COMPANY OVERVIEW. September 2014

Transcription

1 COMPANY OVERVIEW September

2 Safe Harbor and Non-GAAP Financial Measures Certain statements and information included in this presentation are "forward-looking statements" under the Federal Private Securities Litigation Reform Act of 1995, including our expectations regarding earnings growth, lease fleet growth, sales activity and performance in our product lines, including full service lease, supply chain solutions, commercial rental and used vehicle sales, and anticipated capital expenditures through the end of the year. Accordingly, these forward-looking statements should be evaluated with consideration given to the many risks and uncertainties inherent in our business that could cause actual results and events to differ materially from those in the forward-looking statements. Important factors that could cause such differences include, among others, lower than expected lease sales, decreases in commercial rental demand and pricing, fluctuations in market demand for used vehicles impacting inventory levels, pricing and our anticipated proportion of retail versus wholesale sales, lower than expected benefits from maintenance initiatives and a newer fleet, setbacks in the economic recovery, decreases in freight demand or volumes, our ability to obtain adequate profit margins for our services, our inability to maintain current pricing levels due to soft economic conditions, further decline in economic and market conditions in the U.K., business interruptions or expenditures due to severe weather or natural occurrences, competition from other service providers, customer retention levels, loss of key customers, unexpected bad debt reserves or write-offs, changes in customers business environments that will limit their ability to commit to long-term vehicle leases, a decrease in credit ratings, increased debt costs, adequacy of accounting estimates, reserves and accruals particularly with respect to pension, taxes, depreciation, insurance and revenue, sudden or unusual changes in fuel prices, 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. This presentation includes certain non-gaap financial measures as defined under SEC rules, including operating revenue, comparable earnings, comparable earnings per share forecast, comparable earnings before income tax, comparable tax rate, adjusted return on capital, total cash generated, free cash flow, total obligations and the ratios based on these financial measures. Refer to Appendix Non-GAAP Financial Measures for more information about the non-gaap financial measures contained in this presentation. Additional information as required by Regulation G regarding non-gaap financial measures can be found in our most recent Form 10-K, Form 10-Q and our Form 8-K filed as of the date of this presentation with the SEC, which are available at 2

3 Historical Overview 3

4 Ryder's Rich History 80 Years s Grew rapidly by focusing on transportation solutions s Trucking deregulation; diversified into non-core businesses 1990 s Divested non-core businesses 2000 s Improved performance through process changes 4

5 Supplementing Organic Growth Through Acquisitions 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 Pollock NationaLease 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 Focus on Contractual Core 5

6 Current Business Overview 6

7 Ryder Profile Fleet Management Solutions Supply Chain Solutions Full Year 2013 Total Revenue (1) $6.4 Billion Comparable Earnings (1)(2) $257 Million Assets $9.1 Billion Vehicles Maintained 209,500 Employees 28,900 (1) These amounts result from continuing operations. (2) Net Earnings from Continuing Operations are $243 million. 7

8 Product Line Summary Segment / Product Operating Revenue Margin (Earnings before Tax % Operating Revenue) Assets Number of Vehicles FY2013 FY2013 2Q2014 2Q2014 Adjusted Return on Capital (3) FY2013 FMS: Commercial Rental $0.8B 40,700 FMS: Full Service Lease $2.2B 10.0% (1) (FMS Segment) $8.8B (FMS Segment) 123, % (FMS Segment) FMS: Contract Maintenance FMS: On-Demand Maintenance Supply Chain Solutions $0.2B 39,700 NA 6,500 $2.1B 6.3% (1) $0.9B 12,500 2) 13.5% Ryder System, Inc. $5.3B 7.0% $9.7B 219, % (1) Segment earnings before tax excluded non-operating pension costs. (2) Vehicles supporting Supply Chain Solutions are provided by FMS and are included in the FMS fleet count. (3) Rolling 12 months 8

9 Vision / Mission / Values VISION To bring compelling value through outsourcing MISSION VALUES Ryder provides innovative supply chain and fleet solutions that are reliable, safe and efficient, enabling our customers to deliver on their promises Trust Innovation Collaboration Expertise Safety We will crack the code on fleet and supply chain outsourcing by bringing compelling value propositions to our customers 9

10 Our Strategy and Strategic Priorities Strategy Grow fleet management and supply chain outsourcing services by targeting private fleets (FMS) and key verticals (SCS) with innovative solutions, operational excellence, best in class talent and information technology 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. Growth Focus - Accelerate growth rate through increased sales & marketing effectiveness and new product innovation Operational Excellence Op Revenue EPS ROC Spread Innovation Growth Focus 4. Talent & Culture Attract, develop and retain the best talent in an environment where leaders Talent engage & Culture their 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 10

11 Driving Increased Outsourcing 1 Client Pain Points Overlap 2 Overcome Typical 3 Resulting in with Provider Capabilities Outsourcing Barriers Outsourcing 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) Loss of Control Demonstrate industry specific expertise to build relationships and trust (Food / Beverage and Automotive) Cost Flexibility around valueadded services and continuous improvement Commitment Provide onramps and transactional services Execution Risks Enhance operational excellence and be known for best execution 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 Provider Capabilities Client Pain Points Greater Coverage (relative to client) Flexibility (options for client) Compelling Value Through Outsourcing New initiatives to address barriers combined with secular trends will allow us to realize stronger growth from outsourcing 11

12 Overcoming Barriers with New/Enhanced Capabilities Loss of Control FSL Conversions to Dedicated PO Management/Consolidation Cost Dedicated + Transportation Management Solution Natural gas vehicles Commitment On-Demand Maintenance Transactional transport for oil & gas industry Execution Risk Uptime through best-in-class maintenance quality Expertise in new SCS markets We will drive increased outsourcing through initiatives and services that address barriers 12

13 Market Overview The transportation and logistics markets present significant growth opportunities. Estimated market sizes are as follows: Market Segment Total commercial fleet market U.S., Canada Lease and rental market (outsourced) U.S., Canada, U.K. Dedicated contract carriage market (outsourced) U.S. Supply chain logistics market (outsourced) North America and Asia Market Size 7.9 million vehicles 1.1 million vehicles $15 billion $275 billion Note: Vehicle market shown is class 3-8; Supply chain logistics market represents Ryder s targeted countries within North America and Asia. Sources: Truck Rental and Leasing Association, R.L. Polk, Monitor Group, A.T. Kearney 13

14 Geographic Overview Countries of Operation North America: Europe: Asia: U.S., Canada, Mexico U.K., Germany Singapore, China - with a network of owned and agent offices throughout Asia Revenue by Region 6% 3% <1% 7% U.S. Canada (since 1957) Europe (since 1971) Mexico (since 1994) Asia (since 2001) Total non-u.s. revenue = 16% 84% 14

15 Leading Indicators Second quarter results for Ryder s key leading indicators included: Commercial Rental: Utilization (a) Pricing (a) Fleet Count (Average) Used Vehicle Pricing: Tractors Trucks Lease: Early Lease Terminations (c) Supply Chain Solutions: Volumes 78.3%, down 220 bps from prior year up 5% from prior year up 8% from prior year up 15% from prior year; up 9% from 1Q14 up 16% from prior year; up 4% from 1Q14 34% below 6-year average total volumes up (a) (b) (c) Global power units U.S. power units U.S. 15

16 Business Segments 16

17 Fleet Management Solutions: Product and Services Overview Fleet Management Solutions Commercial Rental (23% FMS revenue) Full Service Lease (64% FMS revenue) Contract Maintenance (5% FMS revenue) Contract-Related Maintenance (6% FMS revenue) Fleet Support Services (2% FMS revenue) Commercial vehicles for short-term customer needs Used by both lease and non-lease customers Sample Clients: Long-term contractual agreement Includes vehicle procurement, maintenance services and used vehicle disposition Comprehensive package of fleet support services available Comprehensive, preventive maintenance services Vehicles are owned by our clients or under third-party finance lease contracts Ancillary maintenance work on Ryder or customer owned vehicles not included in base contract On-demand maintenance for large customer owned fleets Fuel Insurance Safety Regulatory reporting Technology Supply Chain Solutions Note: Revenue percents based on segment operating revenue (excludes fuel). 17

18 Fleet Management Solutions: Market and Segments Diversified portfolio of customers represent many industries including: Food & Beverage Transportation & Warehousing Housing Business & Personal Services Industrial Current Customers Ryder has been successful serving both large and small private fleets 13,500 full service lease/contract maintenance customers 37,700 commercial rental customers 800 operating locations (operates in U.S., Canada, U.K., Germany) 123,000 full service lease and 39,700 contract maintenance vehicles in service 40,700 commercial rental vehicles in service 6,500 customer vehicles serviced under transactional on-demand maintenance Market Size Already outsourced full service lease and rental market is estimated to be 1.1 million vehicles in U.S., Canada and U.K. Total commercial market is estimated to be 7.9 million vehicles in U.S. and Canada (additional market opportunity in the U.K.) 18

19 Fleet Management Solutions: Growth Opportunities Private Fleet & For-Hire Conversions / Product Innovation Largest opportunity for growth Leverage secular trends including higher vehicle cost, complexity of engine technology, new emissions standards, residual risk exposures, credit availability, capital redeployment, technician shortage, etc. to drive outsourcing decision Focusing on product innovation to target new customers i.e. On-Demand Maintenance, natural gas vehicles, Three-Year Flex Lease, Flex-to-Green Lease, etc. Share Gain Lower cost structure enhances competitive position in 1.1 million vehicle 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 19

20 Fleet Management Solutions: Macro Trends Favoring FMS Average Age of US Fleet Class 8 US Retail Sales Forecast - Class 8 Tractors Age (years) 6.8 actual forecast (Sales 000 s Units) actual forecast Source: ACT Research Sources: ACT Research, Eaton, Global Insight and Volvo/Mack Stronger and more stable sales than in period New vehicle sales stability also reduces used vehicle price volatility 20

21 Fleet Management Solutions: Macro Trends Favoring FMS Increased Vehicle Cost & Complexity Increased Government Regulation EPA 2007 EPA 2010 Increased cost and complexity driven by EPAmandated engine technology changes favor vehicle financing and maintenance outsourcing Driver & Technician Shortage Secular Trends that Support 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 Bank Requirements NOW HIRING NOW HIRING NOW HIRING NOW HIRING Access to Capital Well established procedures to recruit, train & develop drivers and technicians Less inclined to focus capital on non-core activities in tighter credit environment 21

22 Fleet Management Solutions: Investment in Technology 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 over 28,000 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 Features increase 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 22

23 Fleet Management Solutions: Full Service Lease Illustration Timeline illustration of the life cycle for a full service lease unit from customer contract signing through vehicle disposal Revenue Generation Customer contract signed Unit ordered from OEM Unit delivered to customer Revenue recognition begins Unit moved to Ryder Used Vehicle Sales Center Unit received from OEM In-service process begins Capital investment made Sales proceeds realized at time of sale Contract pricing is based on a discounted cash flow approach Illustrative cash flows for a full service lease unit are as follows: Financial Impact: Capital Expenditure ($30-120k) Fixed Revenue (average of 85% of revenue based on fixed rate per month) Variable Revenue (average of 15% of revenue based on rate per mile driven) Maintenance, Depreciation and Interest Expense incurred Note: Revenue escalates during contract life based on CPI implementation Sales Proceeds (25-35%) Cash Flow Impact: Negative Positive Positive Note: Timeline shown is for illustration purposes only and does not represent the average timeframe for all units. 23

24 Supply Chain Solutions: Product and Services Overview Supply Chain Solutions Professional Services (5% SCS revenue) Dedicated (57% SCS revenue) Distribution Management (31% SCS revenue) Transportation Management (7% SCS revenue) Strategic consulting & decision support Solutions engineering Network modeling & optimization Total landed cost Lean Six Sigma Turnkey transportation service Drivers Vehicles Routing & scheduling Management & administrative support Warehouse/distribution center operations (>35M sq. ft. managed) Order fulfillment Inbound materials management Outbound product support Reverse logistics Vendor managed inventory Kitting, packaging & assembly Procure and execute over $4.6B in freight moves as customer s agent Shipment planning and execution Freight brokerage Freight bill audit and payment Origin/destination services Supported by: IT Solutions Transportation & warehouse management systems Network optimization tools Inventory & shipment visibility tools Sample Clients: 24

25 Supply Chain Solutions: Markets and Segments Top Industries Currently Served Automotive 28% Hi-Tech 16% Industrial & Other 20% Retail & CPG 36% Current Customers % of FY13 Operating Revenue Market Size Comprehensive solutions for over 670 customers Focus is on customers with sophisticated service requirements who require specialized equipment, specialized handling or integrated services Lease and operate over 35 million square feet of warehouse space (operates in North America and Asia) Manage almost 10,000 North American border crossings per month Outsourced supply chain logistics market in North America and Asia is estimated to be $275 billion Dedicated outsourced market is estimated to be $15 billion (U.S.) 25

26 Supply Chain Solutions: Services and Industry Verticals Automotive Hi-Tech Retail & CPG Industrial & Other Distribution Management Design, manage, and operate networks of warehouses and cross-docks Transportation Management Designing 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 26

27 Supply Chain Solutions: Markets and Segments The global outsourced logistics market is approximately $640 billion, of which North America and our targeted countries in Asia are $275 billion 2012 North American Logistics (excluding freight forwarding) $1.6T U.S. 3PL Revenues by Industry Segment Industrial 6.5% Other 6.5% Healthcare 6.5% Retail & CPG 28.9% Food, Groceries 8.9% $130B Elements % Logistics Spend Outsourced Logistics Spend Automotive 11.1% Hi-Tech 21.5% 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: Transport Intelligence, Armstrong & Associates, Organization for Economic Cooperation and Development 27

28 Supply Chain Solutions: Growth Opportunities for Integrated Solutions PLATFORM FOR GROWTH Known for best execution named Best Third-Party Logistics Provider by Inbound Logistics in ranked among the top five companies for the 16 th consecutive year by Inbound Logistics Specialized capabilities and proactive solutions based on deep expertise Focus higher value integrated and specialized solutions Acquisitions /JV s and internal product development initiatives Differentiated functional execution and deep industry expertise will result in higher growth 28

29 Supply Chain Solutions: Growth Opportunities for Ryder Dedicated Ryder Dedicated focuses on customers with high service requirements (e.g. specialized equipment, specialized handling or integrated services). Targeted strategies for growth include: Conversions from FMS and Private Fleets Target private fleet conversion opportunities through specific industry focus Upsell targeted FMS customers to Ryder Dedicated - drives significant increase in account revenue/earnings Leverage secular outsourcing trends such as CSA, driver shortage and equipment cost/complexity Transportation Management + Dedicated Offering Target customers with a combined transportation management and dedicated services offering. This gives the customer more flexibility while maintaining the stability and security of a dedicated offering. Continued Penetration of Target Market Ryder s dedicated offering differentiates itself from truckload carriers by providing highly specialized services Typical customer characteristics include closed-loop, multi-stop shipments; tight delivery windows; high-value, time sensitive freight; product handling required; dedicated / uniformed driver; logo d vehicle 29

30 Supply Chain Solutions: Customer Example Ryder & CVS Key Facts Started Ryder Dedicated relationship in 1997 Originally outsourced 2 distribution centers to Ryder; has grown to 8 centers with further outsourcing possible Serve over 3,700 stores approximately 50% of total stores Services include vehicle maintenance, driver management, routing/scheduling & fuel Vehicles and driver uniforms display CVS logo Must meet 15 or 30 minute delivery windows to retail stores Volume fluctuations and store network realignments require dynamic scheduling capabilities Customer benefits include Reduced costs Improved service levels Seamless support Support for new store expansions Support for acquisition growth strategy Original SCS relationship has since expanded to FMS business segment Provides full service leasing and maintenance services to 3 additional distribution centers 30

31 Financials & Governance 31

32 $ Per Share $ Millions Earnings from Continuing Operations Earnings from Continuing Operations Before Income Tax EPS from Continuing Operations (1) Comparable Earnings Adjustments to Earnings (59) (1) 2009 (2) 2010(3) 2011 (4) 2012 (5) 2013 (6) (0.08) (0.58) Comparable EPS Adjustments to EPS (1) 2008 includes $21 million of restructuring charges or $0.31 per diluted share, a $2 million international asset impairment charge or $0.03 per diluted share, and a $0.17 tax benefit and $22 million of non-operating pension income or $0.25 per diluted share. Forecast (2) 2009 includes a $7 million international asset impairment charge or $0.12 per diluted share, $6 million of restructuring charges or $0.07 per diluted share, Midpoint and a $0.11 net tax benefit and $46 million of non-operating pension costs or $0.50 per diluted share (3) 2010 includes a $1 million gain on sale of an international asset or $.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. (4) 2011 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. (5) 2012 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. (6) 2013 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. (7) 2014 Forecast includes $10 million in non-operating pension costs or $0.10 per diluted share, partially offset by a tax law benefit and restructuring and other recoveries, of $0.04 per diluted share (30) (0.16) (25) 3.91 (48) 3.31 (0.50) (0.40) (1) (2) (3) (4) (5) (6) (24) (0.25) 451 Forecast Midpoint 5.49 (7) (10) (0.06) (7)

33 Key Financial Statistics Full Year ($ Millions, Except Per Share Amounts) % B/(W) Operating Revenue $ 5,270.5 $ 5, % Fuel Services and Subcontracted Transportation Revenue 1, ,190.6 (4)% Total Revenue $ 6,419.3 $ 6, % Earnings Per Share from Continuing Operations $ 4.63 $ % Comparable Earnings Per Share from Continuing Operations $ 4.88 $ % Memo: Average Shares (Millions ) - Diluted Tax Rate from Continuing Operations 34.1% 33.7% Comparable Tax Rate from Continuing Operations 34.7% 35.4% Adjusted Return on Capital vs. Cost of Capital (Trailing 12 months) 1.0% 0.8% Note: Amounts throughout presentation may not be additive due to rounding. 33

34 Key Financial Statistics June Year-To-Date ($ Millions, Except Per Share Amounts) % B/(W) Operating Revenue $ 2,715.5 $ 2, % Fuel Services and Subcontracted Transportation Revenue (1)% Total Revenue $ 3,295.3 $ 3, % Earnings Per Share from Continuing Operations $ 2.34 $ % Comparable Earnings Per Share from Continuing Operations $ 2.36 $ % Memo: Average Shares (Millions ) - Diluted Tax Rate from Continuing Operations 36.0% 35.3% Comparable Tax Rate from Continuing Operations 37.1% 36.1% Adjusted Return on Capital vs. Cost of Capital (Trailing 12 months) 0.9% 1.1% Note: Amounts throughout presentation may not be additive due to rounding. 34

35 Business Segments Full Year ($ Millions) Operating Revenue: Memo: Total Revenue % B/(W) % B/(W) Fleet Management Solutions $ 3,424.5 $ 3, % $ 4,494.7 $ 4, % Supply Chain Solutions 2, , % 2, , % Eliminations (217.8) (199.3) (9)% (458.5) (428.9) (7)% Total $ 5,270.5 $ 5, % $ 6,419.3 $ 6, % Segment Earnings Before Tax: (1) Fleet Management Solutions $ $ % Supply Chain Solutions % Eliminations (35.5) (29.3) (21)% % Central Support Services (Unallocated Share) (45.5) (42.3) (7)% Non-operating Pension Costs (24.3) (31.4) 23% Restructuring and Other Charges, Net and Other Items 0.2 (16.7) NM Earnings Before Income Taxes % Provision for Income Taxes (125.7) (102.2) (23)% Earnings from Continuing Operations $ $ % 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. 35

36 Business Segments June Year-To-Date ($ Millions) Operating Revenue: Memo: Total Revenue % B/(W) % B/(W) Fleet Management Solutions $ 1,767.8 $ 1, % $ 2,316.3 $ 2, % Supply Chain Solutions 1, , % 1, , % Eliminations (118.2) (105.3) (12)% (245.9) (227.6) (8)% Total $ 2,715.5 $ 2, % $ 3,295.3 $ 3, % Segment Earnings Before Tax: (1) Fleet Management Solutions $ $ % Supply Chain Solutions (9)% Eliminations (20.2) (16.6) (21)% % Central Support Services (Unallocated Share) (23.0) (22.0) (5)% Non-operating Pension Costs (4.9) (10.2) 53% Restructuring and Other Charges, Net and Other Items NM Earnings Before Income Taxes % Provision for Income Taxes (70.3) (56.5) (24)% Earnings from Continuing Operations $ $ % 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. 36

37 Capital Expenditures Full Year ($ Millions) 2013 $ O/(U) 2012 Full Service Lease $ 1,823 $ 1,548 $ 275 Commercial Rental (267) Operating Property and Equipment Gross Capital Expenditures 2,184 2, Less: Proceeds from Sales (Primarily Revenue Earning Equipment) Less: Sale and Leaseback of Assets (130) Net Capital Expenditures $ 1,732 $ 1,618 $

38 Capital Expenditures June Year-To-Date ($ Millions) 2014 $ O/(U) 2013 Full Service Lease $ 818 $ 778 $ 41 Commercial Rental Operating Property and Equipment Gross Capital Expenditures 1, Less: Proceeds from Sales (Primarily Revenue Earning Equipment) Net Capital Expenditures $ 980 $ 760 $

39 Capital Expenditures Forecast ($ Millions) FY 2014 Forecast 2013 Full Service Lease - Replacement $ 1,120 Full Service Lease - Growth 630 Full Service Lease 1,750 $ 1,823 Commercial Rental Operating Property and Equipment Gross Capital Expenditures 2,310 2,184 Less: Proceeds from Sales Less: Proceeds from Sale and Leaseback Net Capital Expenditures $ 1,655 $ 1,732 39

40 Growth Capital Expenditures ($ Millions) 1.0 Growth Capital Expenditures Lease & Rental 850 Growth Capital Expenditures - Lease Higher per Unit Investment Rental Lease Forecast Forecast Forecast Fleet Count increase (~ 2.5k vehicles) Free Cash Flow (257) (384) (386) (300) (1) Termouts 15% 15% 17% 17% 21% 23% 22% 18% (1) U.S. FSL termouts as a % of beginning fleet count 40

41 Comparable EPS and Share Count History ($ Earnings Per Share) Comparable Earnings Per Share $3.59 $4.16 $4.04 $4.43 $3.71 $4.41 $4.88 $5.55 $2.20 $ Forecast Midpoint GAAP EPS Non-Operating Pension Costs (1) (0.09) (0.25) Other Adjustments (2) (0.12) (0.05) (0.06) (0.15) (0.03) (0.04) Comparable EPS Average Diluted Common Share Outstanding (in Thousands) 64,465 61,478 59,728 56,539 55,094 51,884 50,878 50,740 52,071 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. 41

42 Segment Revenue (1) Operating Revenue Total Revenue Full Year Ryder System ($ Billions) Fleet Management (2) Solutions Supply Chain Solutions (3) (1) not restated for discontinued operations. (2) FMS Operating Revenue excludes fuel services revenue. (3) SCS Operating Revenue excludes subcontracted transportation. 42

43 Segment Earnings Before Tax (EBT) (1) EBT as % of Operating Revenue EBT as % of Total Revenue Full Year Ryder System Fleet Management Solutions (2) Supply Chain Solutions (2) YTD13 YTD DOWNTURN YTD13 YTD YTD13 YTD14 (1) not restated for discontinued operations. (2) Excludes non-operating pension costs. 43

44 Adjusted Return on Capital History 7.8% 7.9% Adjusted Return on 7.4% 7.3% Capital (ROC) 6.8% 6.7% 6.6% 6.5% Cost of Capital (COC) 6.3% 6.1% 4.1% 4.8% 5.7% 5.6% 5.5% 5.7% 5.8% 4.8% 4.7% 4.8% 150 bp Spread Targeted Forecast ROC O/(U) COC 1.0% 1.2% 0.8% 0.8% (2.2)% (1.3)% 0.2% 0.8% 1.0% 1.0% Return on Equity 14.6% 15.5% 14.2% 11.2% 4.4% 8.4% 11.9% 14.9% 14.9% 14.9% Adjusted Total $3.8 $4.2 $4.8 $4.8 $4.2 $4.0 $4.6 $5.2 $5.7 $6.6 Capital (1) (1) Adjusted Total Capital represents Adjusted Average Total Capital in billions. 44

45 Financial Indicators Forecast (1) Gross Capital Expenditures (2) $1,289 Full Service Lease Commercial Rental PP&E/Other $1,165 $1,399 $1,757 $1,182 $1,265 $1,088 $1,760 $2,161 $2,184 ($ Millions) $2,310 $657 $600 $725 $ Free Cash Flow (2) Forecast (242) (208) (3) (439) (257) (384) (386) (300) Total Obligations to Equity 275% 234% 201% 146% 129% Total Obligations to Equity Pension Impact (4) 168% 151% 157% 225% 183% 203% 261% 270% 226% 230% 250% Long 2013 Long Term Forecast Target Term Midpoint Midpoint Target (5) 161% 139% 140% 135% 118% 143% 164% 147% 213% 175% 196% 257% 260% 221% Midpoint Balance Sheet Debt to Equity (1) Total Obligations to Equity includes acquisitions. Free Cash Flow and Gross Capital Expenditures exclude acquisitions. (2) not restated for operations discontinued in (3) Includes $176 million payment to the IRS related to full resolution of tax period matters. (4) Illustrates impact of accumulated net pension related equity charge on leverage. (5) Represents long term obligations to equity target of % while maintaining a solid investment grade credit rating. 45

46 Free Cash Flow (1) : Impact From Business Model Changes In the early 2000 s, changes to the business model resulted in a significant improvement in free cash flow generation Free cash flow is expected to be positive over the business cycle Annual variability exists, however, due to changes in fleet replacement and growth in any given year ($ Millions) Cumulative Free Cash Flow $131 $367 $357 $289 $380 $341 $614 $ $2,090 M ($208) (2) ($439) (1) cash flows presented on an as reported basis and not adjusted for operations discontinued in (2) Includes $176 million payment to the IRS in 2005 related to full resolution of tax period matters. 46

47 Free Cash Flow : Recent Impact From Growth Capital Elevated number of units replaced during resulted in higher capital 40-50% higher purchase cost per vehicle (due to 2007 and 2010 engine technology changes) reflected in growth capital Impact from growth capital expected to abate as price differential normalizes Additionally, free cash flow in future years will reflect higher historic capital spending as cash inflow realized over average six year vehicle life ($ Millions) Free Cash Flow Growth Capital $723 $566 $733 $850 ($257) ($384) ($386) ($300) Forecast 47

48 Dividend History Dividend unchanged at $0.15 per quarter from 1989 through 2004 Ten increases in quarterly dividend enacted starting in 2005: Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 48

49 Covenant Compliance ($ Millions) 2018 Global Revolving Credit Facility Covenant / Limitations Maximum 6/30/14 Allowable Debt to Net Worth (1) 194% 300% Secured Indebtedness $326 $2,760 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 October 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. 49

50 Rating Agencies Standard & Poor's Moody's Fitch Short Term Rating A2 P2 F2 Long Term Rating BBB Baa1 A- Outlook Positive Stable Stable (Affirmed 4/14) (Affirmed 3/14) (Affirmed 4/14) 50

51 Corporate Governance Best Practices 11 of 12 Directors are independent; Committee members are all independent Strong Lead Director with significant oversight and authority No Director has been on the Board more than 13 years; five Directors were elected in the last three years 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 Amended Company Articles to eliminate classified Board beginning in 2016 No stockholder rights plan Eliminated eight of nine supermajority voting requirements No related party transaction; strict conflict of interest practices Stock ownership guidelines for officers (4x base salary for CEO and 2x for other officers); Directors (5x annual cash retainer) 51

52 Performance Measurement Performance Goals for Senior Executives Align with Creating Stockholder Value Performance Measures Focus on Top Line and Bottom Line Growth and Capital Management and Shareholder Value Short Term Incentive Plan Measures: EPS Growth Operating Revenue Growth Long Term Incentive Plan Measures: Relative TSR (1) ROC Over 70% of senior executives compensation is at risk and subject to these profitable growth measures Staff and field incentive bonus performance measures align with senior management goals (1) Ryder TSR as compared to a custom list of benchmarked companies. 52

53 Key Points Accelerating revenue growth with strong operating leverage 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 Sales and marketing initiatives including new products designed to drive growth Continued cost savings through ongoing process improvements and lease fleet replacement cycle Targeted and disciplined acquisition process 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 53

54 Appendix 54

55 Appendix: Balance Sheet ($ Millions) June 30, December 31, Cash and Cash Equivalents $ 87 $ 62 Other Current Assets 1,051 1,001 Revenue Earning Equipment, Net 6,930 6,491 Operating Property and Equipment, Net Other Assets Total Assets $ 9,688 $ 9,104 Short-Term Debt / Current Portion Long-Term Debt $ 558 $ 259 Other Current Liabilities Long-Term Debt 4,159 3,930 Other Non-Current Liabilities (including Deferred Income Taxes) 2,047 2,046 Shareholders' Equity 1,965 1,897 Total Liabilities and Shareholders' Equity $ 9,688 $ 9,104 55

56 Appendix: Key Leverage Statistics ($ Millions) June 30, December 31, December 31, Balance Sheet Debt $ 4,717 $ 4,189 $ 3,821 Total Obligations (1) $ 4,805 $ 4,284 $ 3,969 Equity $ 1,965 $ 1,897 $ 1,467 Balance Sheet Debt to Equity 240% 221% 260% Total Obligations to Equity 245% 226% 270% Note: Includes impact of accumulated net pension related equity charge of $470 million as of 6/30/14, $474 million as of 12/31/13 and $645 million as of 12/31/12. (1) Total obligations include the present value of minimum lease payments and guaranteed residual values under operating leases of $88 million as of 6/30/14, $95 million as of 12/31/13 and $148 million as of 12/31/12. 56

57 Appendix: Cash Flow from Continuing Operations June Year-To-Date ($ Millions) Earnings from Continuing Operations $ 125 $ 103 Depreciation Gains on Vehicle Sales, Net (63) (46) Amortization and Other Non-Cash Charges, Net Pension Contributions (65) (24) Changes in Working Capital and Deferred Taxes (2) 28 Cash Provided by Operating Activities Proceeds from Sales (Primarily Revenue Earning Equipment) Collections of Direct Finance Leases Other, Net (1) 8 Total Cash Generated Capital Expenditures (1) (1,255) (948) Free Cash Flow (2) $ (410) $ (107) (1) Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment. (2) Free Cash Flow excludes acquisitions and changes in restricted cash. 57

58 Appendix: Cash Flow from Continuing Operations Full Year ($ Millions) Earnings from Continuing Operations $ 243 $ 201 Depreciation Gains on Vehicle Sales, Net (96) (89) Amortization and Other Non-Cash Charges, Net Pension Contributions (95) (81) Changes in Working Capital and Deferred Taxes Cash Provided by Operating Activities 1,223 1,134 Proceeds from Sales (Primarily Revenue Earning Equipment) Proceeds from Sale and Leaseback of Assets Collections of Direct Finance Leases Other, Net 8 - Total Cash Generated 1,754 1,749 Capital Expenditures (1) (2,140) (2,133) Free Cash Flow (2) $ (386) $ (384) (1) Capital expenditures presented net of changes in accounts payable related to purchases of revenue earning equipment. (2) Free Cash Flow excludes acquisitions and changes in restricted cash. 58

59 N u m b e r o f U n i t s Appendix: Asset Management Update (a) 5,000 2Q08 YTD 2Q09 YTD 2Q10 YTD 2Q11 YTD 2Q12 YTD 2Q13 YTD 2Q14 YTD 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. 4,500 4,000 3,500 3,000 2,948 2,782 3,319 4,381 3,689 3,880 3,096 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. 3,295 3,494 2,500 2,000 1,500 2,180 2,022 2,317 2,242 2,098 1,869 2,488 2,291 1,687 1,584 1,411 1,219 1, Redeployments Extensions Early Terminations (b)(c) (a) U.S. only (b) Current year statistics may exclude some units due to a lag in reporting (c) Excludes early terminations where customer purchases vehicle 59

60 Appendix: Comparable EPS and Share Count History ($ Earnings Per Share) GAAP EPS $ 3.53 $ 3.99 $ 4.19 $ 4.51 $ 1.62 $ 2.37 $ 3.31 $ 3.91 $ 4.63 Non-Operating Pension Costs (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 Asset Impairment/(Gain) on Sale of Property Pension Accounting Charge (0.01) (0.01) (0.04) (0.12) (0.11) (0.06) (0.17) (0.11) (0.21) 0.09 (0.08) (0.10) (0.02) Comparable EPS $ 3.59 $ 4.16 $ 4.04 $ 4.43 $ 2.20 $ 2.53 $ 3.71 $ 4.41 $ 4.88 Average Diluted Common Shares Outstanding 64,465 61,478 59,728 56,539 55,094 51,884 50,878 50,740 52,071 (in thousands) Note: Amounts may not recalculate due to rounding. 60

61 Appendix: 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. Non-GAAP financial measures should be considered in addition to, but not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. Specifically, the following non-gaap financial measures are included in this presentation: Non-GAAP Financial Measure Comparable GAAP Measure Reconciliation & Additional Information Presented on Slide(s) Titled Comparable EPS / Comparable Earnings from Continuing Operations EPS / Earnings from Continuing Operations Earnings from Continuing Operations; Appendix - Comparable EPS History and Share Count; and Appendix - Earnings and EPS from Continuing Operations Reconciliation Comparable EPS Forecast / Comparable Earnings Before Income Tax Forecast EPS Forecast / Earnings Before Income Tax Forecast Earnings from Continuing Operations Adjusted Return on Capital Net Earnings / Total Capital Appendix - Adjusted Return on Capital Reconciliation Total Cash Generated / Free Cash Flow Cash Provided by Operating Activities Appendix - Cash Flow Reconciliation Total Obligations / Total Obligations to Equity Balance Sheet Debt / Debt to Equity Appendix - Key Leverage Statistics Appendix - Debt to Equity Reconciliation Operating Revenue Total Revenue Key Financial Statistics; Segment Revenue FMS/SCS Operating Revenue FMS/SCS Total Revenue Business Segments Comparable Earnings Before Income Tax / Comparable Tax Rate Earnings Before Income Tax / Tax Rate Earnings from Continuing Operations; and Appendix - EBT and Tax Rate from Continuing Operations Reconciliation 61

62 Appendix: Non-GAAP Financial Measures Earnings and EPS from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) YTD14 - YTD14 - YTD13 - YTD13 - Earnings EPS Earnings EPS Reported $ $ 2.34 $ $ 1.98 Non-Operating Pension Costs Benefit from tax law change (1.8) (0.03) - - Restructuring Charges - - (1.9) (0.04) Comparable (1) $ $ 2.36 $ $ 2.06 FY13 - FY13 - FY12- FY12- Earnings EPS Earnings EPS Reported $ $ 4.63 $ $ 3.91 Non-Operating pension costs Pension settlement charge Superstorm Sandy vehicle-related (recoveries) losses (0.4) (0.01) Restructuring and other (recoveries) charges, net (0.4) (0.01) Foreign currency translation benefit (1.9) (0.04) - - Tax benefits - - (4.1) (0.08) Acquisition transaction costs Comparable (1) $ $ 4.88 $ $ 4.41 (1) The company uses Comparable Earnings and Comparable Earnings per Share (EPS) from Continuing Operations, both non-gaap financial measures, which provide useful information to investors and allow for better year over year comparison of operating performance because they exclude from Earnings and EPS from Continuing Operations non-operating pension costs, which we consider to be costs outside of the operational performance of the business and can significantly change from year to year. Comparable Earnings and Comparable EPS also exclude other significant items that are not representative of our ongoing business operations and allow for better year over year comparison. 62

63 Appendix: Non-GAAP Financial Measures EBT and Tax Rate from Continuing Operations Reconciliation ($ Millions or $ Earnings Per Share) YTD14 - YTD14 - YTD14 - YTD13 - YTD13 - YTD13 - EBT Tax Tax Rate EBT Tax Tax Rate Reported $ $ % $ $ % Non-operating Pension Costs Income from foreign currency translation - - (1.9) (0.01) Benefit from tax law change Comparable (1) $ $ % $ $ % FY13 - FY13 - FY13 - FY12 - FY12 - FY12 - EBT Tax Tax Rate EBT Tax Tax Rate Reported $ $ % $ $ % Non-operating Pension Costs Pension settlement charge Superstorm Sandy vehicle-related (gain)/losses (0.6) (0.2) Restructuring and other recoveries, net (0.5) (0.1) Foreign currency translation benefit (1.9) Acquisition transaction costs Tax benefit Comparable (1) $ $ % $ $ % (1) The company uses Comparable Earnings Before Income Tax (EBT) and Comparable Tax Rate from Continuing Operations, both non-gaap financial measures, which provide useful information to investors and allow for better year over year comparison of operating performance because they exclude from EBT and Tax Rate from Continuing Operations non-operating pension costs, which we consider to be costs outside of the operational performance of the business and can significantly change from year to year. Comparable EBT and Comparable Tax Rate also exclude other significant items that are not representative of our ongoing business operations and allow for better year over year comparison. 63

64 Appendix: Non-GAAP Financial Measures Adjusted Return on Capital Reconciliation Net earnings (1) $ 216 $ 227 $ 249 $ 254 $ 200 $ 62 Cumulative effect of change in accounting principle Restructuring and other charges, net and other items (24) (2) Income taxes Adjusted earnings before income taxes Adjusted interest expense (2) Adjusted income taxes (3) (156) (186) (207) (220) (230) (122) Adjusted net earnings $ 257 $ 298 $ 332 $ 356 $ 355 $ 174 ($ Millions) Average total debt (4) $ 1,811 $ 2,148 $ 2,480 $ 2,848 $ 2,882 $ 2,692 Average off-balance sheet debt (4) Average total shareholders' equity (4) 1,412 1,555 1,610 1,791 1,778 1,396 Average adjustments to shareholders' equity (5) (16) (5) (5) Adjusted average total capital $ 3,359 $ 3,846 $ 4,184 $ 4,789 $ 4,841 $ 4,245 Adjusted return on capital 7.7% 7.8% 7.9% 7.4% 7.3% 4.1% (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. 64