive deals in core rental/leasing business to leverage existing facility infrastructure 33

34 FMS - Secular trends support outsourcing Increased Vehicle Cost & Complexity Increased Government Regulation EPA! CSA 2010 FOOD SAFETY REGULATIONS Engine technology changes mandated by EPA favor vehicle financing and maintenance outsourcing Driver & Technician Shortage Secular Trends that Support z Outsourcing Decision Companies have the opportunity to leverage Ryder s maintenance and driver expertise in order to comply with safety regulations Capital Access & Focus NOW HIRING NOW HIRING NOW HIRING NOW HIRING $ Bank Requirements $ NOW HIRING NOW HIRING Access to Capital Well established procedures to recruit, train and develop drivers and technicians Less inclined to focus capital on non-core activities 34

35 FMS - Technology investments support growth TM RyderGyde New, comprehensive fleet management app that can be used by customers as well as non-customers to: Schedule maintenance appointments in 60 seconds Check Ryder and market real-time fuel rates Contact roadside assistance Locate any of our 800 maintenance facilities instantly RydeSmart Telematics Full-featured cloud-based software which integrates GPS technology with on-vehicle computers to lower operating costs and improve customer service by: Reducing fuel usage up to 10-15% through improved routing and driver management Saving an average of 60 hours per year per driver through improved routing and time management Reducing administrative overhead by automating DOT Hours of Service and trip records/fuel tax reporting Improving safety by monitoring and adjusting driver behavior, and linking to Ryder Customer Response Call Center Mobile application for iphone and ipad devices Deployed on ~33,000 Ryder vehicles Customer Web Portal Web based fleet management tool that provides customers with 24/7 access to key operational and maintenance management information about their fleet. Increasing fleet management efficiencies via self-serve features: Customized notifications Roadside assistance cases (RCRC) Odometer entry Vehicle transfers Schedule maintenance Location finder Reporting (integrated with FleetCare) Mobile access to key functionality 35

36 FMS - Timing of revenue and cash flow for ChoiceLease Lease Signed Term Begins ~ Days Lease Term (Avg. Term: 5 7 years) Lease contract pricing based on DCF approach Lease Expires Pricing targeted at bps above segment cost of capital (on a fully-costed basis) Customer contract signed Vehicle ordered from OEM Vehicle placed into service Used vehicle sold Illustrative cash flows for a ChoiceLease unit: Sales compensation driven by deal profitability Higher vehicle investment and maintenance costs recovered in lease rate Time 0 Years 1-6 YE 6 Financial Impact Capital Expenditure (avg. $90K) Fixed Revenue: ~85% based on fixed rate per month Variable Revenue: Remainder (~15%) based on rate per mile driven Maintenance, Depreciation and Interest Expense incurred Fuel costs passed through to customer Note: Revenue escalates during contract life based on CPI index Sales Proceeds (25 35%) Cash Flow Negative Positive Positive 36

37 Used Vehicle Sales Overview Historical view: Most recent multi-year used vehicle sales downturns UVS, net* ($M) Q00 2Q02 9 Quarters Above average OEM production 1995, 1998 to recession + OEM engine issue Proceeds/unit declined 45% 3Q08 1Q10 6 Quarters Above average OEM production 2004 to 2006 Great recession Proceeds/unit declined 17% Q15 4Q17 9 Quarters Above average OEM production 2012 to 2016 Industrial recession + weak export market + less desirable MY10-12 tractors Proceeds/unit declined 33% These multi-year downturns were driven in part by a soft demand environment and an over supply of tractors entering the used market 4 to 6 years after production (*) UVS, net is reported as gains on vehicle sales, net, plus losses from fair value adjustments UVS, net for does not reflect impact from fair value adjustments Note: Proceeds/unit percent change reflects US tractors 37

38 Used Vehicle Sales Overview Fleet profile: Used Vehicles Sold YTD (1) 21% 26% 54% Used Vehicle Inventory (2) Operating Fleet (2) 42% 11% 47% 1% 92% 7% Pre-2011 MY Post-2012 Power vehicles in US & Canada (1) Number sold FY 2018 (2) Vehicle count as of 12/31/18 Majority of model year vehicles expected to be out of the operating fleet by end of 2019 and sold by mid Better maintenance performance experienced on post-2012 vintages. Ryder s Used Vehicle Buyer: 85% operate fleets of 1 3 vehicles 70% sold to repeat buyers Primary industries represented Business & Personal Services Other 22% 22% 56% Initiatives To Maximize Proceeds & Derisk Portfolio: Expand Retail Sales Channels Enhance Website Experience & Analytics Lease Pricing Launched Inside Sales team - centralized group generating leads and selling remotely - results favorable with 80% of sales to new customers at attractive prices Improved online used vehicle sales presence resulting in a better online customer experience Lower accounting residuals are being used for new lease pricing in order to mitigate future residual exposure Transportation 38

39 FMS CUSTOMER CASE STUDY W.B. Mason Ryder s relationship with W.B. Mason began in Over time, W.B. Mason has depended on Ryder to help fuel its growth to become a billion dollar company, most of which has happened in the past 20 years. Ryder s ChoiceLease solution combines several models of uniquely customized and branded trucks including tractors, trailers, refrigerated vehicles and supply trucks - with comprehensive maintenance to keep W.B. Mason moving products efficiently, while expanding its operations. Partnership: More than 1,030 customized tractors, trailers, refrigerated vehicles, and supply trucks - first electric vehicle lease customer 2,000 preventive maintenance inspections per year Procurement of replacement vehicles if a truck goes out of service Adding custom features to the truck to facilitate the delivery of product while maintaining a unique branded look 13+ million miles traveled annually Results: 99% on-time deliveries on same day and next day orders Expanded operations to over 60 locations in 24 states Eight unique designs of trucks to accommodate varying types and volumes of products ChoiceLease vehicles reflect the customer s branding with the Ryder logo and vehicle # displayed near the cab door 39

40 DTS - Providing dedicated fleets and drivers Dedicated Transportation Solutions (13% of RSI Operating Revenue) Dedicated Transportation (97% of DTS Revenue) Turnkey transportation service Professional drivers Vehicles Routing & scheduling Management & administrative support Transportation Management (3% of DTS Revenue) Procure and execute over $1.3B in freight moves as customer s agent Shipment planning and execution Freight brokerage Freight bill audit and payment Origin/destination services Supported by: IT and Engineering Solutions Network optimization tools that efficiently allocate freight between a dedicated fleet and third-party common carriers Sample Clients: 40

41 DTS Driving customer value with flexible solutions Diversified portfolio comprising 200+ customers Hi-tech & Healthcare Industrial 18% CPG Retail Metals Construction Utilities Energy Chemicals Other (Based on 2018 DTS Customer Count) 5% 5% 4% 9% 9% 11% 11% 16% 15% Current State Focused on developing flexible solutions for customers with unique needs, such as: specialized equipment or product handling, complex routes, sophisticated service level requirements and time sensitive routes Market Size Dedicated outsourced market is ~ $16 billion (U.S.) Macro Trends driver shortage increased safety regulations ELD, HOS, CSA capacity constraints / increasing freight rates increased cost & complexity, new engine technology Driver Recruiting DTS and SCS employ over 9,500 professional drivers and ~25 dedicated recruiters A key source for drivers has been former military personnel Safety Focus DriveCam technology is installed on all DTS and SCS vehicles and is aimed at improving safety, while also providing a costbenefit to Ryder and its customers Program enhances safety by combining data and video analytics with realtime driver feedback and coaching Integration 9,500 vehicles from FMS are utilized to support DTS customers DTS and SCS share Transportation Management, engineering and IT resources 41

42 DTS - Secular trends and internal initiatives driving growth Targeted strategies for growth include: Conversions from FMS and Private Fleets Upsell targeted FMS customers to a dedicated solution - increases revenue 4-5x with increased margin, return on capital and customer retention Leverage secular outsourcing trends such as CSA, driver shortage and equipment cost/complexity Utilize Total Cost of Ownership tool to articulate savings Dedicated + Transportation Management Offering with TranSync Target customers dealing with capacity constraints to meet their fluctuating needs. Our TM TranSync tool optimally allocates freight between a customer s dedicated fleet and procured 3 rd party common carriers Provides customers more flexibility while maintaining the stability and security of a dedicated offering Continued Penetration of Target Markets Ryder s dedicated offering differentiates itself from truckload carriers by providing highly specialized services for customers across industries Customer characteristics include closed-loop, multi-stop shipments; tight delivery windows; high-value, time sensitive freight; dedicated / uniformed driver; logo d vehicle TM 42

43 DTS CUSTOMER CASE STUDY Apria Healthcare Ryder provides a dedicated fleet of 29 drivers, 23 tractors, and 34 trailers to Apria Healthcare, one of America s leading providers of home respiratory services and medical equipment. Ryder handles approximately 325 shipments, which amounts to approximately 90 truckloads per week for Apria. Partnership: Dry-van truckload transportation services for specialized respiratory products moving from distribution centers and cross docks to branches Value-added services such as hazardous materials compliance, product segregations, and vendor backhauls Route planning and optimization for outbound customer deliveries and inbound material flows, including expedited shipments Inbound shipment consolidation into full truckload Driver recruitment and training Results: $1 million in annual savings from supply chain optimization and process improvements Fully optimized network by filling backhaul lanes with inbound shipments from suppliers to DCs Achieved fuel savings through access to competitively priced fuel at Ryder s 400+ full-service fueling stations Reduced carbon footprint from fewer shipments 43

44 SCS Design and execute optimized logistics solutions Distribution Management (40% SCS revenue) Dedicated (34% SCS revenue) Supply Chain Solutions Transportation Management (13% SCS revenue) (26% of RSI Operating Revenue) Ryder Last Mile (7% SCS revenue) Professional Services (6% SCS revenue) Warehouse/distribution center operations (55M sq. ft.) Inbound materials management Outbound product support Kitting, packaging & refurbishment Just-in-time replenishment Reverse logistics E-commerce network support Transportation component of integrated logistics solution Includes drivers, vehicles, routing & scheduling and management & administrative support Procure and execute over $5.4B in freight moves as customer s agent Shipment planning and execution Freight brokerage Freight bill audit and payment Origin/destination services E-commerce fulfillment provider Last mile delivery provider of big & bulky goods National network able to reach 95% of US and Canada in 2-days Strategic consulting & decision support Solutions engineering Network modeling & optimization Total landed cost Lean Six Sigma Supported by: IT Solutions Transportation & warehouse management systems Network optimization tools Inventory & shipment visibility tools Sample Clients: 44

45 SCS Industry focus driving growth Current Customers Comprehensive solutions for over 500 customers Lease and operate 55 million square feet of warehouse space (operates in North America and Asia) Manage 21,000+ border crossings per month between the U.S, Mexico and Canada 9,500 vehicles from FMS are utilized to support SCS customers Focus is on customers with sophisticated logistics requirements - many require an integrated solution that combines two or more service offerings Top Industries Served Technology & Healthcare 18% CPG & Retail 36% Automotive 36% Industrial & Other 10% Market Size Outsourced supply chain logistics market in the U.S. is estimated to be $127 billion (1) % of FY18 Operating Revenue (1) Source: Armstrong & Associates 45

46 SCS Integrated solutions targeting key industries Automotive Technology & Healthcare CPG & Retail Industrial & Other Distribution Management Design, manage and operate networks of warehouses and cross-docks, perform value-added services such as packaging, postponement, and final mile delivery Transportation Management Design and manage networks of for-hire carriers Dedicated Design, manage and operate a network of Ryder vehicles and drivers dedicated to a customer Leading market positions in Automotive and CPG Retail market position is growing 46

47 SCS Large markets with significant growth potential The global outsourced logistics market is approximately $900 billion, of which the U.S. is $127 billion $1.1T 2017 U.S. Logistics* U.S. 3PL Revenues by Industry Segment Healthcare 8% Industrial 8% Other 5% Retail & Consumer Goods 29% Food, Groceries 9% $127B Elements 1 8% 1 Logistics Spend Outsourced Logistics Spend Automotive 10% Hi-Tech 23% Outsourced logistics is a large market, growing faster than the overall economy. Companies continue to increase logistics outsourcing to reduce cost and to focus resources on core competencies. 1 Elements industry segment includes: oil, plastics, metals, chemicals, energy, fibers and utilities Sources: Armstrong & Associates *Markets where Ryder competes 47

48 SCS - Growth driven by expertise and execution Platform for growth Known for best execution - Ranked among the top five companies by Inbound Logistics Specialized capabilities and proactive solutions based on deep expertise Focus on integrated and specialized solutions Internal product development initiatives Acquisitions /JV s Differentiated functional execution and deep industry expertise will result in higher growth 48

49 SCS New products and capabilities to drive growth Smart Warehouse Ryder s smart warehouse incorporates a strategic mix of innovative technologies to create efficiencies RyderShare TM Cloud-based integration platform drives operating efficiencies Ryder Last Mile Acquisition of MXD Group (April 2018) Significantly expands Ryder s capabilities in e-commerce fulfillment and last mile delivery of big and bulky goods 49

50 SCS CUSTOMER CASE STUDY Whirlpool Since 2001, Whirlpool has partnered with Ryder to operate two warehouse facilities in Plainfield, Indiana, which includes using LEAN methods to eliminate waste and increase employee productivity. With more than 1.2M square feet of warehouse space managed and 650 employees, the operation packages, and distributes 19M timesensitive service parts each year. Partnership: Complex warehouse operation requires management of 53k active SKUs in 400k product locations Sophisticated technology provides fast, accurate order processing with as many as 150k parts handled daily and over 95% of them piece-picked Value-added services include kitting of 19M pieces per year Results: LEAN practices and incentives have increased productivity by 33%, while order accuracy has remained high at 99.7% $1.2M reduction in inventory from packaging material Consolidated four packaging facilities and a parts distribution facility to yield significant savings & service improvements Zero customer disruption from packaging operation 50

51 Supplementing organic growth through acquisitions Focus on Contractual Core in FMS, DTS and SCS Lily Truck Leasing Gator Leasing Gordon Truck Leasing LogiCorp (Logistics) Lend Lease International Truck Leasing Northern NationaLease Case Leasing & Rental Ascent Logistics Vertex Services General Car and Truck Leasing System Ruan Leasing Company 4 G s Truck Renting Pollack National Lease Transpacific / CRSA Logistics Edart Leasing Total Logistic Control Carmenita Leasing The Scully Companies B.I.T. Leasing Hill Hire plc 2012 Euroway 2014 Bullwell 2017 Dallas Service Center 2018 MXD Group Metro Truck & Tractor Leasing 51

52 Financials & Governance 52

53 Three-Year Financial Targets Operating Revenue Growth Fleet Management 6-7% Dedicated Transportation 9-10% Supply Chain 7-8% EBT as % of Operating Revenue Fleet Management 10-12% Dedicated Transportation 8-9% Supply Chain 8-9% ROC Spread bps Leverage (Debt-to-Equity) % (*) Three-year targets established as of 2/16/18; leverage target revised 2/14/19 from % to reflect impact from lease accounting change 53

54 $ Per Share $ Millions Comparable Earnings History (1) Comparable Earnings Before Income Taxes Earnings Before Tax Adjustments to Earnings Before Tax Forecast Midpoint Comparable EPS EPS Adjustments to EPS (1) Earnings Before Income Taxes, Comparable Earnings Before Income Taxes, EPS and Comparable EPS are all from continuing operations (2) 2017 EPS includes significant benefit from tax reform that is excluded from Comparable EPS Note: Amounts throughout presentation may not be additive due to rounding. (2) Forecast Midpoint 54

55 Key Financial Statistics Full Year ($ Millions, Except Per Share Amounts) %B/(W) Total Revenue $ 8,409.2 $ 7, % Fuel and Subcontracted Transportation 1, , % Operating Revenue $ 6,693.4 $ 6, % Earnings Per Share from Continuing Operations $ 5.21 $ (65)% Comparable Earnings Per Share from Continuing Operations $ 5.79 $ % Memo: Earnings from Continuing Operations $ $ Comparable EBITDA $ 2,041.4 $ 1, % Average Shares (Millions) - Diluted Tax Rate from Continuing Operations 26.3% (151.9)% Comparable Tax Rate from Continuing Operations 24.7% 34.9% Note: Amounts throughout presentation may not be additive due to rounding. 55

56 Key Financial Statistics ($ Millions, Except Per Share Amounts) 2019 Forecast 2018 %B/(W) Revenue: Total Revenue $ 9,100 $ 8,409 8% Fuel and Subcontracted Transportation 1,800 1,716 5% Operating Revenue $ 7,300 $ 6,693 9% Earnings From Continuing Operations: Earnings Before Income Taxes $373 - $395 $ 374 0% - 6% Earnings $275 - $291 $ 276 0% - 5% Comparable Earnings Before Income Taxes $425 - $446 $ 407 5% - 10% Comparable Earnings $318 - $334 $ 306 4% - 9% Earnings Per Share (EPS) from Continuing Operations: EPS $ $5.48 $ 5.21 (1)% - 5% Comparable EPS $ $6.30 $ % - 9% Comparable EPS ex- New Lease Accounting Standard (1) $ $6.50 $ % - 12% Memo: Estimated New Lease Accounting Standard EPS Impact $ (0.20) $ 0.25 NM Comparable EBITDA $ 2,380 $ 2,041 17% Average Shares (Millions) - Diluted Tax Rate from Continuing Operations 26.2% 26.3% Comparable Tax Rate from Continuing Ops 25.1% 24.7% Adjusted Return on Capital vs. Cost of Capital 0.2% 0.1% Note: Earnings per share amounts are calculated independently for each component and may not be additive due to rounding. 56

57 Business Segments Full Year ($ Millions) Memo: Operating Revenue % B/(W) % B/(W) Total Revenue: Fleet Management Solutions $ 5,255.2 $ 4, % $ 4,407.6 $ 4, % Dedicated Transportation Solutions 1, , % % Supply Chain Solutions 2, , % 1, , % Eliminations (577.5) (469.5) (23)% (350.1) (300.2) (17)% Total $ 8,409.2 $ 7, % $ 6,693.4 $ 6, % Segment Earnings Before Tax: (1) Fleet Management Solutions $ $ % Dedicated Transportation Solutions % Supply Chain Solutions % Eliminations (63.6) (53.3) (19)% % Central Support Services (Unallocated Share) (49.0) (48.1) (2)% Non-operating Pension Costs (7.5) (27.7) NM Restructuring and Other Items (25.1) (28.2) NM Earnings Before Income Taxes $ $ % Provision for Income Taxes (98.3) NM Earnings from Continuing Operations $ $ (65)% Comparable Earnings from Continuing Operations $ $ % (1) Our primary measure of segment financial performance excludes unallocated CSS, non-operating pension costs, restructuring and other charges, net and other items. 57

58 Capital Expenditures Full Year ($ Millions) $ O/(U) 2017 ChoiceLease $ 2,207 $ 1,457 $ 750 Commercial Rental Operating Property and Equipment Gross Capital Expenditures 3,165 1,941 1,224 Less: Proceeds from Sales (Primarily Revenue Earning Equipment) (33) Net Capital Expenditures $ 2,769 $ 1,512 $ 1,257 Memo: Acquisitions $ 167 $ 7 $

59 Capital Expenditures, Cash Flow & Leverage Full Year 2019 Forecast 2018 ChoiceLease Replacement $ 1,342 $ 1,044 Growth 1,393 1,163 Total ChoiceLease 2,735 2,207 Commercial Rental Replacement Growth Total Commercial Rental Operating Property and Equipment Gross Capital Expenditures 3,635 3,165 Less: Proceeds from Sales Net Capital Expenditures $ 3,185 $ 2,769 ($ Millions) Cash Provided by Operating Activities $ 2,045 $ 1,635 Total Cash Generated $ 2,580 $ 2,106 Free Cash Flow $ (1,120) $ (944) Debt to Equity (1) 285% 228% (1) 2018 debt to equity of 228% is within our target range of % prior to lease accounting changes forecast debt to equity of 285% is within our revised target range of % subsequent to lease accounting change. 59

60 Cash Flow from Continuing Operations Full Year ($ Millions) Earnings from Continuing Operations $ 276 $ 792 Depreciation 1,395 1,255 Used Vehicles Sales, Net (1) Amortization and Other Non-Cash Charges, Net Pension Contributions (28) (41) Tax Reform Benefit 15 (587) Changes in Working Capital and Deferred Taxes (124) 56 Cash Provided by Operating Activities 1,635 1,548 Proceeds from Sales (Primarily Revenue Earning Equipment) (2) Collections of Direct Finance Leases & Other (2) Total Cash Generated 2,106 2,050 Capital Expenditures (2), (3) (3,050) (1,860) Free Cash Flow (4) $ (944) $ 190 Debt to Equity (5) 228% 191% (1) Reflects 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. (5) Debt to equity does not reflect the impact from lease accounting changes. 60

61 Growth Capital Expenditures ($ Millions) Growth Capital Expenditures Lease & Rental 1.5 1,292 1, , Rental Lease Free Cash Flow $ , , , , Forecast $258 (257) (488) (340) (315) (728) (944) (1,120) 303 1,090 Free Cash Flow is impacted by growth capital in the period of initial vehicle investment and by variability in the timing of replacement capital Total Cash Generated Comparable EBITDA $1,328 1,442 1,645 1,783 1,944 1,940 2,099 2,050 2,106 2,580 $1,183 1,318 1,439 1,523 1,668 1,802 1,858 1,830 2,041 2,380 Total Cash Generated and Comparable EBITDA increase following periods of growth as capital is priced into lease contracts and recovered over the contract term 61

62 2019 Causes of Comparable EPS Change (1) ($ Earnings Per Share) $1.10 $6.50 $6.30 $5.79 $0.47 $0.20 $0.47 $0.38 $0.27 $0.16 $0.16 $0.10 $0.20 $0.23 $ Pre-Lease Accounting Strategic Investments UVS / Depr (2) Interest/In surance Maintenance on older model year vehicles Compensation -Merit -Stock Comp+Bonu s Overheads & Other DTS Commercial SCS Cost Rental Actions ChoiceLease/ Select Care Lease Accounting Impact 2019 Post-Lease Accounting (1) Represents Comparable EPS from Continuing Operations (2) Includes impact of residual value changes of negative $0.41 and Used Vehicle Sales, net, of negative $0.11, partially offset by accelerated depreciation of $

63 Comparable EPS and Share Count History ($ Earnings Per Share) Comparable Earnings Per Share $3.71 $4.40 $4.85 $5.53 $6.10 $5.43 $4.53 $5.79 $6.15 $2.20 $ F Forecast Midpoint GAAP EPS Non-Operating Pension Costs (1) Other Adjustments (2) 0.08 (0.15) (0.06) (10.68) Comparable EPS Average Diluted Common Share Outstanding (in Thousands) 55,094 51,884 50,878 50,740 52,071 53,036 53,260 53,361 52,988 52,696 53,000 (1) Non-operating pension costs primarily represent interest cost, expected return on plan assets and recognized net actuarial gains/losses. (2) Reconciliation provided in Appendix. Amounts throughout presentation may not be additive due to rounding. 63

64 Segment Revenue Full Year Operating Revenue Total Revenue ($ Billions) Ryder System Fleet Management Solutions Dedicated Transportation Solutions Supply Chain Solutions

65 Segment Earnings Before Tax (EBT) EBT as % of Operating Revenue EBT as % of Total Revenue Full Year Ryder System (2) Fleet Management Solutions Dedicated Transportation Solutions (2) Supply Chain Solutions (1) Includes pension lump-sum settlement charges of $97.2 million or 1.8% of operating revenue in (2) Includes pension lump-sum settlement charges of $97.2 million or 1.5% of total revenue in

66 Financial Indicators Forecast (1) Gross Capital Expenditures ($ Millions) Lease Commercial Rental PP&E/Other Free Cash Flow $258 (257) (488) (340) (315) (728) (944) (1,120) Debt to Equity / Total Obligations to Equity (2) Pension Impact (3) Debt to Equity 196% 257% 272% 227% 260% 277% 263% 191% 228% 285% (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. 66

67 Adjusted Return on Capital Spread Adj ROC O/(U) COC (1.3)% 0.2% 0.9% 1.0% 1.1% 1.4% 0.5% (0.2)% 0.1% 0.2% (2) (3) Return on Equity 8.4% 11.9% 14.9% 14.9% 11.3% 16.1% 12.8% 35.9% 9.5% 11.1% Adjusted Total Capital (1) $4.0 $4.6 $5.2 $5.6 $6.6 $7.1 $7.6 $7.5 $8.8 $10.0 (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 (3) Reflects one-time benefit from revaluation of net deferred income tax liability due to Tax Reform 67

68 Dividend History $2.60 $2.10 $1.60 $1.10 $0.60 Dividend unchanged at $0.15 per quarter from 1989 through 2004 Fifteen increases in quarterly dividend enacted starting in QUARTERLY DIVIDEND 0.54 $

69 Covenant Compliance ($ Millions) 2023 Global Revolving Credit Facility Covenant / Limitations Maximum 12/31/18 Allowable Debt to Net Worth (1) 184% 300% Secured Indebtedness $833 $3,752 Receivables Indebtedness $200 $425 Asset Backed Indebtedness $0 $1,250 Ryder continues to operate well within the limitations of its committed primary lending facility (1) Calculated per the facility agreement as amended in September Net worth represents shareholder equity excluding any accumulated other comprehensive income or loss associated with our pension and other post-retirement plans. Debt represents total balance sheet debt. 69

70 Rating Agencies Fitch Moody's Standard & Poor's Short Term Rating F2 P2 A2 Long Term Rating A- Baa1 BBB+ Outlook Stable Stable Stable 70

71 Corporate Governance Best Practices 11 of 12 Directors are independent; all Committee members are independent Strong Lead Independent Director with significant oversight and authority; oversees Board s annual evaluation process, CEO succession planning and search process for new directors Average director tenure is 9 years; 25% of directors on Board less than 6 years 7 of 12 directors diverse by race, gender or ethnicity Board includes three current CEOs of other companies; two former CFOs; several former Presidents and COOs and an academic expert in accounting/governance transparency No related party transactions; strict conflict of interest practices No stockholder rights plan Governance actions taken in recent years: - Commenced annual elections for all directors in Adopted an amendment to our Articles and By-laws to provide shareholders with the right to act by written consent - Adopted proxy access, with terms in line with prevailing standards - Reduced shareholder voting requirements from a majority of shares outstanding to a majority of votes cast - Eliminated eight of nine supermajority voting requirements - Adopted double trigger vesting upon a change of control in Ryder s equity plan - Adopted a clawback policy - Increased stock ownership guidelines (6x base salary for CEO and 3x for other officers) 71

72 Performance Measurement Performance goals align with creating shareholder value Performance Measures Focus on Top Line and Bottom Line Growth, Capital Management and Shareholder Value Short Term Incentive Plan Measures: Comparable EPS Operating Revenue Long Term Incentive Plan Measures (1) : Strategic Revenue Growth ROC/COC Spread Over 85% of CEO s compensation and over 75% for other senior executives is at risk and subject to these performance measures (1) TSR modifier where Ryder s performance is measured against a TSR performance peer group and payouts will be modified upward or downward up to 15%. 72

73 Key Points Businesses operate in very large markets Market trends encourage long-term outsourcing decisions increasing complexity/cost of vehicle technology, emissions standards, driver shortage, credit availability, complex global supply chains, regulatory issues Continued revenue and fleet growth with strong operating leverage Sales and marketing initiatives including new products designed to drive growth Leveraging technology for long-term growth Continued cost savings through ongoing process improvements Balance sheet and liquidity position solid Ryder is well positioned for success with a lower cost structure, well-aligned fleet, solid balance sheet, strong market position and competitive posture, solid value proposition and significant growth opportunities 73

74 Appendix 74

75 Appendix: Balance Sheet ($ Millions) December 31, 2018 December 31, 2017 Current Assets $ 1,568 $ 1,323 Revenue Earning Equipment, Net 9,498 8,355 Operating Property and Equipment, Net Other Assets 1,141 1,009 Total Assets $ 13,051 $ 11,464 Current Liabilities $ 1,362 $ 1,189 Total Debt 6,624 5,410 Other Non-Current Liabilities (including Deferred Income Taxes) 2,155 2,024 Shareholders' Equity 2,910 2,842 Total Liabilities and Shareholders' Equity $ 13,051 $ 11,464 75

76 Appendix: Key Leverage Statistics ($ Millions) December 31, December 31, December 31, Total Debt $ 6,624 $ 5,410 $ 5,391 Equity (1) $ 2,910 $ 2,842 $ 2,058 Debt to Equity 228% 191% 262% Book Value of Revenue Earning Equipment = 1.5x Debt Balance (1) Includes impact of accumulated net pension related equity charge of $712 million as of 12/31/18, $567 million as of 12/31/17 and $622 million as of 12/31/16. 76

77 Appendix: Asset Management YTD Update (US Only) 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. (a) Current year statistics may exclude some units due to a lag in reporting (b) Excludes early terminations where customer purchases vehicle (c) 2018 YTD activity excludes internal assignments. Historical periods not restated to exclude assignments (represents ~30% of volume) (a)(b)(c) 77

78 Appendix: US Retail Sales Forecast (000 s Units) 350 Class 6-7 Vehicles (Medium - Heavy Duty Trucks) (000 s Units) 350 Class 8 Vehicles (Heavy Duty Tractors & Trucks) actual forecast actual forecast Higher forecast for Class 8 Vehicles stable forecast for Class 6-7 Vehicles Sources: ACT Research and IHS Markit Average Production

79 Appendix: Comparable EPS and Share Count History ($ Earnings Per Share) GAAP EPS $ 1.62 $ 2.37 $ 3.31 $ 3.90 $ 4.63 $ 4.14 $ 5.73 $ 4.95 $ $ 5.21 Non-operating pension costs Goodwill impairment Restructuring and other charges, net (0.01) Tax reform-related and other tax adjustments, net (10.78) 0.19 Uncertain tax provision (0.08) Pension lump sum settlement expense Pension-related adjustments (0.01) Operating tax adjustment Gain on sale of property 0.12 (0.02) (0.27) - Acquisition-related tax adjustment Acquisition transaction costs Tax law changes Superstorm Sandy vehicle-related recoveries Foreign currency translation benefit (0.11) (0.21) 0.09 (0.08) (0.03) (0.04) (0.06) (0.01) (0.04) Comparable EPS $ 4.85 $ 5.53 $ 6.10 $ 5.43 $ 4.53 $ 5.79 Average Diluted Common Shares Outstanding 55,094 51,884 50,878 50,740 52,071 53,036 53,260 53,361 52,988 52,696 Note: Amounts may not recalculate due to rounding. 79

80 Appendix: Earnings & EPS from Continuing Operations 2010 includes a $1 million gain on sale of an international asset or $0.02 per diluted share, $4 million of acquisition costs or $0.08 per diluted share, a $0.21 net tax benefit and $27 million of non-operating pension costs or $0.31 per diluted share includes $0.09 tax charge, $4 million of acquisition-related severance and other restructuring costs or $0.05 per diluted share, $2 million of transaction costs or $0.04 per diluted share and $19 million of non-operating pension costs or $0.22 per diluted share includes an $0.08 tax benefit partially offset by a $8 million charge related to restructuring or $0.11 per diluted share, a $8 million charge related to Superstorm Sandy or $0.10 per diluted share and $31 million in non-operating pension costs or $0.37 per diluted share includes a $2 million benefit from foreign currency translation or $0.04 per diluted share, $24 million in non-operating pension costs or $0.28 per diluted share, a $3 million pension settlement charge or $0.03 per diluted share and other net charges of $1 million or $0.02 per diluted share includes $10 million in non-operating pension costs or $0.05 per diluted share, $13 million in pension settlement charges or $0.14 per diluted share, $97 million from a one-time pension lump sum settlement or $1.16 per diluted share, $2 million from acquisition-related costs or $0.04 per diluted share, $2 million charge related to restructuring or $0.03 per diluted share, partially offset by a tax law change benefit of $2 million or $0.03 per diluted share includes $4 million benefit from tax law change or $0.04 per diluted share, $1 million benefit from pension settlement adjustments or ($0.01) per diluted share, $18 million in restructuring costs or $0.23 per diluted share, and $19 million in nonoperating pension costs or $0.21 per diluted share includes $8 million in pension-related charges or $0.09 per share, $5 million in restructuring and other charges or $0.06 per share and $30 million in non-operating pension costs or $0.33 per diluted share includes a $.03 tax law benefit, a $24 million gain on sale of property or $0.27 per diluted share, an operating tax adjustment of $2 million or $0.3 per diluted share, a $5 million pension related adjustment or $0.06 per diluted share, a $21 million charge related to restructuring or $0.25 per diluted share, a net tax reform related benefit of $10.75 per diluted share, and $27 million of non-operating pension costs or $0.31 per diluted share includes $4.7 million of non-operating pension costs or $0.09 per diluted share, a $7.7 million charge related to restructuring or $0.15 per diluted share, a $15.5 million charge related to goodwill impairment or $0.29 per diluted share, a $10.0 million charge due to tax reform-related and other tax adjustments, net or $0.19 per diluted share, a benefit of $3.0 million or $0.06 per diluted share related to a tax law change and a benefit of $4.4 million or $0.08 million related to an uncertain tax position. 80

81 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 Operating Revenue Measures: Comparable GAAP Measure Reconciliation & Additional Information Presented on Slide Titled Operating Revenue Total Revenue Key Financial Statistics FMS Operating Revenue, DTS Operating Revenue and SCS Operating Revenue 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 Total Revenue, DTS Total Revenue and SCS Total 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) Fleet Management Solutions (FMS), Dedicated Transportation Solutions (DTS) and Supply Chain Solutions (SCS) Comparable Earnings Measures: Comparable Earnings and Comparable EPS Earnings and EPS from Continuing Operations Earnings and EPS from Continuing Operations Reconciliation Comparable EPS Forecast EPS Forecast from Continuing Operations EPS Forecast Continuing Operations Comparable Earnings Before Income Tax and Comparable Tax Rate Adjusted Return on Capital (ROC) and Adjusted ROC Spread Comparable Earnings Before Interest, Taxes, Depreciation and Amortization and Comparable Earnings Before Interest, Taxes, Depreciation and Amortization Forecast Cash Flow Measures: Earnings Before Income Tax and Tax Rate 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. Earnings from Continuing Operations Earnings and Tax Rate from Continuing Operations Reconciliation Adjusted Return on Capital Reconciliation Comparable EBITDA Reconciliation Total Cash Generated and Free Cash Flow Cash Provided by Operating Activities Cash Flow Reconciliation Debt Measures: Total Obligations and Total Obligations to Equity Balance Sheet Debt and Debt to Equity Debt to Equity Reconciliation 81

82 Appendix: Non-GAAP Financial Measures Earnings and EPS from Continuing Operations Reconciliation (1) ($ Millions or $ Earnings Per Share) FY18 FY18 FY17 FY17 Earnings EPS Earnings EPS GAAP $ $ 5.21 $ $ Non-operating pension costs Pension-related adjustments Gain on sale of property (14.8) (0.27) Restructuring and other charges, net Goodwill impairment Tax law changes (3.0) (0.06) Tax reform-related and other tax adjustments, net (572.6) (10.78) Uncertain tax position (4.4) (0.08) Operating tax adjustment Comparable $ $ 5.79 $ $ 4.53 (1) The reconciliation of the EBT and Tax Rate for these items are included on next slide. 82

83 Appendix: Non-GAAP Financial Measures EBT and Tax Rate from Continuing Operations Reconciliation FY18 FY18 FY18 EBT Tax Tax Rate GAAP $ $ % Non-operating pension costs Pension-related adjustments Restructuring and other charges, net Goodwill impairment 15.5 Tax law changes 3.0 Tax reform-related and other tax adjustments, net (10.0) Uncertain tax position 4.4 Comparable (1) $ $ % FY17 FY17 FY17 EBT Tax Tax Rate GAAP $ $ (477.7) (151.9)% Non-operating pension costs Pension-related adjustments Gain on sale of property (24.1) (9.4) Restructuring and other charges, net Tax law changes (1.8) Tax reform-related and other tax adjustments, net Operating tax adjustment Comparable (1) $ $ % ($ Millions or $ Earnings Per Share) (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. 83

84 Appendix: Non-GAAP Financial Measures ($ Millions or $ Earnings Per Share) Earnings and EPS from Continuing Operations Reconciliation Full Year 2019 EPS forecast $ $5.48 Non-operating pension costs, net of tax 0.36 Expiring state net operating losses 0.10 ERP implementation 0.26 Restructuring and other charges, net 0.10 Comparable EPS forecast $ $6.30 Lease accounting standard 0.20 Comparable EPS forecast - excluding new lease accounting standard $ $

85 Appendix: Non-GAAP Financial Measures Adjusted Return on Capital Reconciliation (1) ($ Millions) Net earnings (2) $ 200 $ 62 $ 118 $ 170 $ 210 $ 238 Restructuring and other charges, net and other items Income taxes Adjusted earnings before income taxes Adjusted interest expense (3) Adjusted income taxes (4) (230) (122) (124) (157) (167) (177) Adjusted net earnings [A] $ 355 $ 174 $ 194 $ 262 $ 294 $ 327 Average total debt (5) $ 2,882 $ 2,692 $ 2,512 $ 3,079 $ 3,778 $ 4,015 Average off-balance sheet debt (5) Average total shareholders' equity (5) 1,778 1,396 1,402 1,428 1,406 1,594 Average adjustments to shareholders' equity (6) (3) (2) Adjusted average total capital [B] $ 4,841 $ 4,245 $ 4,030 $ 4,588 $ 5,182 $ 5,608 Adjusted return on capital [A]/[B] 7.3% 4.1% 4.8% 5.7% 5.7% 5.8% Weighted average cost of capital 6.5% 6.3% 6.1% 5.5% 4.8% 4.8% Adjusted return on capital spread (7) 0.8% (2.2)% (1.3)% 0.2% 0.9% 1.0% (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. (7) Represents the adjusted return on capital vs. cost of capital (trailing 12 months) 85

86 Appendix: Non-GAAP Financial Measures Adjusted Return on Capital Reconciliation (1) ($ Millions) Forecast Net earnings (2) $ 218 $ 305 $ 263 $ 792 $ 273 $ 290 Restructuring and other charges, net and other items Income taxes (477) Adjusted earnings before income taxes Adjusted interest expense (3) Adjusted income taxes (4) (214) (224) (199) (168) (142) (180) Adjusted net earnings [A] $ 383 $ 413 $ 367 $ 316 $ 434 $ 500 Average total debt (5) $ 4,653 $ 5,177 $ 5,549 $ 5,360 $ 5,979 $ 7,350 Average off-balance sheet debt (5) Average total shareholders' equity (5) 1,926 1,895 2,053 2,207 2,874 2,605 Average adjustments to shareholders' equity (6) (68) (43) 12 Adjusted average total capital [B] $ 6,589 $ 7,084 $ 7,606 $ 7,501 $ 8,813 $ 9,970 Adjusted return on capital [A]/[B] 5.8% 5.8% 4.8% 4.2% 4.9% 5.0% Weighted average cost of capital 4.7% 4.4% 4.3% 4.4% 4.8% 4.8% Adjusted return on capital spread (7) 1.1% 1.4% 0.5% (0.2)% 0.1% 0.2% (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. (7) Represents the adjusted return on capital vs. cost of capital (trailing 12 months) Forecast reflects impact from lease accounting change. 86

87 Appendix: Non-GAAP Financial Measures Adjusted Return on Capital Reconciliation (1) ($ Millions) FMS DTS SCS FMS DTS SCS Net earnings (2) $ 780 $ 38 $ 72 $ 247 $ 45 $ 98 Restructuring and other charges, net and other items (25) (5) Income taxes (467) Adjusted earnings before income taxes Adjusted interest expense (3) Adjusted income taxes (4) (166) (20) (32) (112) (20) (39) Adjusted net earnings [A] $ 266 $ 44 $ 74 $ 390 $ 56 $ 106 Average total debt (5) $ 5,530 $ (77) $ (84) $ 6,087 $ (90) $ 10 Average off-balance sheet debt (5) Average total shareholders' equity (5) 1, , Average adjustments to shareholders' equity (6) (140) (153) Adjusted average total capital [B] $ 6,984 $ 362 $ 528 $ 8,206 $ 391 $ 689 Adjusted return on capital [A]/[B] 3.8% 12.1% 14.0% 4.8% 14.2% 15.4% (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. (7) Represents the adjusted return on capital vs. cost of capital (trailing 12 months) 87

88 Appendix: Non-GAAP Financial Measures Comparable EBITDA Reconciliation (1) Twelve months ended December 31, ($ Millions) Earnings from continuing operations Provision for income taxes Earnings before income taxes from continuing operations Non-operating pension costs Restructuring and other charges, net (0.5) Pension lump sum settlement expense Pension-related adjustments 2.8 Acquisition-related tax adjustment Superstorm Sandy vehicle-related (recoveries) losses 8.2 (0.6) Foreign currency translation benefit (1.9) Acquisition transaction costs International gain on sale (0.9) Comparable earnings before income taxes Interest expense Depreciation Losses from used vehicle fair value adjustments 16.4 Amortization Comparable EBITDA 1, , , ,523.1 (1) Non-GAAP elements of this calculation have been reconciled to the corresponding GAAP measures. A numerical reconciliation of earnings before income taxes from continuing operations to comparable earnings before income taxes from continuing operations is provided on this slide. 88

89 Appendix: Non-GAAP Financial Measures Comparable EBITDA Reconciliation (1) Twelve months ended December 31, ($ Millions) Earnings from continuing operations Provision for income taxes Earnings before income taxes from continuing operations Non-operating pension costs Restructuring and other charges, net Pension lump sum settlement expense 97.2 Pension-related adjustments 12.6 (0.5) 7.7 Acquisition-related tax adjustment 1.8 Superstorm Sandy vehicle-related (recoveries) losses Foreign currency translation benefit Acquisition transaction costs International gain on sale Comparable earnings before income taxes Interest expense Depreciation 1, , ,187.1 Losses from used vehicle fair value adjustments Amortization Comparable EBITDA 1, , ,858.1 (1) Non-GAAP elements of this calculation have been reconciled to the corresponding GAAP measures. A numerical reconciliation of earnings before income taxes from continuing operations to comparable earnings before income taxes from continuing operations is provided on this slide. 89

90 Appendix: Non-GAAP Financial Measures Comparable EBITDA Reconciliation (1) Three months ended December 31, Twelve months ended December 31, ($ Millions) 2019 Forecast Earnings from continuing operations $ $ $ $ $ Provision for income taxes 2.7 (564.7) (477.7) Earnings before income taxes from continuing operations Non-operating pension costs ERP implementation 18.0 Restructuring and other charges, net Goodwill impairment 15.5 Pension-related adjustments 5.5 Operating tax adjustment 2.2 Tax reform-related and other tax adjustments, net Gain on sale of property (24.1) (24.1) Comparable earnings before income taxes Interest expense Depreciation , , ,255.2 Losses from used vehicle fair value adjustments Amortization Comparable EBITDA $ $ $ 2,380.0 $ 2,041.4 $ 1,829.9 (1) Non-GAAP elements of this calculation have been reconciled to the corresponding GAAP measures. A numerical reconciliation of earnings before income taxes from continuing operations to comparable earnings before income taxes from continuing operations is provided on this slide. 90

91 Appendix: Non-GAAP Financial Measures Cash Flow Reconciliation ($ Millions) 12/31/ /31/ /31/ /31/ /31/2014 Cash Provided by Operating Activities from Continuing Operations $ 1,028 $ 1,042 $ 1,160 $ 1,252 $ 1,383 Proceeds from Sales (Primarily Revenue Earning Equipment) (1) Collections of Direct Finance Leases (1) Other, net (1) 3 8 (1) Total Cash Generated 1,328 1,442 1,645 1,783 1,944 Capital Expenditures (1), (2) (1,070) (1,699) (2,133) (2,123) (2,259) Free Cash Flow (3) $ 258 $ (257) $ (488) $ (340) $ (315) Memo: Depreciation Expense (4) $ 808 $ 863 $ 944 $ 967 $ 1,047 Net cash used in financing activities Net cash used in investing activities (982) (1,657) (1,635) (1,604) (1,705) (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. 91

92 Appendix: Non-GAAP Financial Measures Cash Flow Reconciliation ($ Millions) 12/31/ /31/ /31/ /31/ /31/2019 Forecast Cash Provided by Operating Activities from Continuing Operations $ 1,442 $ 1,601 $ 1,548 $ 1,635 $ 2,045 Proceeds from Sales (Primarily Revenue Earning Equipment) (1) Collections of Direct Finance Leases (1) Other, net (1) Total Cash Generated 1,940 2,099 2,050 2,106 2,580 Capital Expenditures (1), (2) (2,668) (1,905) (1,860) (3,050) (3,700) Free Cash Flow (3) $ (728) $ 194 $ 190 $ (944) $ (1,120) Memo: Depreciation Expense (4) $ 1,187 $ 1,187 $ 1,255 $ 1,395 $ 1,600 Net cash provided by (used in) financing activities 731 (186) (155) 1,093 1,100 Net cash used in investing activities (2,161) (1,406) (1,366) (2,746) (3,165) (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. 92

93 Appendix: Non-GAAP Financial Measures Debt to Equity Reconciliation (1) ($ Millions) 12/31/2009 % to Equity 12/31/2010 % to Equity 12/31/2011 % to Equity Debt $ 2, % $ 2, % $ 3, % PV of minimum lease payments and guaranteed residual values under operating leases for vehicles Total Obligations (2) $ 2, % $ 2, % $ 3, % (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. Note: Amounts may not recalculate due to rounding. 93

94 Contact Information Bob Brunn VP Investor Relations, Corporate Strategy & Product Strategy Calene Candela Group Director Investor Relations Investor Website: