Ryder System : 2021 Ryder Annual Report (2024)

CORPORATE PROFILE

Ryder System, Inc. is a $9.7 billion logistics and transportation company. We operate behind the scenes, managing critical fleet, transportation, and supply chain functions for more than 50,000 customers, many of which make the products that consumers use every day.

R E V E N U E

BREAKDOWN:

DIVERSIFIED CUSTOMER BASE

(as % of 2021 Operating Revenue)

DRIVING IN THE RIGHT DIRECTION

• We've made significant progress on actions to increase the return profile of the business while generating increased free cash flow.

Many of these actions are multi-year initiatives that we expect will provide incremental benefits going forward, positioning us well for the future."

ROBE RT SAN CH E Z

Chairman and CEO

INCREASING FMS RETURNS

• Multi-yearlease pricing and maintenance cost-savings initiatives
• Strong pricing environment in rental and used vehicle sales
• Declining depreciation impact from prior residual value estimate changes

ACCELERATING GROW TH AND EXPANDING

CAPABILITIES IN SCS/DTS

• Acquisitions significantly expanding e-fulfillment and multi-client distribution capabilities
• Innovative technology is key driver of record new contract wins

MITIGATING IMPACT FROM

CYCLICAL DOWNTURNS

• Maintaining vehicle residuals at historically low levels
• Shifting vehicle mix toward trucks to capitalize on e-commerce trends

INCREASING ROE TARGET OVER THE CYCLE

FROM 15% TO HIGH TEENS RANGE

• Reflects return improvement actions, planned initiatives, and our outlook

CEO LETTER

TO SHAREHOLDERS

DEAR SHAREHOLDERS:

I'm proud of the strong results the Ryder team delivered during 2021. The ongoing effects of the COVID-19 pandemic and related economic disruption presented unprecedented challenges for our customers and we were there to help them thrive. Increased transportation and supply chain complexities are making it harder for companies to keep these functions in-house and a record number are seeking Ryder's expertise through our outsourced solutions. Supply chain disruptions, labor shortages, and truck production constraints fueled demand for our logistics and transportation solutions, and companies increasingly turned to Ryder to overcome these market challenges.

2021 RESULTS

In 2021, we generated record ROE of 21%, reflecting strong demand and pricing in used vehicle sales and rental, as well as benefits from our multi-year lease pricing and maintenance cost-savings initiatives. Based on fundamental changes we've made to elevate the return profile of our Fleet Management Solutions (FMS) business, including increased lease return requirements and lower ongoing maintenance costs, we raised our long-term ROE target over the cycle from

15% to a range of high-teens. We also delivered record comparable EPS from continuing operations of $9.58, reflecting strong FMS results.

We generated strong operating cash flow of $2.2 billion and free cash flow of $1.1 billion, reflecting our strategy focused on moderate growth with higher returns in our FMS business and accelerated growth in our higher return Supply Chain and Dedicated Transportation businesses. Free cash flow also benefitted

• We're enthusiastic about the potential for growth in our industry, and are making strategic investments

in technology and new product development to create new opportunities for long-term revenue and earnings growth."

In our Supply Chain Solutions (SCS) and Dedicated Transportation Solutions (DTS) businesses, we achieved record new contract wins that are expected to generate profitable growth in 2022 and beyond. Companies are increasingly engaging Ryder to increase the efficiency and resiliency of their supply chains, while our operational expertise and innovative technology are key differentiators in winning new business. Earnings in SCS were negatively impacted by supply chain disruptions impacting our automotive customers, while labor shortages adversely affected results in SCS and DTS. Pre-tax earnings as a percent of operating revenue for both segments are expected to return to target levels in the second half of 2022, reflecting growth, acquisitions, contract adjustments to recover unusually higher labor costs, and an expected recovery in automotive production.