COMPANY OVERVIEW. November 2017

Transcription

1 COMPANY OVERVIEW November 2017

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 conditions, earnings performance, revenue in our business segments, fleet size, growth in our contractual product lines, demand and pricing trends in commercial rental and used vehicle sales, free cash flow, 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, our ability to adapt to changing market conditions, lower than expected lease and used vehicle sales, decreases in commercial rental demand, our ability to right-size our commercial rental fleet in line with demand, ability to maintain normalized levels of used vehicle inventory, ability to redeploy our used vehicles and prepare them for sale in a cost efficient manner, ability to properly value the used vehicle fleet, worsening of market demand for used vehicles, higher than expected maintenance costs or lower than expected benefits from maintenance initiatives, decreases in freight demand or volumes, ability to execute new operations efficiently and profitably, our ability to obtain adequate profit margins for our services due to our ability to execute efficiently, 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, loss of key customers, unexpected bad debt reserves or write-offs, 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 maintain access to capital markets, 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 34, 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 Business Overview

4 Market size and secular trends support growth strategy Ryder is a leading provider of outsourced transportation and logistics solutions for commercial customers Fleet Management Solutions (FMS) Dedicated Transportation Solutions (DTS) - Turnkey transportation solution that includes dedicated vehicles, drivers and engineering & administrative support 13% Large addressable markets 2 million vehicles addressable with FMS $400B addressable market in DTS $800B addressable market in SCS Room for growth: Large do-it-yourself market Approximately 5-15% is currently outsourced Secular trends that favor outsourcing Increasing costs and complexity More stringent regulations Labor demographics ~ driver shortage Dynamic supply chains - Vehicle leasing and maintenance services, supported by commercial rental and used vehicle sales 64% (% of 2016 Operating Revenue) 23% Supply Chain Solutions (SCS) - Integrated logistics solutions consisting of distribution management, dedicated transportation, management of outside carriers, and professional services Strategic initiatives focused on penetrating the non-outsourced transportation and logistics markets Opportunity to drive operating leverage in shop network with ~30% capacity available 4

5 Leading provider of outsourced solutions FULL YEAR 2016 RYDER IS A FORTUNE 500 COMPANY WITH $ $ 6.8 Billion 234,100 34,500 (1) These amounts result from continuing operations. (2) Net Earnings from Continuing Operations are $265 million. ANNUAL REVENUE (1) 290 Million COMPARABLE EARNINGS (1) (2) Million MAINTENANCE LOCATIONS VEHICLES SQ FT OF WAREHOUSE SPACE EMPLOYEES >90% of revenue generated in North America 87% (% of 2016 Revenue) 6% 5% 2% <1% U.S. Canada (since 1957) U.K. (since 1971) Mexico (since 1994) Asia (since 2001) Customers are spread across a variety of industries Food & Beverage Transportation & W/H Automotive Retail & Consumer Goods Industrial Housing Technology Business & Pers. Services Other 8% 8% 7% 6% 11% 10% 9% 22% 19% 5

6 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 1990 s Growth in a Time of Turmoil 1940s 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 6

7 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 7

8 Large U.S. markets with significant growth potential across all business segments Total Market Truck leasing, maintenance and rental (FMS) U.S. Power Vehicles 8M Power Vehicles Addressable with Rental, On- Demand, and Used Vehicle Sales Dedicated transportation (DTS) Warehouse and truckbased transportation management (SCS) US $ US $ $800B $1T Highly Addressable Market 2M Power Vehicles Addressable with Full Service Lease and Contract Maintenance $400B $800B Currently Outsourced 0.3M Power Vehicles $13B $100B Sources: Polk/HIS, Armstrong & Associates, Ryder estimates 8

9 Secular trends drive the shift to outsourcing Secular Trends Impact Increasing Costs New engine technology: purchase costs up 40-50% 1 Maintenance complexity: cost up 55-65% 1 More Stringent Regulations New EPA Emissions Standards: Issued thru 2027 Lower capacity / productivity due to Compliance, Safety & Accountability (CSA), Hours of Service & Electronic Logging Device (ELD) Mandate Food Safety Standards increase complexity Labor Demographics Driver shortage ~150k by 2020 Technician shortage ~200k needed over next 10 years Warehouse labor pressure / minimum wage legislation Dynamic Supply Chains More nearshoring / onshoring Growth in e-commerce and omni-channel 1. Power vehicles 9

10 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 10

11 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 operational excellence, a strong customer focus, innovative solutions, 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 11

12 Comprehensive product and service offerings Segment / Product FMS: ChoiceLease FMS: Commercial Rental FMS: SelectCare Contracts FMS: SelectCare On-Demand Dedicated Transportation Solutions (DTS) Supply Chain Solutions (SCS) Operating Revenue Margin (Earnings before Tax % Operating Revenue) Assets Number of Vehicles Adjusted Return on Capital (4) FY2016 FY2016 3Q2017 3Q2017 FY2016 $2.6B 137,300 $0.8B 9.4% (1) (FMS Segment) $10.2B (FMS Segment) 37,800 $0.2B 54,400 NA 8,700 (2) 4.4% (FMS Segment) $0.8B 8.2% (1) $0.3B 8,300 (3) 12.4% $1.4B 7.8% (1) $0.9B 8,000 (3) 14.9% Ryder System, Inc. $5.8B 7.0% $11.3B 184, % (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 12

13 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 13

14 Progress on initiatives to overcome outsourcing barriers Outsourcing Barriers Progress Initiative Result 1 Operational Excellence LEAN roll out in SCS Uptime initiative All major accounts Record-low breakdowns 2 Innovation Launch new products 5 Products Launched (FMS 3; SCS 1; DTS 1) 3 Customer Focus Upsell FMS to DTS Total Cost of Ownership (TCO) sales tool Customer Satisfaction Index (CSI) Customer Advisory Boards 2/3 of new DTS sales 40%+ of lease growth from do-ityourselfers CSI scores up across all segments Formalized customer feedback 4 Talent & Culture 2 employee engagement surveys Employee headcount up America s Best Employers list (Forbes) for 3 years Supports new business 5 IT IT Transformation Foundational changes + Customer Facing Technology 14

15 Driving growth with new products and capabilities Flexible Maintenance Solutions Introduced ChoiceLease Preventive and ChoiceLease On Demand (2016) and launched SelectCare On Demand (2015) in order to offer a broader range of flexible, maintenance options Total Cost of Ownership Tool Improving sales effectiveness through a better understanding of true fleet costs and the value generated by an outsourced solution with Ryder Marketing Initiatives Building awareness for Ryder services and solutions, generating sales leads through targeted communications and incorporating customer feedback into product development process Enhanced Rental and Maintenance Customer Experience View available rental vehicles and locations and manage reservations on a convenient online platform. Control maintenance activities fleetwide with real-time visibility, communication and reporting RyderShare Supply Chain Visibility Tool Leverages network synergies and backhauls through mobile application with real-time mapping visibility to loads 15

16 Demonstrated lease fleet growth 7, will represent our 6th consecutive year of organic lease fleet growth 6,800 6,000 5,000 4,000 3,000 This sustained growth represents a significant improvement versus the prior decade when the lease fleet declined organically in 8 out of 10 years ( ) 3,200 4,100 3,500 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) 16

17 Leading disruptive change in transportation Description Environment Ryder s approach NextGen Vehicles the Tesla effect Low/zero emission electrified powertrains Semi-autonomous and fully autonomous control systems Speed of adoption and regulations uncertain Likely initial use cases: Electrified => light-duty vehicles Autonomous => long-haul applications Work with OEMs to establish maintenance standards Partnerships for deployment of new technologies Nikola, Workhorse & Chanje Asset Sharing the Uber effect Monetize underutilized trucks or freight capacity by providing access to another party with correlated need Early stages of platform and marketplace Gain capacity visibility RyderShare development Explore partnerships and matching platforms E-commerce the Amazon effect Movement of goods through new, often parallel supply chains to end customers B2B or B2C - for purchases originated online E-commerce growth continues to accelerate, shifting volume from traditional channels, but only ~10% of market E-commerce penetration varies by industry Provide omni-channel solutions addressing e-commerce needs 17

18 Business Segments

19 Our point of differentiation: providing integrated transportation and logistics solutions FMS DTS SCS Solutions comprising two or more services: Vehicle Maintenance, Financing & Support Services Drivers, Routing, Scheduling & Administration Transportation Management Distribution Management Network Design Salesforce equipped to sell appropriate solution to each customer 19

20 FMS - Maximizing uptime for over 14,000 contractual customers Fleet Management Solutions 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). 20

21 FMS Operating in large, diverse market segments Diversified portfolio of customers represent many industries including: Transportation, Logistics & & Warehousing Food Food & Beverage & Beverage Construction & Housing & Housing Business Business & Personal & Personal Services Serv. Industrial Industrial Retail Retail Stores Stores & Apparel & Apparel Automotive Automotive Energy, Energy, Chemical & Plastic & Products Plastics Other Other 4% 4% 4% 8% 6% 9% 12% 29% 23% Current Customers Ryder has been successful in serving both large and small private fleets 14,800 ChoiceLease/SelectCare contract customers 38,000 commercial rental customers 800 operating locations (operates in U.S., Canada, U.K., Germany) 137,300 ChoiceLease and 54,400 SelectCare contract vehicles in service 37,800 commercial rental vehicles in service 21,000 customer vehicles serviced during 2016 under transactional 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 0.3 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 2016 U.S. Lease & Rental Revenue) 21

22 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 to target new customers ChoiceLease Preventive ChoiceLease On Demand SelectCare On Demand Natural gas vehicles Shorter Term Leases Flex-to-Green Lease 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 22

23 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 23

24 FMS - Technology investments support growth 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 24

25 FMS - Timing of revenue and cash flow for full service lease 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 full service lease 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 25

26 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 Full Service 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 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 26

27 DTS - Providing dedicated fleets and drivers Dedicated Transportation Solutions Dedicated Transportation (97% of DTS Revenue) Transportation Management (3% of DTS Revenue) Turnkey transportation service Professional drivers Vehicles Routing & scheduling Management & administrative support Procure and execute over $1.1B 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: 27

28 DTS Driving customer value with flexible solutions Diversified portfolio comprising 200+ customers Industrial CPG Retail Metals Hi-tech & Healthcare Construction Media & Publishing Energy Other 5% 7% 9% 12% 11% 10% 10% 20% 18% Current State Focus is 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 Approximately 5,000 professional drivers Market Size Dedicated outsourced market is estimated to be $13 billion (U.S.) Trends Macro trends, including the driver shortage, increased safety regulations and capacity constraints support an outsourced solution Integration Over 8,000 vehicles from FMS are utilized to support DTS customers DTS and SCS share Transportation Management, engineering and IT resources (Based on 2015 DTS Customer Count) 28

29 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 29

30 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 30

31 SCS Design and execute optimized logistics solutions Supply Chain Solutions Distribution Management (47% SCS revenue) Dedicated (39% SCS revenue) Transportation Management (9% SCS revenue) Professional Services (5% SCS revenue) Warehouse/distribution center operations (>40M sq. ft. managed) Packaging & postponement Order fulfillment Inbound materials management Outbound product support Reverse logistics Vendor managed inventory Transportation component of integrated logistics solution Includes drivers, vehicles, routing & scheduling and management & administrative support Procure and execute over $3.6B in freight moves as customer s agent Shipment planning and execution Freight brokerage Freight bill audit and payment Origin/destination services 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: 31

32 SCS Industry focus driving growth Current Customers Comprehensive solutions for over 500 customers Lease and operate over 44 million square feet of warehouse space (operates in North America and Asia) Manage 15,800 border crossings per month between Mexico and the U.S and Canada 8,000 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% Automotive 41% CPG & Retail 32% Industrial & Other 9% Market Size Outsourced supply chain logistics market in the U.S. is estimated to be $100 billion % of FY16 Operating Revenue 32

33 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 and postponement 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 Differentiated position by providing integrated product solutions targeted at key industry verticals 33

34 SCS Large markets with significant growth potential The global outsourced logistics market is approximately $720 billion, of which the U.S. is $100 billion $1.1T 2015 U.S. Logistics* U.S. 3PL Revenues by Industry Segment Healthcare 8% Industrial 8% Other 5% Retail & Consumer Goods 29% Food, Groceries 9% $110B Elements 1 8% 1 Logistics Spend Outsourced Logistics Spend Automotive 11% Hi-Tech 22% 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 34

35 SCS - Growth driven by expertise and execution Platform for growth Known for best execution - Ranked among the top five companies for the 18th consecutive year 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 35

36 RyderShare - launched May 2017 Real-time visibility among all transportation modes, along with the ability to manage issues by exception, from a single source with desktop and mobile access Visibility: Real-time map views of all loads dedicated, private fleet, for-hire, freight brokerage, rail Tracking: Estimated time of arrival Alerts: Identification, reporting and notification of shipping exceptions Neutral Integration Platform Analytics: On-time performance, reports and load validation 36

37 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 37

38 Supplementing organic growth through acquisitions Focus on Contractual Core in FMS, DTS and SCS 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 Lily Truck Leasing Gator Leasing Gordon Truck Leasing 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 38

39 Financials & Governance

40 Three-year financial targets Operating Revenue Growth Target Fleet Management 6 7% Dedicated Transportation 9 10% Supply Chain 7 8% Segment EBT as % Op Rev Fleet Management 12 13% Dedicated Transportation 8 9% Supply Chain 8 9% ROC Spread bps Leverage (Debt-to-Equity) % 40

41 $ 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 Note: Amounts throughout presentation may not be additive due to rounding. Forecast Midpoint 41

42 Key Financial Statistics Full Year ($ Millions, Except Per Share Amounts) %B/(W) Total Revenue $ 6,787.0 $ 6, % Fuel and Subcontracted Transportation ,010.8 (1)% Operating Revenue $ 5,790.9 $ 5, % Earnings Per Share from Continuing Operations $ 4.94 $ 5.73 (14)% Comparable Earnings Per Share from Continuing Operations $ 5.42 $ 6.13 (12)% Memo: Average Shares (Millions) - Diluted Tax Rate from Continuing Operations 34.9% 34.8% Comparable Tax Rate from Continuing Operations 35.3% 35.3% Adjusted Return on Capital vs. Cost of Capital (Trailing 12 months) 0.5% 1.4% Note: Amounts throughout presentation may not be additive due to rounding. 42

43 Key Financial Statistics ($ Millions, Except Per Share Amounts) September Year-To-Date %B/(W) Total Revenue $ 5,389.9 $ 5, % Fuel and Subcontracted Transportation (936.1) (733.8) 28% Operating Revenue $ 4,453.8 $ 4, % Earnings Per Share from Continuing Operations $ 2.79 $ 4.02 (31)% Comparable Earnings Per Share from Continuing Operations $ 3.16 $ 4.35 (27)% Memo: Average Shares (Millions) - Diluted Tax Rate from Continuing Operations 36.8% 36.1% Comparable Tax Rate from Continuing Operations 36.6% 36.4% Adjusted Return on Capital vs. Cost of Capital (Trailing 12 months) (0.3)% 1.0% Note: Amounts throughout presentation may not be additive due to rounding. 43

44 Business Segments Full Year ($ Millions) Memo: Operating Revenue % B/(W) % B/(W) Total Revenue: Fleet Management Solutions $ 4,556.2 $ 4,545.7 % $ 3,947.7 $ 3, % Dedicated Transportation Solutions 1, % % Supply Chain Solutions 1, , % 1, , % Eliminations (428.0) (417.1) (3)% (283.2) (255.7) (11)% Total $ 6,787.0 $ 6, % $ 5,790.9 $ 5, % Segment Earnings Before Tax: (1) Fleet Management Solutions $ $ (20)% Dedicated Transportation Solutions % Supply Chain Solutions % Eliminations (50.1) (47.2) (6)% (12)% Central Support Services (Unallocated Share) (40.9) (48.5) 16% Non-operating Pension Costs (29.7) (19.2) (55)% Restructuring and Other Items (12.7) (17.6) NM Earnings Before Income Taxes $ $ (13)% Provision for Income Taxes (141.7) (163.2) 13% Earnings from Continuing Operations $ $ (14)% Comparable Earnings from Continuing Operations $ $ (11)% (1) Our primary measure of segment financial performance excludes unallocated CSS, non-operating pension costs, restructuring and other charges, net and other items. 44

45 Business Segments September Year-To-Date ($ Millions) Memo: Operating Revenue % B/(W) % B/(W) Total Revenue: Fleet Management Solutions $ 3,491.8 $ 3, % $ 2,986.8 $ 2, % Dedicated Transportation Solutions % % Supply Chain Solutions 1, , % 1, % Eliminations (343.0) (318.3) (8)% (221.0) (212.1) (4)% Total $ 5,389.9 $ 5, % $ 4,453.8 $ 4, % Segment Earnings Before Tax: (1) Fleet Management Solutions $ $ (28)% Dedicated Transportation Solutions (17)% Supply Chain Solutions (5)% Eliminations (38.1) (37.1) (3)% (25)% Central Support Services (Unallocated Share) (33.0) (30.0) (10)% Non-operating Pension Costs (20.9) (22.0) 5% Restructuring and Other Items, Net (9.3) (7.7) NM Earnings Before Income Taxes $ $ (30)% Provision for Income Taxes % Earnings from Continuing Operations $ $ (31)% Comparable Earnings from Continuing Operations $ $ (28)% 1. Our primary measure of segment financial performance excludes unallocated CSS, non-operating pension costs, restructuring and other charges, net and other items. 45

46 Balanced capital allocation philosophy Capital Expenditures Organic growth: Primarily vehicle capex for contractual lease fleet Dividend Growth Growth reflects long-term earnings growth 10% CAGR since 2005 Acquisitions FMS: Tuck-ins drive operating leverage SCS/DTS: Expand capabilities, industries served Share Repurchases Anti-dilutive: Offset dilution creep Discretionary: Driven by balance sheet leverage 46

47 Capital Expenditures Full Year ($ Millions) $ O/(U) 2015 Full Service Lease $ 1,548 $ 2,060 $ (512) Commercial Rental (440) Operating Property and Equipment Gross Capital Expenditures 1,763 2,696 (933) Less: Proceeds from Sales (Primarily Revenue Earning Equipment) (6) Net Capital Expenditures $ 1,342 $ 2,269 $ (927) 47

48 Capital Expenditures September Year-To-Date ($ Millions) $ O/(U) 2016 ChoiceLease $ 986 $ 1,223 $ (237) Commercial Rental Operating Property and Equipment (7) Gross Capital Expenditures 1,376 1,404 (28) Less: Proceeds from Sales (Primarily Revenue Earning Equipment) (302) (338) (36) Net Capital Expenditures $ 1,074 $ 1,066 $ 8 48

49 Capital Expenditures, Cash Flow & Leverage Full Year ($ Millions) 2017 Forecast 2016 Full Service Lease Replacement $ 945 $ 963 Growth Total Full Service Lease 1,465 1,548 Commercial Rental (Replacement) Operating Property and Equipment Gross Capital Expenditures 1,865 1,763 Less: Proceeds from Sales Net Capital Expenditures $ 1,475 $ 1,342 Cash Provided by Operating Activities $ 1,600 $ 1,601 Total Cash Generated $ 2,070 $ 2,099 Free Cash Flow $ 250 $ 194 Total Debt to Equity 240% 263% 49

50 Cash Flow from Continuing Operations Full Year ($ Millions) Earnings from Continuing Operations $ 265 $ 306 Depreciation 1,187 1,122 Gains on Used Vehicles, Net (1) (1) (100) Amortization and Other Non-Cash Charges, Net Pension Contributions (128) (34) Changes in Working Capital and Deferred Taxes Cash Provided by Operating Activities 1,601 1,442 Proceeds from Sales (Primarily Revenue Earning Equipment) (2) Collections of Direct Finance Leases & Other (2) Total Cash Generated 2,099 1,940 Capital Expenditures (2), (3) (1,905) (2,668) Free Cash Flow (4) $ 194 (728) (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. 50

51 Cash Flow from Continuing Operations September Year-To-Date ($ Millions) Earnings from Continuing Operations $ 149 $ 215 Depreciation Used Vehicle Sales, Net 12 (33) Amortization and Other Non-Cash Charges, Net Pension Contributions (11) (65) Changes in Working Capital and Deferred Taxes Cash Provided by Operating Activities 1,166 1,185 Proceeds from Sales (Primarily Revenue Earning Equipment) (1) Collections of Direct Finance Leases & Other (1) Total Cash Generated 1,522 1,584 Capital Expenditures (1), (2) (1,313) (1,511) Free Cash Flow (3) $ 210 $ 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. Free Cash Flow excludes acquisitions and changes in restricted cash. 51

52 Growth Capital Expenditures ($ Millions) 1, $ Forecast 2017 Forecast Free Cash Flow $ (257) (488) (340) (315) (728) Operating Cash Flow $985 1,028 1,042 1,160 1,252 1,383 1,442 1,601 1,600 52

53 Comparable EPS and Share Count History ($ Earnings Per Share) $6.13 $5.58 $5.42 Comparable Earnings Per Share $4.04 $4.43 $3.71 $4.40 $4.88 $4.51 $2.20 $ F Forecast Midpoint GAAP EPS Non-Operating Pension Costs (1) (0.09) (0.25) Other Adjustments (2) (0.06) (0.15) (0.03) Comparable EPS Average Diluted Common Share Outstanding (in Thousands) 59,728 56,539 55,094 51,884 50,878 50,740 52,071 53,036 53,260 53,400 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. 53

54 Segment Revenue Full Year Operating Revenue Total Revenue ($ Billions) Ryder System Fleet 4 Management Solutions Dedicated Transportation Solutions Supply Chain Solutions

55 Segment Earnings Before Tax (EBT) EBT as % of Operating Revenue EBT as % of Total Revenue Ryder 6 System Full Year (2) YTD16 YTD17 Fleet Management Solutions (2) YTD16 YTD Dedicated Transportation Solutions YTD16 YTD Supply Chain Solutions YTD16 YTD17 (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

56 Capital Expenditures, Cash Flow and Leverage (1) Gross Capital Expenditures ($ Millions) Lease Commercial Rental PP&E/Other Free Cash Flow (257) (488) (340) (315) (728) Debt to Equity / Total Obligations to Equity (2) Pension Impact (3) (4) Debt to Equity 175% 196% 257% 272% 227% 260% 277% 263% 240% (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 250% - 300% while maintaining solid investment grade credit rating. 56

57 Adjusted Return on Capital Spread Adjusted Return on Capital (ROC) Cost of Capital (COC) 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% (0.2)% Return on Equity 14.2 % 11.2 % 4.4 % 8.4 % 11.9% 14.9% 14.9% 11.3% 16.1% 12.8% 10.0% Adjusted Total Capital (1) $4.8 $4.8 $4.2 $4.0 $4.6 $5.2 $5.6 $6.6 $7.1 $7.6 $7.5 (2) 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. 57

58 Free Cash Flow : Recent Impact From Growth Capital Grew lease fleet organically beginning in 2012 Significantly higher purchase cost per vehicle (from 2007 and 2010 engine technology changes) reflected in growth capital Impact expected to abate as price differential normalizes Free cash flow in future years will reflect the recovery of higher capital spending over average six year lease term Additionally, operating cash flow will increase going forward reflecting the recovery of higher capital spending over life of the lease Counter-cyclical nature of business model demonstrated in 2016 as lower lease and minimal rental capital spending are expected to result in positive free cash flow Free Cash Flow Growth Capital $723 $566 $733 $907 $1,292 $194 $585 $250 ($ Millions) $520 ($257) ($340) ($315) ($488) ($728) Forecast 58

59 Dividend History $1.70 $1.50 $1.30 $1.10 $0.90 $0.70 $0.50 $0.30 $0.10 Dividend unchanged at $0.15 per quarter from 1989 through 2004 Thirteen increases in quarterly dividend enacted starting in 2005 $ QUARTERLY DIVIDEND 59

60 Covenant Compliance ($ Millions) 2020 Global Revolving Credit Facility Covenant / Limitations Maximum 9/30/2017 Allowable Debt to Net Worth (1) 193% 300% Secured Indebtedness $731 $3,206 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 January 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. 60

61 Rating Agencies Fitch Moody's Standard & Poor's Short Term Rating F2 P2 A2 Long Term Rating A- Baa1 BBB+ Outlook Stable Stable Stable 61

62 Corporate Governance Best Practices 10 of 11 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 7 years; 40% of directors on Board less than 6 years 6 of 11 directors are women or minorities Board includes three current CEOs of other companies; one former CEO; 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: - Began annual director elections in 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) 62

63 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: Relative TSR (1) ROC Over 85% of CEO s compensation and over 75% for other senior executives is at risk and subject to these performance measures (1) Ryder TSR as compared to a custom list of benchmarked companies. 63

64 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 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 64

65 Appendix

66 Appendix: Balance Sheet ($ Millions) September 30, 2017 December 31, 2016 Current Assets $ 1,253 $ 1,102 Revenue Earning Equipment, Net 8,249 8,148 Operating Property and Equipment, Net Other Assets Total Assets $ 11,259 $ 10,902 Current Liabilities $ 1,086 $ 953 Total Debt 5,349 5,391 Other Non-Current Liabilities (including Deferred Income Taxes) 2,648 2,506 Shareholders' Equity 2,175 2,052 Total Liabilities and Shareholders' Equity $ 11,259 $ 10,902 66

67 Appendix: Key Leverage Statistics ($ Millions) September 30, December 31, Total Debt $ 5,349 $ 5,391 Equity (1) $ 2,175 $ 2,052 Debt to Equity 246% 263% Book Value of Revenue Earning Equipment = 1.5x Debt Balance (1) Includes impact of accumulated net pension related equity charge of $611 million as of 9/30/17 and $627 million as of 12/31/16. 67

68 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. Statistics may exclude some units due to a lag in reporting. b. Excludes early terminations where customer purchases vehicle. c. Periods prior to 2017 not restated to exclude units reclassified within the same customer relationship (represents ~30% of historical volume). 68

69 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 Improving forecast for Class 8 Vehicles stable forecast for Class 6-7 Vehicles Sources: ACT Research, IHS Markit and Volvo/Mack Average Production

70 Appendix: Comparable EPS and Share Count History ($ Earnings Per Share) GAAP EPS $ 3.99 $ 4.19 $ 4.51 $ 1.62 $ 2.37 $ 3.31 $ 3.90 $ 4.63 $ 4.14 Non-operating pension costs 0.22 (0.09) (0.25) Pension settlement charges Restructuring charges Superstorm Sandy vehicle-related recoveries) losses Foreign currency translation benefit Tax (benefits)/law changes Acquisition related transaction costs/adjustment Asset impairment/(gain) on sale of property Pension accounting charge (0.01) (0.01) (0.04) (0.11) (0.06) (0.17) (0.11) (0.21) 0.09 (0.08) - (0.03) (0.10) (0.02) Comparable EPS $ 4.16 $ 4.04 $ 4.43 $ 2.20 $ 2.53 $ 3.71 $ 4.40 $ 4.88 $ 5.58 Average Diluted Common Shares Outstanding 61,478 59,728 56,539 55,094 51,884 50,878 50,740 52,071 53,000 (in thousands) Note: Amounts may not recalculate due to rounding. 70

71 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 $0.10 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 $0.10 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 nonoperating 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 $0.10 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 $19 million in non-operating pension costs or $0.21 per diluted share, $14 million in restructuring costs or $0.19 per diluted share, $4 million in consulting costs or $0.04 per diluted share, $4 million benefit from tax law change or $0.04 per diluted share and $1 million benefit from pension settlement adjustments or ($0.01) per diluted share includes $30 million in non-operating pension costs or $0.33 per diluted share, $8 million in pension-related charges or $0.09 per share and $5 million in restructuring and other charges or $

72 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 Total Revenue, DTS Total Revenue and SCS Total Revenue Fleet Management Solutions (FMS), Dedicated Transportation Solutions (DTS) and Supply Chain Solutions (SCS) Operating Revenue Growth ex-foreign Exchange Total Revenue Foreign Exchange Impact on Operating Revenue Growth 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) Comparable Earnings Measures: Comparable Earnings and Comparable EPS Earnings and EPS from Continuing Operations Earnings and EPS from Continuing Operations Reconciliation Comparable Earnings Before Income Tax and Comparable Tax Rate Earnings Before Income Tax and Tax Rate Earnings and Tax Rate from Continuing Operations Reconciliation Comparable EPS Forecast EPS Forecast from Continuing Operations EPS Forecast Continuing Operations Adjusted Return on Capital (ROC) and Adjusted ROC Spread Cash Flow Measures: 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 Total Cash Generated and Free Cash Flow Cash Provided by Operating Activities Cash Flow from Continuing Operations Debt Measures: Total Obligations and Total Obligations to Equity Balance Sheet Debt and Debt to Equity Debt to Equity Reconciliation 72

73 Appendix: Non-GAAP Financial Measures Earnings and EPS from Continuing Operations Reconciliation (1) ($ Millions or $ Earnings Per Share) FY16 FY16 FY15 FY15 Earnings EPS Earnings EPS GAAP $ $ 4.94 $ $ 5.73 Non-operating pension costs Pension-related adjustments (0.3) (0.01) Professional fees Tax law change (2.1) (0.04) Restructuring and other charges (recoveries), net Comparable $ $ 5.42 $ $ 6.13 YTD17 YTD17 YTD16 YTD16 Earnings EPS Earnings EPS GAAP $ $ 2.79 $ $ 4.02 Non-operating pension costs Fees related to a cost savings program Operating tax adjustment Pension settlement charge Tax law change rate increase Restructuring (2.1) (0.04) Pension-related adjustment Comparable $ $ 3.16 $ $ 4.35 (1) The reconciliation of the EBT and Tax Rate for these items are included on the next slide. 73

74 Appendix: Non-GAAP Financial Measures EBT and Tax Rate from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) FY16 FY16 FY16 EBT Tax Tax Rate GAAP $ $ % Non-operating pension costs Pension-related adjustments Restructuring and other charges (recoveries), net Comparable (1) $ $ % FY15 FY15 FY15 EBT Tax Tax Rate GAAP $ $ % Non-operating pension costs Pension-related adjustments (0.5) (0.2) Restructuring and other charges (recoveries), net Professional fees Tax law change 2.1 Comparable (1) $ $ % 74

75 Appendix: Non-GAAP Measures EBT and Tax Rate from Continuing Operations Reconciliation YTD17 YTD17 YTD17 EBT Tax Tax Rate GAAP $ $ % Non-operating pension costs Fees related to a cost savings program Operating tax adjustment Pension settlement charge Restructuring (2.6) (0.5) Tax law change (1.8) Comparable (1) $ $ % ($ Millions or $ Earnings Per Share) YTD16 YTD16 YTD16 EBT Tax Tax Rate GAAP $ $ % Non-operating pension costs Pension-related adjustment Comparable (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. 75

76 Appendix: Non-GAAP Financial Measures Adjusted Return on Capital Reconciliation (1) ($ Millions) Net earnings (2) $ 254 $ 200 $ 62 $ 118 $ 170 $ 210 Restructuring and other charges, net and other items Income taxes Adjusted earnings before income taxes Adjusted interest expense (3) 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) Average total shareholders' equity (5) 1,791 1,778 1,396 1,402 1,428 1,406 Average adjustments to shareholders' equity (6) (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% (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. 76

77 Appendix: Non-GAAP Financial Measures Adjusted Return on Capital Reconciliation (1) ($ Millions) Q16 3Q Forecast Net earnings (2) $ 238 $ 218 $ 305 $ 262 $ 291 $ 195 $ 213 Restructuring and other charges, net and other items Income taxes Adjusted earnings before income taxes Adjusted interest expense (3) Adjusted income taxes (4) (177) (214) (224) (198) (217) (159) (175) Adjusted net earnings [A] $ 327 $ 383 $ 413 $ 366 $ 402 $ 296 $ 314 Average total debt (5) $ 4,015 $ 4,653 $ 5,177 $ 5,549 $ 5,559 $ 5,378 $ 5,351 Average off-balance sheet debt (5) Average total shareholders' equity (5) 1,594 1,926 1,895 2,052 2,026 2,094 2,126 Average adjustments to shareholders' equity (6) (2) Adjusted average total capital [B] $ 5,608 $ 6,589 $ 7,084 $ 7,605 $ 7,589 $ 7,475 $ 7,481 Adjusted return on capital [A]/[B] 5.8% 5.8% 5.8% 4.8% 5.3% 4.0% 4.2% Weighted average cost of capital 4.8% 4.7% 4.4% 4.3% 4.3% 4.3% 4.4% Adjusted return on capital spread 1% 1.1% 1.4% 0.5% 1% (0.3)% (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. 77

78 Appendix: Non-GAAP Financial Measures Adjusted Return on Capital Reconciliation ($ Millions) 2016 FMS DTS SCS Net earnings (2) $ 233 $ 39 $ 67 Restructuring and other charges, net and other items (27) Income taxes Adjusted earnings before income taxes Adjusted interest expense (3) Adjusted income taxes (4) (182) (28) (40 ) Adjusted net earnings [A] $ 313 $ 45 $ 70 Average total debt (5) $ 5,717 $ (86) $ (56 ) Average off-balance sheet debt (5) Average total shareholders' equity (5) 1, Average adjustments to shareholders' equity (6) (52) Adjusted average total capital [B] $ 7,165 $ 363 $ 466 Adjusted return on capital [A]/[B] 4.4% 12.4% 14.9 % (1) Earnings calculated based on a 12-month rolling period. (2) Interest expense includes interest for on and off-balance sheet vehicle obligations. (3) Income taxes were calculated by excluding taxes related to comparable earnings items and interest expense. (4) The average is calculated based on the average GAAP balances. (5) Represents comparable earnings items for those periods. 78

79 Appendix: Non-GAAP Financial Measures ($ Millions) Cash Flow Reconciliation 12/31/ /31/ /31/ /31/ /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) Collections of Direct Finance Leases (1) 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) Net cash used in investing activities (449) (982) (1,657) (1,635) (1,604) (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. 79

80 Appendix: Non-GAAP Financial Measures Cash Flow Reconciliation ($ Millions) 12/31/ /31/ /31/2016 9/30/2016 9/30/ Forecast Cash Provided by Operating Activities from Continuing Operations $ 1,383 $ 1,442 $ 1,601 $ 1,185 $ 1,166 $ 1,600 Proceeds from Sales (Primarily Revenue Earning Equipment) (1) Collections of Direct Finance Leases (1) Other, net (1) (1) Total Cash Generated 1,944 1,940 2,099 1,584 1,522 2,070 Capital Expenditures (1), (2) (2,259) (2,668) (1,905) (1,511) (1,313) (1,820) Free Cash Flow (3) $ (315) $ (728) $ 194 $ 72 $ 210 $ 250 Memo: Depreciation Expense (4) $ 1,047 $ 1,122 $ 1,187 $ 878 $ 933 1,250 Net cash provided by (used in) financing activities (186) (56) (191) (250) Net cash used in investing activities (1,705) (2,161) (1,406) (1,109) (962) $ (1,300) 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. 80

81 Appendix: Non-GAAP Financial Measures Debt to Equity Reconciliation (1) ($ Millions) 12/31/2008 % to Equity 12/31/2009 % to Equity 12/31/2010 % to Equity 12/31/2011 % to Equity Debt $ 2, % $ 2, % $ 2, % $ 3, % PV of minimum lease payments and guaranteed residual values under operating leases for vehicles Total Obligations (2) $ 3, % $ 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. 81

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