2022 ANNUAL REPORT
ACCELERATING
PROFITABLE GROWTH
CORPORATE PROFILE
Ryder System, Inc. is a $12 billion
logistics and transportation
company. We operate behind
the scenes, managing critical
fleet, transportation, and supply
chain functions for nearly 45,000
customers, many of which make
products consumers use every day.
DIVERSIFIED CUSTOMER BASE
20%
Food & Beverage
18%
Retail & Consumer Goods
17%
Transportation & Logistics
11%
Automotive
10%
Industrial
7%
Housing
5%
Technology
5%
Business & Personal Services
7%
Other
SUPPLY CHAIN
SOLUTIONS (SCS)
DEDICATED
TRANSPORTATION
SOLUTIONS (DTS)
FLEET MANAGEMENT
SOLUTIONS (FMS)
39%
OF TOTAL REVENUE
15% 46%
OF TOTAL REVENUE
OF TOTAL REVENUE
Ryder’s Supply Chain Solutions
business segment offers
businesses an end-to-end
suite of solutions that includes
warehousing, distribution,
transportation logistics,
e-commerce and omnichannel
fulfillment, and last mile delivery
to turn logistics networks into
competitive advantages.
Ryder’s Dedicated
Transportation Solutions
business segment provides
customers all the benefits of
a private fleet by combining
the best of Ryder’s leasing and
maintenance capabilities with
the safest and most professional
drivers and technology in
the industry.
Ryder’s Fleet Management
Solutions business segment
offers full-service leasing
solutions, contract maintenance,
and commercial rental of trucks,
tractors, and trailers to help
businesses of all sizes across
virtually every industry deliver
for their customers.
1933
YEAR
FOUNDED
258,600
VEHICLES
SERVICED
48,300
EMPLOYEES
$10.7B
FREIGHT UNDER
MANAGEMENT
~45,000
COMMERCIAL
CUSTOMERS
95M
SQ. FT. OF
WAREHOUSE
SPACE
Ryder System, Inc.
NYSE: R
LEADING PROVIDER OF OUTSOURCED LOGISTICS AND
TRANSPORTATION SOLUTIONS IN NORTH AMERICA
2022 ANNUAL REPORT
EXECUTING ON OUR
BALANCED GROWTH STRATEGY
B A L A N C I N G T O P - L I N E G R O W T H W I T H R E T U R N S A N D F R E E C A S H F L O W
2022 ACCOMPL ISH MENTS
DE-RISK AND OPTIMIZE
THE MODEL
ENHANCE RETURNS AND FREE
CASH FLOW OVER CYCLE
DRIVE LONG-TERM
PROFITABLE GROWTH
Strengthened renewing DTS contracts to
facilitate higher and faster cost pass-throughs
Improved returns in SCS/DTS
SCS/DTS revenue is 54% of total,
up from 37% in 2015
FMS UK exit substantially complete;
~$400M in proceeds redeployed
Annual cost savings surpassed $100M
from multi-year maintenance initiative
Strategic SCS acquisitions
60% of lease portfolio priced at
higher returns
Returned $680M to shareholders through
buybacks and dividends
Lease growth of 1,300 vehicles
MULTI-YEAR INITI AT IV ES EXPEC T E D TO BE NE FI T E PS OV E R TH E CYCL E
Acquisitions/Share Repurchases
FMS Maintenance Cost Savings
FMS Lease Pricing
Profitable SCS/DTS Growth
3 | RYDE R 2022 AN NUAL REPORT
2022 ANNUAL REPORT
BALANCED GROWTH STRATEGY
DRIVES STRONG EARNINGS
D E A R S H A R E H O L D E R S :
I’m extremely proud of the Ryder team’s strong execution in 2022. We made
significant progress on our balanced growth strategy, which allows us to achieve
top-line growth with returns and free cash flow and ultimately create long-term
shareholder value. We strategically prioritized initiatives that are de-risking and
optimizing our business model, enhancing returns and free cash flow over the cycle,
and driving long-term profitable growth. Successful execution of these initiatives,
combined with favorable market conditions, enabled us to deliver record revenue,
earnings, and adjusted return on equity (ROE) in 2022. Secular trends, including
demand for resilient supply chains, ongoing labor challenges, and OEM production
constraints, continued to drive companies to choose Ryder as their long-term
transportation and logistics outsourcing solution. In addition, our investments
in innovative technology such as RyderShare™, our visibility and collaboration
platform, remain key differentiators for us in the marketplace.
202 2 R E S U LT S
In 2022, we generated record ROE of 29%, reflecting strong market conditions
in used vehicle sales and rental, as well as benefits from our initiatives to
increase returns. Our lease pricing initiative remains a meaningful contributor
to higher returns in Fleet Management Solutions (FMS), as does our multi-year
maintenance initiative, which surpassed its $100 million annual cost savings target
in 2022. Improved performance in Supply Chain Solutions (SCS) and Dedicated
Transportation Solutions (DTS) also benefited results, reflecting pricing adjustments
and cost recovery initiatives, as well as organic growth and SCS acquisitions. We also
delivered record comparable earnings per share (EPS) from continuing operations
of $16.37, up from $9.58 in the prior year.
Record revenue of $12 billion was driven by organic revenue growth in all three
business segments, reflecting secular trends and our sales and marketing initiatives, as
well as strategic acquisitions in SCS. SCS and DTS revenue combined represented 54%
of total company revenue, up from 37% in 2015, and demonstrated accelerated growth
in these higher-return businesses, consistent with our balanced growth strategy.
Operating cash flow grew to $2.3 billion, and free cash flow was $921 million,
which includes proceeds of approximately $400 million from the exit of our sub-
performing FMS business in the United Kingdom. The exit is substantially complete,
and the proceeds have been redeployed to higher-return opportunities. Our strong
balance sheet enabled us to fund organic growth and strategic SCS acquisitions, as
well as return more than $680 million to shareholders through share repurchases
“Successful execution of initiatives
supporting our balanced growth strategy,
combined with favorable market
conditions, enabled us to deliver record
revenue, earnings, and ROE in 2022.”
R O B E R T S A N C H E Z
Chairman and CEO
3 | RYDE R 2022 AN NUAL REPORT
CEO LETTER
“Although market conditions in used
vehicle sales and rental are expected to
normalize in 2023, we expect to achieve
our long-term financial targets over the
cycle and to outperform prior cycles
due to ongoing momentum from
multi-year initiatives.”
29%
2022 ADJUSTED RETURN ON EQUITY
4 | RYDE R 2022 AN NUAL REPORT
SHAREHOLDER LETTER (CONTINUED)
and quarterly dividends. Although market conditions in used vehicle sales and
rental are expected to normalize in 2023, we expect to achieve our long-term
financial targets over the cycle and to outperform prior cycles due to ongoing
momentum from multi-year initiatives.
I N V E S T I N G I N T H E F U T U R E
As part of our strategy to accelerate growth in SCS, we executed several strategic
acquisitions in 2022. In January 2022, we acquired Whiplash, Ryder’s largest
acquisition to date. The acquisition significantly grew our network with scalable
e-commerce and omnichannel fulfillment solutions and was a key driver of 2022
SCS revenue growth. Later in the year, we further diversified our e-fulfillment
portfolio by adding retail clients in health, beauty, and cosmetics with the
acquisition of Dotcom Distribution.
In September 2022, Ryder acquired Baton, a start-up known for developing
proprietary logistics technology that optimizes transportation networks. Prior
to the acquisition, Ryder initially invested in Baton via RyderVentures, Ryder’s
corporate venture capital fund. Baton’s co-founders now serve as co-chief product
and technology officers for Ryder and are focused on bringing to market innovative
solutions that solve industry challenges.
We’ve also enhanced many of our innovative technology offerings. For example, we
expanded COOP by Ryder®, our peer-to-peer commercial vehicle sharing platform,
nationwide. We’ve also rolled out the next evolution of RyderShare™, our one-
of-a-kind visibility and collaborative logistics technology, which now includes a
warehouse management solution. On the digital technology front, our RyderView™
platform is offering customers a best-in-class delivery execution technology for
big-and-bulky goods. In addition, through RyderVentures, we’re committed to
investing $50 million in and collaborating with start-up companies that are tackling
disruptions in our industry. To date, RyderVentures has invested in various start-ups,
including micro-fulfillment, warehouse automation, dispatch technology, driver
staffing, autonomous vehicles, and mobile carbon capture, among others.
C O R P O R AT E R E S P O N S I B I L I T Y
Businesses also rely on Ryder to guide them through unpredictable market
disruptions and an evolving logistics landscape. Today, more than ever, they choose
Ryder to build and maintain their supply chains and transportation networks in a
sustainable, responsible, and respectful manner.
In 2022, we published our annual Corporate Sustainability Report (CSR) for 2021, outlining
our efforts and investments in sustainability, as well as how the areas of environmental,
social, and governance (ESG) are integrated into the fabric of our business.
CEO LETTER
“We strive to create a high-performance
culture that embraces diverse
perspectives and experiences and ensures
that all our employees have opportunities
to develop the skills they need to excel in
their fields. Human capital management
is a priority for our executives and board
of directors.”
48,300
EM PLOYEES
5 | RYDE R 2022 AN NUAL REPORT
SHAREHOLDER LETTER (CONTINUED)
Charitable giving is also embedded throughout our organization, both at the
corporate and employee level. In 2022, Ryder’s charitable giving priorities
continued to follow a strategic and purposeful focus, coming in at $2.9 million,
which remained in line with past giving levels as well as with national corporate
giving benchmarks and focus areas. In October, we hosted our annual United
Way workplace campaign and the generosity of Ryder employees prevailed – we
achieved records in both employee funding and participation, raising $1.0 million
between employee contributions and Ryder’s corporate gift.
We’re continually striving to make Ryder a better business, a better place to work, and a
better corporate citizen, and we’re being recognized for our efforts. FORTUNE® named
us among its “World’s Most Admired Companies” for an 11th consecutive year on this
global list. Ryder was also named a “Green Supply Chain Partner” by Inbound Logistics
for the 14th consecutive year, as well as being voted among the “Top 10 3PLs” in its
Readers’ Choice Excellence Awards. We also ranked among the “Top 25 Most Innovative
& Disruptive Companies” in the freight technology space, according to the FreightWaves
FreightTech 25 awards. And, for the fourth consecutive year, Women in Trucking named
us one of the “Top Companies for Women to Work for in Transportation,” while also
honoring six Ryder employees as “Top Women to Watch in Transportation” in 2022.
At the core of our success are our employees. We strive to create a high-performance
culture that embraces diverse perspectives and experiences and ensures that all our
employees have opportunities to develop the skills they need to excel in their fields.
We ended the year with 48,300 employees, up from 28,000 employees a decade ago.
Throughout these 10 years, we’ve remained committed to identifying and developing
talent across our organization, including front-line employees interacting with
customers and those behind-the-scenes supporting our field teams.
On behalf of Ryder’s leadership team and all our employees, thank you for your
investment and confidence in Ryder. We remain focused on executing our balanced
growth strategy, which we expect will lead to long-term, profitable growth and
increased shareholder value.
Sincerely,
Robert Sanchez
Chairman and CEO
March 2023
Adjusted ROE, comparable EPS, and free cash flow are non-GAAP financial measures. For a reconciliation of
these non-GAAP financial measures, see pages 37, 46-53 of our Annual Report on Form 10-K for the year
ended December 31, 2022.
P E R F O R M A N C E C H A R T S
(in millions, except per share amounts)
Adjusted Return on Equity
Comparable EBITDA
30%
25%
20%
15%
10%
5%
0%
(5%)
(1%)
2020
$2,258
$2,433
$2,722
29%
21%
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
2021
2022
2020
2021
2022
Comparable EPS
Free Cash Flow
$16.37
$9.58
$20
$15
$10
$5
$0
($5)
($0.27)
$2,000
$1,500
$1,000
$500
$0
$1,587
$1,057
$921
2020
2021
2022
2020
2021
2022
Operating Revenue
Dividend Per Common Share
$2.24
$2.28
$2.40
$9,280
$7,828
$7,024
$10,000
$8,000
$6,000
$4,000
$2,000
$0
$2.50
$2.00
$1.50
$1.00
$0.50
$0.0
2020
2021
2022
2020
2021
2022
Adjusted ROE, comparable EBITDA, comparable EPS, free cash flow, and operating revenue are non-GAAP financial measures.
For a reconciliation of these non-GAAP financial measures, see pages 37, 46-53 of our Annual Report on Form 10-K for the year ended December 31, 2022.
6 | RYDE R 2022 AN NUAL REPORT
2022 ANNUAL REPORT
ACCELERATING GROWTH THROUGH STRATEGIC
ACQUISITIONS AND INNOVATIVE TECHNOLOGY
Next-Generation
Vehicles
E-commerce
A R E A S O F S T R AT E G I C F O C U S
At Ryder, we identified four key areas of disruption in our industry: accelerating
demand for e-commerce fulfillment, asset sharing, next-generation vehicles, and
digital technologies. Each of these present considerable challenges in today’s ever-
changing environment, but they also offer significant opportunities for innovation.
That’s why Ryder is investing in and developing new solutions and technologies
that tackle these disruptions, such as a newly expanded, tech-forward e-commerce
fulfillment offering; a leading peer-to-peer commercial vehicle-sharing platform;
programs to help accelerate the commercialization of electric and autonomous
vehicles; and a one-of-a-kind visibility and collaborative logistics technology that’s
enabling more efficient and resilient supply chains.
Digital Technologies
Asset Sharing
A C Q U I S I T I O N S
EXPANDING E-COMMERCE
To address the accelerating demand for e-commerce, Ryder acquired two leading
providers of omnichannel fulfillment and distribution services for high-growth retail
and e-commerce brands.
With the acquisition of Whiplash, Ryder gained a seamless, end-to-end
omnichannel fulfillment solution designed to provide scalability for merchants
at every stage of their growth journeys, from digitally-native vendors to major
nationwide retailers. With a proprietary e-commerce technology platform, an
impressive roster of more than 250 brands, and key geographic strongholds for
maximum speed and flexibility – coupled with Ryder’s port-to-door transportation
logistics solutions – the newly rebranded and expanded Ryder E-commerce by
Whiplash solution positions us to deliver incredible value for customers looking
for more advanced e-fulfillment solutions.
Ryder also acquired Dotcom Distribution, further expanding our e-fulfillment
solution with an impressive roster of brands in new industry verticals, including
health, beauty, and cosmetics – in line with our larger strategy to grow and diversify
our e-commerce portfolio.
And, with an expanded footprint, Ryder e-commerce now delivers to 100% of the
U.S. in two days or less.
7 | RYDE R 2022 AN NUAL REPORT
ACCELERATING GROWTH THROUGH STRATEGIC ACQUISITIONS AND INNOVATIVE TECHNOLOGY
OPTIMIZING TRANSPORTATION NETWORKS
As part of our strategy to bring new technology-driven solutions to market, Ryder
acquired Baton, a San Francisco-based start-up known for the development of a
proprietary logistics technology focused on optimizing transportation networks.
Now, with Baton: A Ryder Technology Lab, we gain the exceptional talent of proven
product developers and technologists to lead the innovation and development of
the next generation of customer-facing technologies at Ryder.
I N N O VAT I V E T E C H N O L O G I E S
RYDERSHARE
Ryder rolled out the next evolution of its one-of-a-kind visibility and collaborative
logistics technology RyderShare™, which enables everyone involved in moving goods
through supply chains – shippers, receivers, carriers, and service providers – to work
together in real time to prevent costly delays and find efficiency gains.
Initially focused on the transport of goods, RyderShare now includes a warehouse
management solution for end-to-end visibility as goods move inbound on trucks
to within the four walls of warehouses and distribution centers and, ultimately,
outbound to their final destinations. The result is the only digital platform by a
3PL that provides real-time visibility, collaboration, and exception management
throughout the end-to-end supply chain.
To date, RyderShare has logged more than nine million shipments with customers
realizing significant improvements in productivity, labor efficiency, on-time delivery
performance, and instant revenue recognition.
RYDERVIEW
We enhanced our RyderView™ platform, a best-in-class delivery execution
technology for Ryder Last Mile, our final-mile delivery solution for big-and-bulky
goods. Now, Ryder customers can offer consumers a branded experience for self-
service scheduling at the point of purchase or convenient self-service rescheduling,
as well as real-time visibility and omnichannel communication. RyderView also
facilitates engagement across customers, operators, and carriers, to provide the
best white-glove delivery experience.
RyderShare™
KEY DIFFERENTIATOR IN
IN FLUENCING MORE THA N 35%
OF 2 022 SC S/DTS NEW SALES
“As a fully integrated port-to-door
transportation and supply chain logistics
provider, achieving the kind of next-level
visibility and collaboration that RyderShare
provides in today’s disruptive supply chain
environment has proven to be a game changer
for our customers,” says Steve Sensing,
President of Global SCS and DTS.
LEARN MORE HERE
8 | RYDE R 2022 AN NUAL REPORT
ACCELERATING GROWTH THROUGH STRATEGIC ACQUISITIONS AND INNOVATIVE TECHNOLOGY
NEXT-GENERATION VEHICLES
To ensure Ryder customers have access to the most modern fleets in the industry,
we collaborate with leading truck manufacturers and vehicle technology innovators.
Ryder continually develops leasing, maintenance, and fleet management
products to allow our customers to adopt new technologies, and we are
evolving our infrastructure to support the adoption of electric vehicles and the
commercialization of autonomous vehicles. Our focus is on practical, intelligent,
and cost-effective solutions to support the next generation of commercial vehicles.
COOP BY RYDER®
Ryder expanded its peer-to-peer commercial vehicle sharing platform nationwide.
Through COOP and its network of third-party truck and trailer owners, renters
on the platform now have access to more than 50,000 trucks and trailers (based
on availability). The expansion follows the success of the initial rollout in nine key
states, underscoring the continued growth of the COOP platform with the high
demand for rental vehicles and the opportunity to monetize underutilized assets.
To date, more than 10,000 businesses have joined the program, with
COOP experiencing 250% year-over-year growth since launching in 2018.
RYDERVENTURES
Through our corporate venture capital fund, we’re committed to investing $50
million in and collaborating with start-up companies that are tackling disruptions
in our industry, driven by accelerating demand for e-commerce fulfillment,
commercial asset sharing, next-generation vehicles, and digital technologies. With
RyderVentures, we gain early access to emerging technologies that address our
customers’ pain points and help speed them to market. To date, RyderVentures
has made investments in start-ups that range in focus from micro-fulfillment to
warehouse automation, dispatch technology, driver staffing, autonomous vehicles,
and mobile carbon capture, among others.
“Ryder has a strong history investing in and
working with startups to leverage emerging
technologies to make our business and,
ultimately, our customers’ businesses better,”
says Karen Jones, EVP, CMO and Head of
New Product Innovation. “We realized pretty
quickly that we needed to identify earlier
in the process those new technologies that
address our customers’ pain points and then
work alongside the start-ups developing them
to speed the solutions to market.”
LEARN MORE HERE
9 | RYDE R 2022 AN NUAL REPORT
2022 ANNUAL REPORT
OUR COMMITMENT TO RESPONSIBLE
SUSTAINABILITY
Sustainability at Ryder is about being thoughtful, purposeful, and focused on meeting such expectations in the areas of environmental,
social, and governance (ESG). Integrated into the fabric of our business, ESG guides innovations to improve safety and efficiency,
reduce emissions, and inspire our team to develop the best solutions for our customers.
D E T E R M I N I N G O U R K E Y E S G T O P I C S
In 2022, we identified our ESG key topics by utilizing a third party to conduct an
ESG materiality assessment to strategically refine our sustainability management and
reporting efforts. The assessment process included benchmarking numerous ESG
topics across our industry, peers, and global reporting frameworks as well as engaging
more than 350 stakeholders (employees, customers, suppliers, and shareholders) in
the process. The following key ESG topics guide our sustainability efforts:
ENVIRONMENTAL
Air quality
Energy
Greenhouse gas (GHG) emissions
Environmental management
SOCIAL
Accident and safety management
Diversity, equity, and inclusion
Employee engagement
Employee health and safety
Employee talent and development
Employment
Human rights
Labor management
Non-discrimination
GOVERNANCE
Anti-corruption
Business ethics and integrity
Customer privacy
Data security
Supply chain management
SUSTAINABILITY REPORTING,
GOALS & PROGRESS
The 2021 Ryder Corporate Sustainability
Report (CSR) references the Global
Reporting Initiative (GRI) Standards
2021, Sustainability Accounting Standards
Board (SASB) Air Freight & Logistics
Standards, and Task Force on Climate-
Related Financial Disclosures (TCFD).
LEARN MORE ABOUT RYDER’S SUSTAINABILITY
REPORTING INCLUDING OUR GOALS AND
PROGRESS HERE.
1 0 | RYDER 2022 ANNUAL REPORT
OUR COMMITMENT TO RESPONSIBLE SUSTAINABILITY
E N V I R O N M E N TA L
Ryder is committed to reducing our environmental footprint to conserve resources
and associated costs.
OUR ENVIRONMENTAL PERFORMANCE DATA*
Total Scope 1, 2, and 3 Emissions (metric tons CO2e)
2019
TOTAL GHG EMISSIONS
11,020,857
2020
TOTAL GHG EMISSIONS
10,989,164
2021
TOTAL GHG EMISSIONS
7,496,246
792,122
99,935
681,841
82,903
10,128,800
10,224,420
1
e
p
o
c
S
2
e
p
o
c
S
3
e
p
o
c
S
684,619
71,374
6,740,253
*Environmental data for 2022 is not yet available and will be provided in the 2022 CSR.
S O C I A L
We strive to create a high-performance culture that embraces diverse perspectives
and experiences while ensuring all our employees have opportunities to develop
the skills needed to grow and excel. Our highest priority is the safety of our
employees, customers, and the public, which is enhanced through training and
technology. We develop our talent by providing a safe, collaborative, and innovative
work environment.
G O V E R N A N C E
We are proud to be a trusted logistics and transportation partner, grounded by
strong governance. We value our relationships with investors and maintain a strong
governance profile that provides shareholders with meaningful participation rights.
At Ryder, upholding high standards of governance and ethical behavior is important
to our long-term growth and success. Our Principles of Business Conduct outlines
our expectations for all employees to conduct business fairly, honestly, and ethically.
UNDERSTANDING OUR
SCOPE 1, 2, AND 3 GHG EMISSIONS
The Greenhouse Gas Protocol
(GHG Protocol) categorizes and
defines emissions as:
• Scope 1: Direct emissions from
sources owned or controlled by
the company.
For Ryder, this includes mobile and
stationary mobile emissions from the
vehicles we operate and stationary
emissions from the combustion of
natural gas, propane, and heating
oil in our owned furnaces.
• Scope 2: Indirect emissions from
purchased gridsourced electricity,
steam, heat, or cooling.
For Ryder, this is electricity we
purchase to power facilities that we
own or lease for our operations.
• Scope 3: All other indirect emissions
that are a consequence of the
activities of the company but occur
from sources not owned or controlled
by the company. Scope 3 emissions
are categorized as upstream
(emissions that occur in the lifecycle
of products and services up to
their point of sale) or downstream
(emissions that occur from products
and services’ use and end-of-life).
For Ryder, Scope 3 reports emissions
from 8 of 15 categories, which are
described in our 2021 CSR.
1 1 | RYDER 2022 ANNUAL REPORT
CORPORATE INFORMATION
EXECUTIVE LEADERSHIP
ROBERT E. SANCHEZ
Chair and Chief Executive Officer
JOHN J. DIEZ
Executive Vice President and
Chief Financial Officer
THOMAS M. HAVENS
President,
Global Fleet Management Solutions
J. STEVEN SENSING
President,
Global Supply Chain Solutions and
Dedicated Transportation Solutions
ROBERT D. FATOVIC
Executive Vice President,
Chief Legal Officer and
Corporate Secretary
KAREN M. JONES
Executive Vice President and
Chief Marketing Officer
FRANCISCO LOPEZ
Executive Vice President and
Chief Human Resources Officer
SANFORD J. HODES
Senior Vice President and
Chief Procurement and
Corporate Development Officer
RAJEEV RAVINDRAN
Executive Vice President and
Chief Information Officer
CRISTINA GALLO-AQUINO
Senior Vice President, Controller
and Principal Accounting Officer
BOARD OF DIRECTORS
LUIS P. NIETO, JR. 2,4
Retired President of the Consumer Foods
Group for ConAgra Foods Inc.
DAVID G. NORD 1,4
Retired Chairman, President and Chief
Executive Officer of Hubbell Incorporated
ABBIE J. SMITH 1,4
Professor of Accounting at the University of
Chicago Booth School of Business
E. FOLLIN SMITH 2,3
Retired Executive Vice President, Chief
Financial Officer and Chief Administrative
Officer of Constellation Energy Group, Inc.
DMITRI L. STOCKTON 2,4
Retired Chairman, President and CEO of
GE Asset Management
CHARLES M. SWOBODA 1,3
Retired President and Chief Executive
Officer of Cree, Inc.
HANSEL E. TOOKES, II 1,3*
Retired President of Raytheon International
NEW YORK STOCK EXCHANGE
NYSE: R
ANNUAL MEETING
Ryder System, Inc. will be hosting its Annual
Meeting of Shareholders on Friday, May 5,
2023, at 10 a.m. The Annual Meeting will
beheld in person at PGA National Resort,
400 Avenue of the Champions, Palm Beach
Gardens, FL 33418.
INDEPENDENT REGISTERED CERTIFIED
PUBLIC ACCOUNTING FIRM
ROBERT E. SANCHEZ
Chair and Chief Executive Officer
ROBERT J. ECK 2,3,5
President, Retired Chief Executive Officer
of Anixter International, Inc.
ROBERT A. HAGEMANN 1,4
Retired Senior Vice President and Chief
Financial Officer of Quest Diagnostics
Incorporated
MICHAEL F. HILTON 2,3
Retired President and Chief Executive
Officer of Nordson Corporation
TAMARA L. LUNDGREN 1,3
President and Chief Executive Officer
of Schnitzer Steel Industries, Inc.
PricewaterhouseCoopers LLP
TRANSFER AGENT
AND REGISTRAR
EQ Shareholder Services
Post Office Box 64854
St. Paul, MN 55164-0854
(866) 927-3884
(651) 450-4085 (fax)
www.shareowneronline.com
Outside the U.S.
(651) 450-4064
D I V I D E N D R E I N V E S T M E N T
P L A N
Shareholders may automatically reinvest
their dividends and cash in additional
shares of Ryder System, Inc. stock by
enrolling in the Company’s Dividend
Reinvestment Plan. Information about
the Dividend Reinvestment Plan may be
obtained by contacting:
EQ Shareholder Services
Post Office Box 64854
St. Paul, MN 55164-0854
(866) 927-3884
(651) 450-4085 (fax)
www.shareowneronline.com
Outside the U.S.
(651) 450-4064
For Dividend Reinvestment Plan
Optional Cash Investments:
EQ Shareowner Services
Post Office Box 64856
St. Paul, MN 55164-0856
PHYSICAL ADDRESS
RYDER CORPORATE HEADQUARTERS
11690 NW 105th Street
Miami, FL 33178
INVESTOR RELATIONS
https://investors.ryder.com
(305) 500-4053
RyderForInvestors@ryder.com
CALENE CANDELA
Vice President, Investor Relations
(305) 500-4764
ccandela@ryder.com
1-Audit Committee
2-Compensation Committee
3-Corporate Governance and Nominating Committee
4-Finance Committee
5-Lead Independent Director
*Mr. Tookes will be retiring from the Board of Directors,
effective as of the date of the Annual Meeting, and is
therefore not standing for re-election.
1 2 | RYDER 2022 ANNUAL REPORT
☑
☐
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-4364
RYDER SYSTEM, INC.
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of incorporation or organization)
11690 N.W. 105th Street
Miami, Florida 33178
(Address of principal executive offices, including zip code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Ryder System, Inc. Common Stock ($0.50 par value)
Securities registered pursuant to Section 12(g) of the Act: None
59-0739250
(I.R.S. Employer Identification No.)
(305) 500-3726
(Telephone number, including area code)
Trading symbol(s)
R
Name of exchange on which registered
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed by reference to the price at
which the common equity was sold at June 30, 2022 was $3.5 billion. The number of shares of Ryder System, Inc. Common Stock outstanding at
January 31, 2023 was 46,289,738.
Documents Incorporated by Reference into this Report
Ryder System, Inc. 2022 Proxy Statement
Part of Form 10-K into which Document is Incorporated
Part III
RYDER SYSTEM, INC.
FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Page No.
Business ....................................................................................................................................
ITEM 1
ITEM 1A Risk Factors ..............................................................................................................................
Unresolved Staff Comments ....................................................................................................
ITEM 1B
Properties ..................................................................................................................................
ITEM 2
Legal Proceedings ....................................................................................................................
ITEM 3
Mine Safety Disclosures ...........................................................................................................
ITEM 4
PART II
ITEM 5
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities ..............................................................................................
Selected Financial Data ............................................................................................................
ITEM 6
Management’s Discussion and Analysis of Financial Condition and Results of Operations ..
ITEM 7
ITEM 7A Quantitative and Qualitative Disclosures About Market Risk .................................................
Financial Statements and Supplementary Data ........................................................................
ITEM 8
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure ..
ITEM 9
ITEM 9A Controls and Procedures ...........................................................................................................
Other Information .....................................................................................................................
ITEM 9B
PART III
ITEM 10
ITEM 11
ITEM 12
ITEM 13
ITEM 14
PART IV
ITEM 15
ITEM 16
Directors, Executive Officers and Corporate Governance .......................................................
Executive Compensation ..........................................................................................................
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters ..............................................................................................................
Certain Relationships and Related Transactions, and Director Independence .........................
Principal Accountant Fees and Services ..................................................................................
Exhibits and Financial Statement Schedules ............................................................................
Form 10-K Summary ...............................................................................................................
Exhibit Index ............................................................................................................................
SIGNATURES ..............................................................................................................................................
1
12
22
22
22
22
22
24
25
57
58
109
109
109
110
110
110
111
111
111
111
112
116
i
PART I
ITEM 1. BUSINESS
OVERVIEW
Ryder System, Inc. (Ryder) is a leading logistics and transportation company. We provide supply chain, dedicated
transportation, and commercial fleet management solutions. We report our financial performance based on three business
segments: (1) Fleet Management Solutions (FMS), which provides full service leasing and leasing with flexible maintenance
options, commercial rental and maintenance services of trucks, tractors and trailers to customers principally in the United States
(U.S.) and Canada; (2) Supply Chain Solutions (SCS), which provides integrated logistics solutions, including distribution
management, dedicated transportation, transportation management, brokerage, e-commerce, last mile, and professional services
in North America; and (3) Dedicated Transportation Solutions (DTS), which provides turnkey transportation solutions in the
U.S., including dedicated vehicles, professional drivers, management, and administrative support. Dedicated transportation
services provided as part of an operationally integrated, multi-service, supply chain solution to SCS customers are primarily
reported in the SCS business segment. In 2022, we announced our intentions to exit the FMS United Kingdom (U.K.) business
and have substantially completed the wind down as of December 31, 2022.
___________________
(1) FMS revenue includes eliminations
We operate in highly competitive markets. Our customers select us based on numerous factors including service quality,
price, technology and service offerings. As an alternative to using our services, customers may choose to provide these services
for themselves, or may choose to obtain similar or alternative services from other third-party vendors. Our customer base
includes enterprises operating in a variety of industries as shown below:
Further information on our business and reportable business segments are presented in Part II, Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations", and in Note 3, "Segment Reporting" of the Notes to
Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" in this Annual
Report.
1
MISSION AND STRATEGY
Ryder's mission is to responsibly deliver innovative supply chain and transportation solutions that are reliable, safe and
efficient, enabling our customers to deliver on their promises. Our primary strategy is to accelerate growth in our higher return,
less capital intensive supply chain and dedicated businesses and grow our fleet management business at or above targeted
returns. We aim to achieve this by focusing on companies either internally managing their supply chain services or outsourcing
their needs to other providers. We are also focused on delivering positive free cash flow over the economic and freight cycles
and returning capital to shareholders. This strategy is supported by:
• leveraging secular trends that favor the decision to outsource logistics and transportation services, such as dynamic
supply chains, labor constraints, increased cost and complexity, supply chain disruptions, government incentives and
regulations, e-commerce, and disruptive technologies;
• growing earnings from our contractual businesses;
• offering innovative products, solutions and support services to create and strengthen customer relationships;
• delivering operational excellence through continuous productivity and process improvements;
• attracting, developing and retaining the best talent;
• deploying technology to accelerate growth while improving operational efficiencies; and
• executing our disciplined capital allocation priorities that include investing in organic growth, pursuing targeted
acquisitions and investments, and returning capital to shareholders.
INDUSTRY AND OPERATIONS
Fleet Management Solutions
Value Proposition
Through our FMS business, we provide our customers with a variety of fleet solutions that are designed to improve their
competitive position. By outsourcing these services to us, our customers can focus on their core business, improve their
efficiency and productivity, and lower their costs. Our FMS product offering is comprised of full service leasing as well as
leasing with flexible maintenance options; shorter-term commercial vehicle rental; contract or transactional maintenance
services; digital and technology support services that optimize asset performance, compliance, safety; and comprehensive fuel
services. In addition, we provide our customers the ability to purchase a large selection of used trucks, tractors and trailers
through our used vehicle sales facilities or through our digital channel. FMS also provides vehicles and maintenance, fuel and
other services for vehicles used in our SCS and DTS businesses.
Market Trends
The U.S. commercial fleet market is estimated to include 9 million vehicles, of which 5 million vehicles are privately
owned by companies, 2 million vehicles are with for-hire carriers, 1 million vehicles are leased from banks or other financial
institutions, and 1 million vehicles are being leased or rented from third parties, including Ryder1. The companies that privately
own their fleets generally provide all or a portion of the fleet management services for themselves rather than outsourcing those
services to third parties such as Ryder.
Over the last several years, many key trends have been reshaping the transportation industry. Companies that own,
maintain and manage their own fleet of vehicles have put greater emphasis on the quality of their preventive maintenance and
safety programs because of increased demand for efficiency and reliability. The maintenance and operation of commercial
vehicles has become more complex and expensive, requiring companies to spend a significant amount of time and money
implementing new technology, diagnostics, retooling and training. Companies must also manage global supply chain
disruptions and labor issues that have accelerated due to the pandemic, such as a limited supply of commercial vehicles and a
shortage of mechanics and qualified truck drivers. Maintenance and other vehicle operational processes have also become more
costly as a result of increased regulation and active enforcement efforts by federal and state governments. In addition, volatility
in the used vehicle sales market, fluctuating energy prices, and alternative fuel technologies have and will continue to make it
difficult for businesses to predict and manage fleet costs. We believe these trends increase the value of our product offering and
will increasingly lead privately held fleets to outsource.
1 U.S. Fleet as of September 2022, Class 3-8, IHS Markit Ltd.
2
Operations
In 2022, our global FMS business accounted for 46% of our consolidated revenue.
U.S. Our FMS customers in the U.S. range from small businesses to large national enterprises operating in a wide
variety of industries, the most significant of which are transportation and warehousing, food and beverage, housing, business
and personal services, and industrial. As of December 31, 2022, we had 558 operating locations, excluding ancillary storage
locations, in 50 states, the District of Columbia and Puerto Rico. Our operating locations serve multiple customers and have
maintenance facilities that typically include a shop for preventive maintenance and repairs, a service island for fueling, safety
inspections and preliminary maintenance checks, offices for sales and other personnel, and in many cases, a commercial rental
vehicle counter. We also operate on-site at 164 customer locations, which primarily provide vehicle maintenance solely for that
customer's fleet.
Canada. As of December 31, 2022, we had 28 operating locations throughout seven Canadian provinces. We also
operate 14 maintenance facilities on-site at customer properties in Canada.
Europe. At the beginning of 2022, we announced our intention to exit operations in Europe. Throughout 2022, we
disposed of the majority of our vehicles and facilities in Europe. As of December 31, 2022, we had 8 locations and
approximately 800 vehicles remaining. We expect to complete the wind down of European operations by June 2023.
FMS Product Offerings
ChoiceLease. Our lease offering, ChoiceLease, provides customers with vehicles, maintenance services, supplies, and
related equipment necessary for operation of the vehicles while our customers furnish and supervise their own drivers and
exercise control over the vehicles. The ChoiceLease offering allows customers to select the terms of their lease alongside the
level of maintenance they prefer, from full service coverage to on-demand, or pay-as-you-go, maintenance.
Our ChoiceLease customers receive the following benefits:
• Competitive Prices as we are able to leverage our vehicle buying power for the benefit of our customers. Once we
have signed an agreement with the customer, we acquire vehicles and components that are custom engineered to the
customer’s requirements and lease the vehicles to the customer for periods generally ranging from three to seven
years for trucks and tractors and typically ten years for trailers.
• Preventative and Flexible Maintenance Programs based on vehicle type and time or mileage intervals that are cost-
effective and designed to reduce vehicle downtime.
• Extensive network of maintenance facilities and trained technicians for maintenance, vehicle repairs, 24-hour
emergency roadside service, and replacement vehicles for vehicles that are temporarily out of service.
• Access to Lease Vehicles as we are able to leverage our original equipment manufacturer (OEM) relationships to
secure access to vehicles.
• No Vehicle Residual Risk Exposure as we typically retain vehicle residual risk exposure.
• Optional Fleet Support Services, including our fuel services; safety services such as safety training, driver
certification and loss prevention consulting; vehicle use and other tax reporting, permitting and licensing, and
regulatory compliance (including hours of service administration); physical damage insurance coverage extension
under our existing insurance policies and related insurance services; environmental services; access to RyderGyde™
on ryder.com®, our customer-facing platform that enables fleet managers and drivers to engage with Ryder services
in a digital way.
For the year ended December 31, 2022, ChoiceLease revenue accounted for 51% of our FMS total revenue.
Commercial Rental. We offer rental vehicles to customers that have a need to supplement their private fleet of vehicles
on a short-term basis (one day up to one year in length) to handle seasonal increases in their business or discrete projects.
ChoiceLease customers also utilize our commercial rental fleet to handle their peak or seasonal business needs, as substitute
vehicles while their lease vehicles are undergoing maintenance, and while they are awaiting delivery of new lease vehicles.
Although a portion of our commercial rental business is purely occasional in nature, we focus on building long-term
relationships with customers so that we become their preferred source for commercial vehicle rentals. In addition to vehicle
rental, we may extend liability insurance coverage under our existing policies to our rental customers as well as the benefits of
cost savings and convenience of our comprehensive fuel services program. For the year ended December 31, 2022, commercial
rental revenue accounted for 21% of our FMS total revenue.
We also provide our customers with access to one of the leading commercial vehicle sharing platform, COOP by
Ryder®, connecting fleet owners with idle vehicles to trusted businesses in need of rental vehicles, available to businesses in all
3
50 states. With the nationwide rollout of COOP, more companies and vehicle owners can generate the revenue needed to
support vehicle payments or meet financial strains caused by otherwise idle vehicles. Additionally, COOP provides relief to
businesses as the industry continues to face ongoing driver and vehicle shortages.
SelectCare. Through our SelectCare product, we provide maintenance services to customers who choose not to lease
some or all of their vehicles from us. Our SelectCare customers have the opportunity to utilize our extensive network of
maintenance facilities and trained technicians to maintain the vehicles they own or lease from third parties. There are several
bundles of services available to SelectCare customers including full service contract maintenance, preventive only maintenance
and on-demand maintenance. Vehicles covered under this offering are typically serviced at our own facilities. However, based
on the size and complexity of a customer’s fleet, we may operate an on-site maintenance facility at the customer’s location or
through our mobile service vehicles.
We may also offer our lease and maintenance customers additional maintenance and repair services, as needed, that are
not included in contractual agreements, such as services when a customer damages a vehicle. In such situations, we generally
charge the customer on an hourly basis for work performed. By servicing all of our customers’ maintenance needs, we create
stronger, long-term relationships and have greater opportunity to provide customers with a wide range of outsourcing solutions.
In 2022, we introduced in select markets, a pay-as-you-go retail mobile maintenance solution and digital platform that enables
all fleet owners and managers to order maintenance with an expert technician anytime, anywhere, without contract with Torque
by Ryder®. For the year ended December 31, 2022, SelectCare revenue accounted for 10% of our FMS total revenue.
The following table provides information regarding the number of vehicles and customers by FMS product offering as of
December 31, 2022:
ChoiceLease
Commercial rental (2)
SelectCare (3)
___________________
U.S.
Foreign (1)
Total
Vehicles
Customers
Vehicles
Customers
Vehicles
Customers
125,500
39,500
52,600
10,700
27,000
1,700
9,900
2,300
3,000
1,300
3,100
200
135,400
41,800
55,600
12,000
30,100
1,900
(1) ChoiceLease and SelectCare includes approximately 800 and 1,000 vehicles, respectively, related to the exit of the FMS U.K. business. ChoiceLease
includes 100 customers related to the exit of the FMS U.K. business.
(2) Commercial rental customers represent those who rented a vehicle more than 3 days during the year and include 5,800 ChoiceLease customers.
(3)
SelectCare customers include approximately 1,000 ChoiceLease customers.
Fuel Services. We provide our FMS customers with access to diesel fuel at competitive prices at 427 of our
maintenance facilities across the U.S. and Canada. We also provide fuel services such as fuel planning, fuel tax reporting,
centralized billing, fuel cards and fuel monitoring. Although fuel sales do not have a significant impact on our FMS earnings, as
it is largely a pass-through cost to customers, we believe allowing customers to leverage our fuel buying power is a significant
and valuable benefit to our customers. For the year ended December 31, 2022, fuel services revenue accounted for 18% of our
FMS total revenue.
Used Vehicles. We primarily sell our used vehicles from our 66 retail sales centers throughout North America (15 of
which are co-located at an FMS shop), at our branch locations and through our website at www.ryder.com/used-trucks.
Typically, before we offer used vehicles for sale, our technicians ensure that the vehicles are Ryder Certified™, which means
that they have passed a comprehensive, multi-point performance inspection based on specifications formulated through our
maintenance program; Ryder DOT Verified™, which are fully inspected to be compliant with Department of Transportation
(DOT) standards with some wear and tear, or Ryder As-Is vehicles. Given our focus on maximizing sales proceeds, we
primarily sell our used vehicles through our retail channel, which allows us to leverage our maintenance expertise and strong
brand reputation to realize higher sales proceeds than in the wholesale market. The realized sales proceeds of used vehicles are
dependent upon various other factors, including the general state of the used vehicle market, the supply and demand for used
commercial vehicles in wholesale and retail markets, and the age and condition of the vehicle at the time of its disposal. In
recent years, the general state of the used vehicle sales market has been particularly volatile. Pricing in the used vehicle market
significantly declined in 2019 and 2020 and then significantly increased in 2021. In 2022, OEMs continued to face new vehicle
production challenges and rapidly changing demand patterns, resulting in strong used vehicle sales throughout the year, despite
the sequential decline in used truck and tractor pricing during the second half of the year from record high levels in the first
half.
4
FMS Business Strategy
Our FMS business strategy is to be the leading provider of fleet management outsourcing services for light, medium and
heavy duty commercial highway vehicles. This strategy revolves around the following interrelated goals and priorities:
• drive fleet growth that maximizes our return on investment by (1) successfully implementing sales and marketing
initiatives designed to encourage private fleet operators and for-hire carriers to outsource all or some portion of their
fleet management needs to us, (2) reducing costs through operational efficiencies, including long-term maintenance
initiatives, and (3) offering innovative products, solutions and support services that will create and strengthen new and
existing customer relationships;
• deliver a consistent, industry-leading and cost-effective lease and maintenance program to our customers through
continued process improvement; productivity initiatives; and technology improvements, which also help us attract new
customers; and
• optimize asset utilization and management, particularly with respect to our rental fleet, used vehicle operations and
maintenance facility infrastructure.
Competition
As an alternative to using our fleet management services, companies may choose to provide these services for
themselves or to obtain similar or alternative services from other third-party vendors.
Our FMS business segment competes with companies that provide and manage maintenance services themselves and
those providing similar services on a national, regional and local level. Many regional and local competitors provide services on
a national level through their participation in various cooperative programs. We compete with finance lessors, truck and trailer
manufacturers and independent dealers who provide full service lease products, finance leases, extended warranty maintenance,
rental and other transportation services. We compete with other companies based on factors such as price, geographic coverage,
equipment, maintenance options, and service reliability and quality. We also face competition from managed maintenance
providers who are hired to coordinate and manage the maintenance of large fleets of vehicles through a network of third-party
maintenance providers.
Supply Chain Solutions
Value Proposition
Through our SCS business, we offer a broad range of innovative logistics management services that are designed to
optimize customers' supply chain and address customers' key business requirements. Our business is organized by industry
verticals (Consumer Packaged Goods and Retail, Automotive, Technology and Healthcare, and Industrial and Other) to enable
our teams to focus on the specific needs of their customers. Our SCS product offerings includes: distribution management,
dedicated transportation, transportation management, brokerage, e-commerce, last mile, and professional services. These
offerings are supported by our continued investments in a variety of information technology and engineering solutions and can
be provided independently or as an integrated solution to optimize supply chain effectiveness. Key aspects of our value
proposition are our operational execution, industry expertise, and customer-facing visibility platform, which are important
differentiators in the marketplace.
Market Trends
Logistics spending in our key target markets in North America was approximately $2.5 trillion, of which $484 billion
was outsourced2. Outsourced logistics is a market with significant growth opportunity. More sophisticated, cost-effective and
reliable supply chain practices are required as supply chains expand and become more complex and susceptible to global
disruptions. For example, we believe secular trends continue to accelerate demand for supply chain resiliency, outsourcing e-
commerce fulfillment and final mile delivery of big and bulky goods, and a movement towards onshoring and nearshoring of
manufacturing and supply chain operations. The more complicated the supply chain or the product requirements, the greater the
need for companies to utilize the expertise of supply chain solution providers.
2 Armstrong & Associates - A Roaring 2021: Demand Drives 3PLs to the Best Growth and M&A Year on Record, July 2022
5
Operations
For the year ended December 31, 2022, our global SCS business accounted for 39% of our consolidated revenue, and our
global customer accounts and warehousing square footage were as follows:
(In millions, except customer accounts)
Global SCS
United States
Foreign:
Mexico
Canada
Total
___________________
(1)
Includes Ryder leased and owned, and Ryder managed.
December 31, 2022
Customer
Accounts
Square
Footage (1)
669
116
35
151
820
88
5
2
7
95
In the U.S., SCS customer accounts are mostly large enterprises that maintain large, complex supply chains. Most of our
core SCS business operations are strategically geographically located to maximize efficiencies and reduce costs. We also
centralize certain logistics expertise in locations not associated with specific customer sites. For example, our carrier
procurement, contract management, freight bill audit and payment services, and transportation optimization and execution
groups operate out of our logistics centers in Novi, Michigan and Fort Worth, Texas. In Mexico, our operations offer a full
range of SCS services, which are often highly integrated with our distribution and transportation operations, and manage
approximately 20,700 border crossings each month between the U.S. and Mexico. Our Canadian operations are highly
coordinated with their U.S. and Mexico counterparts and manage approximately 8,800 border crossings each month.
SCS Product Offerings
Distribution Management. Our SCS business offers a wide range of services relating to a customer’s distribution
operations, such as designing a customer’s distribution network; managing distribution facilities; coordinating warehousing and
transportation for inbound and outbound material flows; handling import and export for international shipments; coordinating
just-in-time replenishment of component parts to manufacturing plants and final assembly; and providing shipments to
customer distribution centers or end customer delivery points, including support for e-commerce fulfillment networks.
Additional value-added services, such as light assembly of components into defined units, packaging and refurbishment, are
also offered to our customers. For the year ended December 31, 2022, distribution management solutions accounted for 33% of
our SCS revenue.
Dedicated Transportation. Dedicated transportation services are offered as part of an integrated supply chain solution
to our customers with a high degree of specialization and a combination of outside carriers, equipment, professional drivers and
dedicated services. Our dedicated transportation services offering is designed to increase our customers' competitive position,
improve risk management and integrate their transportation needs with their overall supply chain. As part of our dedicated
transportation services, we also offer routing and scheduling, fleet sizing, safety, regulatory compliance, risk management,
technology and communication systems support including on-board computer and other technical support. These additional
services allow our customers to mitigate labor challenges associated with maintaining a private fleet of vehicles, such as driver
recruitment and turnover, and government regulation, including hours of service regulations, DOT audits and workers'
compensation. Dedicated transportation operations are located at our customer facilities, and our dedicated offering utilizes and
benefits from our extensive network of FMS facilities, which provides maintenance for all Ryder vehicles used in SCS
solutions. For the year ended December 31, 2022, approximately 32% of our SCS revenue was related to dedicated
transportation services.
6
Transportation Management and Brokerage. Our SCS business offers freight transportation, transportation
management, and brokerage services relating to all aspects of a customer’s transportation network, including shipment
optimization, load scheduling, and delivery confirmation through a series of technological and web-based solutions. Our
transportation consultants focus on carrier procurement of all modes of transportation with an emphasis on truck-based
transportation, and also includes rate negotiation, freight bill audits and payment services. In addition, our SCS business
provides customers with brokerage services designed to provide prequalified trucking capacity in North America. For the year
ended December 31, 2022, we purchased or executed $10.7 billion in freight moves on our customers' behalf, including $248
million in brokerage services. For the year ended December 31, 2022, transportation management solutions accounted for 12%
of our SCS revenue.
E-commerce and Last Mile. Our e-commerce and last mile services offer omnichannel delivery with two-day delivery
across the entire U.S. and one-day delivery across the majority of the U.S. Our e-commerce and last mile services are provided
through a network of over 158 sites strategically located throughout the U.S. These sites may be owned or leased by us, our
customers or our agents. For our e-commerce customers, we receive, pick, pack, and ship smaller items via parcel carriers to the
end consumer’s home or through our carrier networks to our customer’s warehouse or retail stores. For our last mile customers,
we receive, assemble, and prepare big and bulky items through a third-party agent network for final delivery to the end
consumer. Consumers can then choose from multiple levels of delivery services, including minor installation of the item and
disposal of the replaced item. We use proprietary scheduling Ryder View 2.0 software for maximum efficiency that optimizes
routes and allows customers to select their appointment time. For the year ended December 31, 2022, our e-commerce and last
mile services accounted for 20% of our SCS revenue.
Professional Services. Our SCS business offers a variety of knowledge-based professional services that support every
aspect of a customer’s supply chain. Our SCS professionals evaluate a customer’s existing supply chain to identify
inefficiencies as well as opportunities for integration and improvement. Once the assessment is complete, we work with the
customer to develop a supply chain strategy to create the most value for the customer and their target clients. The solution may
include both a network design that sets forth the number, location and function of key components of the network and a
transportation solution that optimizes the mode or modes of transportation and route selection. For the year ended December 31,
2022, knowledge-based professional services accounted for 3% of our SCS revenue.
Strategic Investments
On January 1, 2022, we acquired PLG Investments I, LLC (Whiplash), a leading national provider of omnichannel
fulfillment and logistics services. The acquisition expanded our e-commerce and omnichannel fulfillment network. On August
31, 2022, we acquired Baton, a San Francisco-based start-up focused on the development of a proprietary logistics technology
for optimizing transportation networks. The acquisition is expected to expand our development of the next generation of
customer-facing technologies at Ryder. On November 1, 2022 we acquired .Com Distribution Corporation, a provider of
omnichannel fulfillment and distribution services for high-growth retail and e-commerce brands. The acquisition is expected to
further expand our e-commerce and omnichannel fulfillment network.
SCS Business Strategy
Our SCS business strategy is to offer our customers differentiated, functional execution and proactive solutions from our
expertise in key industry verticals. The strategy revolves around the following interrelated goals and priorities:
• provide customers with best in class execution and quality through reliable and flexible supply chain solutions;
• develop innovative solutions and capabilities that drive value for our customers, such as RyderShare™, a real-time
collaborative visibility tool showing all goods moving across the supply chain;
• create a culture of innovation and collaboration to provide solutions to meet our clients' needs;
• focus consistently on network optimization and continuous improvement;
• execute on targeted sales and marketing growth strategies; and
• expand customer relationships to include fast growing offerings in e-commerce fulfillment and last mile.
Competition
As an alternative to using our services, companies may choose to internally manage their own supply chains and logistics
operations, or obtain similar or alternative services from other third-party vendors.
In the SCS business segment, we compete with a large number of companies providing similar services, each of which
has a different set of core competencies. We compete with a handful of large, multi-service companies across all of our product
7
offerings and industries. We also compete against other companies on specific service offerings (for example, in transportation
management, distribution management or dedicated transportation) or with companies specializing in a specific industry. We
face different competitors in each country or region where they may have a greater operational presence. We compete based on
factors such as price, service offerings, market knowledge, expertise in logistics-related technology and overall performance
(e.g., timeliness, accuracy, and flexibility).
Dedicated Transportation Solutions
Value Proposition
Through our DTS business, we combine equipment, maintenance, professional drivers, administrative services and
additional services, including routing and scheduling, fleet sizing, safety, regulatory compliance, risk management, and
technology and communication systems support to provide customers with a dedicated transportation solution that is designed
to increase their competitive position, improve risk management and integrate their transportation needs with their overall
supply chain. This solution allows us to mitigate our customers' labor challenges associated with maintaining a private fleet of
vehicles, such as driver recruitment and retention, and government regulation, including electronic logging devices and hours of
service regulations, DOT audits and workers’ compensation. Our DTS solution offers a high degree of specialization to meet
the needs of customers with sophisticated service requirements such as tight delivery windows, high-value or time-sensitive
freight distribution, closed-loop distribution, multi-stop shipments, specialized equipment and integrated transportation needs.
Market Trends
The U.S. dedicated market was estimated to be $23.1 billion3 from an addressable market of approximately $550.0
billion4. This market is affected by many of the same trends that impact our FMS business. The administrative requirements
relating to regulations issued by the DOT regarding driver screening, training and testing, as well as record keeping and other
costs associated with the hours of service requirements, make our DTS offering an attractive alternative to private fleet and
driver management. There continues to be significant pressure on the availability of qualified truck drivers and shippers
continue to seek dedicated capacity from quality transportation and logistics providers, which makes our offering attractive to
potential customers. In addition, market demand for just-in-time delivery creates a need for well-defined routing and scheduling
plans that are based on comprehensive asset utilization analysis and fleet rationalization studies offered as part of our DTS
services.
Operations/Product Offerings
For the year ended December 31, 2022, our DTS business accounted for 15% of our consolidated revenue. As of
December 31, 2022, we had 209 DTS customer accounts in the U.S. Because it is highly customized, our DTS product is
particularly attractive to companies that operate in industries that have time-sensitive deliveries or special handling
requirements, as well as companies who require specialized equipment. DTS accounts typically operate in a limited geographic
area, and, therefore, most of the professional drivers assigned to these accounts are short haul drivers, meaning they return
home at the end of each work day, which helps with driver recruiting and retention. Although a significant portion of our DTS
operations are located at customer facilities, our DTS business also utilizes and benefits from our extensive network of FMS
facilities, including the FMS maintenance network that services the vehicles used in DTS solutions.
In order to customize a DTS transportation solution for our customers, our DTS logistics specialists perform a
transportation analysis using advanced logistics planning and operating tools. Based on this analysis, they formulate a logistics
design that includes the routing and scheduling of vehicles, the efficient use of vehicle capacity and overall asset utilization.
The goal of each customized plan is to create a distribution system that optimizes freight flow while meeting a customer’s
service goals. A team of DTS transportation specialists can then implement the plan by leveraging the resources, expertise and
technological capabilities of both our FMS and SCS businesses.
To the extent a distribution plan includes multiple modes of transportation (air, rail, sea and highway), our DTS team, in
conjunction with our SCS transportation specialists, selects appropriate transportation modes and carriers, places the freight,
monitors carrier performance and audits billing. In addition, through our SCS business, we can reduce costs and add value to a
DTS customer’s distribution system by aggregating orders into loads, looking for shipment consolidation opportunities and
organizing loads for vehicles that are returning from their destination point back to their point of origin (backhaul).
3 Armstrong & Associates - A Roaring 2021: Demand Drives 3PLs to the Best Growth and M&A Year on Record,, July 2022
4 Addressable market as of September 2022, Class 3-8, IHS Markit Ltd. (formerly RL Polk) & Ryder Internal Estimates
8
DTS Business Strategy
Our DTS business strategy is to offer services to customers who need specialized equipment, specialized handling,
dedicated capacity, or integrated transportation services. This strategy revolves around the following interrelated goals and
priorities:
• increase market share to provide more specialized services with customers across industries, including customers in
the retail, metals and mining, energy and utility, consumer product goods, construction, and food and beverage
industries;
• develop innovative solutions and capabilities that drive value for our customers, such as RyderShare™, a real-time
collaborative visibility tool showing all goods moving across the supply chain;
• utilize the support of the FMS sales team to compel private fleet operators to outsource all or some of their
transportation needs to us;
• align the DTS business with other SCS product lines to create revenue opportunities and improve operating
efficiencies in both segments;
• improve competitiveness in the non-specialized and non-integrated customer segments, including dedicated capacity
solutions;
• focus consistently on network optimization and continuous improvement; and
• recruit and retain professional drivers.
Competition
Our DTS business segment competes with other dedicated providers and truckload carriers servicing on a national,
regional and local level. We compete with these companies based on a number of factors, including price, equipment options
and features, maintenance, service and geographic coverage, driver availability and operations expertise. As an alternative to
using our services, companies may choose to internally manage their own private fleets, or obtain similar or alternative services
from other third-party vendors. We are able to differentiate our DTS product offering by leveraging our FMS vehicles and
maintenance services and integrating the DTS services with those of SCS to create a more comprehensive transportation
solution for our customers. Our strong safety record and focus on customer service also enables us to uniquely meet the needs
of customers with high-value products that require specialized handling in a manner that differentiates us from truckload
carriers.
CYCLICALITY
Our business is impacted by economic and market conditions. In a strong economic cycle, there is generally more
demand for our fleet management, dedicated transportation and supply chain services. In a weak or volatile economy, demand
for our services decreases and is considerably more unpredictable. Because of these factors, we have continued to focus on
increasing the diversity of our customer base and strengthening our long-term business relationships with our customers.
Although we believe these efforts help mitigate the immediate impact of an economic downturn, customers are often unwilling
to commit to a full-service lease or long-term supply chain and dedicated contracts during a protracted or severe economic
downturn. Because commercial rental and used vehicle sales are transactional, they are more cyclical in nature and are also
heavily dependent on economic and market conditions, and results can vary significantly in both the short and long-term. We
mitigate some of the potential impact of an economic downturn through a disciplined and centralized approach to asset
management. This approach allows us to manage the size, mix and location of our operating fleet and used vehicle inventories
to try and maximize asset utilization and used vehicle proceeds in both strong and weak market conditions.
REGULATION
Our business is subject to regulation by various federal, state, local and foreign governmental entities. The DOT and
various federal and state agencies exercise broad powers over certain aspects of our business, generally governing such
activities as authorization to engage in motor carrier operations, safety and operations. The Federal Motor Carrier Safety
Administration (FMCSA), under the DOT, manages a Compliance, Safety, Accountability initiative (CSA), partnering with
state agencies designed to monitor and improve commercial vehicle motor safety, which uses roadside inspections and
violations to measure motor carriers and drivers. The FMCSA also has regulations mandating electronic logging devices in
commercial motor vehicles that impact various aspects of our dedicated, supply chain and rental businesses.
We are also subject to a variety of laws and regulations promulgated by national, state, provincial and local governments,
including the U.S. Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA),
which regulate safety, the management of hazardous materials, water discharges, air emissions, solid waste disposal and the
9
release and cleanup of regulated substances. In addition, we must comply with licensing and other requirements imposed by the
U.S. Department of Homeland Security and the U.S. Customs Service as a result of increased focus on homeland security and
our Customs-Trade Partnership Against Terrorism certification. We may also become subject to new or more restrictive
regulations imposed by these agencies or other authorities or states relating to carbon emissions controls and reporting, engine
exhaust emissions, drivers’ hours of service, wage and hour requirements, employee and independent contractor classification,
security, including data privacy and cyber security, and ergonomics.
Additional information about the regulations that we are subject to can be found in Item 1A. "Risk Factors" in this
Annual Report on Form 10-K. Refer to Note 20, “Environmental Matters,” in the Notes to Consolidated Financial Statements
for a discussion surrounding environmental matters.
HUMAN CAPITAL
We strive to create a high-performance culture that embraces diverse perspectives and experiences and ensures that all of
our employees have opportunities to develop the skills they need to grow and excel in their fields. Human capital management
is a priority for our executives and board of directors. We are committed to identifying and developing the talent necessary for
our long-term success throughout all levels of our organization, including our front-line employees interacting with our
customers or behind-the-scenes supporting our field teams. We have a robust talent and succession planning process and have
established programs to support the development of our talent pipeline for critical roles in our organization. Annually, we
conduct a robust review with the leadership team focusing on high performing and high potential talent, diverse talent and the
succession plan for our critical roles.
We also recognize that it is important to develop our future leaders. We provide a variety of resources to help our
employees build and develop their skills, including online development resources as well as individual development
opportunities and projects for key talent. Additionally, we have leadership development resources for our future leaders as they
continue to develop their skills. We invest in our employees by offering comprehensive health, welfare and retirement
programs, along with wellness programs and well-being initiatives.
In addition, we provide our professional drivers, technicians and warehouse workers with on-going training
opportunities. For example, we pair our professional drivers with certified driver trainers during onboarding and provide
position and customer-specific training. Our technicians also receive both online and in-person training to enable them to
continuously improve their maintenance skills and we collaborate with our OEMs to ensure our technicians possess the
knowledge and skills necessary to service our customers. Our warehouse workers also receive regular safety and compliance
training that is specific to their location.
At December 31, 2022, we had approximately 48,300 full-time employees worldwide, of which 48,100 were employed
in North America and 200 in Europe. We currently employ approximately 10,800 professional drivers and 4,800 technicians.
We have approximately 31,900 hourly employees in the U.S., approximately 3,700 of which are organized by labor unions.
Those employees organized by labor unions are principally represented by the International Brotherhood of Teamsters, the
International Association of Machinists and Aerospace Workers, and the United Auto Workers. Their wages and benefits are
governed by 96 separate labor agreements which are renegotiated periodically. Although we have not experienced a material
work stoppage or strike, these events can potentially occur given the types of businesses in which we currently engage. We
consider the relationship with our employees to be good. Refer to Item 1A. Risk Factors for further information regarding risk
associated with our human capital and the attraction, development, and retention of personnel.
Safety
Our safety culture is founded upon a core commitment to the safety, health and well-being of our employees, customers
and the community. As a core value, our focus on safety is embedded in our day-to-day operations, reinforced by many safety
programs and continuous operational improvement and supported by a talented and dedicated safety organization. We have
created and implemented policies, processes and training programs to minimize safety events, and we review and monitor our
performance closely. Our safety organization team oversees our overall safety strategy and consists of three divisions: Safety
Standards & Technology, Field Safety Solutions, and U.S. Department of Transportation Compliance. Together, our safety
organization manages our safety policies, technologies and training, all field safety processes, risks assessments, safety site
investigations and regulatory compliance activities, among other things.
We deploy relevant vehicle safety systems in the vehicles we operate, including active brake assistance, lane departure
warning systems and stability control, to enhance safety performance. We also install aftermarket safety monitoring systems
that provide effective means for our operations teams to measure and improve driver performance, including in-vehicle video
event recorders. Driver training is also a key component of our safety program. We use certified driver trainers to on-board and
train our professional drivers. Proactive injury and crash prevention and remedial training are also delivered regularly online to
10
each employee through a highly interactive lesson platform. Our technicians also receive both online and in-person training to
enable them to continuously improve their maintenance skills to ensure we are servicing our customers in compliance with best-
in-line safety measures. Our proprietary, web-based safety management system, Ryder SafetyNet, delivers monthly proactive
safety programs as well as safety compliance tasks tailored to every location and helps measure safety activity effectiveness
across the organization.
The safety policies and procedures in place require that all managers, supervisors and employees incorporate safe
processes in all aspects of our business. Monthly safety scorecards are tracked and reviewed by management for progress
toward key safety objectives.
The safety of our customers is also paramount at Ryder. Safety support is provided to customers through Ryder Fleet
Risk Services (FRS). FRS helps customers navigate the increasingly complex industry landscape through customized
consultation, innovative solutions, and best-in-class safety programs.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Name
Robert E. Sanchez
Position
Chair and Chief Executive
Officer
Current
Position
Since
2013
John J. Diez
Executive Vice President and
Chief Financial Officer
2021
Thomas M. Havens President, Global Fleet
Management Solutions
2021
Prior Business Experience
President and Chief Operating Officer from February
2012 to December 2012. President, Global FMS from
September 2010 to February 2012. Executive Vice
President and Chief Financial Officer from October 2007
to September 2010. Executive Vice President of
Operations, U.S. FMS from October 2005 to October
2007. Senior Vice President and Chief Information
Officer from January 2003 to October 2005.
President, Global FMS from August 2019 to May 2021.
President of DTS from March 2015 to August 2019.
Senior Vice President of Ryder Dedicated from March
2014 to February 2015. Senior Vice President of Asset
Management from January 2011 to February 2014.
Senior Vice President and Global Chief of Operations
for FMS from November 2012 to May 2021. Vice
President and General Manager for FMS in Canada from
September 2011 to November 2012.
Age
57
52
54
J. Steven Sensing
Robert D. Fatovic
President, Global Supply
Chain Solutions and
Dedicated Transportation
Solutions
Executive Vice President,
Chief Legal Officer and
Corporate Secretary
Karen M. Jones
Francisco Lopez
Executive Vice President and
Chief Marketing Officer
Executive Vice President and
Chief Human Resources
Officer
Sanford J. Hodes (1) Senior Vice President and
Rajeev Ravindran
Cristina Gallo-
Aquino
Chief Procurement and
Corporate Development
Officer
Executive Vice President and
Chief Information Officer
Senior Vice President,
Controller and Principal
Accounting Officer
___________________
2015 Vice President and General Manager of the Technology
55
industry group from February 2007 to February 2015.
2012
2014
2018
2022
Executive Vice President, General Counsel and
Secretary from June 2004 to July 2012. Senior Vice
President, U.S. Supply Chain Operations, Hi-Tech and
Consumer Industries from December 2002 to May 2004.
Vice President and Deputy General Counsel from May
2000 to December 2002.
Senior Vice President and Chief Marketing Officer from
September 2013 to October 2014.
Chief Human Resources Officer February 2016 to
February 2018. Senior Vice President, Global Human
Resources Operations from July 2013 to February 2016.
Senior Vice President and Deputy General Counsel and
Safety, Health, and Security from February 2011 to
October 2022.
2018
Chief Information Officer and Group Vice President at
JM Enterprises from 2012 to January 2018.
2020 Vice President and Chief Financial Officer, Global FMS
from August 2015 to August 2020. Vice President and
Controller from September 2010 to August 2015.
57
60
48
55
57
49
(1)
Sanford J. Hodes became Senior Vice President and Chief Procurement Officer on October 1, 2022, upon retirement of Timothy Fiore.
11
FURTHER INFORMATION
For further discussion concerning our business, see the information included in Items 7 and 8 of this report. Industry and
market data used throughout Item 1 was obtained through a compilation of surveys and studies conducted by industry sources,
consultants and analysts.
We make available our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
all amendments to those reports through the Investor Relations page on our website at www.ryder.com as soon as reasonably
practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission (SEC). The
SEC maintains an Internet site that contains our reports, proxy and information statements, and our other SEC filings. The
address of the SEC's website is www.sec.gov.
In addition, our Corporate Governance Guidelines, Principles of Business Conduct and Board committee charters are
posted on the Corporate Governance page of our website at investors.ryder.com. Upon request to our Investor Relations page
on our website, we will provide a copy of these documents to anyone, free of charge.
ITEM 1A. RISK FACTORS
The following is a cautionary discussion of the material risks and uncertainties that management believes affect us. Any of the
following risks, as well as risks that are not currently known to us or that we currently deem immaterial, could materially affect
our business, financial condition or results of operations. Accordingly, you should carefully consider the following risk factors
in conjunction with all of the other information set forth in or incorporated by reference in this Form 10-K.
Business and Operating Risks
Decreased customer demand for transportation services due to adverse economic conditions, competition or other
factors has impacted and could in the future adversely impact our business and operating results.
The transportation industry is highly cyclical and susceptible to trends in economic activity. Our business relies on the
strength of our customers’ businesses and their level of confidence in current and future economic conditions. Our vehicles are
leased or rented to customers that transport goods commercially, so the demand for our products and services is tied directly to
the production and sale of goods by our customers, and more generally, the health of the North American economy and overall
levels of competition in the transportation and logistics industry. As a result, our business may begin to slow before overall
market slowdowns, at the point of customer uncertainty, and may recover later than overall market recoveries, as our customers
may continue to feel uncertain about future market conditions. If uncertainty and lack of customer confidence around
macroeconomic and transportation industry conditions increase (such as due to recessionary conditions or inflationary
pressures), our future growth prospects, business and results of operations could be materially adversely affected.
Among our services and product offerings, demand for used vehicles, rental, and longer-term contractual services are
particularly susceptible to changes in economic and market conditions. For example, in a weak or volatile economy (such as
during an economic recession or downturn), our customers may not need additional vehicles, may experience reduced shipping
needs, or are often unwilling to commit or unable to fulfill long-term contracts. Accordingly, any sustained weakness in
demand or a protracted economic downturn can negatively impact performance and operating results in used vehicle sales,
rental, and longer-term contractual services across our business segments.
Disruptions in global supply chains, including as a result of global pandemics, has impacted, and may continue to
impact, our business, results of operations and financial condition.
Our business is highly susceptible to changes in economic conditions and our products and services are directly tied to
the production and sale of goods. Disruptions in global supply chains have impacted each of our business segments as the
supply and demand of commercial vehicles directly impacts our FMS business, and the production and supply of certain goods
impacts the business of our customers in SCS and DTS, and therefore our own business. In the first half of 2020, the measures
taken in response to the COVID-19 pandemic prohibited many of our customers from continuing their operations, which had an
immediate adverse effect on our business as we experienced lower demand for commercial rental and used vehicles in our FMS
business and reduced volumes in our SCS business. To the extent that similar measures are implemented in the future in
response to the COVID-19 pandemic or other public health or safety crisis, our business and results of operations may be
adversely affected.
In 2020, we experienced global supply chain disruptions as a result of COVID-19-related policies and regulations. In
2021, we experienced a significant increase in demand for rental and used vehicles, as well as lease, due to the limited supply of
commercial vehicles caused by these global supply chain disruptions. In our SCS business, the semiconductor supply shortage
12
caused by supply chain disruptions impacted the production activity of our automotive customers, resulting in decreased
demand for some of our services. Throughout 2022, we continued to experience increased demand in rental and used vehicle
sales, despite a sequential decline in used truck and tractor pricing in the latter half of the year. which positively impacted our
profitability. If a limited supply of commercial vehicles continues for an extended period, we expect to continue to experience
benefits in rental and used vehicle pricing and overall demand; however, we may experience limited rental and lease fleet
growth, and have a limited inventory of used vehicles for sale. If OEMs improve the supply or produce an oversupply of new
commercial vehicles in an attempt to meet increased consumer demand, our FMS business may experience reduced rental
demand and used vehicle sales in the future. We have also experienced reduced volumes in some of our other SCS customers
as they are unable to obtain certain goods due to supply chain disruptions. A prolonged disruption in global supply chains may
have a material adverse impact on our SCS revenues and earnings.
At times when global supply chains are disrupted, we are also likely to experience increased inflationary pressures as
companies implement additional measures to mitigate such disruptions, and such additional measures tend to increase costs.
Across our businesses, we are experiencing higher costs in certain areas, including payroll and third-party services.
Overall, although these supply chain disruptions have contributed to increased demand for our services as companies
seek long-term outsourcing solutions, such disruptions have also negatively impacted a portion of our earnings. The extent to
which such disruptions will continue to impact our business, operations and financial results will depend on numerous evolving
factors that are difficult to accurately predict. Moreover, depending on the measures taken by governments, businesses and
individuals in response to new variants of COVID-19, economic and commercial activity may be impacted, and, as a result, we
may again experience slowdowns and reduced demand.
We bear the risk that we will not be able to resell our used vehicles at a price at or above their residual value estimates.
To determine the residual value estimates and useful life of our vehicle fleet, management is required to make judgments
about future events that are subject to risks and uncertainties outside of their control. While we regularly review and update our
outlook for the used vehicle market, as management believes appropriate, the used vehicle pricing market has historically been
subject to significant pricing volatility. Despite management's best estimates, we may be unable to accurately forecast the
residual value of our vehicle fleet or accurately and timely adjust our residual estimates to better align with future market
conditions at the end of a vehicle's useful life. A variety of factors, many of which are outside of our control, could cause
residual value estimates to differ from actual used vehicle sales pricing, such as changes in supply and demand of used vehicles;
volatility in market conditions; changes in vehicle technology; competitor pricing; regulatory requirements; driver shortages;
customer requirements and preferences; and changes in underlying assumption factors.
Any material decrease in residual value estimates could have a material adverse impact on our financial results. In the
past, we have realized losses on sales of used vehicles at the end of a vehicle's useful life when our residual value estimates
were above used vehicle market prices due to rapidly changing market conditions. In addition, when we have materially
decreased residual value estimates, our earnings over the vehicle's remaining useful life have decreased due to an increase in
depreciation expense. Alternatively, we may realize gains on sales of used vehicles at the end of a vehicle's useful life when our
residual value estimates are below used vehicle market prices. While management determines residual value estimates with the
goal of minimizing losses on sales of used vehicles or to record the best estimate of fair value at the end of a vehicle's useful
life, there is no assurance our residual value estimates will be at or below used vehicle market sales.
For a detailed discussion on our accounting policies and assumptions relating to depreciation and residual values, please
see “Critical Accounting Estimates - Residual Value Estimates and Depreciation” in Management’s Discussion and Analysis of
Financial Condition and Results of Operations.
Our profitability has been and could in the future be negatively impacted if our key operational assumptions and
pricing structure prove to be invalid.
Substantially all of our SCS and DTS services, as well as our ChoiceLease and SelectCare products offered through
FMS, are provided under long-term contractual arrangements with our customers. These contractual arrangements include
pricing terms that are subject to a number of key operational assumptions, such as:
•
•
•
with respect to our SCS contracts, the scope of services, production volumes, operational efficiencies, the mix of
fixed versus variable costs, market wages, availability of labor, productivity, inflation, interest rates and other
factors;
with respect to our DTS contracts, market wages, availability of labor, equipment costs, insurance rates, inflation,
interest rates, and other operating factors; and
with respect to our ChoiceLease and SelectCare contracts, residual value estimates (ChoiceLease only) and
maintenance costs (including inflation and interest rates).
13
If we are incorrect in our operational assumptions, or, as a result of subsequent changes in customer demand or other
market forces that are outside of our control, these assumptions prove to be invalid, we could have lower margins than
anticipated in a contract or segment, lose business, or be unable to offer competitive products and services. For example, our
SCS and DTS services are highly customized and offer a high degree of specialization to meet the needs of our customers. We
may not be able to adjust the pricing terms in some of our SCS and DTS contracts in the event any of our assumptions prove to
be invalid. As a result, if we do not accurately predict our costs to execute SCS or DTS contracts, it could result in a significant
decrease in revenue or loss that could adversely affect our operating results and financial condition. Additionally, although
some of our SCS or DTS contracts provide for renegotiation upon a material change, there is no assurance that we will be
successful in obtaining the necessary price adjustments or that pricing will be sufficient to cover the risk.
Our capital intensive business requires us to make capital decisions based upon projected customer activity levels and
market demand for our commercial rental product line.
We make significant investments in vehicles to support our rental business based on anticipated customer demand. We
make commitments to purchase the vehicles many months in advance of the expected use of the vehicle and seek to optimize
the size and mix of the commercial rental fleet based on demand projections and various other factors. As a result, our business
is dependent on our ability to accurately estimate future levels of rental activity and consumer preferences to effectively
capitalize on market demand in order to drive the highest levels of utilization and revenue per unit. Missing our projections
could result in too much or too little capacity in our rental fleet. Overcapacity could require us to deploy or sell vehicles at
lower than anticipated pricing levels, which may result in higher depreciation and losses on sales of vehicles. In addition,
overcapacity could result in lower revenues and higher costs and have an adverse impact on profitability. Undercapacity could
impact our ability to reliably provide rental vehicles to our customers and may negatively affect our reputation. We employ a
sales force and operations team on a full-time basis to manage and optimize this product line; however, their efforts may not be
sufficient to overcome unforeseen changes in market demand in the rental business. In contrast, in our ChoiceLease product
line, we typically do not purchase vehicles until we have an executed contract with a customer.
We may fail to respond adequately or in a timely manner to innovative changes in new technology in our industry.
In recent years, our industry has been characterized by rapid changes in technology, leading to innovative transportation
and logistics concepts that have impacted, or have the potential to significantly impact, our business model, competitive
landscape and the industries of our customers and suppliers. While we are actively engaged in evaluating emerging technology
and developing strategic alliances and new products, we cannot be certain that our initiatives will be successful or timely, and
our failure to effectively implement any initiative could have an adverse impact on our financial condition or results of
operations.
For example, new concepts are currently under development for advanced electric vehicles, autonomous or semi-
autonomous self-driving vehicles, connected vehicle platforms and drones. There is also a rapidly growing demand for e-
commerce services, last mile home delivery and asset- and freight-sharing services. In addition, there may be other innovations
that could impact the transportation, trucking and supply chain and logistics industries that we cannot yet foresee. Our inability
to quickly adapt to and adopt innovations desired by our customers may result in a significant loss of demand for our service
offerings. An increase in customer use of electric vehicles could reduce the demand for our vehicle maintenance services, diesel
vehicles and related offerings. Likewise, self-driving vehicles may reduce the demand for our dedicated service offerings,
where, in addition to a vehicle, we provide a driver as part of an integrated, full service customer solution. Moreover, advances
in technology may require us to increase investments in order to remain competitive, and our customers may not be willing to
accept higher prices to cover the cost of these investments. In addition, the timing of when we have to adopt new technologies
may be affected by changes in the political or regulatory environment, which could further increase our investment costs,
operating complexity and our ability to offer such technologies to our customers in the jurisdictions in which we operate.
Failure to maintain, upgrade and consolidate our information technology networks could adversely affect us.
Our success depends on the functionality of information technology systems to support our service offerings. Extended
delays or cost overruns in securing, developing and otherwise implementing technology solutions to support our business,
including any future initiatives, would delay and possibly prevent us from realizing the projected benefits of these initiatives. In
addition, our reputation with our customers suffers when outages, system failures or delays in timely access to data occur in our
information technology systems that support key business processes.
We are continuously upgrading and consolidating our information technology systems by enhancing or replacing legacy
systems. When we acquire new businesses, we also have to integrate those acquired systems to our network. These activities
subject us to additional costs and risks, including disruption of our internal control structure, substantial capital expenditures,
14
additional administration and operating expenses, impairment of our ability to provide our services, retention of sufficiently
skilled personnel to implement and operate the new systems, and other costs and risks. Our system implementations may not
result in productivity improvements at a level that outweighs the costs of implementation, or any increased productivity.
We face risks related to cybersecurity attacks and other breaches of our systems and information technology.
We depend on the integrity of our information and the proper functioning and availability of our information systems in
operating our business. It is important that the data processed by these systems remains confidential and accurate as it may
include sensitive customer information, confidential customer transaction data, employee records, and key financial and
operational results and statistics. While we maintain an information security program that consists of industry standard
safeguards and controls to help safeguard our confidential information, including security training and compliance protocols,
we cannot prevent or mitigate all data breaches or cyberattacks. Threats to network and data security are becoming increasingly
diverse and sophisticated, with attacks increasing in frequency (especially with the shift to remote work environments), scope
and potential harm.
We have experienced cybersecurity threats and breaches targeting our information technology systems and networks and
those of our third-party providers. Although, to date, these incidents have not had a material impact on our financial condition
or results of operations, future events could expose us to these risks. Moreover, these types of events could also expose us, our
vendors, or our customers to loss or misuse of such information and restrict or prevent operations or financial reporting for a
period of time. Depending on the type and scope of the intrusion or cybersecurity attack, we could face litigation or other
potential liability and harm to our business. Likewise, data privacy breaches from our systems could expose personally
identifiable information of our employees or contractors, sensitive customer data, or vendor data to unauthorized persons,
adversely impacting our customer service, employee and customer relationships, and our reputation.
In addition, some of our software applications are utilized by third parties who provide outsourced administrative
functions. Such third parties may have access to confidential information that is critical to our business operations and services.
While our information security program includes enhanced controls to monitor third-party providers’ security programs, these
third parties are subject to their own data breaches, cyberattacks and other events or actions that could damage, disrupt or close
down their networks or systems, which in turn may adversely impact our performance capabilities. Also, efforts to prevent,
detect and mitigate data breaches and cyberattacks subject us to additional costs.
Regulatory authorities have increased their focus on how companies collect, process, use, store, share and transmit
personal data. New privacy security laws and regulations, including the United Kingdom’s Data Protection Act 2018, the
European Union General Data Protection Regulation 2016, the California Consumer Privacy Act and the California Privacy
Rights Act, pose increasingly complex and rigorous compliance challenges, which may increase our compliance costs. Any
failure to comply with data privacy laws and regulations could result in significant penalties, fines, legal challenges and
reputational harm.
We may fail to establish sufficient insurance reserves to adequately cover workers’ compensation and vehicle liabilities.
We are substantially self-insured for vehicle liability and workers’ compensation claims. Our self-insurance accruals are
based on actuarially estimated, undiscounted cost of claims, which includes claims incurred but not reported. While we believe
that our estimation processes are well designed and comply with generally accepted accounting principles in the United States,
actuarial techniques and best practices, any projection of losses concerning workers’ compensation and vehicle coverage is
subject to a considerable degree of variability. The causes of this variability include litigation trends, claim settlement patterns,
rising medical and other costs as well as fluctuations in the frequency or severity of accidents. If actual losses incurred are
greater than those anticipated, our self-insurance reserves may be insufficient and additional costs could be recorded in our
consolidated financial statements. If we suffer a substantial loss in excess of our self-insured limits, the loss and related
expenses may be covered by traditional insurance and excess insurance we have in place, but if not covered or above such
coverages, losses could harm our business, financial condition or results of operations. For a detailed discussion on our
accounting policies and assumptions relating to our self-insurance reserves, please see the “Critical Accounting Estimates -
Self-Insurance Accruals” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Strategic Risks
We operate in a highly competitive industry and our business may suffer if we are unable to adequately address
potential downward pricing pressures and other competitive factors.
The transportation industry is highly competitive. We face competition in all geographic markets and each industry
sector in which we operate. Increased competition or our inability to compete successfully may lead to a reduction in revenues,
15
reduced profit margins, increased pricing pressure, or a loss of market share, any one of which could affect our financial results.
Numerous competitive factors could impair our ability to maintain our current profitability, including:
our inability to obtain expected customer retention levels or profitability;
customers may choose to provide the services we provide for themselves;
•
•
• we compete with many other transportation and logistics service providers, some of which have greater capital
•
•
resources or lower cost structures than we do;
our inability to compete with new entrants in the transportation and logistics market that may offer similar
services at lower cost or have greater technological capabilities;
our competitors may periodically reduce their prices to gain business, especially during times of declining
economic growth, which may limit our ability to maintain or increase prices or impede our ability to maintain our
profitability or grow our market share or profitability;
• many customers periodically accept bids from multiple carriers for their shipping needs, and this process may
•
•
•
depress rates or result in the loss of some of our business to competitors;
the continuing trend toward consolidation in the trucking industry may result in larger carriers with greater
financial resources than we have;
advances in technology require increased investments to remain competitive, and our customers may not be
willing to accept higher prices to cover the cost of these investments; and
because cost of capital is a significant competitive factor, any increase in either the cost of our debt or equity as a
result of reductions in our debt rating or stock price volatility could have a significant impact on our competitive
position.
Failure to execute our business strategy, explore strategic transactions, and develop, market and deliver high-quality
services that meet customer expectations may cause our revenue and earnings to suffer.
Our long-term business strategy is to move clients to outsource their transportation and logistics needs and thereby
expand the market for our services. We seek to execute our strategy by providing innovative solutions, operational excellence,
top customer service, superior talent and best-in-class information technology. By providing high-quality leasing services, we
aim to attract customers that traditionally have only been interested in operating their own transportation and logistics networks.
To successfully execute on this strategy, we must continue to focus on developing innovative solutions that meet our
existing and target customers’ evolving needs and keep pace with our competitors. Expanding our service offerings to entice
and support new clients may strain our management, capital resources, information systems and customer service. We may also
need to hire new employees, which may increase costs and may result in temporary inefficiencies until those employees become
proficient in their jobs.
In furtherance of our strategy, we routinely evaluate opportunities and may enter into agreements for possible strategic
transactions, including acquisitions, partnerships or divestitures. We may be unable to identify strategic transactions or we may
be unable to negotiate commercially acceptable terms. Other risks involved in engaging in these strategic transactions include
the possible failure to realize the expected benefits of such transactions within the anticipated time frame, or at all, such as cost
savings, synergies, sales and growth opportunities. In addition, the integration of an acquired business may result in material
unanticipated challenges, expenses and liabilities. Any one of these factors could result in lower than expected revenues or
earnings related to combining the companies or derived from a strategic transaction and could adversely impact our financial
condition or results of operations. For example, in 2022 we completed several acquisitions that expanded our e-commerce
network; however, if we fail to properly integrate those businesses, there is a risk that the acquisitions will not add the
forecasted revenue to SCS or provide the expected incremental growth to earnings.
Notwithstanding our efforts, new or enhanced service offerings may not meet customer demands, prove to be profitable
or succeed in the long term. If we do not respond to current customer needs and establish new, and further develop existing,
customer relationships, our ability to maintain a competitive advantage and continue to grow our business profitability could be
negatively affected.
We and the vehicle equipment manufacturers in our FMS business rely on a small number of suppliers.
We buy vehicles and related equipment from a relatively small number of OEMs in our FMS business. Some of our
vehicle manufacturers rely on a small concentration of suppliers for certain vehicle parts, components and equipment. A
discrete event in a particular OEM’s or supplier’s industry or location, or adverse regional economic conditions impacting an
16
OEM or supplier’s ability to provide vehicles or a particular component, has and could in the future adversely impact our FMS
business and profitability. In addition, our business and reputation could also be negatively impacted if any parts, components
or equipment from one of our suppliers suffer from broad-based quality control issues or become the subject of a product recall
and we are unable to obtain replacement parts from another supplier in a timely manner. Although we believe we have
alternative sources of supply for the equipment and other supplies used in our business, termination or significant alteration of
our relationship with any of our key suppliers could have a material adverse effect on our business, financial condition or
results of operations in the unlikely event that we were unable to obtain adequate equipment or supplies from other sources in a
timely manner or at all.
We derive a significant portion of our SCS and DTS segment revenue from a relatively small number of customers.
During 2022, sales to our top ten SCS customers accounted for 42% of our SCS total revenue and 34% of our SCS
operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation). Additionally, 32% of our SCS total
revenue and 27% of our SCS operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation) is from
the automotive industry and is directly impacted by automotive vehicle production. Our top ten DTS customers accounted for
40% of DTS total revenue and 37% of DTS operating revenue (a non-GAAP measure excluding fuel and subcontracted
transportation). The loss of any of these customers or a significant reduction in the services provided to any of these customers
could materially and adversely impact our operating results. While we continue to focus our efforts on diversifying our
customer base, we may not be successful in doing so.
We are also subject to credit risk associated with the concentration of our accounts receivable from our SCS and DTS
customers. If one or more of these customers were to become bankrupt, insolvent or otherwise were unable to pay for the
services provided by us, we may incur significant write-offs of accounts receivable or incur lease or asset impairment charges
that could adversely affect our operating results and financial condition.
In addition, many of our customers operate in cyclical or seasonal industries, or operate in industries, including the food
and beverage industry, that may be impacted by unanticipated weather, growing conditions (such as drought, insects or
disease), natural disasters, pandemics, and other conditions over which we have no control. A downturn in our customers’
businesses or unanticipated events impacting their businesses could cause a reduction in freight volume shipped by those
customers or a reduction in their need for our services, which could materially and adversely affect our operating results and
financial condition.
Human Capital
If we are unable to mitigate labor shortage challenges our financial results may continue to be negatively impacted.
We are experiencing higher labor costs due to labor shortage challenges across all of our business segments, particularly
our DTS and SCS segments. These higher labor costs as well as higher subcontracted transportation costs have negatively
impacted our earnings in both DTS and SCS in the past. If labor shortages continue for an extended period of time, our earnings
may be further adversely impacted.
Professional Drivers. We hire professional drivers primarily for our SCS and DTS business segments. There is
significant competition for qualified professional drivers in the transportation industry. Additionally, interventions and
enforcement under the CSA program may shrink the industry’s pool of professional drivers as those drivers with unfavorable
scores may no longer be eligible to drive for us. As a result of driver shortages, we have, and in the future could continue to be
required to increase driver compensation, let trucks sit idle, use outside driver agencies and subcontracted transportation
carriers; or face difficulty meeting customer demands, all of which could adversely affect our growth and profitability.
Technicians. Similarly, we hire technicians in our FMS business segment to perform vehicle maintenance services on
our ChoiceLease, SelectCare and rental fleets. In recent years, there has been a decrease in the overall supply of skilled
maintenance technicians, particularly new technicians with qualifications from technical programs and schools, which could
make it more difficult to attract and retain skilled technicians. If we are unable to maintain an adequate number of qualified
technicians, whether through the retention of current technicians or the hiring of new qualified technicians, our business could
be adversely affected.
Management and Other Key Personnel. The foundation to our success is developing a skilled and diverse workforce
that is motivated and committed to providing our customers with extraordinary service. If we fail to recruit, retain and motivate
our employees in senior management and other key roles such as technology and supply chain management, or fail to preserve
company culture, then we may not be able to execute on our strategy and grow our business as planned.
17
In addition, we are committed to creating a diverse, equitable and collaborative work environment by implementing
diversity and inclusion initiatives throughout our organization. If we do not, or are perceived not to, successfully implement
these initiatives, our reputation or ability to recruit and retain talent may be adversely impacted. Moreover, our current
employees may terminate their employment with us at any time with minimal advance notice, and we are experiencing
increased competition for talent that is making it more difficult for us to retain the employees we have and to recruit new
employees. In addition, we are facing increased regulatory and compliance requirements that further decrease the pool of
available candidates.
Failure to successfully negotiate with our union employees may result in strikes, work stoppages, or substantially higher
labor costs.
We have approximately 3,700 employees that are organized by labor unions whose wages and benefits are governed by
96 labor agreements that are renegotiated periodically. Disputes with regard to the terms of these agreements or our potential
inability to negotiate acceptable contracts with these unions in the future could result in, among other things, a material work
stoppage, slowdown or strike by the affected employees. If our workers were to engage in a work stoppage, strike or other
slowdown, or other employees were to become unionized, or the terms and conditions in future labor agreements were
renegotiated, we could experience significant business disruptions or higher operating costs, which could have an adverse effect
on our financial position, results of operations, or cash flows.
Environmental, Climate and Weather Risks
Our business may be affected by global climate change and legal, regulatory or other market responses to such change.
Global, federal, state and local legislative and regulatory efforts to address the effects of global warming and climate
change have affected and will likely continue to affect our businesses. For example, federal, state and local governments are
considering emission reduction (e.g., greenhouse gas and nitrogen dioxide) regulatory requirements or related taxes, zero-
emission vehicle mandates and increased environmental disclosure and compliance requirements. These and other similar
efforts may impose restrictions on our activities or require us to take certain actions, all of which may, over time, increase our
costs and adversely affect our business and results of operations.
For instance, a regulatory mandate for the use of zero-emission vehicles or ban of diesel or gasoline powered vehicles
could reduce the resell value and demand for our vehicles as well as the demand for maintenance services in FMS and offerings
in our SCS and DTS businesses. In addition, in the U.S., compliance with environmental regulations and the associated
potential cost is complicated by the fact that states are following different approaches to the regulation of climate change. As a
result, we cannot predict the ultimate effect on our operating results or cost structure until the timing, scope and extent of any
such regulations become known.
On the other hand, even absent any such regulation, increased awareness on the impact of climate change and any
adverse publicity about emissions by the transportation industries could accelerate the adoption of new technology and
potentially decrease customer demands for some of our services and used vehicles if consumers change their purchasing
behaviors in response to the effects of climate change.
Severe weather or other natural occurrences could result in significant business interruptions and expenditures in
excess of available insurance coverage.
Our business is more susceptible to severe weather and other natural occurrences as we operate a capital-intensive
business with a large number of vehicles and need to access roads and warehouses in order to service our customers. Severe
weather may negatively affect our operations as it may damage our vehicles and facilities, and prohibit our workforce from
servicing our customers. In addition, fuel costs may rise and other significant business interruptions could occur. Insurance to
protect against loss of business and other related consequences resulting from these natural occurrences is subject to coverage
limitations, and may not be sufficient to cover all of our damages and may not be available at commercially reasonable rates.
The frequency or intensity of severe weather events has increased in the last 20 years as a result of global climate change,
according to United Nations Office for Disaster Risk Reduction, and may continue to do so.
Legal and Regulatory Risks
We face litigation risks that could have a material adverse effect on the operation of our business.
We face litigation risks regarding a variety of issues, including accidents involving our trucks and injuries to employees,
alleged violations of federal and state labor and employment law including class-action lawsuits alleging wage and hour
18
violations, independent contractor misclassification and improper pay, securities laws, environmental liability, commercial
claims, cyber and other matters. These proceedings may be time-consuming, expensive and disruptive to normal business
operations. The defense of such lawsuits could result in significant expense and the diversion of our management’s time and
attention from the operation of our business. In recent years, several insurance companies have stopped offering coverage to
trucking companies and reduced capacity limits as a result of increases in the severity of automobile liability claims and higher
costs of settlements and verdicts, causing the cost of such insurance to increase. This trend could adversely affect our ability to
obtain suitable insurance coverage or further increase the cost for such coverage significantly, each of which may adversely
affect our financial condition, results of operations, liquidity or cash flows. Costs we incur to defend or to satisfy a judgment or
settlement of these claims may not be covered by insurance or could exceed the amount of that coverage or increase our
insurance costs and could have a material adverse effect on our financial condition, results of operations, liquidity and cash
flows.
We operate in a highly regulated industry, and changes in existing regulations or costs of compliance with, or liability
for violation of, existing or future laws or regulations could have a material adverse effect on our business.
Our business is subject to regulation by various federal, state, local and foreign governmental agencies. In the U.S., the
Department of Transportation (DOT), as well as local, state and other federal agencies exercise broad powers over our motor
carrier operations, safety and the treatment and disposal of waste materials. We are also subject to environmental laws and
regulations imposed by the EPA, including requirements related to exhaust emissions. Given the size of our employee base, we
are also subject to health and safety laws imposed by OSHA, as well as those imposed by state and local authorities. In
addition, we must also comply with domestic and international laws and regulations related to tax.
Compliance with existing laws and regulations has involved, and we expect will continue to involve, significant time
commitments and costs, and in recent years, we have seen an increase in proactive regulatory enforcement. For example, the
DOT, through the Federal Motor Carrier Safety Administration (FMCSA) periodically conducts compliance reviews and
evaluates the safety rating assessed to motor carriers (“satisfactory,” “conditional” or “unsatisfactory”). The receipt of a final
“conditional” or “unsatisfactory” safety rating due to deficiencies in our safety and compliance program could have a material
adverse effect on our customer relationships, as some of our existing customer contracts require a “satisfactory” DOT safety
rating. Moreover, if we fail to comply with DOT regulations, including our failure to maintain a “satisfactory” DOT safety
rating, the DOT could levy fines and require us to cease all transportation services under our operating authority, which could
have a material adverse effect on our business. In addition, compliance and enforcement initiatives implemented by the
FMCSA related to driver time, fitness and safety may shrink the industry’s pool of qualified professional drivers. These
initiatives and the current shortage of qualified drivers could increase the costs to attract, train and retain qualified drivers, as
well as increase driver turnover, decrease asset utilization, limit growth, and adversely impact our results of operations. With
respect to our international operations in Canada, Europe and Mexico, we are subject to local laws and regulatory requirements,
including tax and anti-bribery laws, which vary significantly from country to country. Our failure to comply with each of these
laws may expose us to legal liability, fines or other penalties.
In addition, new laws, rules or regulations may be adopted or interpretative changes to existing regulations could be
issued at any time. Any new initiatives could further increase our costs or operating complexity and our ability to offer certain
services in the jurisdictions in which we operate. Our failure to comply with any existing or future laws or regulations, whether
actual or alleged, could have a material adverse effect on our business and on our ability to access the capital required to operate
our business. Among other things, any such failure could expose us to reputational harm, loss of business, fines, penalties or
potential litigation liabilities, and the loss of operating authority and restrictions on our operations. For example, compliance
with new laws or regulations related to employee and independent contractor classification may cause us to incur additional
exposure under federal and state tax and employment laws. Similarly, compliance with new environmental laws or regulations
may also impose new restrictions on our business or require us to take certain actions that may increase our costs and adversely
affect our business.
We may also fail to ensure that companies we acquire, that may not have historically maintained internal compliance
controls, risk mitigation processes, or policies or procedures, comply with regulatory and legal requirements consistent with our
standards. Moreover, we are also subject to reputational risk and other detrimental business consequences associated with
noncompliance by other parties with whom we engage with, such as employees, customers, agents, suppliers or other persons
using our supply chain or assets to commit illegal acts, including the use of company assets for terrorist activities or a breach of
data privacy laws.
19
Our failure to comply with U.S. or foreign tax laws or a government challenging our tax position could adversely affect
our business and future operating results.
We are affected by various U.S. federal, state and foreign tax laws, including income taxes and taxes imposed on the
purchase, sale and lease of goods and services, such as sales, excise, property, value-added tax, fuel, environmental and other
taxes. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination
is uncertain. For example, significant judgment is required in determining our worldwide provision for income taxes. Our tax
expense includes estimates of additional tax that may be incurred for tax exposures and reflects various estimates and
assumptions, including assessments that could affect the valuation of our net deferred tax assets. Our operating results could be
adversely affected by changes in the effective tax rate as a result of a change in the mix of earnings in countries with differing
statutory tax rates, changes in our overall profitability, changes in tax legislation, the results of audits and examinations of
previously filed tax returns and continuing assessments of our income and indirect tax exposures.
In addition, from time to time we are under audit by tax authorities in different jurisdictions with regards to income tax
and indirect tax matters. Economic and political pressures to increase tax revenue in various jurisdictions may make resolving
tax disputes favorably more difficult. Although we believe our tax estimates are reasonable, the final determination of tax audits
and any other related tax proceedings in the jurisdictions where we are subject to taxation could be materially different from our
historical income and indirect tax provisions and accruals.
Finally, changes in U.S. federal, state or international tax laws applicable to corporate multinationals, other tax reform
currently being considered by many countries, including the U.S., and changes and clarifications in taxing jurisdictions’
administrative interpretations, decisions, policies and positions may materially adversely impact our tax expense and cash
flows. The U.S. Congress, the Organization for Economic Co-operation and Development, the European Union, and other
government agencies in jurisdictions in which we and our affiliates invest or do business have maintained a focus on the
taxation of multinational companies and have a number of on-going tax initiatives. If we are unable to successfully take actions
to manage the adverse impacts of new tax legislation, or if additional interpretations, regulations, amendments or technical
corrections exacerbate the adverse impacts of such legislation, the legislation could have a material adverse effect on our
financial condition, results of operations and cash flows.
General Risk Factors
Our business may be affected by uncertainty or changes in U.S. or global social, political or regulatory conditions.
Adverse developments in laws, policies or practices in the U.S. and internationally can negatively impact our business
and the business of our customers. Negative domestic and international global trade conditions as a result of social, political or
regulatory changes or perceptions could materially affect our business, financial conditions and results of operations.
We provide services domestically and to a lesser extent outside of the U.S., which subjects our business to various
additional risks, including:
•
•
•
•
•
•
•
•
•
changes in tariffs, trade restrictions, trade agreements, and taxes;
varying tax regimes, including consequences from changes in applicable tax laws;
difficulties in managing or overseeing foreign operations and agents;
foreign currency fluctuations and limitations on the repatriation of funds due to foreign currency controls;
different liability standards;
fluctuations in inflation rates;
the price and availability of fuel;
national and international conflict; and
intellectual property laws of countries that do not protect our rights in intellectual property to the same extent as
the laws of the U.S.
If we do not correctly anticipate changes in social, political or regulatory conditions or their impact on the transportation
industry, we may not alter our business practices in time to avoid adverse effects. Additionally, the occurrence or consequences
of any of these factors may restrict our ability to operate in the affected region and/or decrease the profitability of our operations
in that region.
Our suppliers may also be affected by changes in the political and regulatory environment, both in the U.S. and
internationally. Negative impacts on our suppliers could result in disruptions in the supply and availability of equipment or
services needed for our business that could in turn affect our ability to operate and serve our customers as planned.
20
Volatility in assumptions, discount rates, and asset values related to our pension plans may adversely affect the
valuation of our obligations, the current funding levels and our pension expense under our defined benefit pension
plans.
We historically sponsored a number of defined benefit plans for employees not covered by union-administered plans,
including certain employees in foreign countries. As of December 31, 2022, the aggregate projected benefit obligations of our
global defined pension plans was $1.7 billion, and the plan assets of our global defined benefit pension plans was $1.6 billion.
The funded status of the plans, equal to the difference between the present value of plan obligations and assets, is a significant
factor in determining pension expense and the ongoing funding requirements of those plans. Macroeconomic factors, as well as
changes in investment returns and discount rates used to calculate pension expense and related assets and liabilities, can be
volatile and may have an unfavorable impact on our costs and funding requirements. Although we have actively sought to
control increases in these costs and funding requirements through investment policies and plan contributions, there can be no
assurance that we will succeed, and continued cost and funding requirement pressure could reduce the profitability of our
business and negatively impact our cash flows.
Damage to our reputation through unfavorable publicity or the actions of our employees could adversely affect our
financial condition.
Our success depends on our ability to consistently deliver operational excellence and strong customer service. Our
inability to deliver our services and solutions as promised on a consistent basis, or our customers having a negative experience
or otherwise becoming dissatisfied, can negatively impact our relationships with new or existing customers and adversely affect
our brand and reputation, which could, in turn, adversely affect revenue and earnings growth. Adverse publicity (whether or not
justified) relating to activities by our employees, contractors, agents or others with whom we do business, such as customer
service mishaps or noncompliance with laws, could tarnish our reputation and reduce the value of our brand. With the increase
in the use of social media outlets such as Facebook, YouTube, Instagram and Twitter, adverse publicity can be disseminated
quickly and broadly, making it increasingly difficult for us to effectively respond. This unfavorable publicity could also require
us to allocate significant resources to rebuild our reputation.
We may be negatively impacted by adverse events in the global credit and financial markets, by an investment rating
downgrade or by the loss of an investment grade rating.
Our FMS business is highly capital intensive and its profitability could be adversely affected if we are unable to obtain
sufficient capital to fund its operations. In general, we rely in large part upon global credit and financial markets to fund our
operations and contractual commitments as well as to refinance existing debt. These markets can experience high levels of
volatility and our access to capital could be constrained for extended periods. Our ability to raise capital may be materially
reduced or our borrowing costs may significantly increase if, among other things, access to public investment grade debt
becomes limited or closed, we lose access to our global revolving credit facility, or funding costs increase due to the loss of an
investment grade rating, a severe economic downturn or rising interest rates.
As of December 31, 2022, we had $6.4 billion of outstanding indebtedness. If we are unable to raise additional capital by
accessing the debt and equity markets or our costs of raising additional capital were to materially increase, our business could
experience a material adverse effect on our operating results or we could face difficulty in implementing our long-term strategy.
Future acts of terrorism or war, or regulatory changes to combat the risk of terrorism or war may cause significant
disruptions in our operations.
Transportation assets such as our fleet of vehicles and other infrastructure and information technology systems remain a
target for terrorist activities. Terrorist attacks, along with any government response to those attacks, may adversely affect our
financial condition, results of operations or liquidity. Regulations adopted by federal, state or local governmental bodies that
impact the transportation industry, including checkpoints and travel restrictions on large trucks, could disrupt or impede the
timing of our operations or cause us to incur increased expenses in order to continue meeting customer requirements. In
addition, complying with these or future regulations could continue to increase our operating costs and reduce operating
efficiencies. We maintain insurance coverages addressing these risks and we have received U.S. Patriot Act protections for our
security practices related to the rental of our assets. However, such insurance may be inadequate or become unavailable,
premiums charged for some or all of the insurance could increase dramatically, regulations may change or U.S. Patriot Act
protections could be reduced. These changes could exacerbate the effects of an act of terrorism on our business, resulting in a
significant business interruption, increased costs and liabilities and decreased revenues or an adverse impact on results of
operations.
21
None.
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
Our properties consist primarily of vehicle maintenance and repair facilities, warehouses and other real estate and
improvements.
We maintain 637 FMS properties in the U.S., Puerto Rico and Canada; we own 439 of these and lease the remaining
properties. Our FMS properties are primarily comprised of maintenance facilities generally including a repair shop, rental
counter, fuel service island, administrative offices, and used vehicle retail sales centers.
Additionally, we manage 178 on-site maintenance facilities, located at customer locations.
We also maintain 229 locations in the U.S. and Canada in connection with our domestic SCS business. Almost all of our
SCS locations are leased and generally include a warehouse and administrative offices.
We maintain 48 international locations (locations outside of the U.S. and Canada) for our international businesses. There
are 8 locations in the U.K. and Germany, and 40 locations in Mexico. The majority of these locations are leased and may be a
repair shop, warehouse or administrative office.
Additionally, we maintain 10 U.S. locations primarily used for Central Support Services. These facilities are generally
administrative offices, of which we own four and lease the remaining locations.
ITEM 3. LEGAL PROCEEDINGS
We are involved in various claims, lawsuits and administrative actions arising in the normal course of our businesses.
Some involve claims for substantial amounts of money and/or claims for punitive damages. While any proceeding or litigation
has an element of uncertainty, management believes that the disposition of such matters, in the aggregate, will not have a
material impact on our consolidated financial condition or liquidity. Refer to Note 22, "Contingencies and Other Matters", for
additional information regarding our legal proceedings.
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Ryder Common Stock
Our common shares are listed on the New York Stock Exchange under the trading symbol “R.” As of January 31, 2023,
there were 5,154 common stockholders of record.
22
Performance Graph
The following graph compares the performance of our common stock with the performance of the Standard & Poor’s
MidCap 400 Index and the Dow Jones Transportation 20 Index for a five year period by measuring the changes in common
stock prices from December 31, 2017 to December 31, 2022.
The stock performance graph assumes for comparison that the value of our common stock and of each index was $100 on
December 31, 2017, and that all dividends were reinvested. Past performance is not necessarily an indicator of future result
23
Purchases of Equity Securities
The following table provides information with respect to purchases we made of our common stock during the quarter
ended December 31, 2022:
Maximum
Number of
Shares
That May
Yet Be
Purchased
Under the
Discretionary
and
Anti-Dilutive
Programs (2)
Maximum
Number of
Dollars
That May
Yet Be
Purchased
Under the
Accelerated
Share
Repurchase
Program (3)
—
Total
Number
of
Shares
Purchased as
Part of
Publicly
Announced
Programs (2)
—
4,500,000 $
2,840,673
1,659,327 $
84,720
1,574,607 $
—
—
Total
Number
of Shares
Purchased (1)
Average
Price
Paid per
Share
— $ —
2,840,743
85,284
88.72
93.00
2,926,027 $ 88.84
2,925,393
October 1 through October 31, 2022
November 1 through November 30, 2022
December 1 through December 31, 2022
Total
___________________
(1) During the three months ended December 31, 2022, we purchased an aggregate of 634 shares of our common stock in employee-related transactions.
(2)
(3)
Employee-related transactions may include: (i) shares of common stock withheld as payment for the exercise price of options exercised or to satisfy the
tax withholding liability associated with our share-based compensation programs and (ii) open-market purchases by the trustee of Ryder’s deferred
compensation plans relating to investments by employees in our stock, one of the investment options available under the plans.
In October 2021, our board of directors authorized two new share repurchase programs. The first program grants management discretion to repurchase
up to 2.0 million shares of common stock over a period of two years, commencing on October 14, 2021 and expiring on October 14, 2023 (the "2021
Discretionary Program"). The 2021 Discretionary Program is designed to provide management with capital structure flexibility while concurrently
managing objectives related to balance sheet leverage, acquisition opportunities, and shareholder returns. The second program authorizes management
to repurchase up to 2.5 million shares of common stock, issued to employees under our employee stock plans since September 1, 2021 (the "2021 Anti-
Dilutive Program"). The 2021 Anti-Dilutive Program is designed to mitigate the dilutive impact of shares issued under our employee stock plans. The
2021 Anti-Dilutive Repurchase Program commenced on October 14, 2021 and expires on October 14, 2023. Share repurchases under both programs
can be made from time to time using our working capital and a variety of methods, including open-market transactions and trading plans established
pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The timing and actual number of shares repurchased are subject to market conditions,
legal requirements and other factors, including balance sheet leverage, availability of quality acquisitions and stock price.
In September 2022, we completed our $300 million accelerated share repurchase program. This program was authorized by our board of directors in
February 2022, and at that time, we repurchased and retired an initial share amount of approximately 3 million. The final settlement occurred in
September 2022, resulting in the delivery and retirement of approximately 1 million additional shares. The number of shares ultimately repurchased and
retired was based on the average of Ryder's daily volume-weighted average price per share of common stock during a repurchase period, less a
discount. The average price paid for all of the shares delivered and retired under the ASR was $74.47 per share. Refer to Note 15, "Share Repurchase
Programs," in the Notes to Consolidated Financial Statements for a discussion on our share repurchase programs.
ITEM 6. SELECTED FINANCIAL DATA
Reserved.
24
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should
be read in conjunction with our consolidated financial statements and related notes contained in Part II, Item 8 of this Annual
Report on Form 10-K. The following MD&A describes the principal factors affecting results of operations, financial resources,
liquidity, contractual cash obligations and critical accounting estimates. This section of the Form 10-K generally discusses 2022
and 2021 items and year-to-year comparisons between 2022 and 2021. Discussions of 2020 items and year-to-year comparisons
between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in Part II, Item 7 of the our Annual Report on Form 10-K for the fiscal year
ended December 31, 2021, filed on February 17, 2022.
Our results of operations and financial condition are influenced by a number of factors including: macroeconomic and
other market conditions, including pricing and demand; used vehicle sales; customer contracting activity and retention;
maintenance costs; residual value estimate changes; currency exchange rate fluctuations; customer preferences; inflation; fuel
and energy prices; insurance costs; interest rates; labor costs; unemployment levels; tax rates; changes in accounting or
regulatory requirements; and cybersecurity attacks. This MD&A includes certain forward-looking statements that are based on
our current plans and expectations and are subject to risks, uncertainties and assumptions. We caution readers that certain
important factors could cause actual results and events to differ significantly from those expressed.
Certain prior period amounts have been reclassified to conform with the current period presentation. First, we included
"Other operating expenses" with "Selling, general and administrative expenses" in the Consolidated Statements of Earnings.
Second, we revised the presentation of certain costs that for the year ended December 31, 2021, were reported in "Cost of lease
& related maintenance and rental" and "Cost of services," which should have been included in the "Cost of fuel services" within
the Consolidated Statements of Earnings. These costs were not material to any financial statement line item and we elected to
revise the presentation of these prior period costs to conform to the current year presentation in our financial statements.
For a detailed description of certain risk factors that impact our business, including those related to the COVID-19 effects,
refer to Part I, Item 1A. "Risk Factors” and "Special Note Regarding Forward-Looking Statements" sections included in this
Annual Report.
This MD&A includes certain non-GAAP financial measures. Please refer to the “Non-GAAP Financial Measures” section
of this MD&A for information on these non-GAAP measures, including reconciliations to the most comparable GAAP
financial measure and the reasons why we believe each measure is useful to investors.
OVERVIEW
General
Ryder is a leading logistics and transportation company. We report our financial performance based on three business
segments: (1) Fleet Management Solutions (FMS), which provides full service leasing and leasing with flexible maintenance
options, commercial rental and maintenance services of trucks, tractors and trailers to customers principally in the United States
(U.S.) and Canada; (2) Supply Chain Solutions (SCS), which provides integrated logistics solutions, including distribution
management, dedicated transportation, transportation management, brokerage, e-commerce, last mile, and professional services
in North America; and (3) Dedicated Transportation Solutions (DTS), which provides turnkey transportation solutions in the
U.S., including dedicated vehicles, professional drivers, management, and administrative support. Dedicated transportation
services provided as part of an operationally integrated, multi-service, supply chain solution to SCS customers are primarily
reported in the SCS business segment. In 2022, we announced our intentions to exit the FMS United Kingdom (U.K.) business
and have substantially completed the wind down as of December 31, 2022.
Further information on our business and reportable business segments are presented in Part I, Item 1, "Business", and in
Note 3, "Segment Reporting" of the Notes to Consolidated Financial Statements included in Part II, Item 8, "Financial
Statements and Supplementary Data" in this Annual Report.
Business Trends
During 2022, we continued to experience highly favorable trends in logistics and transportation solutions due to ongoing
supply chain and labor shortage challenges. In addition, demand conditions for transportation services were strong reflecting
solid freight activity and tight vehicle availability due to continued OEM production constraints. These market conditions,
along with successful management of our initiatives to increase long-term returns, resulted in record revenue and earnings. We
had strong sales of new long-term customer contracts in SCS and DTS, which we expect will contribute to long-term profitable
growth. In the first half of the year, we also experienced strong demand and pricing for our rental and used vehicles due to a
limited supply of vehicles. Benefits from our initiatives to increase returns and drive long-term profitable growth delivered
25
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
higher earnings in our contractual lease, supply chain and dedicated businesses. We have also experienced higher costs across
our business, particularly payroll and third-party services, due to increasing inflationary pressure.
In FMS, used vehicle sales and rental outperformed the prior year. Used vehicle market conditions remain relatively
strong, and as anticipated, pricing sequentially declined in the second half of the year from historical highs. Despite this decline
in pricing, we realized record used vehicle gains as prices remained, and continue to remain, well above our residual value
estimates. Our North America ChoiceLease fleet grew 1,300 units in 2022. In 2023, we expect strong but reduced earnings as a
slowing macroeconomic and freight environment drive lower results in used vehicle sales and rental, with some offset from
tight truck capacity due to ongoing OEM production constraints. Although we expect a weaker economic environment in 2023,
we believe our 2023 used vehicle sales and rental results will be reflective of a normalized economic environment compared to
the elevated performance levels we experienced during 2022. Our lease pricing initiatives also delivered improved portfolio
returns, and we expect to continue realizing incremental earnings as our remaining portfolio is renewed at higher returns.
In SCS, we experienced strong outsourcing trends in warehousing and distribution, as well as in e-commerce fulfillment
and last mile delivery of big and bulky items in 2022. New long-term customer contracts in SCS and DTS, combined with the
e-commerce acquisition of Whiplash and the Midwest Warehouse & Distribution System (Midwest) acquisition, contributed to
significant revenue growth. The SCS acquisitions are providing us with enhanced capabilities in fast-growing e-commerce
fulfillment and in multi-client warehousing. The pricing adjustments and cost recovery initiatives implemented this year due to
higher labor costs in SCS and DTS, have helped DTS return to its target earnings level and SCS improve its earnings year-over-
year.
While we are experiencing positive momentum in our businesses, other unknown effects from extended higher fuel prices,
inflationary cost pressures, prolonged labor shortages, extended disruptions in vehicle and vehicle part production and rising
interest rates may negatively impact demand for our business, financial results, and significant judgments and estimates.
SELECTED OPERATING PERFORMANCE ITEMS
•
Total revenue of $12.0 billion and operating revenue (a non-GAAP measure) of $9.3 billion for 2022 increased 24%
and 19%, respectively as compared to prior year, reflecting organic revenue growth across all business segments and
SCS acquisitions
• Diluted EPS from continuing operations of $16.96 in 2022 versus $9.70 in prior year, reflecting significantly higher
earnings in FMS and improved performance in SCS and DTS
Comparable EPS (a non-GAAP measure) from continuing operations of $16.37 in 2022 versus $9.58 in prior year
•
• Adjusted Return on Equity (ROE) (a non-GAAP measure) of 29% in 2022, up from 21% in prior year
• Net cash provided by operating activities from continuing operations of $2.3 billion in 2022 versus $2.2 billion in prior
year. Free cash flow (a non-GAAP measure) of $921 million in 2022 versus $1.1 billion in prior year
26
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS SUMMARY
(Dollars in millions, except per share amounts)
Total revenue
Operating revenue (1)
Earnings (loss) from continuing operations before income taxes (EBT)
Comparable EBT (1)
Earnings (loss) from continuing operations
Comparable earnings from continuing operations (1)
Net earnings (loss)
Comparable EBITDA (1)
Earnings (loss) per common share (EPS) — Diluted
Continuing operations
Comparable (1)
Net earnings (loss)
Debt to equity
Adjusted return on equity (1)
Net cash provided by operating activities from continuing operations
Free cash flow (1)
Total capital expenditures (2)
____________________
2022
2021
2020
2022/2021
2021/2020
Change
24%
19%
75%
68%
65%
62%
67%
12%
75%
71%
76%
15%
11%
NM
NM
NM
NM
NM
8%
NM
NM
NM
$ 12,011
$ 9,663
$ 8,420
9,280
7,828
7,024
$ 1,216
$
1,144
863
833
867
693
682
522
515
519
$
(130)
(29)
(112)
(14)
(122)
2,722
2,433
2,258
$ 16.96
$ 9.70
$ (2.15)
16.37
17.04
216 %
29 %
9.58
9.66
235 %
21 %
(0.27)
(2.34)
293 %
(1) %
$ 2,310
$ 2,175
$ 2,181
921
1,057
1,587
2,652
2,012
1,070
NM - Denotes Not Meaningful throughout the MD&A
(1) Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for reconciliations of the most comparable GAAP
measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.
Includes capital expenditures that have been accrued, but not yet paid.
(2)
In 2022, total revenue increased 24% to $12.0 billion. Operating revenue (a non-GAAP measure excluding fuel,
subcontracted transportation and ChoiceLease liability insurance revenues) increased 19% to $9.3 billion. The increases in total
and operating revenue were primarily due to higher revenue across all of our business segments and the SCS acquisitions of
Whiplash and Midwest. Total revenue also increased from higher subcontracted transportation and fuel revenue.
EBT and comparable EBT (a non-GAAP measure) increased to $1.2 billion and $1.1 billion, respectively, from
$693 million and $682 million, respectively, primarily due to higher used vehicle sales results (including the declining impact
of depreciation expense from prior residual value estimate changes), better commercial rental performance, and increased
results in SCS and DTS.
FULL YEAR CONSOLIDATED RESULTS
Lease & Related Maintenance and Rental
(Dollars in millions)
Lease & related maintenance and rental revenues
Cost of lease & related maintenance and rental
Gross margin
Gross margin %
Change
2022
2021
2020
2022/2021
2021/2020
$ 4,174
$ 3,995
$ 3,704
2,774
2,884
3,109
$ 1,400
$ 1,111
$
595
4%
(4)%
26%
8%
(7)%
87%
34 %
28 %
16 %
Lease & related maintenance and rental revenues represent revenue from our ChoiceLease and commercial rental product
offerings within our FMS business segment. Revenues increased 4% in 2022, primarily driven by increases in commercial
rental demand and pricing.
Cost of lease & related maintenance and rental represents the direct costs related to lease & related maintenance and
rental revenue and are comprised of depreciation of revenue earning equipment, maintenance costs (primarily repair parts and
labor), and other costs such as licenses, insurance and operating taxes. Cost of lease & related maintenance and rental excludes
interest costs from vehicle financing, which are reported within "Interest expense" in our Consolidated Statements of Earnings.
27
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cost of lease & related maintenance and rental decreased 4% in 2022 primarily due to declining depreciation expense impacts
from prior residual value estimate changes as well as the reduction of the U.K. vehicle fleet related to our exit from the FMS
U.K. business, partially offset by higher repair labor and parts costs.
Lease & related maintenance and rental gross margin and gross margin as a percentage of revenue increased to 34%
primarily due to a declining impact of depreciation expense from prior residual value estimate changes, higher commercial
rental and ChoiceLease pricing and improved rental utilization.
Services
(Dollars in millions)
Services revenue
Cost of services
Gross margin
Gross margin %
Change
2022
2021
2020
2022/2021
2021/2020
$ 7,118
$ 5,181
$ 4,318
6,153
4,503
3,653
$
965
$
678
$
665
37%
37%
42%
20%
23%
2%
14 %
13 %
15 %
Services revenue represents all the revenues associated with our SCS and DTS business segments, as well as SelectCare
and fleet support services associated with our FMS business segment. Services revenue increased 37% in 2022, due to increases
in revenue in SCS and DTS driven by growth from acquisitions, new business, increased pricing and higher volumes. Prior year
volumes in SCS were negatively impacted from supply chain disruptions, primarily in the automotive industry.
Cost of services represents the direct costs related to services revenue and is primarily comprised of salaries and
employee-related costs, subcontracted transportation (purchased transportation from third parties), fuel, vehicle liability costs
and maintenance costs. Cost of services increased 37% in 2022, primarily due to the growth in revenue and higher
subcontracted transportation and labor, rent and fuel costs in SCS and DTS, including the impact from inflationary cost
pressures.
Services gross margin increased 42% in 2022, due to higher pricing, new business, growth from acquisitions and
increased volumes. Services gross margin as a percentage of revenue increased in 2022, due to pricing adjustments made on
SCS and DTS customer contracts to recover higher labor and subcontracted transportation costs as well as other cost recovery
efforts.
Fuel Services
(Dollars in millions)
Fuel services revenue
Cost of fuel services
Gross margin
Gross margin %
Change
2022
2021
2020
2022/2021
2021/2020
$
$
719
694
25
$
$
487
474
13
$
$
398
383
15
48%
46%
92%
22%
24%
(13)%
3 %
3 %
4 %
Fuel services revenue represents fuel services provided to our FMS customers. Fuel services revenue increased 48% in
2022, primarily reflecting higher fuel prices passed through to customers.
Cost of fuel services includes the direct costs associated with providing our customers with fuel. These costs include fuel,
salaries and employee-related costs of fuel island attendants and depreciation of our fueling facilities and equipment. Cost of
fuel services increased 46% in 2022 as a result of higher fuel prices.
Fuel services gross margin increased to $25 million and gross margin as a percentage of revenue remained at 3% in 2022.
Fuel is largely a pass-through to customers for which we realize minimal changes in margin during periods of steady market
fuel prices. However, fuel services margin is impacted by sudden increases or decreases in market fuel prices during a short
period of time, as customer pricing for fuel is established based on current market fuel costs. Fuel services gross margin was not
significantly impacted by these price change dynamics in 2022.
28
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Selling, General and Administrative Expenses
(Dollars in millions)
Selling, general and administrative expenses (SG&A)
Percentage of total revenue
2022
2021
2020
2022/2021
2021/2020
$ 1,415
$ 1,187
$ 1,044
19%
14%
12 %
12 %
12 %
Change
SG&A expenses increased 19% in 2022. The increase in 2022 was mainly due to higher incentive-based compensation
costs, higher bad debt, amortization of intangibles from the Whiplash and Midwest acquisitions and higher travel expense.
SG&A expenses as a percentage of total revenue remained unchanged at 12% in 2022.
Non-Operating Pension Costs, net
(Dollars in millions)
Non-operating pension costs, net
2022
2021
2020
2022/2021
2021/2020
$
11 $
(1) $
11
NM
NM
Change
Non-operating pension costs, net include the amortization of net actuarial loss and prior service cost, interest cost and
expected return on plan assets components of pension and postretirement benefit costs, as well as any significant charges for
settlements or curtailments if recognized. Non-operating pension costs, net increased due to lower return on assets from a shift
in mix of assets and higher interest expense from a higher discount rate partially offset by lower amortization expense.
Used Vehicle Sales, net
(Dollars in millions)
Used vehicle sales, net
2022
2021
2020
2022/2021
2021/2020
$
(450) $
(257) $
—
75%
NM
Change
Used vehicle sales, net includes gains or losses from sales of used vehicles, selling costs associated with used vehicles
and write-downs of vehicles held for sale to fair market value (referred to as "valuation adjustments"). The increased used
vehicle sales results in 2022 was due to higher proceeds per unit of sales of used vehicles as compared to the prior year. Used
vehicle sales, net in 2022, includes gains associated with the exit of the FMS U.K. business of $49 million.
Average proceeds per unit increased in 2022 from the prior year. The following table presents the average used vehicle
proceeds per unit changes, using constant currency, compared with the prior year:
Tractors
Trucks
Interest Expense
(Dollars in millions)
Interest expense
Effective interest rate
2022/2021
2021/2020
43%
51%
78%
70%
2022
2021
2020
2022/2021
2021/2020
$
228
$
214
$
261
7%
(18)%
3.5 %
3.2 %
3.6 %
Change
Interest expense increased 7% in 2022 primarily reflecting higher interest rates and higher average outstanding debt,
partially offset by a higher mix of variable rate debt.
Miscellaneous Income, net
(Dollars in millions)
Miscellaneous income, net
2022
2021
2020
2022/2021
2021/2020
$
(32) $
(66) $
(22)
(52)%
200%
Change
Miscellaneous income, net consists of investment income on securities used to fund certain benefit plans, interest income,
gains on sales of operating property, foreign currency transaction remeasurement and other non-operating items. Miscellaneous
29
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
income, net was $32 million in 2022 as compared to $66 million in the prior year, primarily due to lower investment income
and higher gains on sale of properties in the prior year.
Restructuring and Other Items, net
(Dollars in millions)
Restructuring and other items, net
2022
2021
2020
2022/2021
2021/2020
$
2 $
32 $
111
(94)%
(71)%
Change
Refer to Note 21, “Other Items Impacting Comparability” in the Notes to Consolidated Financial Statements for a
discussion of restructuring charges and other items.
Provision for (Benefit from) Income Taxes
(Dollars in millions)
Provision for (benefit from) income taxes
Effective tax rate on continuing operations
Comparable tax rate on continuing operations (1)
_______________
2022
2021
2020
2022/2021
2021/2020
$
353
$
171
$
(18)
106%
NM
Change
29.1 %
27.2 %
24.7 %
24.5 %
(14.1) %
(52.1) %
(1) Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for reconciliations of the most comparable GAAP
measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.
The provision for income taxes increased to $353 million in 2022 due to higher earnings and a higher effective tax rate.
Our effective tax rate from continuing operations was 29.1% as compared to 24.7% in the prior year and our comparable tax
rate on continuing operations was 27.2% as compared to 24.5% in the prior year. The increases in the rates were due to
incremental U.S. tax on higher foreign earnings related to the exit of our FMS U.K. business as well as a shift in the mix of
earnings subject to tax in different jurisdictions. Refer to our discussion of changes in our provision for (benefit from) income
taxes and effective tax rate from continuing operations in Note 11, “Income Taxes” in the Notes to Consolidated Financial
Statements.
30
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FULL YEAR OPERATING RESULTS BY BUSINESS SEGMENT
(Dollars in millions)
Revenue:
Fleet Management Solutions
Supply Chain Solutions
Dedicated Transportation Solutions
Eliminations
Total
Operating Revenue: (1)
Fleet Management Solutions
Supply Chain Solutions
Dedicated Transportation Solutions
Eliminations
Total
Earnings (loss) from continuing operations before income taxes:
Fleet Management Solutions
Supply Chain Solutions
Dedicated Transportation Solutions
Eliminations
Unallocated Central Support Services
Non-operating pension costs, net
Other items impacting comparability, net (2)
2022
2021
2020
2022/2021
2021/2020
Change
$
6,327 $
5,680 $
5,171
4,720
1,786
(822)
3,155
1,457
(629)
11%
50%
23%
2,544
1,229
(524)
(31)%
$ 12,011 $
9,663 $
8,420
24%
$
5,213 $
4,941 $
4,578
3,254
1,239
(426)
2,211
1,055
(379)
6%
47%
17%
1,870
929
(353)
(12)%
$
9,280 $
7,828 $
7,024
19%
$
1,054 $
663 $
(142)
186
102
(115)
1,227
(83)
(11)
83
117
49
(78)
751
(69)
1
10
160
73
(43)
48
(77)
(11)
(90)
59%
59%
108%
47%
63%
20%
NM
NM
10%
24%
19%
(20)%
15%
8%
18%
14%
(7)%
11%
NM
(27)%
(33)%
(81)%
NM
10%
NM
NM
NM
Earnings (loss) from continuing operations before income taxes
$
1,216 $
693 $
(130)
75%
_______________
(1) Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for reconciliations of the most comparable GAAP
measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.
(2) Refer to Note 21, "Other Items Impacting Comparability," and below for a discussion of items excluded from our primary measure of segment performance.
As part of management’s evaluation of segment operating performance, we define the primary measurement of our segment
financial performance as "Earnings from continuing operations before taxes" (EBT), which includes an allocation of costs from
Central Support Services (CSS) and excludes non-operating pension costs, net and certain other items as discussed in Note 21,
“Other Items Impacting Comparability,” in the Notes to Consolidated Financial Statements. CSS represents those costs incurred
to support all business segments, including finance and procurement, corporate services, human resources, information
technology, public affairs, legal, marketing and corporate communications.
The objective of the EBT measurement is to provide clarity on the profitability of each business segment and, ultimately, to
hold leadership of each business segment accountable for their allocated share of CSS costs. Segment results are not necessarily
indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during
the periods presented. Certain costs are not attributable to any segment and remain unallocated in CSS, including costs for
investor relations, public affairs and certain executive compensation. Refer to Note 3, “Segment Reporting,” in the Notes to
Consolidated Financial Statements for a description of the methodology for allocating the remainder of CSS costs to the business
segments.
Our FMS segment leases revenue earning equipment, as well as provides rental vehicles, fuel, maintenance and other
ancillary services to the SCS and DTS segments. Inter-segment EBT allocated to SCS and DTS includes earnings related to
equipment used in providing services to SCS and DTS customers. EBT related to inter-segment equipment and services billed to
SCS and DTS customers (equipment contribution) are included in both FMS and the segment that served the customer and then
eliminated upon consolidation (presented as “Eliminations”).
31
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table sets forth the benefit from equipment contribution included in EBT for our SCS and DTS business
segments:
(Dollars in millions)
Equipment Contribution:
Supply Chain Solutions
Dedicated Transportation Solutions
Total
2022
2021
2020
2022/2021
2021/2020
Change
$
$
47 $
33 $
68
45
115 $
78 $
18
25
43
42%
51%
47%
83%
80%
81%
In 2022, the increase in SCS and DTS equipment contribution is primarily related to increased fuel margins due to rapid
fluctuations in fuel prices and higher proceeds on sales of used vehicles.
Items excluded from our segment EBT measure and their classification within our Consolidated Statements of Earnings are
as follows (dollars in millions):
Description
Classification
2022
2021
2020
Restructuring and other, net (1)
ERP implementation costs (1)
Gains on sale of U.K revenue earning equipment (1)
Gains on sale of properties (1)
Early redemption of medium-term notes (1)
ChoiceLease liability insurance revenue (1)
Other items impacting comparability, net
Non-operating pension costs, net (2)
_______________
Restructuring and other items, net
$
(2) $
(19) $
Restructuring and other items, net
Used vehicles sales, net
Miscellaneous income, net
Interest expense
Revenue
Non-operating pension costs, net
—
49
36
—
—
83
(11)
(13)
—
42
—
—
10
1
(77)
(34)
—
6
(9)
24
(90)
(11)
$
72 $
11 $
(101)
(1) Refer to Note 21, “Other Items Impacting Comparability,” in the Notes to Consolidated Financial Statements for additional information.
(2) Refer to Note 19, “Employee Benefit Plans,” in the Notes to Consolidated Financial Statements for additional information.
Fleet Management Solutions
(Dollars in millions)
ChoiceLease
Commercial rental (1)
SelectCare and other
Fuel services and ChoiceLease liability insurance (2)
FMS total revenue
FMS operating revenue (3)
FMS EBT
FMS EBT as a % of FMS total revenue
FMS EBT as a % of FMS operating revenue (3)
_______________
2022
2021
2020
2022/2021
2021/2020
Change
$
3,203 $
3,220 $
3,160
1,351
659
1,114
1,114
607
739
834
584
593
$
6,327 $
5,680 $
5,171
(1)%
21%
9%
51%
11%
$
5,213 $
4,941 $
4,578
6%
$
1,054 $
663 $
(142)
59%
16.7%
20.2%
11.7%
13.4%
(2.7)% 500 bps
(3.1)% 680 bps
2%
34%
4%
25%
10%
8%
NM
NM
NM
(1) For the years ended December 31, 2022, 2021, and 2020 rental revenue from lease customers in place of a lease vehicle represented 33%, 30%, and 33%
of commercial rental revenue, respectively.
In the first quarter of 2021, we completed the exit of the extension of our liability insurance coverage for ChoiceLease customers.
(2)
(3) Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for reconciliations of the most comparable GAAP
measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.
32
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FMS total revenue increased 11% to $6.3 billion in 2022 primarily due to higher fuel services revenue primarily reflecting
higher fuel prices passed through to customers and higher operating revenue (a non-GAAP measure excluding fuel and
ChoiceLease liability insurance revenues). FMS operating revenue increased 6% to $5.2 billion in 2022 primarily driven by
increases in commercial rental demand and pricing. FMS operating revenue grew despite a 2% negative impact from the wind
down of the FMS U.K. business.
FMS EBT increased 59% in 2022, primarily from higher used vehicle sales and rental results reflecting benefits from tight
truck capacity and initiatives to improve returns in these areas. Increased gains on used vehicles sold and a declining impact of
depreciation expense from prior vehicles residual values estimates changes contributed $260 million in higher year over year
earnings. Used vehicle pricing increased from the prior year for both trucks and tractors. Used vehicle inventory levels increased
to 4,300 vehicles, but remains well below the target range of 7,000 - 9,000 vehicles. Commercial rental results benefited from 7%
increased power fleet pricing in 2022, and strong power fleet utilization. Rental power fleet utilization increased to 83% from
80% in 2022.
During the first quarter of 2022, we announced our intention to exit the FMS U.K. business. The exit from the operations is
substantially complete as of December 31, 2022. More than 90% of the revenue earning equipment and operating property
equipment in the U.K. were sold during 2022, generating proceeds of approximately $400 million. We expect to finalize the
shutdown of all U.K. operations and complete the sale of the remaining vehicles and properties in 2023. As a result of the
liquidation of the balance sheet, we anticipate recognizing a material foreign currency cumulative translation adjustment loss in
2023. The foreign currency cumulative translation adjustment will have no impact on our consolidated financial position or cash
flows.
33
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our global fleet of owned and leased revenue earning equipment and SelectCare vehicles, including vehicles under on-
demand maintenance, is summarized as follows (rounded to the nearest hundred):
End of period vehicle count
By type:
Trucks (1)
Tractors (2)
Trailers and other (3)
Total
By product line:
ChoiceLease
Commercial rental
Service vehicles and other
Held for sale
Total
Memo: U.K. Vehicle Count
2022
2021
2020
2022/2021
2021/2020
Change
72,700
69,400
41,500
75,100
70,700
43,500
77,300
73,300
44,100
183,600
189,300
194,700
135,400
143,900
149,600
41,800
2,100
40,700
2,200
35,000
2,400
179,300
186,800
187,000
4,300
2,500
7,700
183,600
189,300
194,700
(3)%
(2)%
(5)%
(3)%
(6)%
3%
(5)%
(4)%
72%
(3)%
1,000
13,000
14,300
(92)%
(3)%
(4)%
(1)%
(3)%
(4)%
16%
(8)%
—%
(68)%
(3)%
(9)%
Customer vehicles under SelectCare contracts (4)
55,600
54,500
50,300
2%
8%
Average vehicle count
By product line:
ChoiceLease
Commercial rental
Service vehicles and other
Held for sale
Total
Customer vehicles under SelectCare contracts (4)
Customer vehicles under SelectCare on-demand (5)
Total vehicles serviced
_______________
140,000
146,300
154,800
41,600
2,200
37,900
2,300
37,500
2,600
183,800
186,500
194,900
(4)%
10%
(4)%
(1)%
3,700
4,600
11,300
(20)%
187,500
191,100
206,200
(2)%
55,700
15,400
53,000
15,700
54,900
18,800
258,600
259,800
279,900
5%
(2)%
—%
(5)%
1%
(12)%
(4)%
(59)%
(7)%
(3)%
(16)%
(7)%
(1) Generally comprised of Class 1 through Class 7 type vehicles with a Gross Vehicle Weight (GVW) up to 33,000 pounds.
(2) Generally comprised of over the road on highway tractors and are primarily comprised of Class 8 type vehicles with a GVW of over 33,000 pounds.
(3) Generally comprised of dry, flatbed and refrigerated type trailers.
(4) Excludes customer vehicles under SelectCare on-demand contracts. Includes end of period vehicles from the U.K. of 1,000, 1,100, and 1,400 for the periods
2022, 2021, and 2020, respectively.
(5) Comprised of the number of unique vehicles serviced under on-demand maintenance agreements. This does not represent averages for the periods. Vehicles
included in the count may have been serviced more than one time during the respective period.
Note: Average vehicle counts were computed using a 24-point average based on monthly information.
34
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides information on our North America active ChoiceLease fleet (number of units rounded to
nearest hundred) and our Global commercial rental power fleet utilization (excludes trailers):
Active ChoiceLease fleet
End of period vehicle count (1)
Full year average vehicle count (1)
Commercial rental statistics
Commercial rental utilization - power fleet (2)
_______________
2022
2021
2020
2022/2021
2021/2020
Change
128,400
128,900
130,800
128,700
129,900
133,500
—%
(1)%
(1)%
(3)%
83 %
80 %
67 % 250 bps
1,300 bps
(1) Active ChoiceLease vehicles are calculated as those units currently earning revenue and not classified as not yet earning or no longer earning units.
(2) Rental utilization is calculated using the number of days units are rented divided by the number of days units are available to rent based on the days in the
calendar year.
Supply Chain Solutions
(Dollars in millions)
Consumer packaged goods and retail
Automotive
Technology and healthcare
Industrial and other
Subcontracted transportation and fuel
SCS total revenue
Change
2022
2021
2020
2022/2021
2021/2020
$
1,747 $
1,020 $
870
302
335
1,466
693
240
258
944
814
638
223
195
674
$
4,720 $
3,155 $
2,544
71%
26%
26%
30%
55%
50%
25%
9%
8%
32%
40%
24%
SCS operating revenue (1)
$
3,254 $
2,211 $
1,870
47%
18%
SCS EBT
SCS EBT as a % of SCS total revenue
SCS EBT as a % of SCS operating revenue (1)
$
186 $
117 $
160
59%
(27)%
3.9%
5.7%
3.7%
5.3%
6.3%
8.6%
20 bps
40 bps
(260) bps
(330) bps
Memo:
End of period fleet count
_______________
13,100
10,700
9,400
22%
14%
(1) Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for reconciliations of the most comparable GAAP
measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.
The following table summarizes the components of the change in revenue on a percentage basis versus the prior year:
Organic, including price and volume
Acquisition
Fuel
Net increase
2022
2021
Total
25 %
23
2
50 %
Operating (1)
22 %
25
—
47 %
Total
22 %
1
1
24 %
Operating (1)
17 %
1
—
18 %
————————————
(1) Non-GAAP financial measure. Refer to the "Non-GAAP Financial Measures" section of this MD&A for reconciliations of the most comparable GAAP
measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.
35
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SCS total revenue increased 50% and SCS operating revenue (a non-GAAP measure excluding fuel and subcontracted
transportation revenues) increased 47% primarily due to the acquisitions of Whiplash and Midwest and strong revenue growth in
all industry verticals from new business, higher volumes and increased pricing. Operating revenue organically grew 22% in 2022.
SCS EBT increased 59% in 2022 due to new business, increased pricing and cost recovery initiatives. SCS comparisons
also benefited from higher volumes and acquisitions. The increase in SCS EBT was partially offset by a $20 million asset
impairment related to the early termination of a customer distribution center in 2023 and higher incentive-based compensation.
The positive impact of acquisitions included incremental non-cash amortization expense of $27 million, a negative impact of 100
basis point on EBT as a percentage of SCS operating revenue in 2022.
Dedicated Transportation Solutions
(Dollars in millions)
DTS total revenue
DTS operating revenue (1)
DTS EBT
DTS EBT as a % of DTS total revenue
DTS EBT as a % of DTS operating revenue (1)
Memo:
End of period fleet count
_______________
$
$
$
2022
2021
2020
2022/2021
2021/2020
1,786 $
1,457 $
1,229
23%
19%
Change
1,239 $
1,055 $
929
17%
14%
102 $
49 $
73
108%
(33)%
5.7%
8.2%
3.4%
4.6%
5.9%
7.9%
230 bps
(250) bps
360 bps
(330) bps
11,400
11,300
9,200
1%
23%
(1) Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for reconciliations of the most comparable GAAP
measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.
DTS total revenue increased 23% in 2022 primarily due to higher operating revenue (a non-GAAP measure excluding fuel
and subcontracted transportation revenues), fuel and subcontracted transportation revenue. DTS operating revenue increased 17%
in 2022 due to new business, increased pricing and higher volumes.
DTS EBT increased 108% in 2022 primarily due to increased pricing, new business as well as higher fuel margins and
gains on sales of vehicles.
Central Support Services
(Dollars in millions)
Total CSS
Allocation of CSS to business segments
Unallocated CSS
Change
2022
2021
2020
2022/2021
2021/2020
$
$
419 $
369 $
324
(336)
(300)
(247)
83 $
69 $
77
14%
12%
20%
14%
21%
(10)%
Total CSS costs increased 14% to $419 million in 2022 primarily due to strategic investments in marketing and technology,
increased incentive-based compensation costs and professional fees. Unallocated CSS costs increased by $14 million in 2022
primarily reflecting increased professional fees and 2021 investment income from Ryder Ventures, our corporate venture capital
fund that did not reoccur in 2022.
36
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL RESOURCES AND LIQUIDITY
Cash Flows
The following is a summary of our cash flows from continuing operations:
(In millions)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Effect of exchange rates on cash
Net change in cash and cash equivalents
(In millions)
Net cash provided by operating activities
Earnings (loss) from continuing operations
Non-cash and other, net
Collections on sales-type leases
Changes in operating assets and liabilities
Years ended December 31,
2022
2021
2020
$
2,310 $
2,175 $
2,181
(1,850)
(1,450)
(601)
(861)
(4)
(204)
(1,507)
(1)
$
(405) $
520 $
Years ended December 31,
2022
2021
2020
5
78
$
863 $
522 $
(112)
1,903
1,824
2,243
135
(591)
139
(310)
114
(64)
Cash flows from operating activities from continuing operations
$
2,310 $
2,175 $
2,181
Cash provided by operating activities increased to $2.3 billion in 2022 from $2.2 billion driven by higher earnings partially
offset by increased working capital needs. The increase in working capital needs was primarily due to a decrease in accounts
payable due to the timing of payments, collections of our receivables and higher operating lease payments, reflecting additional
properties from our acquisitions and inflationary cost pressures. Cash used in investing activities increased to $1.9 billion in 2022
compared with $1.5 billion in 2021 primarily due an increase in cash paid for capital expenditures, partially offset by higher
proceeds from sale of revenue earnings equipment and operating property and equipment. Cash used in financing activities
increased to $861 million in 2022 compared to $204 million in 2021 primarily due to common stock repurchases.
The following table shows the components of our free cash flow:
(In millions)
Net cash provided by operating activities
Sales of revenue earning equipment (1)
Sales of operating property and equipment (1)
Other (1)
Total cash generated (2)
Purchases of property and revenue earning equipment (1)
Free cash flow (2)
_______________
Years ended December 31,
2022
2021
2020
$
2,310 $
2,175 $
2,181
1,182
53
7
3,552
(2,631)
$
921 $
748
74
1
539
13
—
2,998
2,733
(1,941)
1,057 $
(1,146)
1,587
Includes cash inflows from other investing activities.
(1)
(2) Non-GAAP financial measures. Reconciliations of net cash provided by operating activities to total cash generated and to free cash flow are set forth in this
table. Refer to the “Non-GAAP Financial Measures” section of this MD&A for the reasons why management believes these measures are important to
investors.
Free cash flow (a non-GAAP measure) decreased to $921 million in 2022 from $1.1 billion in 2021 primarily due to an
increase in capital expenditures, partially offset by higher proceeds from the sale of revenue earning equipment and higher
earnings. In 2022, free cash flow includes approximately $400 million of proceeds from the sale of revenue earning equipment
and operating property and equipment related to the wind down of our FMS U.K. business.
37
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cash provided by operating activities from continuing operations will increase to approximately $2.4 billion in 2023. We
expect free cash flow (a non-GAAP measure) to decrease to approximately $200 million reflecting an increase in capital
expenditures due to higher investments in the ChoiceLease fleet and impact of vehicle OEM delivery delays.
Income Tax Cash Obligations
During 2022, total income taxes paid were $115 million. In the future, our income tax cash obligations may increase.
Taxable income and cash taxes payable may be impacted by a variety of factors, including (i) the amount of book income
generated in each jurisdiction, (ii) total capital expenditures, (iii) the reversal of our deferred tax liability, (iv) remaining net
operating losses, (v) the availability of U.S. federal bonus depreciation, and (vi) the impact of any changes in U.S., state and
foreign income tax laws. While it is likely that our income tax cash obligations may increase at some point in the future, we
cannot reasonably estimate the timing or impact of these factors.
Purchase Obligations
The majority of our purchase obligations are pay-as-you-go transactions made in the ordinary course of business. Purchase
obligations include agreements to purchase goods or services that are legally binding and that specify all significant terms,
including: fixed or minimum quantities to be purchased; fixed minimum or variable price provisions; and the approximate timing
of the transaction. Any amounts for which we are liable under purchase orders for goods and services received are reflected in the
Consolidated Balance Sheets as “Accounts payable” and “Accrued expenses and other current liabilities.” In addition, we reflect
obligations with settlements that are greater than twelve months from December 31, 2021, as "Other non-current liabilities",
including operating lease liabilities. The most significant purchase obligations relate to the purchase of revenue earning
equipment.
Capital expenditures generally represent the purchase of revenue earning equipment (trucks, tractors and trailers) within our
FMS segment. These expenditures primarily support the ChoiceLease and commercial rental product lines. The level of capital
required to support the ChoiceLease product line varies based on customer contract signings for replacement vehicles and growth.
These contracts are long-term agreements that result in predictable cash flows typically over three to seven years for trucks and
tractors and ten years for trailers. We utilize capital for the purchase of vehicles in our commercial rental product line to replenish
and expand the fleet available for shorter-term use by contractual or occasional customers. Operating property and equipment
expenditures primarily relate to spending on items such as vehicle maintenance facilities and equipment, computer and
telecommunications equipment, investments in technologies, and warehouse facilities and equipment.
The following is a summary of capital expenditures:
(In millions)
Revenue earning equipment:
ChoiceLease
Commercial rental
Operating property and equipment
Gross capital expenditures (1)
2022
2021
2020
$
1,824 $
1,194 $
541
2,365
287
2,652
651
1,845
167
2,012
856
85
941
129
1,070
76
Changes in accounts payable related to purchases of property and revenue earning equipment
(21)
(71)
Cash paid for purchases of property and revenue earning equipment
$
2,631 $
1,941 $
1,146
_______________
(1) Excludes $12 million, $15 million and $14 million in 2022, 2021 and 2020, respectively, in assets held under finance leases resulting from new or the
extension of existing finance leases and other additions.
Gross capital expenditures increased to$2.7 billion in 2022 primarily reflecting higher planned investments in the
ChoiceLease fleet, in the SCS business and technology. In 2021, our OEMs faced new vehicle production challenges due to
supply chain disruptions resulting in a significant increase in new vehicle delivery lead times. As a result, a significant amount of
new vehicle orders placed in 2021 were delayed for delivery until 2022 and 2023. We expect capital expenditures to increase to
approximately $3.0 billion in 2023 primarily as a result of higher investments in the ChoiceLease fleet and OEM delivery delays.
During 2022 and 2021, we completed the acquisitions of Whiplash, Midwest and a number of other acquisitions, primarily
in the SCS business segment. Each of these acquisitions have been accounted for as business combinations. Total consideration
for these acquisitions, net of cash acquired was $515 million in 2022 and $284 million in 2021. We will continue to evaluate
38
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
targeted acquisitions consistent with our mission and strategy. Refer to Note 24, "Acquisitions," in the Notes to Consolidated
Financial Statements for additional information.
Other Obligations and Commitments
The following table provides other material cash requirements from contractual obligations and commitments and the
related reference in the Notes to Consolidated Financial Statements for further information:
Description
Insurance obligations (primarily self-insurance)
Operating leases
Debt
Employee benefit plans
Reference
Note 10
Note 12
Note 13
Note 19
Reference Title
Accrued Expenses and Other Liabilities
Leases
Debt
Employee Benefit Plans
We believe that our operating cash flows and access to the debt markets, as further discussed in "Financing and Other
Funding Transactions" below, are sufficient to meet our contractual obligations.
Financing and Other Funding Transactions
We utilize external capital primarily to support working capital needs and growth in our asset-based product lines. The
variety of financing alternatives typically available to fund our capital needs include commercial paper, long-term and medium-
term public and private debt, asset-backed securities, bank term loans, leasing arrangements, and bank credit facilities. Our
principal sources of financing are issuances of unsecured commercial paper and medium-term notes.
Cash and equivalents totaled $267 million as of December 31, 2022. As of December 31, 2022, approximately $169 million
was held outside the U.S. and is available to fund operations and other growth of non-U.S. subsidiaries. We have historically
asserted our intent to permanently reinvest foreign earnings outside of the U.S. In 2021, we reevaluated our historic assertion with
respect to our U.K. and Germany operations and concluded that we no longer consider these earnings to be indefinitely
reinvested. Federal, state and foreign income taxes, withholding taxes and the tax impact of foreign currency exchange gains or
losses were considered on the remaining U.K. and Germany undistributed earnings as of December 31, 2022, and there was no
impact to deferred taxes. In October 2022, we repatriated $282 million of foreign earnings from the U.K., and in February 2023,
we repatriated an additional $38 million of foreign earnings from the U.K. We intend to continue to permanently reinvest the
earnings of our remaining foreign subsidiaries indefinitely.
We believe that our operating cash flows, together with our access to the public unsecured bond market, commercial paper
market and other available debt financing, will be adequate to meet our operating, investing and financing needs in the foreseeable
future. However, volatility or disruption in the public unsecured debt market or the commercial paper market may impair our
ability to access these markets on terms commercially acceptable to us. If we cease to have access to public bonds, commercial
paper and other sources of unsecured borrowings, we would meet our liquidity needs by drawing upon contractually committed
lending agreements or by seeking other funding sources.
In February 2022, we issued an aggregate principal amount of $450 million unsecured medium terms notes that mature on
March 1, 2027. The notes bear interest at a rate of 2.85% per year. In May 2022, we issued an aggregate principal amount of
$300 million unsecured medium-term notes that mature on June 15, 2027. The notes bear interest at a rate of 4.30% per year.
In November 2022, we entered into three term notes that mature on November 16, 2027, with aggregate principal amounts
totaling $175 million, bearing annual interest rates ranging from 5.0% to 5.15%.
In 2022, we received $102 million from financing transactions backed by a portion of our revenue earning equipment. The
proceeds from the transaction were used for general corporate purposes. We provided end of term guarantees for the residual
value of the revenue earning equipment in the transaction.
Refer to Note 13, “Debt,” in the Notes to Consolidated Financial Statements for information around the global revolving
credit facility, the trade receivables financing program, issuance of medium-term notes under our shelf registration statement,
asset-backed financing obligations and debt maturities.
Our ability to access unsecured debt in the capital markets is impacted by both our short-term and long-term debt ratings.
These ratings are intended to provide guidance to investors in determining the credit risk associated with our particular securities
based on current information obtained by the rating agencies from us or from other sources. Ratings are not recommendations to
39
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
buy, sell or hold our debt securities and may be subject to revision or withdrawal at any time by the assigning rating agency.
Lower ratings generally result in higher borrowing costs, as well as reduced access to unsecured capital markets. A significant
downgrade below investment grade of our short-term debt ratings would impair our ability to issue commercial paper and likely
require us to rely on alternative funding sources. A significant downgrade below investment grade would not affect our ability to
borrow amounts under our global revolving credit facility described below, assuming ongoing compliance with the terms and
conditions of the credit facility.
Our debt ratings and rating outlooks as of December 31, 2022 were as follows:
Short-term
Short-term Outlook
Long-term
Long-term Outlook
Rating Summary
Standard & Poor’s Ratings Services
Moody’s Investors Service
Fitch Ratings
DBRS
A2
P2
F2
R-1 (Low)
—
Stable
—
Stable
BBB
Baa2
BBB+
A (Low)
Positive
Stable
Stable
Stable
As of December 31, 2022, we had the following amounts available to fund operations under the following facilities:
Global revolving credit facility
Trade receivables financing program
(In millions)
$727
168
In accordance with our funding philosophy, we generally attempt to align the aggregate average remaining re-pricing life of
our debt with the aggregate average remaining re-pricing life of our vehicle assets. We utilize both fixed-rate and variable-rate
debt to achieve this alignment and generally target a mix of 20% - 40% variable-rate debt as a percentage of total debt
outstanding. The variable-rate portion of our total debt (including notional value of swap agreements) was 19% and 16% as of
December 31, 2022 and 2021, respectively. The increase in variable-rate debt was primarily driven by increased commercial
paper borrowings.
Our debt to equity ratios were 216% and 235% as of December 31, 2022 and 2021, respectively. The debt to equity ratio
represents total debt divided by total equity. The decrease in the debt to equity ratio from year-end 2022 primarily reflects lower
debt balances and increased earnings partially offset by higher share repurchases.
Off-Balance Sheet Arrangements
Guarantees. Refer to Note 14, “Guarantees,” in the Notes to Consolidated Financial Statements for a discussion of our
agreements involving guarantees.
Pension Information
Refer to Note 19, “Employee Benefit Plans,” in the Notes to Consolidated Financial Statements for background and further
information regarding our company-sponsored defined benefit retirement plans. During 2022, total global pension contributions
were $23 million, compared with $7 million in 2021. We estimate total 2023 required contributions to our pension plans to be
approximately $5 million and we do not expect to make voluntary contributions. The present value of estimated global pension
contributions that would be required over the next 5 years totals approximately $42 million (pre-tax). Changes in interest rates and
the market value of the securities held by the plans could materially change, positively or negatively, the funded status of the
plans and affect the level of pension expense and required contributions in future years. The ultimate amount of contributions is
also dependent upon the requirements of applicable laws and regulations.
Due to the underfunded status of our defined benefit plans, we had an accumulated net pension equity charge (after-tax) of
$566 million and $529 million as of December 31, 2022 and 2021, respectively. The decline in funded status reflects a negative
rate of return on plan assets of 24%, partially offset by an increase in discount rates in 2022.
We expect 2023 defined benefit pension expense to increase to approximately $40 million due to an increase in discount
rates offset by an increase in expected return on assets. See the “Critical Accounting Estimates — Pension Plans” section for
further discussion on pension accounting estimates.
Share Repurchase Programs and Cash Dividends
In September 2022, we completed our $300 million accelerated share repurchase program. This program was authorized by
our board of directors in February 2022, and at that time, we repurchased and retired an initial amount of approximately 3 million
40
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
shares. The final settlement occurred in September 2022, resulting in the delivery and retirement of approximately 1 million
additional shares. The number of shares ultimately repurchased and retired was based on the average of Ryder's daily volume-
weighted average price per share of common stock during the repurchase period, less a discount. The average price paid for the 4
million shares delivered and retired under the accelerated share purchase agreement was $74.47 per share.
During the fourth quarter of 2022, we repurchased 2 million shares for $179 million under the 2021 Discretionary program.
Additionally, we repurchased 0.9 million shares for $78 million under the 2021 Anti-Dilutive program.
In February 2023, our board of directors authorized a new discretionary share repurchase program to grant management
discretion to repurchase up to 2 million shares of common stock over a period of two years (the "2023 Discretionary Program").
The 2023 Discretionary Program is designed to provide management with capital structure flexibility while concurrently
managing objectives related to balance sheet leverage, acquisition opportunities, and shareholder returns.
Refer to Note 15, “Share Repurchase Programs,” in the Notes to Consolidated Financial Statements for a discussion on our
share repurchase programs.
Cash dividend payments to shareholders of common stock were $123 million in 2022 and $122 million in 2021. In 2022 and
2021, our annualized dividend was $2.40 and $2.28 per share of common stock, respectively. During 2022, we increased our
annualized dividend rate 7% to $2.48 per share of common stock.
Market Risk
In the normal course of business, we are exposed to fluctuations in interest rates, foreign currency exchange rates and
market fuel prices. We manage these exposures in several ways, including, in certain circumstances, the use of a variety of
derivative financial instruments when deemed prudent. We do not enter into leveraged derivative financial transactions or use
derivative financial instruments for trading purposes.
Exposure to market risk for changes in interest rates exists for our debt obligations. Our interest rate risk management
program objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing
costs. We manage our exposure to interest rate risk primarily through the proportion of fixed-rate and variable-rate debt we hold
in the total debt portfolio. From time to time, we also use interest rate swap agreements to manage our fixed-rate and variable-rate
exposure and to better match the repricing of debt instruments to that of our portfolio of assets. The fair value of our derivatives
liability was $47 million as of December 31, 2022.
As of December 31, 2022, we had $4.7 billion of fixed-rate debt outstanding (excluding finance leases and U.S. asset-
backed securities) with a weighted-average interest rate of 3.68% and a fair value of $4.5 billion. A hypothetical 10% change in
market interest rates would impact the fair value of our fixed-rate debt by approximately $56 million and impact pre-tax earnings
by $17 million as of December 31, 2022, respectively. Changes in the relative sensitivity of the fair value of our financial
instrument portfolio for these theoretical changes in the level of interest rates are primarily driven by changes in our debt
maturities, interest rate profile and amount.
As of December 31, 2022, we had $1.2 billion of variable-rate debt, including $500 million of fixed-rate debt instruments
swapped to LIBOR and SOFR-based floating-rate debt. Changes in the fair value of the interest rate swaps were offset by changes
in the fair value of the debt instruments and no net gain or loss was recognized in earnings. The fair value of our variable-rate debt
as of December 31, 2022 was $1.2 billion. A hypothetical 10% increase in market interest rates would not impact the fair value of
our variable-rate debt or change pre-tax earnings by a material amount as of December 31, 2022.
We are also subject to interest rate risk with respect to our pension and postretirement benefit obligations, as changes in
interest rates will effectively increase or decrease our liabilities associated with these benefit plans, which also results in changes
to the amount of pension and postretirement benefit expense recognized on an annual basis.
Exposure to market risk for changes in foreign currency exchange rates relates primarily to our foreign operations’ buying,
selling and financing in currencies other than local currencies and to the carrying value of net investments in foreign subsidiaries.
The majority of our transactions are denominated in U.S. dollars. The principal foreign currency exchange rate risks to which we
are exposed include the Canadian dollar, British pound sterling and Mexican peso. We manage our exposure to foreign currency
exchange rate risk related to our foreign operations’ buying, selling and financing in currencies other than local currencies by
naturally offsetting assets and liabilities not denominated in local currencies to the extent possible. A hypothetical uniform 10%
strengthening in the value of the U.S dollar relative to all the currencies in which our transactions are denominated would not
materially impact the results of operations. We also use foreign currency option contracts and forward agreements from time to
time to hedge foreign currency transactional exposure. We generally do not hedge the foreign currency exposure related to our net
investment in foreign subsidiaries.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Exposure to market risk for fluctuations in market fuel prices relates to a small portion of our service contracts for which
the cost of fuel is integral to service delivery and the service contract does not have a mechanism to adjust for increases in market
fuel prices. As of December 31, 2022, we also had various fuel purchase arrangements in place to ensure delivery of fuel at
market rates in the event of fuel shortages. We are exposed to fluctuations in market fuel prices in these arrangements since none
of the arrangements fix the price of fuel to be purchased. Changes in the price of fuel are generally passed on to our customers for
which we realize minimal changes in profitability during periods of steady market fuel prices. However, profitability may be
positively or negatively impacted by sudden increases or decreases in market fuel prices during a short period of time as customer
pricing for fuel services is established based on current market fuel costs. We believe the exposure to fuel price fluctuations would
not materially impact our results of operations, cash flows or financial position.
ENVIRONMENTAL MATTERS
Refer to Note 20, “Environmental Matters,” in the Notes to Consolidated Financial Statements for a discussion surrounding
environmental matters.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles in the U.S. (U.S.
GAAP) requires us to make estimates and assumptions. Our significant accounting policies are described in the Notes to
Consolidated Financial Statements. Certain of these policies require the application of subjective or complex judgments, often as a
result of the need to make estimates about the effect of matters that are inherently uncertain. These estimates and assumptions are
based on historical experience, changes in the business environment, and other factors that we believe to be reasonable under the
circumstances. Different estimates that could have been applied in the current period or changes in the accounting estimates that
are reasonably likely can result in a material impact on our financial condition and operating results in the current and future
periods. We review the development, selection and disclosure of these critical accounting estimates with Ryder’s Audit
Committee on an annual basis.
The following discussion, which should be read in conjunction with the descriptions in the Notes to Consolidated Financial
Statements, is furnished for additional insight into certain accounting estimates that we consider to be critical.
Residual Value Estimates and Depreciation. At the time we acquire a vehicle, we estimate the vehicle's useful life and its
estimated residual value (i.e., the price at which we ultimately expect to sell the vehicles at the end of its useful life). These
estimates determine the depreciation that will be recognized evenly (straight-line) over the vehicle’s useful life and are intended to
minimize losses or to record the best estimate of fair value at the end of a vehicle's useful life.
We periodically review and adjust, as appropriate, the estimated residual values and useful lives of existing revenue earning
equipment for the purposes of recording depreciation expense as described in Note 6, “Revenue Earning Equipment, Net" in the
Notes to Consolidated Financial Statements. Based on the results of our analysis, we may adjust the estimated residual values and
useful lives of certain classes of our revenue earning equipment each year. Reductions in estimated residual values or useful lives
will increase depreciation expense over the remaining useful life of the vehicle. Conversely, an increase in estimated residual
values or useful lives will decrease depreciation expense over the remaining useful life of the vehicle. Our review of the estimated
residual values and useful lives of revenue earning equipment is based on vehicle class, (i.e., generally subcategories of trucks,
tractors and trailers by weight and usage), historical and current market prices, third-party expected future market prices, expected
lives of vehicles, and expected sales in the wholesale or retail markets, among other factors. We revised our estimated residual
values in 2022, 2021 and 2020. The nature of these estimate changes and the impact to earnings are disclosed in the Notes to
Consolidated Financial Statements.
The approximate unfavorable incremental impact on the annual depreciation expense resulting from prior residual value
estimate changes since 2019 is estimated to be $125 million in 2023, and were $193 million and $309 million in 2022 and 2021,
respectively. Gains on used vehicle sales, net results were $450 million and $257 million in 2022 and 2021, respectively.
Depreciation Sensitivity
Based on our fleet of revenue earning equipment as of December 31, 2022, a hypothetical 10% reduction in estimated
residual values would increase depreciation expense over the remaining life of our fleet by approximately $320 million. The
current residual value estimates of our total fleet are at historically low levels. Our estimates reflect anticipated market conditions
and are intended to reduce the probability of losses or need for additional depreciation during a potential cyclical downturn.
While we believe that the carrying values and estimated sales proceeds for revenue earning equipment are reasonable, we
cannot guarantee that if economic conditions deteriorate or future sales proceeds are adversely impacted, we will not realize losses
on sales or be required to further reduce our residual value estimates. A variety of factors, many of which are outside of our
42
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
control, could cause residual value estimates to differ from actual used vehicle sales pricing, such as changes in supply and
demand of used vehicles; volatility in market conditions; changes in vehicle technology; competitor pricing; regulatory
requirements; driver shortages; customer requirements and preferences; and changes in underlying assumption factors. As a result,
future residual value estimates and resulting depreciation expense are subject to change based upon changes in these factors.
Revenue Recognition. We generate revenue primarily through contracts with customers to lease, rent and maintain revenue
earning equipment and to provide logistics management and dedicated transportation services. We enter into contracts that can
include various combinations of products and services, which are generally capable of being distinct and accounted for as separate
performance obligations. We account for a contract when it has approval and commitment from both parties, the rights of the
parties are identified, payment terms are determined, the contract has commercial substance, and collectibility of consideration is
probable. We generally recognize revenue over time as we provide the promised products or services to our customers in an
amount we expect to receive in exchange for those products or services.
We offer a full service lease as well as a lease with more flexible maintenance options under our ChoiceLease product line
in our FMS business segment, which are marketed, priced and managed as bundled products that include the equipment lease,
maintenance and other related services. Our ChoiceLease product line includes the lease of a vehicle (lease component) and
maintenance and other services (non-lease component). Contract consideration is allocated between the lease and non-lease
components based on management's best estimate of the relative stand-alone selling price of each component. We do not sell the
components of our ChoiceLease product offering on a stand-alone basis, therefore significant judgment is required to determine
the stand-alone selling prices of the lease and maintenance components in order to allocate the consideration on a relative stand-
alone selling price basis.
For the lease component, we estimate the stand-alone selling price using the projected cash outflows related to the
underlying leased vehicle, net of the estimated disposal proceeds, and a certain targeted return considering the weighted average
cost of capital. For the non-lease component of the contract, we estimate the stand-alone selling price of the maintenance
component using an expected cost-plus margin approach. The expected costs are based on our historical costs of providing
maintenance services in our ChoiceLease arrangements. The margin is based on the historical margin percentages for our full
service maintenance contracts in the SelectCare product line, as the maintenance performance obligation in those contracts is
similar to maintenance in our ChoiceLease arrangements. Full service maintenance arrangements in SelectCare are priced based
on targeted margin percentages for new and used vehicles by type of vehicle (trucks, tractors, and trailers), considering the fixed
and variable costs of providing maintenance services.
We recognize maintenance revenue using an input method, consistent with the estimated pattern of the costs to maintain the
underlying vehicles. This generally results in the recognition of a contract liability for the portion of the customer's billings
allocated to the maintenance service component of the agreement. The non-lease revenue from maintenance services related to
our ChoiceLease product is recognized in "Lease & related maintenance and rental revenues" in the Consolidated Statements of
Earnings. In 2022, 2021 and 2020, we recognized $1.0 billion, $1.0 billion and $965 million, respectively.
The stand-alone price for both the lease and non-lease components could vary in the future based on both external market
conditions and our pricing strategies as a result of the market conditions.
Pension Plans. We apply actuarial methods to determine the annual net periodic pension expense and pension plan liabilities
on an annual basis, or on an interim basis if there is an event, such as a curtailment, requiring remeasurement. Each December, we
review actual experience compared with the assumptions used and make adjustments to our assumptions, if warranted. In
determining our annual estimate of periodic pension cost, we are required to make an evaluation of critical factors such as
discount rate, expected long-term rate of return on assets, retirement rate and mortality. Discount rates are based upon a duration
analysis of expected benefit payments and the equivalent average yield for high quality corporate fixed income investments as of
our annual measurement date at December 31. In order to estimate the discount rate relevant to our plan, we use models that
match projected benefits payments of our primary U.S. plan to coupons and maturities from a hypothetical portfolio of high
quality corporate bonds. Long-term rate of return assumptions are based on a review of our asset allocation strategy and long-term
expected asset returns. Investment management and other fees paid using plan assets are factored into the determination of asset
return assumptions.
Assumptions as to mortality of the participants in our pension plan is a key estimate in measuring the expected payments
participants may receive over their lifetime, and therefore the amount of expense we will recognize. We update our mortality
assumptions as deemed necessary by taking into consideration relevant actuarial studies as they become available as well as
43
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
reassessing our own historical experience. Disclosure of the significant assumptions used in arriving at the 2022 net pension
expense is presented in Note 19, “Employee Benefit Plans,” in the Notes to Consolidated Financial Statements.
As part of our strategy to manage future pension costs and net funded status volatility, we regularly assess our pension
investment strategy. Our U.S. pension investment policy and strategy seek to reduce the effects of future volatility on the fair
value of our pension assets relative to our pension liabilities by increasing our allocation of high quality, longer-term fixed income
securities and reducing our allocation of equity investments as the funded status of the plan improves. The composition of our
U.S. pension assets was 21% equity securities and alternative assets and 79% debt securities and other investments as of
December 31, 2022. In 2023, we increased our long-term expected rate of return assumption (net of fees) for our primary U.S.
plan to 5.40% from 3.60% based on expected improved market returns in our asset portfolio.
Accounting guidance applicable to pension plans does not require immediate recognition of the effects of a deviation
between these assumptions and actual experience or the revision of an estimate. This approach allows the favorable and
unfavorable effects that fall within an acceptable range to be netted and included in “Accumulated other comprehensive loss.” We
had a pre-tax accumulated actuarial loss of $759 million and $706 million as of December 31, 2022 and 2021, respectively. To the
extent the amount of cumulative actuarial gains and losses exceed 10% of the greater of the benefit obligation or plan assets, the
excess amount is primarily amortized over the average remaining life expectancy of participants. As of December 31, 2022, the
amount of the actuarial loss subject to amortization in 2023 and future years is $589 million. In 2023, we expect to amortize $27
million of net actuarial loss as a component of pension expense. The effect on years beyond 2023 will depend substantially upon
the actual experience of our plans in future years.
A sensitivity analysis of 2023 net pension expense to changes in key underlying assumptions for our primary plan, the U.S.
pension plan, is presented below:
Expected long-term rate of return on assets
Discount rate
Discount rate
Assumed Rate
5.40%
5.50%
5.50%
Change
+/- 0.25
+ 0.25
- 0.25
Impact on 2023 Net
Pension Expense
+/- $3 million
NM
NM
Effect on
December 31, 2022
Projected Benefit
Obligation
N/A
- $30 million
+ $32 million
Self-Insurance Accruals. Self-insurance accruals were $463 million and $466 million as of December 31, 2022 and 2021,
respectively. The majority of our self-insurance relates to vehicle liability and workers’ compensation. We use a variety of
statistical and actuarial methods that are widely used and accepted in the insurance industry to estimate amounts for claims that
have been reported but not paid and claims incurred but not reported. In applying these methods and assessing their results, we
consider such factors as frequency and severity of claims, claim development and payment patterns, and changes in the nature of
our business, among others. Such factors are analyzed for each of our business segments. Our estimates may be impacted by such
factors as increases in the market price for medical services, unpredictability of the size of jury awards and limitations inherent in
the estimation process. We recognized a $25 million benefit in 2022, a benefit of $6 million in 2021 and a charge of $18 million
in 2020 from the development of estimated prior years' self-insured loss reserves. Based on self-insurance accruals at
December 31, 2022, a 5% adverse change in actuarial claim loss estimates would increase operating expense in 2023 by
approximately $23 million.
Goodwill Impairment. We assess goodwill for impairment, as described in Note 1, “Summary of Significant Accounting
Policies — Goodwill and Other Intangible Assets,” in the Notes to Consolidated Financial Statements, on an annual basis or more
often if deemed necessary. As of December 31, 2022, total goodwill was $861 million. To determine whether goodwill is
impaired, we are required to assess the fair value of each reporting unit and compare it to its carrying value. A reporting unit is a
component of an operating segment for which discrete financial information is available and management regularly reviews its
operating performance.
We assess goodwill for impairment on October 1st of each year or more often if deemed necessary. In evaluating goodwill
for impairment, we have the option to first assess qualitative factors to determine whether further impairment testing is necessary,
such as macroeconomic conditions, changes in our industry and the markets in which we operate, and our market capitalization as
well as our reporting units' historical and expected future financial performance. If we conclude that it is more likely than not that
a reporting unit's fair value is less than its carrying value or we bypass the optional qualitative assessment, recoverability is
assessed by comparing the fair value of the reporting unit with its carrying amount. If a reporting unit's carrying value exceeds its
44
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
fair value, we will measure any goodwill impairment losses as the amount by which the carrying amount of a reporting unit
exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit.
For quantitative tests, we estimate the fair value of the reporting units using a combination of both a market and income
approach. Under the market approach, we use a selection of comparable publicly-traded companies that correspond to the
reporting unit to derive a market-based multiple. Under the income approach, the fair value of the reporting unit is estimated
based on the discounted present value of the projected future cash flows. Rates used to discount cash flows are dependent upon
interest rates and the cost of capital based on our industry and capital structure, adjusted for equity and size risk premiums based
on market capitalization. Estimates of future cash flows are dependent on our knowledge and experience about past and current
events and significant judgments and assumptions about conditions we expect to exist, including revenue growth rates, margins,
long-term growth rates, capital requirements, proceeds from the sale of used vehicles, the ability to utilize our tax net operating
losses, and the discount rate. Our estimates of cash flows are also based on historical and future operating performance, economic
conditions and actions we expect to take. In addition to these factors, our SCS and DTS reporting units are dependent on several
key customers or industry sectors. The loss of a key customer may have a significant impact to our SCS or DTS reporting units,
causing us to assess whether or not the event resulted in a goodwill impairment loss.
In making our assessments of fair value, we rely on our knowledge and experience about past and current events and
assumptions about conditions we expect to exist in the future. These assumptions are based on a number of factors, including
future operating performance, economic conditions, actions we expect to take and present value techniques. There are inherent
uncertainties related to these factors and management’s judgment in applying them to the analysis of goodwill impairment. It is
possible that assumptions underlying the impairment analysis will change in such a manner that impairment in value may occur in
the future. We conduct additional sensitivity analyses to assess the risk for potential impairment based upon changes in the key
assumptions in our goodwill valuation test, including long-term growth rates and discount rates.
On October 1, 2022, we completed our annual goodwill impairment test for all reporting units and determined that the fair
values more likely than not exceeded their respective carrying values for each reporting unit. We conducted qualitative analyses
for all of our reporting units.
Income Taxes. Our overall tax position is complex and requires careful analysis by management to estimate the expected
realization of income tax assets and liabilities.
Tax regulations can require items to be included in the tax return at different times than the items are reflected in the
financial statements. As a result, the effective tax rate reflected in the financial statements can be different than that reported in the
tax return. Timing differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that can be
used as a tax deduction or credit in the tax return in future years, for which we have already recognized the tax benefit in the
financial statements. Deferred tax assets were $562 million and $652 million as of December 31, 2022 and 2021, respectively. We
recognize a valuation allowance for deferred tax assets to reduce such assets to amounts expected to be realized. As of
December 31, 2022 and 2021, the deferred tax valuation allowance was $88 million and $24 million, respectively. In determining
the required level of valuation allowance, we consider whether it is more likely than not that all or some portion of deferred tax
assets will not be realized. This assessment is based on management’s expectations as to whether sufficient taxable income of an
appropriate character will be realized within tax carry back and carryforward periods. Our assessment involves estimates and
assumptions about matters that are inherently uncertain, and unanticipated events or circumstances could cause actual results to
differ from these estimates. Should we change our estimate of the amount of deferred tax assets that we would be able to realize,
an adjustment to the valuation allowance would result in an increase or decrease to the provision for income taxes in the period
such a change in estimate was made.
As part of our calculation of the provision for income taxes, we determine whether the benefits of our tax positions are at
least more likely than not of being sustained upon audit based on the technical merits of the tax position. We accrue the largest
amount of the benefit that has a cumulative probability of greater than 50% of being sustained. These accruals require
management to make estimates and judgments with respect to the ultimate outcome of a tax audit. Actual results could vary
materially from these estimates.
A number of years may elapse before a particular matter for which we have established a reserve is audited and finally
resolved. The number of years exposed to audit due to open statutes varies depending on the tax jurisdiction. The tax benefit that
has been previously reserved because of a failure to meet the “more likely than not” recognition threshold would be recognized in
our income tax expense in the first interim period when the uncertainty is resolved under any one of the following conditions:
(1) the tax position has been determined to be “more likely than not” of being sustained, (2) the tax position, amount and/or
timing is ultimately settled through negotiation or litigation, or (3) the statutes of limitations for the tax position has expired. Refer
to Note 11, “Income Taxes,” in the Notes to Consolidated Financial Statements for further discussion.
45
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note 2, “Recent Accounting Pronouncements,” in the Notes to Consolidated Financial Statements for a discussion
of recent accounting pronouncements.
NON-GAAP FINANCIAL MEASURES
Non-GAAP Financial Measures. This Annual Report on Form 10-K includes information extracted from consolidated
financial information that is not required by U.S. GAAP to be presented in the financial statements. Certain elements of this
information are considered “non-GAAP financial measures” as defined by SEC rules. Non-GAAP financial measures should be
considered in addition to, but not as a substitute for or superior to, other measures of financial performance or liquidity prepared
in accordance with U.S. GAAP. Also, our non-GAAP financial measures may not be comparable to financial measures used by
other companies. We provide a reconciliation of each of these non-GAAP financial measures to the most comparable GAAP
measure in this non-GAAP financial measures section or in the MD&A above. We also provide the reasons why management
believes each non-GAAP financial measure is useful to investors in this section.
Specifically, we refer to the following non-GAAP financial measures in this Form 10-K:
Non-GAAP Financial Measure
Comparable GAAP Measure
Operating Revenue Measures:
Operating Revenue
FMS Operating Revenue
SCS Operating Revenue
DTS Operating Revenue
Total Revenue
FMS Total Revenue
SCS Total Revenue
DTS Total Revenue
FMS EBT as a % of FMS Operating Revenue
FMS EBT as a % of FMS Total Revenue
SCS EBT as a % of SCS Operating Revenue
SCS EBT as a % of SCS Total Revenue
DTS EBT as a % of DTS Operating Revenue
DTS EBT as a % of DTS Total Revenue
Comparable Earnings Measures:
Comparable Earnings Before Income Tax
Earnings Before Income Tax
Comparable Earnings
Earnings from Continuing Operations
Comparable Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA)
Net Earnings
Comparable EPS
Comparable Tax Rate
Adjusted Return on Equity (ROE)
Cash Flow Measures:
Total Cash Generated and Free Cash Flow
EPS from Continuing Operations
Effective Tax Rate from Continuing Operations
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
shareholders' equity to adjusted average equity is
provided in the following reconciliations.
Cash Provided by Operating Activities from Continuing
Operations
46
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Set forth in the table below is an overview of each non-GAAP financial measure and why management believes that
presentation of each non-GAAP financial measure provides useful information to investors.
Operating Revenue Measures:
Operating Revenue
FMS Operating Revenue
SCS Operating Revenue
DTS Operating Revenue
FMS EBT as a % of FMS
Operating Revenue
SCS EBT as a % of SCS Operating
Revenue
DTS EBT as a % of DTS Operating
Revenue
Operating revenue is defined as total revenue for Ryder System, Inc. or each business
segment (FMS, SCS and DTS) excluding any (1) fuel and (2) subcontracted
transportation, as well as (3) revenue from our ChoiceLease liability insurance program
which was discontinued in early 2020. We believe operating revenue provides useful
information to investors as we use it to evaluate the operating performance of our core
businesses and as a measure of sales activity at the consolidated level for Ryder System,
Inc., as well as for each of our business segments. We also use segment EBT as a
percentage of segment operating revenue for each business segment for the same reason.
Note: FMS EBT, SCS EBT and DTS EBT, our primary measures of segment
performance, are not non-GAAP measures.
Fuel: We exclude FMS, SCS and DTS fuel from the calculation of our operating revenue
measures, as fuel is an ancillary service that we provide our customers. Fuel revenue is
impacted by fluctuations in market fuel prices and the costs are largely a pass-through to
our customers, resulting in minimal changes in our profitability during periods of steady
market fuel prices. However, profitability may be positively or negatively impacted by
rapid changes in market fuel prices during a short period of time, as customer pricing for
fuel services is established based on current market fuel costs.
Subcontracted transportation: We exclude subcontracted transportation from the
calculation of our operating revenue measures, as these services are also typically a pass-
through to our customers and, therefore, fluctuations result in minimal changes to our
profitability. While our SCS and DTS business segments subcontract certain
transportation services to third party providers, our FMS business segment does not
engage in subcontracted transportation and, therefore, this item is not applicable to FMS.
ChoiceLease liability insurance: We exclude ChoiceLease liability insurance as we
announced our plan in the first quarter of 2020 to exit the extension of our liability
insurance coverage for ChoiceLease customers. The exit of this program was completed
in the first quarter of 2021. We are excluding the revenue associated with this program
for better comparability of our on-going operations.
47
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Comparable Earnings Measures:
Comparable Earnings before
Income Taxes (EBT)
Comparable Earnings
Comparable Earnings per Diluted
Common Share (EPS)
Comparable Tax Rate
Adjusted Return on Equity (ROE)
Comparable Earnings Before
Interest, Taxes, Depreciation and
Amortization (EBITDA)
Comparable EBT, Comparable Earnings and Comparable EPS are defined, respectively,
as GAAP EBT, earnings and EPS, all from continuing operations, excluding (1) non-
operating pension costs, net and (2) other items impacting comparability (as further
described below). We believe these comparable earnings measures provide useful
information to investors and allow for better year-over-year comparison of operating
performance.
Non-operating pension costs, net: Our comparable earnings measures exclude non-
operating pension costs, net, which include the amortization of net actuarial loss and
prior service cost, interest cost and expected return on plan assets components of pension
and postretirement benefit costs, as well as any significant charges for settlements or
curtailments if recognized. We exclude non-operating pension costs, net because we
consider these to be impacted by financial market performance and outside the
operational performance of our business.
Other Items Impacting Comparability: Our comparable and adjusted earnings measures
also exclude other significant items that are not representative of our business operations
as detailed in the reconciliation table below. These other significant items vary from
period to period and, in some periods, there may be no such significant items.
Comparable Tax Rate 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 marginal tax rates to which the non-GAAP adjustments are related.
Adjusted ROE is defined as adjusted net earnings divided by adjusted average
shareholders' equity and represents the rate of return on shareholders' investment. Other
items impacting comparability described above are excluded, as applicable, from the
calculation of net earnings and average shareholders' equity. We use adjusted ROE as an
internal measure of how effectively we use the owned capital invested in our operations.
Comparable EBITDA is defined as net earnings, first adjusted to exclude discontinued
operations and the following items, all from continuing operations: (1) non-operating
pension costs, net and (2) any other items that are not representative of our business
operations (these items are the same items that are excluded from comparable earnings
measures for the relevant periods as described immediately above) and then adjusted
further for (1) interest expense, (2) income taxes, (3) depreciation, (4) used vehicle sales
results and (5) amortization.
We believe comparable EBITDA provides investors with useful information, as it is a
standard measure commonly reported and widely used by analysts, investors and other
interested parties to measure financial performance and our ability to service debt and meet
our payment obligations. In addition, we believe that the inclusion of comparable EBITDA
provides consistency in financial reporting and enables analysts and investors to perform
meaningful comparisons of past, present and future operating results. Other companies
may calculate comparable EBITDA differently; therefore, our presentation of comparable
EBITDA may not be comparable to similarly-titled measures used by other companies.
Comparable EBITDA should not be considered as an alternative to net earnings, earnings
from continuing operations before income taxes or earnings from continuing operations
determined in accordance with GAAP, as an indicator of our operating performance, as an
alternative to cash flows from operating activities (determined in accordance with GAAP),
as an indicator of cash flows, or as a measure of liquidity.
48
Cash Flow Measures:
Total Cash Generated
Free Cash Flow
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We consider total cash generated and free cash flow to be important measures of
comparative operating performance, as our principal sources of operating liquidity are
cash from operations and proceeds from the sale of revenue earning equipment.
Total Cash Generated is defined as the sum of (1) net cash provided by operating
activities, (2) net cash provided by the sale of revenue earning equipment, (3) net cash
provided by the sale of operating property and equipment and (4) other cash inflows
from investing activities. We believe total cash generated is an important measure of
total cash flows generated from our ongoing business activities.
Free Cash Flow is defined as the net amount of cash generated from operating activities
and investing activities (excluding changes in restricted cash and acquisitions) from
continuing operations. We calculate free cash flow as the sum of (1) net cash provided
by operating activities, (2) net cash provided by the sale of revenue earning equipment
and operating property and equipment, and (3) other cash inflows from investing
activities, less (4) purchases of property and revenue earning equipment. We believe free
cash flow provides investors with an important perspective on the cash available for debt
service and for shareholders, after making capital investments required to support
ongoing business operations. Our calculation of free cash flow may be different from the
calculation used by other companies and, therefore, comparability may be limited.
* See Total Cash Generated and Free Cash Flow reconciliations in the Financial
Resources and Liquidity section of Management's Discussion and Analysis.
49
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides a reconciliation of GAAP earnings (loss) before taxes (EBT), earnings (loss), and earnings
(loss) per diluted share (Diluted EPS) from continuing operations to comparable EBT, comparable earnings and comparable EPS.
Certain items included in EBT, earnings and diluted EPS from continuing operations have been excluded from our comparable
EBT, comparable earnings and comparable diluted EPS measures. The following table lists a summary of these items, which are
discussed in more detail throughout our MD&A and within the Notes to Consolidated Financial Statements:
(In millions, except per share amounts)
EBT
Non-operating pension costs, net (1)
Restructuring and other, net (2)
ERP implementation costs (2)
Gains on sale of U.K. revenue earning equipment (2)
Gains on sale of properties (2)
Early redemption of medium-term notes (2)
ChoiceLease liability insurance revenue (2)
Comparable EBT
Earnings (loss)
Non-operating pension costs, net (1)
Restructuring and other, net (including ChoiceLease liability insurance results) (2)
ERP implementation costs (2)
Gains on sale of U.K. revenue earning equipment
Gains on sale of properties (2)
Early redemption of medium-term notes (2)
Tax adjustments, net (3)
Comparable Earnings
Diluted EPS
Non-operating pension costs, net (1)
Restructuring and other, net (including ChoiceLease liability insurance results) (2)
ERP implementation costs (2)
Gains on sale of U.K. revenue earning equipment
Gains on sale of properties (2)
Early redemption of medium-term notes (2)
Tax adjustments, net (3)
Comparable EPS
_______________
Continuing Operations
Years ended December 31,
2022
2021
2020
$
1,216 $
693 $
(130)
$
$
$
$
11
2
—
(49)
(36)
—
—
(1)
19
13
—
(42)
—
—
1,144 $
682 $
11
77
34
—
(6)
9
(24)
(29)
863 $
522 $
(112)
7
3
—
(49)
(36)
—
46
(3)
18
9
—
(32)
—
1
5
44
25
—
(5)
7
22
834 $
515 $
(14)
16.96 $
9.70 $
(2.15)
0.14
0.04
—
(0.96)
(0.71)
—
0.90
(0.06)
0.34
0.18
—
0.10
0.84
0.49
—
(0.59)
(0.10)
—
0.01
0.13
0.42
$
16.37 $
9.58 $
(0.27)
(1) Refer to Note 19, “Employee Benefit Plans,” in the Notes to Consolidated Financial Statements for additional information.
(2) Refer to Note 21, “Other Items Impacting Comparability,” in the Notes to Consolidated Financial Statements for additional information.
(3)
In 2022, adjustments include the global tax impact related to gains on sales of U.K. revenue earning equipment and properties, the release of the valuation
allowance on U.K. deferred tax assets, and tax impact of state rate law changes. In 2021, adjustments include expense related to expiring state net
operating losses. In 2020, adjustments include a valuation allowance of $13 million on our U.K. deferred tax assets, expiring state net operating losses of
$7 million, and state law changes of $2 million.
50
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides a reconciliation of the effective tax rate to the comparable tax rate:
Effective tax rate on continuing operations (1)
Tax adjustments and income tax effects of non-GAAP adjustments (2)
Comparable tax rate on continuing operations (1)
_______________
Years ended December 31,
2022
29.1%
(1.9)%
27.2%
2021
24.7%
(0.2)%
24.5%
2020
(14.1)%
(38.0)%
(52.1)%
(1) The effective tax rate on continuing operations and comparable tax rate are based on EBT and comparable EBT, respectively.
(2) Refer to the table above for more information on tax adjustments on the previous page. Income tax effects of non-GAAP adjustments are calculated based
on the marginal tax rates to which the non-GAAP adjustments are related.
The following table provides a reconciliation of earnings (loss) to comparable EBITDA:
(In millions)
Net earnings (loss)
(Gain) loss from discontinued operations, net of tax
Provision for (benefit from) income taxes
EBT
Non-operating pension costs, net (1)
Other items impacting comparability, net (2)
Comparable EBT
Interest expense (3)
Depreciation
Used vehicle sales, net (4)
Amortization
Comparable EBITDA
_______________
Years ended December 31,
2022
2021
2020
$
867 $
519 $
(122)
(4)
353
1,216
11
(83)
1,144
228
1,713
(400)
37
3
171
693
(1)
(10)
682
214
1,786
(257)
8
10
(18)
(130)
11
90
(29)
252
2,027
—
8
$
2,722 $
2,433 $
2,258
(1) Refer to Note 19, “Employee Benefit Plans,” in the Notes to Consolidated Financial Statements for additional information.
(2) Refer to the table above in the Full Year Operating Results by Segment for a discussion on items excluded from our comparable measures and their
classification within our Consolidated Statements of Earnings and Note 21, “Other Items Impacting Comparability” in the Notes to Consolidated Financial
Statements for additional information.
In 2020, interest expense of $9 million recorded for the early redemption of two medium-term notes is excluded as it is included above in "Other items
impacting comparability, net."
(3)
(4) Refer to Note 6,"Revenue Earning Equipment, net," in the Notes to Consolidated Financial Statements for additional information. In 2022, used vehicle
sales, net of $49 million related to the sale of used vehicles in the U.K. is excluded as it is included above in "Other items impacting comparability, net."
The following table provides a reconciliation of total revenue to operating revenue:
(In millions)
Total revenue
Subcontracted transportation and fuel
ChoiceLease liability insurance revenue (1)
Operating revenue
_______________
Years ended December 31,
2022
2021
2020
$ 12,011 $
9,663 $
8,420
(2,731)
(1,835)
(1,372)
—
—
(24)
$
9,280 $
7,828 $
7,024
(1)
In the first quarter of 2021, we completed the exit of the extension of our liability insurance coverage for ChoiceLease customers.
51
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table provides a reconciliation of FMS total revenue to FMS operating revenue:
(In millions)
FMS total revenue
Fuel services and ChoiceLease liability insurance (1)
FMS operating revenue
FMS EBT
FMS EBT as a % of FMS total revenue
FMS EBT as a % of FMS operating revenue
_______________
Years ended December 31,
2022
2021
2020
$
6,327
$
5,680
$
5,171
(1,114)
(739)
(593)
$
5,213
$
4,941
$
4,578
$
1,054
$
663
$
(142)
16.7%
20.2%
11.7%
13.4%
(2.7)%
(3.1)%
(1)
In the first quarter of 2021, we completed the exit of the extension of our liability insurance coverage for ChoiceLease customers.
The following table provides a reconciliation of SCS total revenue to SCS operating revenue:
(In millions)
SCS total revenue
Subcontracted transportation and fuel
SCS operating revenue
SCS EBT
SCS EBT as a % of SCS total revenue
SCS EBT as a % of SCS operating revenue
Years ended December 31,
2022
2021
2020
$
4,720 $
3,155 $
2,544
(1,466)
(944)
(674)
$
3,254 $
2,211 $
1,870
$
186 $
117 $
160
3.9%
5.7%
3.7%
5.3%
6.3%
8.6%
The following table provides a reconciliation of DTS total revenue to DTS operating revenue:
(In millions)
DTS total revenue
Subcontracted transportation and fuel
DTS operating revenue
DTS EBT
DTS EBT as a % of DTS total revenue
DTS EBT as a % of DTS operating revenue
Years ended December 31,
2022
2021
2020
$
1,786 $
1,457 $
1,229
(547)
(402)
$
1,239 $
1,055 $
(300)
929
$
102 $
49 $
73
5.7%
8.2%
3.4%
4.6%
5.9%
7.9%
The following tables provide numerical reconciliations of net earnings to adjusted net earnings and average shareholders'
equity to adjusted average shareholders' equity (Adjusted ROE), and of the non-GAAP elements used to calculate the adjusted
return on equity to the corresponding GAAP measures:
52
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(In millions)
Net earnings (loss)
Other items impacting comparability, net (1)
Income taxes (2)
Adjusted earnings (loss) before income taxes
Adjusted income taxes (3)
Adjusted net earnings (loss) [A]
Average shareholders’ equity
Average adjustments to shareholders’ equity (4)
Adjusted average shareholders’ equity [B]
Adjusted return on equity [A/B]
_______________
Years ended December 31,
2022
2021
2020
$
867 $
519 $
(122)
(83)
353
1,137
(307)
(10)
171
680
(164)
830 $
516 $
90
(18)
(50)
21
(29)
2,845 $
2,453 $
2,257
(12)
14
60
$
$
$
2,833 $
2,467 $
2,317
29.3%
20.9%
(1.3)%
(1) Refer to the table above in the Full Year Operating Results by Segment for a discussion on items excluded from our comparable measures and their
classification within our Consolidated Statements of Earnings and Note 21, “Other Items Impacting Comparability” in the Notes to Consolidated Financial
Statements for additional information.
Includes income taxes on discontinued operations.
(2)
(3) Represents provision for income taxes plus income taxes on other items impacting comparability.
(4) Represents the impact of other items impacting comparability, net of tax, to equity for the respective period.
The following table provides a reconciliation of forecasted net cash provided by operating activities to forecasted total cash
generated and forecasted free cash flow for 2023:
(In millions)
Net cash provided by operating activities
Proceeds from sales (primarily revenue earning equipment) (1)
Total cash generated
Purchases of property and revenue earning equipment (1)
Forecasted free cash flow
_______________
(1)
Included in cash flows from investing activities.
Forecast 2023
$
$
2,400
750
3,150
(2,950)
200
53
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Forward-looking statements (within the meaning of the Federal Private Securities Litigation Reform Act of 1995) are
statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends concerning
matters that are not historical facts. These statements are often preceded by or include the words “believe,” “expect,” “intend,”
“estimate,” “anticipate,” “will,” “may,” “could,” “should” or similar expressions. This Annual Report contains forward-looking
statements including statements regarding:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
our expectations with respect to the effects of ongoing global supply chain disruptions on our business and financial
results;
our expectations regarding supply of vehicles and its effect on pricing and demand;
our expectations of the long-term residual values of revenue earning equipment, including the probability of
incurring losses or having to decrease residual value estimates in the event of a potential cyclical downturn;
our expectations regarding the effects of acquisitions on our business segments and the integration of such
acquisitions;
our expectations regarding the impact of labor shortages on labor and subcontracted transportation costs;
our expectations in our FMS business segment regarding anticipated ChoiceLease pricing actions and revenue, fleet
growth, sales volume and earnings;
our expectations in our SCS and DTS business segments regarding anticipated operating revenue, trends, earnings,
sales activity and long-term growth;
our expectations regarding industry and market trends and their potential impact on our business;
the expected pricing for used vehicles and sales channel mix;
our expectations of cash flow from operating activities, free cash flow, and capital expenditures;
our expected future contractual cash obligations and commitments;
our ability to meet our objectives with the share repurchase programs;
the adequacy of our accounting estimates and reserves for goodwill and other asset impairments, residual values and
other depreciation assumptions, deferred income taxes and annual effective tax rates, variable revenue
considerations, asset impairments, the valuation of our pension plans, allowance for credit losses, and self-insurance
loss reserves;
the adequacy of our fair value estimates of employee incentive awards under our share-based compensation plans,
publicly traded debt and other debt;
the adequacy and timing of our fair value estimates for the purposes of our purchase consideration allocation with
respect to acquisitions;
our ability to fund all of our operating, investing and financial needs for the foreseeable future through internally
generated funds and outside funding sources;
our expected level of use and availability of outside funding sources, anticipated future payments under debt and
lease agreements, and risk of losses resulting from counterparty default under hedging and derivative agreements;
the anticipated impact of fuel and energy prices, interest rate movements, subcontracted transportation costs and
exchange rate fluctuations;
our expectations as to return on pension plan assets, future pension expense and estimated contributions;
our expectations regarding the scope and anticipated outcomes with respect to certain claims, proceedings and
lawsuits;
the ultimate disposition of estimated environmental liabilities;
54
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
our ability to access commercial paper and other available debt financing in the capital markets;
the impact of our strategic investments;
our expectations regarding losses under guarantees;
the status of our unrecognized tax benefits related to the U.S. federal, state and foreign tax positions;
our expectation regarding the ability to realize our deferred tax assets;
our expectations regarding the reversal of deferred tax liabilities and the timing of cash impact;
our expectations regarding the completion and ultimate outcome of certain tax audits;
our intent to permanently reinvest the earnings of our non U.K. & Germany foreign subsidiaries indefinitely;
the anticipated impact of recent accounting pronouncements;
our expectation with respect to the slowdown of the economy;
our expectation that used vehicle and rental results will reflect a normalized environment;
our expectation regarding future income tax cash obligations;
our expectations regarding lease pricing initiatives effect on earnings;
our expectations regarding our ability to estimate the fair value of assets acquired and liabilities assumed with
respect to Whiplash;
our ability to complete the exit of our FMS U.K. business and our expectation with respect to the timing of such
exit;
our expectation regarding a material foreign currency cumulative translation adjustment loss; and
our expectations regarding the effect of changes to systems and processes on our internal control over financial
reports.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
These statements, as well as other forward-looking statements contained in this Annual Report, are based on our current
plans and expectations and are subject to risks, uncertainties and assumptions. We caution readers that certain important factors
could cause actual results and events to differ significantly from those expressed in any forward-looking statements. These risk
factors, among others, include the following:
•
Market Conditions:
◦
◦
◦
◦
◦
◦
Changes in general economic and financial conditions in the U.S. and worldwide leading to decreased
demand for our services and products, lower profit margins, increased levels of bad debt and reduced access
to credit and financial markets.
Decreases in freight demand which would impact both our transactional and variable-based contractual
business.
Changes in our customers’ operations, financial condition or business environment that may limit their
demand for, or ability to purchase, our services and products.
Decreases in market demand affecting the commercial rental market and used vehicle sales as well as global
economic conditions.
Volatility in customer volumes and shifting customer demand in the industries we service.
Changes in current financial, tax or other regulatory requirements that could negatively impact our financial
and operating results.
55
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
•
Competition:
◦
◦
◦
◦
Advances in technology may impact demand for our services or may require increased investments to remain
competitive, and our customers may not be willing to accept higher prices to cover the cost of these
investments.
Competition from other service providers, some of which have greater capital resources or lower capital costs,
or from our customers, who may choose to provide services themselves.
Continued consolidation in the markets where we operate which may create large competitors with greater
financial resources.
Our inability to maintain current pricing levels due to economic conditions, demand for services, customer
acceptance or competition.
•
Profitability:
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
Lower than expected sales volumes or customer retention levels.
Decreases in commercial rental fleet utilization and pricing.
Lower than expected used vehicle sales pricing levels and fluctuations in the anticipated proportion of retail
versus wholesale sales.
Loss of key customers in our SCS and DTS business segments.
Decreases in volume in e-commerce and Ryder Last Mile.
Our inability to adapt our product offerings to meet changing consumer preferences on a cost-effective basis.
The inability of our information technology systems to provide timely access to data.
The inability of our information security program to safeguard our data.
Sudden changes in market fuel prices and fuel shortages.
Higher prices for vehicles, diesel engines and fuel as a result of new regulations and inflationary pressures.
Higher than expected maintenance costs and lower than expected benefits associated with our maintenance
initiatives.
Lower than expected revenue growth due to production delays at our automotive SCS customers, primarily
related to the worldwide semiconductor supply shortage.
The inability of an original equipment manufacturer or supplier to provide vehicles or components as
originally scheduled.
Our inability to successfully execute our strategic returns and asset management initiatives, maintain our fleet
at normalized levels and right-size our fleet in line with demand.
Our key assumptions and pricing structure, including any assumptions made with respect to inflation, of our
SCS and DTS contracts prove to be inaccurate.
Increased unionizing, labor strikes and work stoppages.
Difficulties in attracting and retaining professional drivers, warehouse personnel, and technicians due to labor
shortages, which may result in higher costs to procure drivers and technicians and higher turnover rates
affecting our customers.
Our inability to manage our cost structure.
Our inability to limit our exposure for customer claims.
Unfavorable or unanticipated outcomes in legal or regulatory proceedings or uncertain positions.
56
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
◦
Business interruptions or expenditures due to severe weather or other natural occurrences.
•
Financing Concerns:
◦
◦
◦
◦
◦
Higher borrowing costs.
Increased inflationary pressures.
Unanticipated interest rate and currency exchange rate fluctuations.
Negative funding status of our pension plans caused by lower than expected returns on invested assets and
unanticipated changes in interest rates.
Instability in U.S. and worldwide credit markets, resulting in higher borrowing costs and/or reduced access to
credit.
•
Accounting Matters:
◦
◦
◦
Reductions in residual values or useful lives of revenue earning equipment.
Increases in compensation levels, retirement rate and mortality resulting in higher pension expense;
regulatory changes affecting pension estimates, accruals and expenses.
Changes in accounting rules, assumptions and accruals.
•
Other risks detailed from time to time in our SEC filings, including in “Item 1A. Risk Factors” of this Annual
Report.
New risk factors 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 risk factors on our business. As a result, no assurance can be given as to our future results or
achievements. You should not place undue reliance on the forward-looking statements contained herein, which speak only as of
the date of this Annual Report. We do not intend, or assume any obligation, to update or revise any forward-looking statements
contained in this Annual Report, whether as a result of new information, future events or otherwise.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by ITEM 7A is included in ITEM 7 of PART II of this report.
57
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINANCIAL STATEMENTS
Page No.
Management’s Report on Internal Control over Financial Reporting .......................................................................
Report of Independent Registered Public Accounting Firm (PCAOB ID 238) .........................................................
Consolidated Statements of Earnings ........................................................................................................................
Consolidated Statements of Comprehensive Income ................................................................................................
Consolidated Balance Sheets .....................................................................................................................................
Consolidated Statements of Cash Flows ....................................................................................................................
Consolidated Statements of Shareholders’ Equity .....................................................................................................
Notes to Consolidated Financial Statements:
Note 1. Summary of Significant Accounting Policies ............................................................................................
Note 2. Recent Accounting Pronouncements .........................................................................................................
Note 3. Segment Reporting .....................................................................................................................................
Note 4. Revenue ......................................................................................................................................................
Note 5. Receivables, Net .........................................................................................................................................
Note 6. Revenue Earning Equipment, Net ..............................................................................................................
Note 7. Operating Property and Equipment, Net ....................................................................................................
Note 8. Goodwill .....................................................................................................................................................
Note 9. Intangible Assets, Net ................................................................................................................................
Note 10. Accrued Expenses and Other Liabilities ..................................................................................................
Note 11. Income Taxes ...........................................................................................................................................
Note 12. Leases .......................................................................................................................................................
Note 13. Debt ..........................................................................................................................................................
Note 14. Guarantees ................................................................................................................................................
Note 15. Share Repurchase Programs .....................................................................................................................
Note 16. Accumulated Other Comprehensive Loss ................................................................................................
Note 17. Earnings Per Share ...................................................................................................................................
Note 18. Share-Based Compensation Plans ............................................................................................................
Note 19. Employee Benefit Plans ...........................................................................................................................
Note 20. Environmental Matters .............................................................................................................................
Note 21. Other Items Impacting Comparability .....................................................................................................
Note 22. Contingencies and Other Matters .............................................................................................................
Note 23. Supplemental Cash Flow Information .....................................................................................................
Note 24. Acquisitions ..............................................................................................................................................
Consolidated Financial Statement Schedule for the Years Ended December 31, 2022, 2021 and 2020:
Schedule II — Valuation and Qualifying Accounts ...............................................................................................
59
60
62
63
64
65
66
67
76
77
80
81
82
84
84
84
85
86
88
91
93
93
94
95
95
97
102
103
104
105
105
108
All other schedules are omitted because they are not applicable or the required information is shown in the consolidated
financial statements or notes thereto.
58
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
TO THE SHAREHOLDERS OF RYDER SYSTEM, INC.:
Management of Ryder System, Inc., together with its consolidated subsidiaries (Ryder), is responsible for establishing
and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the
Securities Exchange Act of 1934. Ryder’s internal control over financial reporting is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes
in accordance with accounting principles generally accepted in the United States of America.
Ryder’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of
Ryder; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in
accordance with authorizations of Ryder’s management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of Ryder’s assets that could have a material effect
on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of Ryder’s internal control over financial reporting as of December 31, 2022. In
making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission in “Internal Control — Integrated Framework (2013).” Based on our assessment and those criteria, management
determined that Ryder maintained effective internal control over financial reporting as of December 31, 2022.
Ryder’s independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the effectiveness of
Ryder’s internal control over financial reporting as of December 31, 2022. Their report appears on the subsequent page.
59
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Ryder System, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Ryder System, Inc. and its subsidiaries (the “Company”) as
of December 31, 2022 and 2021, and the related consolidated statements of earnings, of comprehensive income, of
shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related
notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial
statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on
criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included
in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement
of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our opinions.
As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Whiplash from
its assessment of internal control over financial reporting as of December 31, 2022, because it was acquired by the Company in
a purchase business combination during 2022. We have also excluded Whiplash from our audit of internal control over
financial reporting. Whiplash is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s
assessment and our audit of internal control over financial reporting represent 2.7% and 5.0%, respectively, of the related
consolidated financial statement amounts as of and for the year ended December 31, 2022.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
60
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Earning Equipment - Residual Values
As described in Notes 1 and 6 to the consolidated financial statements, the net carrying amount of revenue earning equipment
was $8.2 billion as of December 31, 2022. Depreciation expense was $1.5 billion primarily related to Fleet Management
Solutions (FMS) revenue earning equipment. Revenue earning equipment, comprised of vehicles, is initially recorded at cost
inclusive of vendor rebates. The provision for depreciation is computed using the straight-line method. As disclosed by
management, they periodically review and adjust, as appropriate, the estimated residual values and useful lives of existing
revenue earning equipment. Management’s review of the estimated residual values and useful lives of revenue earning
equipment is based on vehicle class (i.e., generally subcategories of trucks, tractors and trailers by weight and usage), historical
and current market prices, third-party expected future market prices, expected lives of vehicles, and expected sales in the
wholesale or retail markets, among other factors. The principal considerations for our determination that performing
procedures relating to revenue earning equipment - residual values is a critical audit matter are the significant judgment by
management when estimating residual values, which in turn led to a high degree of auditor judgment, subjectivity and effort in
performing procedures and in evaluating the significant judgment by management in estimating residual values related to the
Company’s historical and current market prices, third-party expected future market prices, and expected sales in the wholesale
and retail markets. Addressing the matter involved performing procedures and evaluating audit evidence in connection with
forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to management’s assessment of, and related adjustments to, the estimated residual values of revenue earning
equipment. These procedures also included, among others (i) testing management’s process for developing the estimated
residual values of revenue earning equipment, (ii) testing the accuracy of the Company’s historical used vehicle sales data and
historical and current market prices, and (iii) evaluating the reasonableness of management’s significant assumptions related to
third party expected future market prices and the expected sales in the wholesale and retail markets. Evaluating management’s
significant assumptions related to third party expected future market prices of used vehicles and the expected sales of used
vehicles in the wholesale and retail markets involved evaluating whether the assumptions used were reasonable considering (i)
past trends in the used vehicle sales market, (ii) consistency with external market and industry data, and (iii) consistency with
evidence obtained in other areas of the audit.
/s/ PricewaterhouseCoopers LLP
Hallandale Beach, Florida
February 15, 2023
We have served as the Company’s auditor since 2006.
61
Years ended December 31,
2022
2021
2020
$
4,174 $
3,995 $
3,704
7,118
719
12,011
2,774
6,153
694
1,415
11
(450)
228
(32)
2
5,181
487
9,663
2,884
4,503
474
1,187
(1)
(257)
214
(66)
32
4,318
398
8,420
3,109
3,653
383
1,044
11
—
261
(22)
111
10,795
8,970
8,550
1,216
353
863
4
693
171
522
(3)
(130)
(18)
(112)
(10)
$
867 $
519 $
(122)
$
17.32 $
9.92 $
(2.15)
0.09
(0.05)
(0.21)
$
17.41 $
9.87 $
(2.34)
$
16.96 $
9.70 $
(2.15)
0.08
(0.05)
(0.21)
$
17.04 $
9.66 $
(2.34)
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In millions, except per share amounts)
Lease & related maintenance and rental revenues
Services revenue
Fuel services revenue
Total revenues
Cost of lease & related maintenance and rental
Cost of services
Cost of fuel services
Selling, general and administrative expenses
Non-operating pension costs, net
Used vehicle sales, net
Interest expense
Miscellaneous income, net
Restructuring and other items, net
Earnings (loss) from continuing operations before income taxes
Provision for (benefit from) income taxes
Earnings (loss) from continuing operations
Gain (loss) from discontinued operations, net of tax
Net earnings (loss)
Earnings (loss) per common share — Basic
Continuing operations
Discontinued operations
Net earnings (loss)
Earnings (loss) per common share — Diluted
Continuing operations
Discontinued operations
Net earnings (loss)
See accompanying Notes to Consolidated Financial Statements.
Note: EPS amounts may not be additive due to rounding.
62
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
Net earnings (loss)
Other comprehensive income (loss):
Changes in cumulative translation adjustment and unrealized loss from cash flow hedges
Amortization of pension and postretirement items
Income tax expense related to amortization of pension and postretirement items
Amortization of pension and postretirement items, net of tax
Years ended December 31,
2022
2021
2020
$
867 $
519 $
(122)
(69)
21
(5)
16
2
28
(6)
22
7
40
(9)
31
Change in net actuarial loss and prior service cost
(72)
122
(17)
Income tax (expense) benefit related to change in net actuarial loss and prior service cost
(18)
(2)
18
Change in net actuarial loss and prior service cost, net of taxes
(54)
104
(19)
Other comprehensive income, net of taxes
(107)
128
19
Comprehensive income (loss)
$
760 $
647 $
(103)
See accompanying Notes to Consolidated Financial Statements.
63
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
Assets:
Current assets:
Cash and cash equivalents
Receivables, net
Inventories
Prepaid expenses and other current assets
Total current assets
Revenue earning equipment, net
Operating property and equipment, net
Goodwill
Intangible assets, net
Sales-type leases and other assets
Total assets
Liabilities and shareholders’ equity:
Current liabilities:
Short-term debt and current portion of long-term debt
Accounts payable
Accrued expenses and other current liabilities
Total current liabilities
Long-term debt
Other non-current liabilities
Deferred income taxes
Total liabilities
Commitments and contingencies (Note 22)
Shareholders’ equity:
Preferred stock, no par value per share — authorized, 3,800,917; none outstanding, December 31, 2022 and 2021
Common stock, $0.50 par value per share — authorized, 400,000,000; outstanding, December 31, 2022 —
46,286,664 and December 31, 2021 — 53,789,036
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total shareholders’ equity
Total liabilities and shareholders’ equity
See accompanying Notes to Consolidated Financial Statements.
December 31,
2022
2021
$
267 $
234
1,610
1,465
78
245
2,200
8,190
1,148
861
295
69
693
2,461
8,323
985
571
171
1,701
1,324
$ 14,395 $ 13,835
$ 1,349 $ 1,333
767
1,200
3,316
5,003
1,568
1,571
748
1,120
3,201
5,247
1,314
1,275
11,458
11,037
—
23
1,192
2,518
(796)
2,937
—
27
1,194
2,266
(689)
2,798
$ 14,395 $ 13,835
64
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Cash flows from operating activities from continuing operations:
Net earnings (loss)
Less: Gain (Loss) from discontinued operations, net of tax
Earnings (loss) from continuing operations
Depreciation expense
Used vehicle sales, net
Amortization expense and other non-cash charges, net
Non-cash lease expense
Non-operating pension costs, net and share-based compensation expense
Deferred income tax expense (benefit)
Collections on sales-type leases
Changes in operating assets and liabilities:
Receivables
Inventories
Prepaid expenses and other assets
Accounts payable
Accrued expenses and other liabilities
Years ended December 31,
2022
2021
2020
$
867 $
519 $
(122)
4
863
1,713
(450)
118
199
57
266
135
(134)
(9)
(121)
(29)
(298)
(3)
522
1,786
(257)
25
98
46
126
139
(240)
(8)
(125)
126
(63)
(10)
(112)
2,027
—
116
92
41
(33)
114
(5)
20
(92)
29
(16)
Net cash provided by operating activities from continuing operations
2,310
2,175
2,181
Cash flows from investing activities from continuing operations:
Purchases of property and revenue earning equipment
Sales of revenue earning equipment
Sales of operating property and equipment
Acquisitions, net of cash acquired
Other
(2,631)
(1,941)
(1,146)
1,182
53
(458)
4
748
74
(325)
(6)
539
13
—
(7)
Net cash used in investing activities from continuing operations
(1,850)
(1,450)
(601)
Cash flows from financing activities from continuing operations:
Net borrowings (repayments) of commercial paper and other
Debt proceeds
Debt repayments
Dividends on common stock
Common stock issued
Common stock repurchased
Other
Net cash used in financing activities from continuing operations
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
Net (decrease) increase in cash, cash equivalents, and restricted cash from continuing operations
Net increase (decrease) in cash, cash equivalents, and restricted cash from discontinued operations
(Decrease) increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period
See accompanying Notes to Consolidated Financial Statements.
134
1,229
(1,552)
(123)
14
(557)
(6)
(861)
(4)
(405)
—
(405)
672
260
300
(608)
(122)
30
(57)
(7)
(377)
2,084
(3,055)
(119)
8
(29)
(19)
(204)
(1,507)
(1)
520
1
521
151
5
78
(1)
77
74
$
267 $
672 $
151
65
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In millions, except share amounts in
thousands)
Amount
Shares
Par
Preferred
Stock
Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Balance at January 1, 2020
$
—
53,278 $
26 $
1,108 $
2,178 $
(836) $ 2,476
Adoption of new measurement of credit
losses on financial instruments
standard
Comprehensive income (loss)
Common stock dividends declared —
$2.24 per share
Common stock issued under employee
stock award and stock purchase plans
and other
Common stock repurchases
Share-based compensation
Balance at December 31, 2020
Comprehensive income
Common stock dividends declared —
$2.28 per share
Common stock issued under employee
stock award and stock purchase plans
and other
Common stock repurchases
Share-based compensation
Balance at December 31, 2021
Comprehensive income (loss)
Common stock dividends declared
—$2.40 per share
Common stock issued under employee
stock award and stock purchase plans
and other (1)
Common stock repurchases
Share-based compensation
Balance at December 31, 2022
$
_______________
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,091
1
(637)
—
—
—
—
—
—
7
(12)
30
53,732
27
1,133
—
—
—
—
792
—
(735)
—
—
—
—
—
30
(16)
47
53,789
27
1,194
—
—
—
—
(549)
—
(6,953)
(4)
—
—
—
—
14
(62)
46
(5)
(122)
(121)
—
(17)
—
1,913
519
—
19
—
—
—
—
(5)
(103)
(121)
8
(29)
30
(817)
128
2,256
647
(125)
—
(125)
—
(41)
—
2,266
867
—
—
—
30
(57)
47
(689)
(107)
2,798
760
(124)
—
(124)
—
(491)
—
—
—
—
14
(557)
46
46,287 $
23 $
1,192 $
2,518 $
(796) $ 2,937
(1) We reversed the issuance of approximately 1.3 million unvested restricted shares that were administratively recorded as issued, but not released.
These shares will be issued and released upon satisfaction of the applicable vesting conditions. The reversal of the shares did not impact earnings per
share.
See accompanying Notes to Consolidated Financial Statements.
66
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation and Presentation
The consolidated financial statements include the accounts of Ryder System, Inc. (Ryder), all entities in which Ryder has
a controlling voting interest (subsidiaries) and variable interest entities (VIEs) where Ryder is determined to be the primary
beneficiary in accordance with generally accepted accounting principles in the United States (U.S. GAAP). Ryder is deemed to
be the primary beneficiary if we have the power to direct the activities that most significantly impact the entity’s economic
performance and we share in the significant risks and rewards of the entity. All significant intercompany accounts and
transactions have been eliminated in consolidation.Certain prior period amounts have been reclassified to conform with the
current period presentation. We included "Other operating expenses" together with "Selling, general and administrative
expenses" in the Consolidated Statements of Earnings. In the year ended December 31, 2021, we previously reported certain
costs in "Cost of lease & related maintenance and rental" and "Cost of services" that should have been included in the "Cost of
fuel services" within the Consolidated Statements of Earnings. These costs were not material to any financial statement line
item and we elected to revise the presentation of these prior period costs to conform to the current year presentation in our
financial statements.
We report our financial performance based on three business segments: (1) Fleet Management Solutions (FMS), which
provides full service leasing and leasing with flexible maintenance options, commercial rental and maintenance services of
trucks, tractors and trailers to customers principally in the United States (U.S.) and Canada; (2) Supply Chain Solutions (SCS),
which provides integrated logistics solutions, including distribution management, dedicated transportation, transportation
management, brokerage, e-commerce, last mile, and professional services in North America; and (3) Dedicated Transportation
Solutions (DTS), which provides turnkey transportation solutions in the U.S., including dedicated vehicles, professional drivers,
management, and administrative support. Dedicated transportation services provided as part of an operationally integrated,
multi-service, supply chain solution to SCS customers are primarily reported in the SCS business segment. In 2022, we
announced our intentions to exit the FMS United Kingdom (U.K.) business and have substantially completed the wind down as
of December 31, 2022.
Use of Estimates
The preparation of our consolidated financial statements requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates are based on
management’s best knowledge of historical trends, actions that we may take in the future, and other information available when
the consolidated financial statements are prepared. Changes in estimates are typically recognized in the period when new
information becomes available. Areas where the nature of the estimate make it reasonably possible that actual results could
materially differ from the amounts estimated include: depreciation and residual values, employee benefit plan obligations, self-
insurance accruals, impairment assessments on long-lived assets (including goodwill and indefinite-lived intangible assets),
revenue recognition, and income tax and deferred tax liabilities.
The effects of COVID-19 negatively impacted several areas of our businesses, particularly in the first half of 2020. While
we are experiencing positive momentum in our businesses, the pandemic and the resulting volatility and uncertainty it has
caused in the current economic environment remains fluid and there may be further impacts on our business, financial results,
and areas of significant judgments and estimates.
Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents represent cash on hand, and highly liquid investments in short-term, interest-bearing
instruments with maturities of three months or less at the date of purchase and are stated at cost. Restricted cash is reflected in
"Prepaid expenses and other current assets" in the Consolidated Balance Sheets.
Revenue Recognition
We generate revenue primarily through contracts with customers to lease, rent and maintain revenue earning equipment
and to provide logistics management and dedicated transportation services. We enter into contracts that can include various
combinations of products and services, which are generally capable of being distinct and accounted for as separate performance
obligations. We account for a contract when it has approval and commitment from both parties, the rights of the parties are
identified, payment terms are determined, the contract has commercial substance, and collectibility of consideration is probable.
67
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
We generally recognize revenue over time as we provide the promised products or services to our customers in an amount we
expect to receive in exchange for those products or services. Revenue is recognized net of amounts collected from customers
for taxes, such as sales tax, that are remitted to the applicable taxing authorities.
Lease & related maintenance and rental
Lease & related maintenance and rental revenues include ChoiceLease and commercial rental revenues from our FMS
business segment. We offer a full service lease as well as a lease with more flexible maintenance options under our
ChoiceLease product line. Our ChoiceLease product is marketed, priced and managed as a bundled service. We do not offer a
stand-alone lease of a vehicle. We also offer rental of vehicles under our commercial rental product line, which allows
customers to supplement their fleet of vehicles on a short-term basis.
Our ChoiceLease product line includes the lease of a vehicle (lease component) and maintenance and other services (non-
lease component). We generally lease new vehicles to our customers. Consideration is allocated between the lease and non-
lease components based on management's best estimate of the relative stand-alone selling price of each component. For further
information regarding our stand-alone selling price estimation process, refer to the "Significant Judgments and Estimates"
section below.
Our ChoiceLease product provides for a fixed charge and a variable charge based on mileage or time usage. Fixed
charges are typically billed at the beginning of the month and variable charges are typically billed a month in arrears. Revenue
from the lease component of ChoiceLease agreements is recognized based on the classification of the arrangement, typically as
either an operating or a sales-type lease. The majority of our leases are classified as operating leases and we recognize revenue
for the lease component of these agreements on a straight-line basis. The non-lease component for maintenance services are not
typically performed evenly over the life of a ChoiceLease contract as the level of maintenance provided generally increases as
vehicles age. Therefore, we recognize maintenance revenue consistent with the estimated pattern of the costs to maintain the
underlying vehicles. This generally results in the recognition of deferred revenue for the portion of the customer's billings
allocated to the maintenance service component of the agreement.
Our commercial rental product includes the short-term rental of a vehicle (one day up to one year in length). All of our
rental arrangements are classified as operating leases and revenue is recognized on a straight-line basis.
Lease and rental agreements do not usually provide for scheduled rent increases or escalations. However, most lease
agreements allow for rate changes based upon changes in the Consumer Price Index (CPI). Lease and rental agreements also
provide for variable usage charges based on a time charge and/or a fixed per-mile charge. The time charge, the per-mile charge
and the changes in rates attributed to changes in the CPI are considered contingent revenue. Therefore, these charges are not
considered fixed or determinable until the equipment usage or CPI change occurs and are excluded from the allocation of
consideration at the inception of the contract. Revenues associated with licensing and operating taxes that are billed as incurred
based on the contract arrangement are also excluded from the allocation of consideration at contract inception and allocated as
earned.
Variable consideration, such as billing for mileage and changes in CPI as well as licensing and operating tax revenues, is
allocated to the lease and maintenance components based on the same allocation percentages at contract inception (or the most
recent contract modification) when earned. Variable consideration allocated to the lease component is recognized in revenue as
earned and variable consideration allocated to the non-lease component is recognized in revenue using an input method,
consistent with the estimated pattern of maintenance costs for the remainder of the contract term.
Leases not classified as operating leases are considered sales-type leases. We recognize revenue for sales-type leases
using the effective interest method, which provides a constant periodic rate of return on the outstanding investment in the lease.
We lease new or used vehicles under our sales-type lease arrangements. We recognize the difference between the net
investment in the lease and the carrying value in selling profit or loss on used vehicles in our results of operations at lease
commencement.
Services
Services revenue includes all SCS and DTS revenues, as well as SelectCare and other revenues from our FMS business
segment. In our SCS business segment, we offer a broad range of logistics management services designed to optimize the
supply chain and address the key business requirements of our customers supported by a variety of technology and engineering
68
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
solutions. In our DTS business segment, we combine equipment, maintenance, professional drivers, administrative services and
additional services to provide customers with a single integrated dedicated transportation solution. DTS services are customized
for our customers based on a transportation analysis to optimize vehicle capacity and overall asset utilization.
Revenues from SCS and DTS service contracts are recognized as services are rendered in accordance with contract terms.
SCS and DTS contracts typically include (1) fixed and variable billing rates, (2) cost-plus billing rates (input method based on
actual costs incurred to perform services and a contracted mark-up), or (3) variable only or fixed only billing rates for the
services. Our billing structure aligns with the value transferred to our customers. We generally have a right to consideration in
an amount that corresponds directly with the value we have delivered to the customer.
Our customers contract us to provide an integrated service of transportation or supply chain logistical services into a
single transportation or supply chain solution. Therefore, we typically recognize SCS and DTS service contracts as one
performance obligation satisfied over time. We generally sell a customized customer-specific solution and use the expected cost
plus a margin approach to estimate the stand-alone selling price of each performance obligation.
Under our SelectCare arrangements, we provide maintenance and repairs required to keep a vehicle in good operating
condition, perform preventive maintenance inspections, provide access to emergency road service, and substitute vehicles. We
provide these maintenance services to customers who choose not to lease our vehicles. The vast majority of our services are
routine and performed on a recurring basis throughout the term of the arrangement. From time to time, we provide non-routine
major repair services in order to place a vehicle back in service.
Our maintenance service arrangement provides for a monthly fixed charge and a monthly variable charge based on
mileage or time usage. Fixed charges are typically billed at the beginning of the month for the services to be provided that
month, while variable charges are typically billed a month in arrears. Most maintenance agreements allow for rate changes
based upon changes in the CPI. The fixed per-mile charge and the changes in rates attributed to changes in the CPI are
recognized as earned.
The maintenance service is the only performance obligation in SelectCare contracts. For contract maintenance
agreements, revenue is recognized as maintenance services are rendered over the terms of the related arrangements. We
generally account for long-term maintenance contracts as one-year contracts since our maintenance arrangements are typically
cancellable, without penalty, after the first year. For transactional maintenance services, revenue is recognized at the point in
time when the service is provided.
Costs associated with the activities performed under our maintenance arrangements are primarily comprised of labor,
parts and outside repair work and are expensed as incurred. Non-chargeable maintenance costs have been allocated and
reflected within “Cost of services” based on the proportionate maintenance-related labor costs relative to all product lines.
Fuel Services
Fuel services revenue is reported in our FMS business segment. We provide our FMS customers with access to fuel at our
maintenance facilities across the U.S. and Canada. Fuel services revenue is invoiced to customers at contracted rates separate
from other services being provided in other contracts, or at retail prices. Revenue from fuel services is recognized when fuel is
delivered to customers. Fuel is largely a pass-through to our customers, for which we realize minimal changes in profitability
during periods of steady market fuel prices. However, profitability may be positively or negatively impacted by sudden
increases or decreases in market fuel prices during a short period of time as customer pricing for fuel services is established
based on current market fuel costs.
Significant Judgments and Estimates
We allocate the contract consideration from our ChoiceLease arrangements between the lease and maintenance
components based on the relative stand-alone selling prices of each of those services. We do not sell the lease component of our
ChoiceLease product offering on a stand-alone basis, therefore significant judgment is required to determine the stand-alone
selling price of the lease component. We sell maintenance services separately through our SelectCare arrangements.
For the lease component, we estimate the stand-alone selling price using the projected cash outflows related to the
underlying leased vehicle, net of the estimated disposal proceeds, and a certain targeted return considering our weighted
average cost of capital. For the non-lease component of the contract, we estimate the stand-alone selling price of the
maintenance component using an expected cost-plus margin approach. The expected costs are based on our history of providing
69
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
maintenance services in our ChoiceLease arrangements. The margin is based on the historical margin percentages for our full
service maintenance contracts in the SelectCare product line, as the maintenance performance obligation in those contracts is
similar to our ChoiceLease arrangements.
Our SCS and DTS contracts often include promises to transfer multiple services to a customer. Our SCS and DTS
services provided within a contract depend on a significant level of integration and interdependency between the services.
Judgment is required to determine whether each service is considered distinct and accounted for as a separate performance
obligation, or accounted for together as a significant integrated service and recognized over time. In making this judgment, we
consider whether the services provided, within the context of the contract, represent the transfer of individual services or a
combined bundle of services to the customer. This involves evaluating the promises to a customer within a contract to identify
the services that need to be performed in order for the promise to be satisfied. Since multiple services that occur at different
points in time during a contract may be accounted for as an integrated service, judgment is required to assess the pattern of
delivery to our customers.
Contract Balances
We record a receivable related to revenue recognized when we have an unconditional right to invoice. We do not have
material contract assets as we generally invoice customers as we perform services. We have elected to not assess whether a
contract has a significant financing component as the period between the receipt of customer payment and the transfer of
service to the customer is less than a year. Refer to Note 5, "Receivables, Net" for the amount of our trade receivables.
Our contract liabilities consist of deferred revenue, which primarily relates to payments received or due in advance of
performance for the maintenance services component of our ChoiceLease product. Changes in contract liabilities are due to the
collection of cash or the satisfaction of our performance obligation under the contract. Refer to Note 4, "Revenue," for further
information.
Costs to Obtain and Fulfill a Contract
Our incremental direct costs of obtaining and fulfilling a contract, which primarily consist of sales commissions and setup
costs, are capitalized and amortized over the period of contract performance or a longer period, generally, the estimated life of
the customer relationship if renewals are expected and the renewal commission is not commensurate with the initial
commission. We capitalize incremental direct costs of obtaining a contract that (1) relate directly to the contract and (2) are
expected to be recovered through revenue generated under the contract. This requires an evaluation of whether the costs are
incremental and would not have occurred absent the customer contract.
Capitalized sales commissions related to our ChoiceLease product are amortized based on the same pattern as the revenue
is recognized for the underlying lease or non-lease components of the contract; generally on a straight-line basis for the lease
component and consistent with the estimated pattern of maintenance costs for the non-lease component. We allocate the
ChoiceLease commissions to the lease and non-lease components based on the same allocation of the contract consideration.
The amortization period aligns with the term of our contract, which typically ranges from three to seven years.
Capitalized sales commissions related to our SCS and DTS service contracts are generally amortized on a straight-line
basis consistent with the pattern that revenue is recognized for the underlying contracts. The amortization period aligns with the
expected term of the contract, which typically ranges from three to five years. Capitalized setup costs related to our SCS and
DTS service contracts are generally amortized on a straight-line basis based on the average life of customer relationships.
The incremental costs to obtain and fulfill a contract are included in “Sales-type leases and other assets” in the
Consolidated Balance Sheets. Costs are primarily amortized in “Selling, general and administrative expenses” in the
Consolidated Statements of Earnings over the expected period of benefit. Refer to Note 4, "Revenue," for further discussion.
Allowance for Credit Losses and Other
We maintain an allowance for billing adjustments related to certain discounts and other customer concessions. The
estimates to determine the allowance for our trade receivables and net investments in sales-type leases are updated regularly
based on our review of historical loss rates, as well as current and expected events impacting our business segments, current
collection trends and historical billing adjustments. Amounts are charged against the allowance when the receivable is
determined to be uncollectible.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
When a business relationship with a customer is initiated, we evaluate collectability from the customer and it is
continuously monitored as services are provided. We have a credit rating system based on internally developed standards and
ratings provided by third parties. Our credit rating system, along with monitoring for delinquent payments, allows us to make
decisions as to whether collectability is probable at the onset of the relationship and subsequently as we offer services. Factors
considered during this process include historical payment trends, industry risks, liquidity of the customer, years in business,
judgments, liens, and bankruptcies. Payment terms vary by contract type, although terms generally include a requirement of
payment within 15 to 90 days.
Leases
Leases as Lessor
We lease revenue earning equipment to customers for periods generally ranging from three to seven years for trucks and
tractors and up to ten years for trailers. We determine if an arrangement is or contains a lease at inception. The standard lease
agreement for revenue earning equipment provides both parties the right to terminate; therefore, we evaluate whether the lessee
is reasonably certain to exercise the termination option in order to determine the appropriate lease term. If we terminate, the
customer has the right (but not obligation) to purchase the vehicle. If the customer terminates, we have the option to require the
customer to purchase the vehicle or pay a termination penalty. Our leases generally do not provide either party an option to
renew the lease. We also rent revenue earning equipment to customers on a short-term basis, from one day up to one year in
length. From time to time, we may also lease facilities to third parties. The majority of our leases are classified as operating
leases. However, some of our revenue earning equipment leases are classified as sales-type leases. Refer to Note 6, "Revenue
Earning Equipment, Net" for further information on our estimates of residual values and useful lives of revenue earning
equipment which impact our sales-type leases.
Leases as Lessee
We lease facilities, revenue earning equipment, material handling equipment, automated vehicle washing machines,
vehicles and office equipment from third parties. We determine if an arrangement is or contains a lease at inception. Operating
lease right-of-use (ROU) assets, which represent our right to use an underlying asset for the lease term, and operating lease
liabilities are recognized based on the present value of lease payments over the lease term at commencement date. As most of
our leases do not provide an implicit rate of return, we use our incremental borrowing rate based on the information available at
commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable.
Operating lease ROU assets also exclude lease incentives received. We pay variable lease charges related to property taxes,
insurance and maintenance as well as changes in CPI for leased facilities; usage of revenue earning equipment, automated
washing machines, vehicles and office equipment; and hours of operation for material handling equipment. For leases with a
term of 12 months or less, with the exception of our real estate leases, we do not recognize a ROU asset or liability and
recognize lease payments in our income statement on a straight-line basis over the lease term and variable lease payments in the
period in which the obligation for those payments is incurred. Operating lease right-of-use assets are included in "Sales-type
leases and other assets" and finance lease assets are included in "Other property and equipment, net" and "Revenue earning
equipment, net". Current operating lease liabilities are included in "Accrued expenses and other current liabilities" and current
finance leases liabilities are included in "Short-term debt and current portion of long-term debt". Noncurrent operating lease
liabilities are included in "Other non-current liabilities" and noncurrent finance lease liabilities are included in "Long-term
debt". All of these items are included in the Consolidated Balance Sheets.
Lease terms for facilities are generally three to five years with one or more five-year renewal options and the lease terms
for revenue earning equipment, material handling equipment, automated washing machines, vehicles and office equipment
typically range from three to seven years with no extension options. Certain of our material handling equipment leases have
residual value guarantees. For purposes of calculating operating lease ROU assets and operating lease liabilities, lease terms
may be deemed to include options to extend or terminate the lease when it is reasonably certain that we will exercise that
option. Macroeconomic conditions are the primary factor used to estimate whether an option to extend a lease term will be
exercised or not. None of our leasing arrangements contain restrictive financial covenants. Lease expense is primarily included
in "Other operating expenses" and "Selling, general and administrative expenses" in the Consolidated Statements of Earnings.
Refer to Note 12, "Leases," for additional information.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Inventories
Inventories, which consist primarily of fuel, tires and vehicle parts, are valued at the lower of cost using the weighted-
average cost basis, or net realizable value.
Revenue Earning Equipment, Operating Property and Equipment, and Depreciation
Revenue earning equipment, comprised of vehicles, and operating property and equipment are initially recorded at cost
inclusive of vendor rebates. Revenue earning equipment and operating property and equipment recognized as finance leases are
initially recorded at the lower of the present value of the lease payments to be made over the lease term or fair value. Vehicle
repairs and maintenance that extend the life or increase the value of a vehicle are capitalized, whereas ordinary repairs and
maintenance (including tire replacement or repair) are expensed as incurred. Direct costs incurred in connection with
developing or obtaining internal-use software are capitalized. Costs incurred during the preliminary stage of a software
development project, as well as maintenance and training costs, are expensed as incurred.
Leasehold improvements are depreciated over the shorter of their estimated useful lives or the term of the related lease. If
a substantial additional investment is made in a leased property during the term of the lease, we re-evaluate the lease term to
determine whether the investment, together with any penalties related to non-renewal, would constitute an economic penalty
such that the renewal appears to be reasonably assured.
Depreciation is computed using the straight-line method on all depreciable assets. Depreciation expense has been
recognized throughout the Consolidated Statements of Earnings depending on the nature of the related asset. We periodically
review and adjust, as appropriate, the estimated residual values and useful lives of existing revenue earning equipment for
purposes of recording depreciation expense. We routinely dispose of used revenue earning equipment as part of our FMS
business. Refer to Note 6, “Revenue Earning Equipment, Net” for more information. Gains and losses on sales of operating
property and equipment are reflected in “Miscellaneous (income) loss, net” in the Consolidated Statements of Earnings.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the underlying acquired net tangible and
intangible assets. Goodwill and other intangible assets with indefinite useful lives are not amortized, but rather, are tested for
impairment at least annually as of October 1 of each year, or more frequently if events or circumstances indicate the carrying
value of goodwill may be impaired. In evaluating goodwill for impairment, we have the option to first assess qualitative factors
to determine whether further impairment testing is necessary, such as macroeconomic conditions, changes in our industry and
the markets in which we operate, and our market capitalization as well as our reporting units' historical and expected future
financial performance.
If we conclude that it is more likely than not that a reporting unit's fair value is less than its carrying value or we bypass
the optional qualitative assessment, recoverability is assessed by comparing the fair value of the reporting unit with its carrying
amount. If a reporting unit's carrying value exceeds its fair value, we would recognize a goodwill impairment loss for the
amount by which the carrying amount of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill
allocated to that reporting unit.
Our estimate of fair value for reporting units is determined based on a combination of a market and an income approach.
Under the market approach, we use a selection of comparable publicly-traded companies that correspond to the reporting unit to
derive a market-based multiple. Under the income approach, the fair value of the reporting unit is estimated based on the
discounted present value of the projected future cash flows. Rates used to discount cash flows are dependent upon interest rates
and the cost of capital based on our industry and capital structure, adjusted for equity and size risk premiums based on market
capitalization. Estimates of future cash flows are dependent on our knowledge and experience about past and current events and
significant judgments and assumptions about conditions we expect to exist, including revenue growth rates, margins, long-term
growth rates, capital requirements, proceeds from the sale of used vehicles, the ability to utilize our tax net operating losses, and
the discount rate. Our estimates of cash flows are also based on historical and future operating performance, economic
conditions and actions we expect to take. In addition to these factors, our SCS and DTS reporting units are dependent on several
key customers or industry sectors. The loss of a key customer may have a significant impact to our SCS or DTS reporting units,
causing us to assess whether or not the event resulted in a goodwill impairment loss.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
There are inherent uncertainties related to these factors and management’s judgment in applying them to the analysis of
goodwill impairment. It is possible that assumptions underlying the impairment analysis will change in such a manner that
impairment in value may occur in the future.
Indefinite-lived intangible assets, consisting of our trade name, are assessed for impairment when circumstances indicate
that the carrying amount may not be recoverable. The assessment is consistent with the process used to evaluate goodwill
impairment. Intangible assets with finite lives are amortized over their respective estimated useful lives. Identifiable intangible
assets that are subject to amortization are evaluated for impairment as described below.
Impairment of Long-Lived Assets Other than Goodwill and Indefinite-Lived Intangible Assets
Long-lived assets held and used, including revenue earning equipment, operating property and equipment, and intangible
assets with finite lives, are tested for recoverability when circumstances indicate that the carrying amount of assets may not be
recoverable. Recoverability of long-lived assets is evaluated by comparing the carrying value of an asset or asset group to
management’s best estimate of the undiscounted future operating cash flows (excluding interest charges) expected to be
generated by the asset or asset group. If these comparisons indicate that the carrying value of the asset or asset group is not
recoverable, an impairment loss is recognized for the amount by which the carrying value of the asset or asset group exceeds its
estimated fair value. Long-lived assets to be disposed of, including revenue earning equipment and operating property and
equipment, are reported at the lower of carrying amount or fair value less costs to sell.
Self-Insurance Accruals
We retain a portion of the accident risk under auto liability, workers’ compensation and other insurance programs. Under
our insurance programs, we retain the risk of loss in various amounts, generally up to $3 million on a per occurrence basis. Self-
insurance accruals are based primarily on an actuarial estimated, undiscounted cost of claims, which includes claims incurred
but not reported. Historical loss development factors are utilized to project the future development of incurred losses, and these
amounts are adjusted based upon actual claim experience and settlements. While we believe that the amounts are adequate,
there can be no assurance that changes to our actuarial estimates may not occur due to limitations inherent in the estimation
process. Changes in the actuarial estimates of these liabilities are charged or credited to earnings in the period determined.
Amounts estimated to be paid within the next year have been classified as “Accrued expenses and other current liabilities” with
the remainder included in “Other non-current liabilities” in the Consolidated Balance Sheets.
We also maintain additional insurance at certain amounts in excess of our respective underlying retention. Amounts
recoverable from insurance companies are not offset against the related liability as our insurance policies do not extinguish or
provide legal release from the obligation to make payments related to such risk-related losses. Amounts expected to be received
within the next year from insurance companies have been included within “Receivables, net” with the remainder included in
“Sales-type leases and other assets” and are recognized only when realization of the claim for recovery is considered probable.
Income Taxes
Our provision for income taxes is based on reported earnings before income taxes. Deferred taxes are recognized for the
future tax effects of temporary differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases, using tax rates in effect for the years in which the differences are expected to reverse.
Valuation allowances are recognized to reduce deferred tax assets to the amount that is more likely than not to be realized.
In assessing the likelihood of realization, we consider estimates of future sources of taxable income. We calculate our current
and deferred tax position based on estimates and assumptions that could differ from the actual results reflected in income tax
returns filed in subsequent years. Adjustments based on filed returns are recorded when identified.
We are subject to tax audits in numerous jurisdictions in the U.S. and around the world. Tax audits by their very nature are
often complex and can require several years to complete. In the normal course of business, we are subject to challenges from
the Internal Revenue Service and other tax authorities regarding amounts of taxes due. These challenges may alter the timing or
amount of taxable income or deductions, or the allocation of income among tax jurisdictions. As part of our calculation of the
provision for income taxes on earnings, we determine whether the benefits of our tax positions are at least more likely than not
of being sustained upon audit based on the technical merits of the tax position. The tax benefit to be recognized is measured as
the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Such accruals
require management to make estimates and judgments with respect to the ultimate outcome of a tax audit. Actual results could
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
vary materially from these estimates. We adjust these reserves as well as the impact of any related interest and penalties in light
of changing facts and circumstances, such as the progress of a tax audit.
Interest and penalties related to income tax exposures are recognized as incurred and included in "Provision for (benefit
from) income taxes” in the Consolidated Statements of Earnings. Accruals for income tax exposures, including penalties and
interest, expected to be settled within the next year are included in “Accrued expenses and other current liabilities”. Income tax
exposures are included in "Deferred income taxes" in the Consolidated Balance Sheets to the extent net operating loss
carryforwards or other tax attributes are available for offset, with the remainder included in “Other non-current liabilities” in the
Consolidated Balance Sheets. The federal benefit from state income tax exposures is included in “Deferred income taxes” in the
Consolidated Balance Sheets.
Severance and Contract Termination Costs
We recognize liabilities for severance and contract termination costs based upon the nature of the cost to be incurred. For
involuntary separation plans that are completed within the guidelines of our written involuntary separation plan, we recognize
the liability when it is probable and reasonably estimable. For one-time termination benefits, such as additional severance pay
or benefit payouts, and other exit costs, such as contract termination costs, the liability is measured and recognized initially at
fair value in the period in which the liability is incurred, with subsequent changes to the liability recognized as adjustments in
the period of change. Severance related to position eliminations that are part of a restructuring plan is included in "Restructuring
and other, net" in the Consolidated Statements of Earnings. Severance costs that are not part of a restructuring plan are
recognized in the period incurred as a direct cost of revenue or within “Selling, general and administrative expenses” in the
Consolidated Statements of Earnings depending upon the nature of the eliminated position.
Environmental Expenditures
We recognize liabilities for environmental matters when it is probable a loss has been incurred and the costs can be
reasonably estimated. Environmental liability estimates may include costs such as anticipated site testing, consulting,
remediation, disposal, post-remediation monitoring and legal fees, as appropriate. The liability does not reflect possible
recoveries from insurance companies or reimbursement of remediation costs by state agencies, but does include estimates of
cost sharing with other potentially responsible parties. Estimates are not discounted, as the timing of the anticipated cash
payments is not fixed or readily determinable. Subsequent adjustments to initial estimates are recognized as necessary based
upon additional information developed in subsequent periods. In future periods, new laws or regulations, advances in
remediation technology, or additional information about the ultimate remediation methodology to be used could significantly
change our estimates. Claims for reimbursement of remediation costs are recognized when recovery is deemed probable.
Derivative Instruments and Hedging Activities
We use financial instruments, including forward exchange contracts and swaps, to manage our exposures to movements in
interest rates and foreign currency exchange rates. The use of these financial instruments modifies our exposure of these rate
movement risks with the intent to reduce the risk or cost to us. We do not expect to incur any losses as a result of counterparty
default as we only enter into contracts with counterparties comprised of large banks and financial institutions that meet
established credit criteria.
On the date a derivative contract is executed, we formally document, among other items, the intended hedging designation
and relationship, along with the risk management objectives and strategies for entering into the derivative contract. We also
formally assess, both at inception and on an ongoing basis, whether the derivatives we used in hedging transactions are highly
effective in offsetting changes in fair values or cash flows of hedged items. Cash flows from derivatives that are accounted for
as hedges are classified in the Consolidated Statements of Cash Flows in the same category as the items being hedged. When it
is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge, we
discontinue hedge accounting prospectively. The fair value of our derivatives was $47 million and $12 million as of
December 31, 2022 and 2021, respectively.
Foreign Currency Translation
Our foreign operations generally use local currency as their functional currency. Assets and liabilities of these operations
are translated at the exchange rates in effect on the balance sheet date. Items in the Consolidated Statements of Earnings are
translated at the average exchange rates. The related translation adjustments are recorded in “Accumulated other comprehensive
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
loss” in the Consolidated Balance Sheets. Gains and losses resulting from foreign currency transactions are recognized in
“Miscellaneous (income) loss, net” in the Consolidated Statements of Earnings.
Share-Based Compensation
The fair value of stock option awards and unvested restricted stock unit (RSU) awards to employees are expensed on a
straight-line basis over the vesting period of the awards. RSUs granted to the board of directors are expensed over a one year
period when they are granted. Windfall tax benefits and tax shortfalls are charged directly to income tax expense.
Earnings Per Share
Earnings per share is computed using the two-class method. The two-class method of computing earnings per share is an
earnings allocation formula that determines earnings per share for common stock and any participating securities according to
dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. RSUs are considered
participating securities since the share-based awards contain a non-forfeitable right to dividend equivalents irrespective of
whether the awards ultimately vest. Under the two-class method, earnings per common share are computed by dividing the sum
of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted
average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are
allocated to both common shares and participating securities based on the weighted average shares outstanding during the
period.
Diluted earnings per common share reflect the dilutive effect of potential common shares from stock options and other
nonparticipating unvested stock. The dilutive effect of stock options is computed using the treasury stock method, which
assumes any proceeds that could be obtained upon the exercise of stock options or vesting of stock awards would be used to
purchase common shares at the average market price for the period. The assumed proceeds include the purchase price the
grantee pays and the unrecognized compensation expense at the end of each period. For periods where we recognize a net loss,
any unvested award would have an anti-dilutive impact to our earnings per share calculation.
Share Repurchases
Repurchases of shares of common stock are made periodically in open-market transactions and are subject to market
conditions, legal requirements and other factors. The cost of share repurchases is allocated between additional paid-in capital
and retained earnings based on the amount of additional paid-in capital at the time of the share repurchase. Shares are retired
upon repurchase.
Defined Benefit Pension and Postretirement Benefit Plans
The funded status of our defined benefit pension plans and postretirement benefit plans are recognized in the Consolidated
Balance Sheets. The funded status is measured as the difference between the fair value of plan assets and the benefit obligation.
The fair value of plan assets represents the current market value of contributions made to irrevocable trusts, held for the sole
benefit of participants, which are invested by the trusts. For defined benefit pension plans, the benefit obligation represents the
actuarial present value of benefits expected to be paid upon retirement. For postretirement benefit plans, the benefit obligation
represents the actuarial present value of postretirement benefits attributed to employee services already rendered. Overfunded
plans, with the fair value of plan assets exceeding the benefit obligation, are aggregated and reported as a pension asset.
Underfunded plans, with the benefit obligation exceeding the fair value of plan assets, are aggregated and reported as a pension
and postretirement benefit liability.
The current portion of pension and postretirement benefit liabilities represents the actuarial present value of benefits
payable within the next year exceeding the fair value of plan assets (if funded), measured on a plan-by-plan basis. These
liabilities are recognized in “Accrued expenses and other current liabilities” in the Consolidated Balance Sheets.
Pension and postretirement benefit expense includes service cost, interest cost, expected return on plan assets,
amortization of net prior service costs loss/credit and net actuarial loss/gain as well as the impact of any settlement or
curtailment. Service cost represents the actuarial present value of participant benefits earned in the current year. The expected
return on plan assets represents the average rate of earnings expected on the funds invested or to be invested to provide for the
benefits included in the obligation. Prior service cost represents the impact of plan amendments. Net actuarial losses arise as a
result of differences between actual experience and assumptions or as a result of changes in actuarial assumptions. Both are
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
initially recognized in “Accumulated other comprehensive loss” in the Consolidated Balance Sheets and are subsequently
amortized as a component of pension and postretirement benefit expense generally over the remaining life expectancy.
The measurement of benefit obligations and pension and postretirement benefit expense is based on estimates and
assumptions approved by management. These valuations reflect the terms of the plans and use participant-specific information
such as compensation, age and years of service, as well as certain assumptions, including estimates of discount rates, expected
return on plan assets, rate of compensation increases, interest rates and mortality rates.
Fair Value Measurements
We carry various assets and liabilities at fair value in the Consolidated Balance Sheets, including vehicles held for sale,
investments held in Rabbi Trusts and pension assets.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price)
in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on
the measurement date. Fair value measurements are classified based on the following fair value hierarchy:
Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at
the measurement date. An active market for the asset or liability is a market in which transactions for the asset
or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices
in markets that are not active; or model-derived valuations or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 Unobservable inputs for the asset or liability. These inputs reflect our own assumptions about the assumptions a
market participant would use in pricing the asset or liability.
When available, we use unadjusted quoted market prices to measure fair value and classify such measurements within
Level 1. If quoted prices are not available, fair value is based upon model-driven valuations that use current market-based or
independently sourced market parameters such as interest rates and currency rates. Items valued using these models are
classified according to the lowest level input or value driver that is significant to the valuation.
The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable and
accounts payable approximate fair value due to the immediate or short-term maturities of these financial instruments. Revenue
earning equipment held for sale is measured at fair value on a nonrecurring basis and is stated at the lower of carrying amount
or fair value less costs to sell. Investments held in Rabbi Trusts and derivatives are carried at fair value on a recurring basis.
Investments held in Rabbi Trusts include exchange-traded equity securities and mutual funds. Fair values for these investments
are based on quoted prices in active markets. Refer to Note 19, "Employee Benefit Plans," for further information regarding
pension assets.
2. RECENT ACCOUNTING PRONOUNCEMENTS
Reference Rate Reform
In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
2020-04, Reference Rate Reform (Topic 848). This update provides optional expedients for applying GAAP to contracts,
hedging relationships, and other transactions that reference LIBOR or another rate expected to be discontinued at the end of
2021 because of rate reform. The update is effective for all transactions from March 12, 2020 through December 31, 2022. On
December 21, 2022, the FASB issued ASU 2022-06, which defers the sunset date of ASC 848, Reference Rate Reform, from
December 31, 2022 to December 21, 2024. ASC 848 provides temporary relief relating to the potential accounting impact
relating to the replacement of LIBOR or other reference rates expected to be discounted as a result of reference rate reform.We
adopted this update as alternative reference rates in relevant contracts were modified through December 31, 2022, and it did not
have a material impact on our consolidated financial position, results of operations, and cash flows.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
3. SEGMENT REPORTING
Our operating segments are aggregated into reportable business segments based upon similar economic characteristics,
products, services, customers and delivery methods.
Our primary measurement of segment financial performance, defined as “Earnings (loss) from continuing operations
before income taxes” (EBT), includes an allocation of costs from Central Support Services (CSS) and excludes Non-operating
pension costs, net and certain other items as described in Note 21, "Other Items Impacting Comparability." CSS represents
those costs incurred to support all business segments, including finance and procurement, corporate services, human resources,
information technology, public affairs, legal, marketing and corporate communications. The objective of the EBT measurement
is to provide clarity on the profitability of each business segment and, ultimately, to hold leadership of each business segment
accountable for their allocated share of CSS costs. Certain costs are not attributable to any segment and remain unallocated in
CSS, including costs for investor relations, public affairs and certain executive compensation. CSS costs attributable to the
business segments are predominantly allocated to FMS, SCS and DTS as follows:
• Finance, corporate services, and health and safety — allocated based upon estimated and planned resource utilization;
• Human resources — individual costs within this category are allocated under various methods, including allocation
based on estimated utilization and number of personnel supported;
•
Information technology — principally allocated based upon utilization-related metrics such as number of users or
minutes of central processing unit time. Customer-related project costs and expenses are allocated to the business
segment responsible for the project; and
• Other — represents legal and other centralized costs and expenses including certain share-based incentive
compensation costs. Expenses, where allocated, are based primarily on the number of personnel supported.
Our FMS segment leases revenue earning equipment and provides fuel, maintenance and other ancillary services to the
SCS and DTS segments. Inter-segment EBT allocated to SCS and DTS includes earnings related to equipment used to provide
services to SCS and DTS customers. EBT related to inter-segment equipment and services billed to SCS and DTS customers
(equipment contribution) are included in both FMS and the segment that served the customer and then eliminated upon
consolidation (presented as “Eliminations”).
Segment results are not necessarily indicative of the results of operations that would have occurred had each segment
been an independent, stand-alone entity during the periods presented. Each business segment follows the same accounting
policies as described in Note 1, “Summary of Significant Accounting Policies.” However, we do not record right-of-use assets
or liabilities for our intercompany operating leases between FMS and SCS and DTS business segments. The following tables
set forth financial information for each of our segments and provide a reconciliation between segment EBT and earnings from
continuing operations before income taxes.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(In millions)
Revenue:
Fleet Management Solutions:
ChoiceLease
Commercial rental
SelectCare and other
Fuel services and ChoiceLease liability insurance (1)
Fleet Management Solutions
Supply Chain Solutions
Dedicated Transportation Solutions
Eliminations (2)
Total revenue
Earnings (loss) from continuing operations before income taxes:
Fleet Management Solutions
Supply Chain Solutions
Dedicated Transportation Solutions
Eliminations
Unallocated Central Support Services
Non-operating pension costs, net (3)
Other items impacting comparability, net (4)
Years ended December 31,
2022
2021
2020
$
3,203 $
3,220 $
3,160
1,351
659
1,114
6,327
4,720
1,786
1,114
607
739
5,680
3,155
1,457
834
584
593
5,171
2,544
1,229
(822)
(629)
(524)
$ 12,011 $
9,663 $
8,420
$
1,054 $
663 $
(142)
186
102
(115)
1,227
(83)
(11)
83
117
49
(78)
751
(69)
1
10
160
73
(43)
48
(77)
(11)
(90)
Earnings (loss) from continuing operations before income taxes
$
1,216 $
693 $
(130)
In the first quarter of 2021, we completed the exit of the extension of our liability insurance coverage for ChoiceLease customers.
_______________
(1)
(2) Represents the elimination of intercompany revenues in our FMS business segment.
(3) Refer to Note 19, "Employee Benefit Plans," for a discussion on these items.
(4) Refer to Note 21, “Other Items Impacting Comparability,” for a discussion of items excluded from our primary measure of segment performance.
78
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table sets forth depreciation expense, other non-cash charges, net, intangible amortization expense, interest
expense (income), capital expenditures paid and total assets for the years ended December 31, 2022, 2021 and 2020, as
provided to the chief operating decision-maker for each of our reportable business segments:
(In millions)
2022
Depreciation expense (1)
Other non-cash charges, net (2)
Intangible amortization expense
Interest expense (income) (3)
Capital expenditures paid
Total assets
2021
Depreciation expense (1)
Other non-cash charges, net (2)
Intangible amortization expense
Interest expense (income) (3)
Capital expenditures paid
Total assets
2020
Depreciation expense (1)
Other non-cash charges, net (2)
Intangible amortization expense
Interest expense (income) (3)
Capital expenditures paid
Total assets
_______________
FMS
SCS
DTS
CSS
Eliminations
Total
$
$
$
$
$
1,618
90
3
219
2,442
$ 10,811
$
$
$
$
$
1,736
39
2
214
1,854
91
173
34
10
155
3,043
47
78
6
3
67
3
4
—
(2)
2
1 $
— $
1,713
13
—
1
32
— $
— $
— $
280
37
228
— $
2,631
380
904
(743) $ 14,395
3
3
—
(3)
1
—
(5)
—
—
19
— $
1,786
— $
— $
— $
115
8
214
— $
1,941
$ 11,000
2,320
318
555
(358) $ 13,835
$
$
$
$
$
1,981
133
3
255
1,090
39
64
5
1
38
3
1
—
(3)
1
4
2
—
8
17
— $
2,027
— $
— $
— $
200
8
261
— $
1,146
$ 11,275
1,313
296
328
(280) $ 12,932
(1) Depreciation expense totaling $27 million in 2022, $26 million in 2021, and $27 million in 2020 associated with CSS assets was allocated to business
(2)
(3)
segments based upon estimated and planned asset utilization.
Includes primarily amortization of operating lease right-of-use assets and sales commissions, and bad debt expense.
Interest expense was primarily allocated to the FMS segment since such borrowings were used principally to fund the purchase of revenue earning
equipment used in FMS; however, interest was also reflected in SCS and DTS based on targeted segment leverage ratios.
Geographic Information
(In millions)
Long-lived assets:
United States
Foreign:
Canada
Europe
Mexico
Total
December 31,
2022
2021
$
8,755 $
8,478
494
22
67
583
531
242
57
830
$
9,338 $
9,308
79
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
4. REVENUE
Disaggregation of Revenue
The following tables disaggregate our revenue recognized by primary geographical market by our reportable business
segments and by industry for SCS. Refer to Note 3, “Segment Reporting”, for the disaggregation of our revenue by major
product/service lines.
Primary Geographical Markets
(In millions)
United States
Canada
Europe (1)
Mexico
Total revenue
Year ended December 31, 2022
FMS
SCS
DTS
Eliminations
Total
$
5,858 $
4,209 $
1,786 $
(780) $ 11,073
319
150
—
251
—
260
—
—
—
(42)
—
—
528
150
260
$
6,327 $
4,720 $
1,786 $
(822) $ 12,011
————————————
(1) Refer to Note 21, "Other Items Impacting Comparability", for further information on the exit of the FMS U.K. business.
(In millions)
United States
Canada
Europe
Mexico
Total revenue
(In millions)
United States
Canada
Europe
Mexico
Total revenue
Industry
Year ended December 31, 2021
FMS
SCS
DTS
Eliminations
Total
$
5,116 $
2,706 $
1,457 $
(600) $
8,679
302
262
—
230
—
219
—
—
—
(29)
—
—
503
262
219
$
5,680 $
3,155 $
1,457 $
(629) $
9,663
Year ended December 31, 2020
FMS
SCS
DTS
Eliminations
Total
$
4,647 $
2,147 $
1,229 $
(507) $
7,516
269
255
—
208
—
189
—
—
—
(17)
—
—
460
255
189
$
5,171 $
2,544 $
1,229 $
(524) $
8,420
We have a diversified portfolio of customers across a full array of transportation and logistics solutions and across many
industries. We believe this will help to mitigate the impact of adverse downturns in specific sectors of the economy. Our
portfolio of ChoiceLease and commercial rental customers, as well as our DTS business, is not concentrated in any one
particular industry or geographic region.
Our SCS business segment includes revenue from the following industries:
(In millions)
Consumer packaged goods and retail
Automotive
Technology and healthcare
Industrial and other
Total revenue
80
Years ended December 31,
2022
2021
2020
$
2,217 $
1,221 $
1,523
1,185
517
463
428
321
993
940
387
224
$
4,720 $
3,155 $
2,544
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Lease & Related Maintenance and Rental Revenues
The non-lease revenue from maintenance services related to our ChoiceLease product is recognized in "Lease & related
maintenance and rental revenues" in the Consolidated Statements of Earnings. In 2022, 2021 and 2020, we recognized $1.0
billion, $1.0 billion and $965 million, respectively.
Deferred Revenue
The following table includes the changes in deferred revenue due to the collection and deferral of cash or the satisfaction
of our performance obligation under the contract:
(In millions)
Balance as of beginning of period
Recognized as revenue during period from beginning balance
Consideration deferred during period, net
Foreign currency translation adjustment and other
Balance as of end of period
Contracted Not Recognized Revenue
Years ended December 31,
2022
2021
2020
$
594 $
630 $
(181)
140
(9)
(183)
145
2
604
(180)
203
3
$
544 $
594 $
630
Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized
(contracted not recognized revenue). Contracted not recognized revenue was $2.3 billion as of December 31, 2022, and
primarily includes deferred revenue and amounts for full service ChoiceLease maintenance revenue that will be recognized as
revenue in future periods as we provide maintenance services to our customers. Contracted not recognized revenue excludes (1)
variable consideration as it is not included in the transaction price consideration allocated at contract inception, (2) revenues
from the lease component of our ChoiceLease product and all the revenue from the commercial rental product, (3) revenues
from contracts with an original duration of one year or less, including SelectCare contracts, and (4) revenue from SCS, DTS
and other contracts where there are remaining performance obligations when we have the right to invoice but the revenue to be
recognized in the future corresponds directly with the value delivered to the customer.
Sales Commissions and Setup Costs
We capitalize incremental sales commissions paid as a result of obtaining ChoiceLease, SCS and DTS contracts as
contract costs. Capitalized sales commissions, including initial direct costs of our leases, was $126 million and $106 million as
of December 31, 2022 and 2021, respectively. Sales commission expense in 2022, 2021 and 2020 was $44 million for all years.
We also capitalize setup costs as a result of obtaining SCS and DTS contracts as contract costs. Capitalized setup costs were
$73 million and $54 million as of December 31, 2022 and 2021, respectively. Setup contract amortization expense in 2022,
2021 and 2020 was $28 million, $23 million and $11 million, respectively.
5. RECEIVABLES, NET
(In millions)
Trade
Sales-type leases
Other, primarily warranty and insurance
Allowance for credit losses and other
Receivables, net
December 31,
2022
2021
$
1,476 $
1,281
120
55
1,651
(41)
148
67
1,496
(31)
$
1,610 $
1,465
81
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table provides a reconciliation of our allowance for credit losses and other:
(In millions)
Balance as of beginning of period
Changes to provisions for credit losses
Write-offs and other
Balance as of end of period
6. REVENUE EARNING EQUIPMENT, NET
Years ended December 31,
2022
2021
$
$
31 $
33
(23)
41 $
43
1
(13)
31
(In millions)
Held for use:
Trucks
Tractors
Trailers and other
Held for sale
Total
December 31, 2022
December 31, 2021
Cost
Accumulated
Depreciation
Net
Cost
Accumulated
Depreciation
Net
Estimated
Useful
Lives
(In years)
3 — 7
$
5,282 $
(2,114) $
3,168 $
5,223 $
(2,055) $
3,168
4 — 7.5
9.5 — 12
7,153
1,610
388
(3,153)
4,000
(690)
(286)
920
102
7,256
1,780
210
(3,059)
4,197
(869)
(163)
911
47
$ 14,433 $
(6,243) $
8,190 $ 14,469 $
(6,146) $
8,323
Total depreciation expense related to revenue earning equipment primarily used in our FMS segment was $1.5 billion,
$1.7 billion and $1.9 billion in 2022, 2021 and 2020, respectively.
Residual Value Estimate Changes
We periodically review and adjust, as appropriate, the estimated residual values and useful lives of existing revenue
earning equipment for the purposes of recording depreciation expense. Reductions in estimated residual values or useful lives
will increase depreciation expense over the remaining useful life of the vehicle. Conversely, an increase in estimated residual
values or useful lives will decrease depreciation expense over the remaining useful life of the vehicle. Our review of the
estimated residual values and useful lives of revenue earning equipment is based on vehicle class, (i.e., generally subcategories
of trucks, tractors and trailers by weight and usage), historical and current market prices, third-party expected future market
prices, expected lives of vehicles, and expected sales in the wholesale or retail markets, among other factors. A variety of
factors, many of which are outside of our control, could cause residual value estimates to differ from actual used vehicle sales
pricing, such as changes in supply and demand of used vehicles; volatility in market conditions; changes in vehicle technology;
competitor pricing; regulatory requirements; driver shortages; customer requirements and preferences; and changes in
underlying assumption factors. We have disciplines related to the management and maintenance of our vehicles designed to
manage the risk associated with the residual values of our revenue earning equipment.
The following table provides a summary of incremental depreciation expense that has been recorded related to our
residual value estimate changes since 2019, as well as used vehicle sales results (rounded to the closest million):
(In millions)
Depreciation expense related to estimate changes
Used vehicle sales, net
Years ended December31,
2022
2021
2020
$
193 $
309 $
(450)
(257)
491
—
In 2022, we performed a review of the residual values and useful lives of our revenue earning equipment. Based on the
results of our analysis, we made adjustments to residual values, which impacted approximately 5% of our total fleet. The
increase in depreciation expense in 2022 as a result of our residual value estimate changes was not material to our results of
operations.
During the second quarter of 2021, we completed a review of the residual values and useful lives of revenue earning
equipment. Based on the results of our analysis, we adjusted our residual value estimates for certain tractors and useful lives of
82
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
certain classes of our revenue earning equipment, which impacted approximately 15% of our total fleet. The increase in
depreciation expense in 2021 as a result of residual value estimate changes was not material to our results of operations.
In 2020, we performed a review of the estimated residual values of our revenue earning equipment primarily due to the
COVID-19 pandemic and its impact on current and expected used vehicle market conditions. In evaluating our residual value
estimates, we reviewed recent multi-year trends; management and third-party outlook for the used vehicle market, including
impacts of COVID-19 and the demand and pricing of our used vehicles; expected sales volumes through our retail and
wholesale channels; inventory levels; and other factors that management deemed necessary to appropriately reflect our expected
sales proceeds. Based on our review, we reduced our estimated residual values primarily for our truck fleet, and to a lesser
extent, our tractor fleet, which resulted in additional depreciation expense of $197 million. This resulted in a decrease to our net
earnings of $146 million and diluted earnings per share of $2.78 in 2020. In 2020, the depreciation expense also included
$294 million related to the residual value changes that occurred in the second half of 2019.
Used Vehicle Sales and Valuation Adjustments
Revenue earning equipment held for sale is stated at the lower of carrying amount or fair value less costs to sell. Losses on
vehicles held for sale for which carrying values exceed fair value, which we refer to as "valuation adjustments," are recognized
at the time they are deemed to meet the held for sale criteria and are presented within "Used vehicle sales, net" in the
Consolidated Statements of Earnings. For revenue earning equipment held for sale, we stratify our fleet by vehicle type (trucks,
tractors and trailers), weight class, age and other relevant characteristics and create classes of similar assets for analysis
purposes. For revenue earning equipment held for sale, fair value was determined based upon recent market prices obtained
from our own sales experience for each class of similar assets and vehicle condition if available or third-party market pricing. In
addition, we also consider expected declines in market prices when valuing the vehicles held for sale, as well as forecasted sales
channel mix (retail/wholesale).
The following table presents revenue earning equipment held for sale that are measured at fair value on a nonrecurring
basis and considered a Level 3 fair value measurement:
(In millions)
Revenue earning equipment held for sale (1):
Trucks
Tractors
Trailers and other
Total assets at fair value
Losses from Valuation Adjustments
December 31,
Years ended December 31,
2022
2021
2022
2021
2020
$
$
1 $
1 $
3 $
4 $
2
—
2
1
5
1
4
6
3 $
4 $
9 $
14 $
18
12
7
37
_______________
(1) Reflects only the portion where net book values exceeded fair values and valuation adjustments were recorded. The net book value of assets held for sale
that were less than fair value was $99 million and $43 million as of December 31, 2022 and 2021, respectively.
The components of used vehicle sales, net were as follows:
(In millions)
Gains on vehicle sales, net (1)
Losses from valuation adjustments
Used vehicle sales, net
_______________
(1)
In 2022, Gains on vehicle sales, net includes $49 million related to the exit of the FMS U.K.business.
Years ended December 31,
2022
2021
2020
$
$
(459) $
(271) $
(37)
9
14
(450) $
(257) $
37
—
83
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
7. OPERATING PROPERTY AND EQUIPMENT, NET
(In millions)
Land
Buildings and improvements
Machinery and equipment
Other
Accumulated depreciation
Total
Estimated Useful Lives
(In years)
December 31,
2022
2021
—
10 — 40
3 — 10
3 — 10
$
233 $
1,033
1,073
186
2,525
240
946
927
146
2,259
(1,377)
(1,274)
$
1,148 $
985
Depreciation expense related to operating property and equipment was $182 million, $128 million and $123 million in 2022,
2021 and 2020, respectively. In 2022, depreciation expense includes an asset impairment of $20 million related to the early
termination of a SCS customer distribution center. The asset impairment was determined under the income-based approach
using a discounted cash flow method of valuation.
8. GOODWILL
The carrying amount of goodwill attributable to each reportable business segment with changes therein was as follows:
(In millions)
Balance as of January 1, 2021
Acquisitions (1)
Foreign currency translation adjustment
Balance as of December 31, 2021
Acquisition (1)
Foreign currency translation adjustment
Balance as of December 31, 2022 (2)
FMS
SCS
DTS
Total
$
244 $
—
—
190 $
96
—
41 $
—
—
$
244 $
286 $
41 $
1
—
289
—
—
—
$
245 $
575 $
41 $
475
96
—
571
290
—
861
_______________
(1) Refer to Note 24, "Acquisitions," for additional information.
(2) Accumulated impairment losses were $26 million and $19 million for FMS and SCS, respectively, as of both December 31, 2022 and 2021.
We assess goodwill for impairment on October 1st of each year or more often if deemed necessary. On October 1, 2022,
we completed our annual goodwill impairment test for all reporting units and determined there was no impairment.
9. INTANGIBLE ASSETS, NET
(In millions)
Indefinite lived intangible assets — Trade name
Finite lived intangible assets, primarily customer relationships (1)
Accumulated amortization
Total
(In millions)
Indefinite lived intangible assets — Trade name
Finite lived intangible assets, primarily customer relationships
Accumulated amortization
Total
December 31, 2022
FMS
SCS
DTS
CSS
Total
$
— $
— $
— $
9 $
59
(55)
338
(58)
8
(6)
—
—
9
405
(119)
$
4 $
280 $
2 $
9 $
295
December 31, 2021
FMS
SCS
DTS
CSS
Total
$
— $
— $
— $
9 $
58
(53)
185
(31)
8
(5)
—
—
$
5 $
154 $
3 $
9 $
9
251
(89)
171
_______________
(1)
Includes $148 million of customer relationships related to the acquisition of PLG Investments I, LLC (Whiplash). Refer to Note 24, "Acquisitions," for
additional information.
84
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The Ryder trade name has been identified as having an indefinite useful life. Customer relationship intangibles are being
amortized on a straight-line basis over their estimated useful lives, generally 6-19 years. We recognized amortization expense
associated with finite lived intangible assets of $37 million in 2022 and $8 million in 2021 and 2020. The future amortization
expense for each of the five succeeding years related to all intangible assets that are currently reported in the Consolidated
Balance Sheets is estimated to range from $22 - $33 million per year for 2023 - 2027.
10. ACCRUED EXPENSES AND OTHER LIABILITIES
(In millions)
Salaries and wages
Deferred compensation
Pension and other employee benefits
Insurance obligations (1)
Operating taxes (2)
Interest
Deposits, mainly from customers
Operating lease liabilities (3)
Deferred revenue (4)
Other (5)
Total
_______________
December 31, 2022
December 31, 2021
Accrued
Expenses
Non-
Current
Liabilities
Total
Accrued
Expenses
Non-
Current
Liabilities
Total
$
259 $
— $
259 $
210 $
— $
5
29
179
132
41
84
191
178
102
80
179
309
—
—
—
541
366
93
85
208
488
132
41
84
732
544
195
6
29
186
166
37
95
100
183
108
91
188
311
—
—
—
256
411
57
210
97
217
497
166
37
95
356
594
165
$
1,200 $
1,568 $
2,768 $
1,120 $
1,314 $
2,434
(1) Insurance obligations are primarily comprised of self-insured claim liabilities.
(2) 2021 amount includes the deferral of certain payroll taxes allowed under the CARES Act.
(3) Refer to Note 24, "Acquisitions", for further information.
(4) Refer to Note 4, "Revenue", for further information.
(5) As of December 31, 2022, and 2021, includes $13 million and $8 million, respectively, of restructuring liabilities related to the exit of the FMS U.K.
business. Refer to Note 21, "Other Items Impacting Comparability" for further information.
We recognized a benefit of $25 million in 2022 and $6 million in 2021 within earnings from continuing operations from
the favorable development of estimated prior years claims where costs were lower than self-insured loss reserves. We
recognized a charge of $18 million in 2020 within earnings from continuing operations from the unfavorable development of
estimated prior years claims where costs exceeded self-insured loss reserves.
85
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
11. INCOME TAXES
The components of earnings (loss) from continuing operations before income taxes and the provision for (benefit from)
income taxes from continuing operations were as follows:
(In millions)
Earnings (loss) from continuing operations before income taxes:
United States
Foreign
Total
Provision for (benefit from) income taxes from continuing operations:
Current tax expense (benefit) from continuing operations:
Federal
State
Foreign
Deferred tax expense (benefit) from continuing operations:
Federal
State
Foreign
Total
Years ended December 31,
2022
2021
2020
$
1,021 $
560 $
(126)
195
133
(4)
$
1,216 $
693 $
(130)
$
30 $
9 $
43
14
87
214
23
29
266
24
12
45
112
8
6
126
$
353 $
171 $
(1)
10
6
15
(28)
(10)
5
(33)
(18)
In 2022, 2021 and 2020, federal, state, and foreign net operating losses were utilized to offset current income taxes
payable resulting in a tax benefit of $103 million, $124 million, and $278 million, respectively.
A reconciliation of the federal statutory tax rate with the effective tax rate from continuing operations follows:
(Percentage of pre-tax earnings)
Federal statutory tax rate
Impact on deferred taxes for changes in tax rates
Additional deferred tax adjustments
State income taxes, net of federal income tax benefit
Foreign rates varying from federal statutory tax rate
FMS U.K. business exit
Tax contingencies
Tax credits
Other permanent book-tax differences
Change in foreign valuation allowance
Other
Effective tax rate
Years ended December 31,
2022
2021
2020
21.0 %
(0.4) %
(0.1) %
5.1 %
(5.3) %
3.2 %
(0.3) %
(0.2) %
0.6 %
5.4 %
0.1 %
21.0 %
(0.3) %
(0.1) %
4.4 %
0.1 %
— %
(0.7) %
(0.3) %
1.8 %
(1.1) %
(0.1) %
29.1 %
24.7 %
21.0 %
0.9 %
0.8 %
(3.4) %
1.3 %
— %
5.5 %
1.7 %
(3.3) %
(11.9) %
1.5 %
14.1 %
86
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Deferred Income Taxes
The components of the net deferred income tax liability were as follows:
(In millions)
Deferred income tax assets:
Self-insurance accruals
Net operating loss carryforwards
Accrued compensation and benefits
Pension benefits
Deferred revenue
Other, including federal benefit on state tax positions
Valuation allowance
Deferred income tax liabilities:
Property and equipment basis differences
Other
Net deferred income tax liability (1)
_______________
December 31,
2022
2021
$
109 $
182
88
27
131
25
562
(88)
474
111
271
69
17
153
31
652
(24)
628
(2,013)
(1,874)
(18)
(24)
(2,031)
(1,898)
$
(1,557) $
(1,270)
(1) Deferred tax assets of $14 million and $5 million have been included in "Sales-type leases and other assets" as of December 31, 2022 and 2021.
During 2021, we reevaluated our historic assertion with respect to our U.K. and Germany operations and determined that
we no longer consider these earnings to be indefinitely reinvested. In October 2022 we repatriated $282 million of undistributed
earnings from our U.K. subsidiary with minimal tax cost. As of December 31, 2022, we continue to consider these earnings no
longer indefinitely reinvested and determined that there was no impact to deferred taxes. We intend to continue to permanently
reinvest the earnings from our remaining foreign jurisdictions which, as of December 31, 2022, had $506 million of
undistributed foreign earnings. Any future repatriations of the unremitted earnings could be subject to additional federal, state
and foreign income taxes, withholding taxes, and/or the tax impact of foreign currency exchange gains or losses. The
determination of the amount of unrecognized deferred tax liability associated with the $506 million of undistributed foreign
earnings is not practicable because of the complexities associated with the hypothetical calculations used in evaluating whether
we will maintain the indefinite reinvestment assertion on the remaining foreign subsidiaries.
As of December 31, 2022, we had U.S. federal tax effected net operating loss carryforwards, before unrecognized tax
benefits, of $81 million, of which $6 million is expected to expire beginning 2035 and the remaining portion has an indefinite
carryforward period. U.S. federal net operating loss deductions are limited to 80% of taxable income for losses generated in
taxable years beginning after December 31, 2017. Various U.S. subsidiaries had state tax-effected net operating loss
carryforwards, before unrecognized tax benefits and valuation allowances, of $31 million that will begin to expire as follows:
approximately $1 million in 2026, $25 million in years 2027 and thereafter, with the remaining $6 million having an indefinite
carryforward period. To the extent that we do not generate sufficient state taxable income through viable planning strategies
within the statutory carryforward periods to utilize the loss carryforwards in these states, the loss carryforwards will expire
unused. We also had foreign tax effected net operating loss carryforwards of $97 million that are available to reduce future
income tax payments in several countries, subject to varying expiration rules. We assess the realizability of our deferred tax
assets and record a valuation allowance to the extent it is determined that they are not more-likely-than-not to be realized.
During 2022, the consideration of all of the evidence led to the determination that the deferred tax assets in the U.K. were more-
likely-than-not realizable, and therefore, the full valuation allowance on the U.K. deferred tax assets of $4 million was released.
Due to our assessment of future sources of taxable income in various states and foreign jurisdictions, we have a cumulative
valuation allowance of $88 million against our deferred tax assets as of December 31, 2022, a net increase of $64 million from
the prior year. The increase is primarily due to a newly established valuation allowance against net operating losses generated
by the U.K.'s parent entity related to the exit of the FMS U.K. business in 2022, that were determined to be not more-likely-
than-not realizable. The valuation allowance is subject to change in future years based on the availability of future sources of
taxable income.
87
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Uncertain Tax Positions
In many cases, our uncertain tax positions are related to tax years that remain subject to examination by the relevant
taxing authorities. The following table summarizes these open tax years by jurisdiction:
Jurisdiction
United States (Federal)
Canada
Mexico
United Kingdom
Brazil (in discontinued operations)
Open Tax Year
2013 - 2015, 2018 - 2022
2013 - 2022
2017 - 2022
2020 - 2022
2017 - 2022
The following table summarizes the activity related to unrecognized tax benefits (excluding the federal benefit received
from state positions):
(In millions)
Balance at January 1
Additions based on tax positions related to the current year
Reductions due to lapse of applicable statutes of limitation
Total before interest and penalties at December 31
Interest and penalties
Balance at December 31
December 31,
2022
2021
2020
$
38 $
43 $
2
(6)
34
3
1
(6)
38
4
$
37 $
42 $
49
2
(8)
43
4
47
Of the total unrecognized tax benefits as of December 31, 2022, $31 million (net of the federal benefit on state issues)
represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future
periods. Unrecognized tax benefits related to federal, state and foreign tax positions may decrease $4 million by December 31,
2023, if audits are completed or tax years close during 2023.
12. LEASES
Leases as Lessor
The components of revenue from leases were as follows:
(In millions)
Operating leases
Lease income related to ChoiceLease
Lease income related to commercial rental (1)
Sales-type leases
Interest income related to net investment in leases
Variable lease income excluding commercial rental (1)
_______________
Years ended December 31,
2022
2021
2020
$
1,490 $
1,538 $
1,566
1,286
1,062
792
$
$
45 $
48 $
49
323 $
312 $
289
(1) Lease income related to commercial rental includes both fixed and variable lease income. Variable lease income is approximately 15% to 25% of total
commercial rental income.
88
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The components of the net investment in sales-type leases, which are included in "Receivables, net" and "Sales-type
leases and other assets" in the Consolidated Balance Sheets, were as follows:
(In millions)
Net investment in the lease - lease payment receivable
Net investment in the lease - unguaranteed residual value in assets
Estimated loss allowance
Total
Maturities of sales-type lease receivables as of December 31, 2022 were as follows:
Years ending December 31
2023
2024
2025
2026
2027
Thereafter
Total undiscounted cash flows
Present value of lease payments (recognized as lease receivables)
Difference between undiscounted cash flows and discounted cash flows
Operating lease payments expected to be received as of December 31, 2022 were as follows:
December 31,
2022
2021
$
598 $
43
641
(6)
583
47
630
(4)
$
635 $
626
(In millions)
$
163
148
128
111
79
111
740
(598)
142
$
(In millions)
$
1,112
842
596
376
204
148
$
3,278
Years ended December 31,
2022
2021
2020
$
13 $
14 $
2
199
10
26
(39)
2
98
9
16
(27)
$
211 $
112 $
13
2
92
8
13
(27)
101
Years ending December 31
2023
2024
2025
2026
2027
Thereafter
Total undiscounted cash flows
Leases as Lessee
The components of lease expense were as follows:
(In millions)
Finance lease cost
Amortization of right-of-use-assets
Interest on lease liabilities
Operating lease cost
Short-term lease and other
Variable lease cost
Sublease income
Total lease cost
89
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Supplemental balance sheet information related to leases was as follows:
(In millions)
Noncurrent assets
Current liabilities
Noncurrent liabilities
Weighted-average remaining lease term
Operating
Finance
Weighted-average discount rate
Operating
Finance
Maturities of operating and finance lease liabilities were as follows:
(In millions)
Years ending December 31
2023
2024
2025
2026
2027
Thereafter
Total lease payments
Less: Imputed Interest
Present value of lease liabilities
December 31,
2022
2021
Operating
Finance
Operating
Finance
$
715 $
38 $
341 $
191
541
13
29
100
256
40
13
31
December 31,
2022
2021
5 years
4 years
5 years
4 years
4.0 %
4.4 %
2.7 %
4.4 %
Operating
Finance
Leases
Leases
Total
$
216 $
14 $
177
152
112
68
79
804
(72)
12
8
5
2
5
46
(4)
$
732 $
42 $
230
189
160
117
70
84
850
(76)
774
Note: Amounts may not be additive due to rounding.
As of December 31, 2022, we have entered into $214 million of additional facility operating leases that have not yet
commenced. The operating leases will commence in 2022 with lease terms of generally 3 to 10 years.
90
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
13. DEBT
(Dollars in millions)
Debt:
Weighted Average
Interest Rate
December 31,
2022
December 31,
2021
Maturities
December 31,
2022
December 31,
2021
U.S. commercial paper
Canadian commercial paper
Trade receivables financing program
Global revolving credit facility
Unsecured U.S. obligations
Unsecured U.S. notes — Medium-term notes (1)
Unsecured foreign obligations
Asset-backed U.S. obligations (2)
Finance lease obligations and other
4.61%
—%
5.14%
—%
4.08%
3.68%
2.88%
2.98%
0.32%
0.34%
—%
—%
3.41%
3.24%
2.00%
2.62%
2026
2026
2023
2026
2027
2023-2027
2024
2023-2029
2023-2031
Debt issuance costs and original issue discounts
Total debt
Short-term debt and current portion of long-term debt
Long-term debt
_______________
$
672 $
—
50
—
375
4,704
50
477
42
6,370
(18)
6,352
(1,349)
$
5,003 $
531
7
—
—
200
5,150
140
527
45
6,600
(20)
6,580
(1,333)
5,247
(1)
Includes the impact from the fair market values of hedging instruments on our notes, which were $47 million as of December 31, 2022 and $12 million as
of December 31, 2021. The notional amount of the executed interest rate swaps designated as fair value hedges was $500 million and $450 million as of
December 31, 2022 and December 31, 2021, respectively.
(2) Asset-backed U.S. obligations are related to financing transactions backed by a portion of our revenue earning equipment.
The fair value of total debt (excluding finance lease and asset-backed U.S. obligations) was approximately $5.7 billion
and $6.2 billion as of December 31, 2022 and 2021, respectively. For publicly-traded debt, estimates of fair value were based
on market prices. For other debt, fair value was estimated based on a model-driven approach using rates currently available to
us for debt with similar terms and remaining maturities. The fair value measurements of our publicly-traded debt and our other
debt were classified within Level 2 of the fair value hierarchy.
Debt Proceeds and Repayments
In February 2022, we issued an aggregate principal amount of $450 million unsecured medium terms notes that mature on
March 1, 2027. The notes bear interest at a rate of 2.85% per year. In May 2022, we issued an aggregate principal amount of
$300 million unsecured medium-term notes that mature on June 15, 2027. The notes bear interest at a rate of 4.30% per year.
In November 2022, we entered into three term notes that mature on November 16, 2027, with aggregate principal
amounts totaling $175 million, bearing annual interest rates ranging from 5.0% to 5.15%.
In 2022, we received $102 million from financing transactions backed by a portion of our revenue earning equipment. The
proceeds from the transaction were used for general corporate purposes. We provided end of term guarantees for the residual
value of the revenue earning equipment in the transaction. The transaction proceeds, along with the end of term residual value
guarantees, have been included within "asset-backed U.S. obligations" in the preceding table.
91
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table includes our debt proceeds and repayments in 2022:
(In millions)
Medium-term notes (1)
U.S. and foreign term loans, finance lease
obligations and other
Total debt proceeds
_______________
Debt Proceeds
Debt Repayments
$
$
749 Medium-term notes
U.S. and foreign term loans, finance lease
480
obligations and other
1,229 Total debt repaid
$
$
1,150
402
1,552
(1) Proceeds from medium-term notes presented net of discount and issuance costs.
Debt proceeds were used to repay maturing debt and for general corporate purposes. If the unsecured medium-term notes
are downgraded below investment grade following, or as a result of, a change in control, the note holders can require us to
repurchase all or a portion of the notes at a purchase price equal to 101% of principal value plus accrued and unpaid interest.
Contractual maturities of total debt, excluding finance lease obligations, are as follows:
Years ending December 31
2023
2024
2025
2026
2027
Thereafter
Total
Finance lease obligations (Refer to Note 12)
Total long-term debt
Global Revolving Credit Facility
(In millions)
$
1,337
1,520
1,096
1,419
922
34
6,328
42
$
6,370
We maintain a $1.4 billion global revolving credit facility, which supports U.S. and Canadian commercial paper
programs, with a syndicate of eleven lending institutions and expires in December 2026. The agreement provides for annual
facility fees which range from 7.0 to 17.5 basis points based on our long-term credit ratings. The annual facility fee is 12.5 basis
points as of December 31, 2022. The credit facility is primarily used to finance working capital and vehicle purchases, but can
also be used to issue up to $75 million in letters of credit (there were no letters of credit outstanding against the facility as of
December 31, 2022). At our option, the interest rate on borrowings under the credit facility is based on specific risk-free rates.
The credit facility contains no provisions limiting its availability in the event of a material adverse change to our business
operations; however, the credit facility does contain standard representations and warranties, events of default, cross-default
provisions, and certain affirmative and negative covenants. Our revolving credit facility will expire in December 2026. As of
December 31, 2022, there was $727 million available under the credit facility.
In order to maintain availability of funding, we must maintain a ratio of debt to Consolidated Net Worth of less than or
equal to 300%. Consolidated Net Worth, as defined in the credit facility, represents shareholders' equity excluding any
accumulated other comprehensive income or loss associated with our pension and other postretirement plans as well as currency
translation adjustment as reported in our consolidated balance sheet. Consolidated Net Worth also adds back the after-tax
charge to shareholders' equity which resulted from our adoption of the new lease accounting standard as of December 31, 2018
(amortized quarterly to 50% of the charge over a 7 year period) and any potential non-cash FMS North America goodwill
impairment charges, should they occur, up to a maximum amount. As of December 31, 2022, the ratio was 162%.
Our global revolving credit facility enables us to refinance short-term obligations on a long-term basis. Short-term
commercial paper obligations are classified as long-term as we have both the intent and ability to refinance on a long-term
basis.
92
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Trade Receivables Financing Program
We maintain a $300 million trade receivables purchase and sale program, pursuant to which we sell certain of our
domestic trade accounts receivable to a bankruptcy remote, consolidated subsidiary of Ryder, that in turn sells, on a revolving
basis, an ownership interest in certain of these accounts receivable to a committed purchaser. The subsidiary is considered a
VIE and is consolidated based on our control of the entity’s activities. We use this program to provide additional liquidity to
fund our operations, particularly when it is cost effective to do so. The costs under the program may vary based on changes in
interest rates. In May 2022, we extended the expiration date of the trade receivables financing program to May 2023. As of
December 31, 2022, the available proceeds under the program were $168 million, net of short-term borrowings of $50 million
and issued letter of credit outstanding of $82 million. The program contains provisions restricting its availability in the event of
a material adverse change to our business operations or the collectability of the collateralized receivables. Sales of receivables
under this program are accounted for as secured borrowings based on our continuing involvement in the transferred assets.
14. GUARANTEES
We have executed various agreements with third parties that contain standard indemnifications that may require us to
indemnify a third party against losses arising from a variety of matters, such as lease obligations, financing agreements,
environmental matters, and agreements to sell business assets, if they bring a claim against us. Normally, we are allowed to
dispute the other party’s claim and our obligations under these agreements may be limited in terms of the amount and/or timing
of any claim. Additionally, we have entered into individual indemnification agreements with each of our independent directors,
through which we will indemnify such director acting in good faith against any and all losses, expenses and liabilities arising
out of such director’s service as a director of Ryder. The maximum amount of potential future payments under these agreements
is generally unlimited.
We cannot predict the maximum potential amount of future payments under certain of these agreements, including the
indemnification agreements, due to the contingent nature of the potential obligations and the distinctive provisions that are
involved in each individual agreement. Historically, such payments have not had a material adverse effect on our business. We
believe that if a loss were incurred in any of these matters, the loss would not have a material adverse impact on our
consolidated results of operations or financial position.
As of December 31, 2022 and 2021, we had letters of credit and surety bonds outstanding, which primarily guarantee
various insurance activities as noted in the following table:
(In millions)
Letters of credit
Surety bonds
15. SHARE REPURCHASE PROGRAMS
December 31,
2022
2021
$
351 $
162
274
182
In October 2021, our board of directors authorized two new share repurchase programs. The first program grants
management discretion to repurchase up to 2.0 million shares of common stock over a period of two years (the "2021
Discretionary Program"). The 2021 Discretionary Program is designed to provide management with capital structure flexibility
while concurrently managing objectives related to balance sheet leverage, acquisition opportunities, and shareholder returns.
The second program authorizes management to repurchase up to 2.5 million shares of common stock, issued to employees
under our employee stock plans since September 1, 2021 (the "2021 Anti-Dilutive Program"). The 2021 Anti-Dilutive Program
is designed to mitigate the dilutive impact of shares issued under our employee stock plans. Both the 2021 Discretionary
Program and the 2021 Anti-Dilutive Program commenced on October 14, 2021 and expire on October 14, 2023. Share
repurchases under both programs can be made from time to time using our working capital and a variety of methods, including
open-market transactions and trading plans established pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934. The
timing and actual number of shares repurchased are subject to market conditions, legal requirements and other factors, including
balance sheet leverage, availability of acquisitions and stock price.
During the fourth quarter of 2022, we repurchased 2 million shares for $179 million under the 2021 Discretionary
program, which completed the program. Additionally, we repurchased 0.9 million shares for $78 million under the 2021 Anti-
Dilutive program. The 2021 Anti-Dilutive Program replaced the 2019 anti-dilutive program, which expired in December 2021.
93
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Under the 2019 anti-dilutive program, in 2021 and 2020, we repurchased 0.7 million, and 0.6 million shares for $57 million and
$29 million, respectively.
In September 2022, we completed our $300 million accelerated share repurchase program. This program was authorized
by our board of directors in February 2022, and at that time, we repurchased and retired an initial amount of approximately
3 million shares. The final settlement occurred in September 2022, resulting in the delivery and retirement of approximately
1 million additional shares. The number of shares ultimately repurchased and retired was based on the average of Ryder's daily
volume-weighted average price per share of common stock during a repurchase period, less a discount. The average price paid
for all of the shares delivered and retired under the accelerated share purchase agreement was $74.47 per share.
In February 2023, our board of directors authorized a new discretionary share repurchase program to grant management
discretion to repurchase up to 2 million shares of common stock over a period of two years (the "2023 Discretionary Program").
The 2023 Discretionary Program is designed to provide management with capital structure flexibility while concurrently
managing objectives related to balance sheet leverage, acquisition opportunities, and shareholder returns.
16. ACCUMULATED OTHER COMPREHENSIVE LOSS
Comprehensive income presents a measure of all changes in shareholders’ equity except for changes resulting from
transactions with shareholders in their capacity as shareholders. The following summary sets forth the components of
accumulated other comprehensive loss, net of tax:
(In millions)
Cumulative translation adjustments
Net actuarial loss and prior service cost (1)
Unrealized gain (loss) from cash flow hedges
Accumulated other comprehensive loss
_______________
(1) Refer to Note 19, "Employee Benefit Plans," for further information.
December 31,
2022
2021
$
(238) $
(566)
8
(153)
(529)
(7)
$
(796) $
(689)
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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
17. EARNINGS PER SHARE
The following table presents the calculation of basic and diluted earnings per common share from continuing operations:
(Dollars in millions, except per share amounts; share amounts in thousands)
Earnings (loss) per share — Basic:
Earnings (loss) from continuing operations
Less: Distributed and undistributed earnings allocated to unvested stock
Earnings (loss) from continuing operations available to common shareholders
Years ended December 31,
2022
2021
2020
$
$
863 $
522 $
(112)
(5)
(2)
(1)
858 $
520 $
(113)
Weighted average common shares outstanding
49,549
52,338
52,362
Earnings (loss) from continuing operations per common share — Basic
$
17.32 $
9.92 $
(2.15)
Earnings (loss) per share — Diluted:
Earnings (loss) from continuing operations
Less: Distributed and undistributed earnings allocated to unvested stock
Earnings (loss) from continuing operations available to common shareholders — Diluted
Weighted average common shares outstanding — Basic
Effect of dilutive equity awards
Weighted average common shares outstanding — Diluted
$
$
863 $
522 $
(112)
—
(2)
(1)
863 $
520 $
(113)
49,549
1,337
50,887
52,338
1,170
53,508
52,362
—
52,362
Earnings (loss) from continuing operations per common share — Diluted
$
16.96 $
9.70 $
(2.15)
Anti-dilutive equity awards not included in diluted EPS
662
682
3,504
_______________
Amounts in the table may not recalculate exactly due to rounding of earnings and shares.
18. SHARE-BASED COMPENSATION PLANS
The following table provides information on share-based compensation expense and related income tax benefits
recognized:
(In millions)
Unvested stock awards
Stock option and employee stock purchase plans
Share-based compensation expense
Income tax benefit
Years ended December 31,
2022
2021
2020
$
44 $
44 $
2
46
(6)
3
47
(7)
Share-based compensation expense, net of tax
$
40 $
40 $
26
4
30
(5)
25
Total unrecognized pre-tax compensation expense related to share-based compensation arrangements as of December 31,
2022 was $47 million and is expected to be recognized over a weighted-average period of approximately 1.8 years. The total
fair value of equity awards vested was $31 million during 2022 and $27 million during both 2021 and 2020. The total cash
received from employees under all share-based employee compensation arrangements was $14 million in 2022, $30 million in
2021 and $8 million 2020.
95
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Share-Based Incentive Awards
Share-based incentive awards are provided to employees under the terms of various share-based compensation plans
(collectively, the Plans). The Plans are administered by the Compensation Committee of the Board of Directors and principally
include grants of restricted stock units (RSUs).
Restricted Stock Units
RSUs entitle the holder to receive one share of Ryder common stock for each RSU granted. Under the terms of our Plans,
dividends on RSUs are paid only upon vesting of the award, and the amount of dividends paid is equal to the aggregate
dividends declared on common shares during the period from the date of grant of the award until the date the shares underlying
the award are delivered. The common stock underlying RSUs is not deemed issued or outstanding upon grant, and does not
carry any voting rights. As of December 31, 2022, there are 4.9 million shares authorized for issuance under the Plans and 1.6
million shares remaining available for future grants.
RSUs granted to employees typically contain time-based vesting conditions, and in the case of certain senior executives
also performance-based vesting conditions. Time-vested restricted stock rights (TVRSRs) typically vest ratably over three years
for employees. The fair value of TVRSRs is determined and fixed based on Ryder’s stock price on the date of grant.
Performance-based restricted stock rights (PBRSRs) are generally granted to executive management and include company
specific performance-based vesting conditions. PBRSRs are awarded based on various revenue, return-based and cash flow
performance targets and may include a total shareholder return (TSR) modifier. The fair values of the PBRSRs that include a
TSR modifier are estimated using a lattice-based option-pricing valuation model that incorporates a Monte-Carlo simulation.
The fair value of PBRSRs that do not include a TSR modifier is determined and fixed on the grant date based on our stock price
on the date of grant. Share-based compensation expense for PBRSRs is recognized on a straight-line basis over the vesting
period, based upon the probability that the performance target will be met.
In 2022 and 2021, PBRSRs were awarded based on adjusted return on equity (ROE), strategic revenue growth (SRG),
and free cash flow (FCF). In 2020, PBRSRs were awarded based on ROE, SRG and earnings before interest, taxes, depreciation
and amortization (EBITDA) margin percent. Our TSR will be compared against the TSR of each of the companies in a custom
peer group to determine our TSR percentile rank versus this custom peer group. The number of PBRSRs will then be adjusted
based on this rank.
We also grant stock awards and RSUs to non-executive members of the board of directors. RSUs to new board members
do not vest until the director has served a minimum of one year. After one year of service on the board of directors, each
director may elect to receive his or her stock award in the form of either (1) shares that are distributed at the time of grant or (2)
RSUs that are delivered upon or after separation from the board. The fair value of the awards is determined and fixed based on
Ryder’s stock price on the date of grant. Share-based compensation expense is recognized for RSUs in the year the RSUs are
granted to board members. Shares of Ryder common stock delivered upon grant have standard voting rights and rights to
dividend payments.
The following is a summary of activity for RSUs as of and for the year ended December 31, 2022:
(Shares in millions)
Unvested stock awards at January 1
Granted
Vested
Forfeited (3)
Unvested stock awards at December 31
Time-Vested (1)
Performance-Based
(2)
Weighted-
Average
Grant Date
Fair Value
$
$
53.59
73.95
52.63
62.03
61.03
Shares
0.5
0.1
(0.1)
—
0.5
Weighted-
Average
Grant Date
Fair Value
$
$
51.79
76.68
60.37
38.45
55.94
Shares
1.2
0.4
(0.4)
(0.1)
1.1
_____________
(1)
Includes RSUs granted to non-executive members of the board of directors.
(2) Performance-based awards are initially granted at target, assuming 100% payout.
(3)
Includes awards canceled due to employee terminations or performance conditions not being achieved.
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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Option Awards
Stock options are awards that allow employees to purchase shares of our stock at a fixed price in the future. Stock option
awards are granted at an exercise price equal to the market price of our stock at the time of grant. These awards, which
generally vest one-third each year, are fully vested three years from the grant date. Stock options have contractual terms of ten
years.
We have not granted stock option awards since 2019. As of December 31, 2022, we had options outstanding and
exercisable of 1.2 million with a weighted-average exercise price of $74.18 and a weighted average-remaining contractual term
of 3.6 years. As of December 31, 2021, we had options outstanding of 1.5 million with a weighted-average exercise price of
$72.82 and a weighted average-remaining contractual term of 4.3 years.
The aggregate intrinsic values (the difference between the close price of our stock on the last trading day of the year and
the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders if all
options were exercised at year-end was $14 million as of December 31, 2022. This amount fluctuates based on the fair market
value of our stock. The fair value of each option award is estimated on the date of grant using a Black-Scholes-Merton option-
pricing valuation model. We use historical data to estimate stock option forfeitures.
Employee Stock Purchase Plan
We maintain an Employee Stock Purchase Plan (ESPP) that enables eligible employees in the U.S. and Canada to
purchase full or fractional shares of Ryder common stock through payroll deductions of a specific dollar amount or up to 15%
of eligible compensation during quarterly offering periods. The price is based on the fair market value of the stock on the last
trading day of the quarter. Stock purchased under the ESPP must be held for 90 days or one year for officers. There were 7.5
million shares authorized for issuance under the existing ESPP as of December 31, 2022. There were 1.7 million shares
remaining available to be purchased in the future under the ESPP as of December 31, 2022.
The following table presents the shares purchased and the related weighted-average purchase price under the ESPP:
Shares purchased
Weighted average purchase price
19. EMPLOYEE BENEFIT PLANS
Pension Plans
Years ended December 31,
2022
2021
2020
171,000
160,000
320,000
$
65.50 $
66.75 $
32.39
We historically sponsored several defined benefit pension plans covering most employees not covered by union-
administered plans, including certain employees in foreign countries. These plans generally provided participants with benefits
based on years of service and career-average compensation levels.
In past years, we made amendments to defined benefit retirement plans that froze the retirement benefits for non-
grandfathered and certain non-union employees in the U.S., Canada and the U.K. As of December 31, 2022, our U.S., Canadian
and U.K. pension plans are frozen for all remaining active employees. These employees have ceased accruing further benefits
under the defined benefit pension plans and began receiving benefits under enhanced defined contribution plans. All pension
benefits earned were fully preserved and will be paid in accordance with plan and legal requirements. We recognized
curtailment losses in 2020 of $9 million in non-operating pension costs, net with an offset to accumulated other comprehensive
loss as a result of the freeze of the pension plans.
We also have a non-qualified supplemental pension plan covering certain U.S. employees, which provides for
incremental pension payments so that the participants' payments equal the amounts that could have been received under our
qualified pension plan if it were not for limitations imposed by income tax regulations. The accrued pension liability related to
this plan was $45 million and $57 million as of December 31, 2022 and 2021, respectively.
97
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Net Pension Expense
Components of net pension expense for defined benefit pension plans were as follows:
(In millions)
Company-administered plans:
Service cost
Interest cost
Expected return on plan assets
Curtailment loss
Amortization of net actuarial loss and prior service cost
Net pension expense
Company-administered plans:
U.S.
Non-U.S.
Net pension expense
Years ended December 31,
2022
2021
2020
$
1 $
1 $
63
(74)
—
21
58
(86)
—
28
$
11 $
1 $
$
$
13 $
9 $
(2)
(8)
11 $
1 $
12
68
(98)
9
32
23
32
(9)
23
Non-operating pension costs, net include the amortization of net actuarial loss and prior service cost, interest cost and
expected return on plan assets components of pension and postretirement benefit costs, as well as any significant charges for
settlements or curtailments if recognized.
The following table sets forth the weighted-average actuarial assumptions used in determining our annual net pension
expense:
Discount rate
Rate of increase in compensation levels
Expected long-term rate of return on plan assets
Gain and loss amortization period (years)
U.S. Plans
Years ended December 31,
Non-U.S. Plans
Years ended December 31,
2022
2.95%
—%
3.60%
21
2021
2.60%
3.00%
3.90%
21
2020
3.18%
3.00%
5.05%
21
2022
2.14%
3.14%
2.79%
25
2021
1.53%
3.11%
3.89%
24
2020
2.28%
3.11%
4.99%
24
The return on plan assets assumption reflects the weighted-average of the expected long-term rates of return for the broad
categories of investments held in the plans net of fees. The expected long-term rate of return is adjusted when there are
fundamental changes in expected returns or in asset allocation strategies of the plan assets.
98
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Obligations and Funded Status
The following table sets forth the benefit obligations, assets and funded status associated with our pension plans:
(In millions)
Change in benefit obligations:
Benefit obligations at January 1
Service cost
Interest cost
Actuarial gain
Pension curtailment and settlement
Benefits paid
Foreign currency exchange rate changes
Benefit obligations at December 31
Change in plan assets:
Fair value of plan assets at January 1
Actual return on plan assets
Employer contribution
Benefits paid
Foreign currency exchange rate changes
Fair value of plan assets at December 31
Funded status
Funded percent
2022
2021
$
2,344 $
2,509
1
63
(547)
1
(111)
(46)
1,705
2,294
(549)
23
(111)
(57)
1,600
$
(105) $
94 %
1
58
(114)
—
(106)
(4)
2,344
2,304
95
7
(106)
(6)
2,294
(50)
98 %
The funded status of our pension plans was presented in the Consolidated Balance Sheets as follows:
(In millions)
Noncurrent asset
Current liability
Noncurrent liability
Net amount recognized
Amounts recognized in accumulated other comprehensive loss (pre-tax) consisted of:
(In millions)
Prior service cost
Net actuarial loss
Net amount recognized
December 31,
2022
2021
$
65 $
(4)
(166)
$
(105) $
125
(4)
(171)
(50)
December 31,
2022
2021
$
$
3 $
759
762 $
4
706
710
In 2023, we expect to amortize $27 million of net actuarial loss and prior service cost as a component of pension expense.
The following table sets forth the weighted-average actuarial assumptions used in determining funded status:
Discount rate
U.S. Plans
December 31,
Non-U.S. Plans
December 31,
2022
5.50%
2021
2.95%
2022
5.05%
2021
2.14%
99
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
As of December 31, 2022 and 2021, our total accumulated benefit obligations, as well as our pension plan obligations
(projected benefit obligations (PBO) and accumulated benefit obligations (ABO)) in excess of the fair value of the related plan
assets, for our U.S. and foreign plans were as follows:
(In millions)
Total accumulated benefit obligations
Plans with pension obligations in excess of plan assets:
PBO
ABO
Fair value of plan assets
Investment Policy and Fair Value of Plan Assets
U.S. Plans
December 31,
Non-U.S. Plans
December 31,
Total
December 31,
2022
2021
2022
2021
2022
2021
$
1,387 $
1,826 $
316 $
516 $
1,703 $
2,342
1,387
1,387
1,229
1,826
1,826
1,661
11
9
—
10
8
—
1,398
1,396
1,229
1,836
1,834
1,661
Our pension investment strategy is to reduce the effects of future volatility on the fair value of our pension assets relative
to our pension obligations. We increase our allocation of high quality, longer-term fixed income securities and reduce our
allocation of equity investments as the funded status of the plans improve. The plans utilize several investment strategies,
including passively managed equity and actively and passively managed fixed income strategies. The investment policy
establishes targeted allocations for each asset class that incorporate measures of asset and liability risks. Deviations between
actual pension plan asset allocations and targeted asset allocations may occur as a result of investment performance and changes
in the funded status from time to time. Rebalancing of our pension plan asset portfolios is evaluated periodically and rebalanced
if actual allocations exceed an acceptable range. U.S. plans account for approximately 77% of our total pension plan assets.
Equity and fixed income securities in our international plans include actively and passively managed mutual funds.
The following table presents the fair value of each major category of pension plan assets and the level of inputs used to
measure fair value as of December 31, 2022 and 2021:
(In millions)
Asset Category
Equity securities:
U.S. common collective trusts
Non-U.S. common collective trusts
Fixed income securities:
Corporate bonds
Common collective trusts
Invested in Collective trusts
Private equity and hedge funds
Total
(In millions)
Asset Category
Equity securities:
U.S. common collective trusts
Non-U.S. common collective trusts
Fixed income securities:
Corporate bonds
Common collective trusts
Private equity and hedge funds
Total
Fair Value Measurements at December 31, 2022
Total
Level 1
Level 2
Level 3
$
115 $
— $
115 $
59
53
1,242
21
110
—
—
—
—
—
59
53
1,237
21
—
$
1,600 $
— $
1,485 $
—
—
—
5
—
110
115
Fair Value Measurements at December 31, 2021
Total
Level 1
Level 2
Level 3
$
191 $
— $
191 $
155
72
1,754
122
—
—
—
—
155
72
1,754
—
$
2,294 $
— $
2,172 $
—
—
—
—
122
122
100
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following is a description of the valuation methodologies used for our pension assets as well as the level of input
used to measure fair value:
Equity securities — These investments include common and preferred stocks and index common collective trusts that
track U.S. and foreign indices. The common collective trusts were valued at the unit prices established by the funds’ sponsors
based on the fair value of the assets underlying the funds. Since the units of the funds are not actively traded, the fair value
measurements have been classified within Level 2 of the fair value hierarchy.
Fixed income securities — These investments include investment grade bonds of U.S. issuers from diverse industries,
government issuers, index common collective trusts that track the Barclays Aggregate Index and other fixed income
investments (primarily mortgage-backed securities). Fair values for the corporate bonds were valued using third-party pricing
services. These sources determine prices utilizing market income models which factor in, where applicable, transactions of
similar assets in active markets, transactions of identical assets in infrequent markets, interest rates, bond or credit default swap
spreads and volatility. Since the corporate bonds are not actively traded, the fair value measurements have been classified
within Level 2 of the fair value hierarchy. The common collective trusts were valued at the unit prices established by the funds’
sponsors based on the fair value of the assets underlying the funds. Since the units of the funds are not actively traded, the fair
value measurements have been classified within Level 2 of the fair value hierarchy. The other investments are not actively
traded and fair values are estimated using bids provided by brokers, dealers or quoted prices of similar securities with similar
characteristics or pricing models. Therefore, the other investments have been classified within Level 2 of the fair value
hierarchy.
Private equity and hedge funds — These investments represent limited partnership interests in private equity and hedge
funds. The partnership interests are valued by the general partners based on the underlying assets in each fund. The limited
partnership interests are valued using unobservable inputs and have been classified within Level 3 of the fair value hierarchy.
The following table presents a summary of changes in the fair value of the pension plans’ Level 3 assets for 2022 and
2021:
(In millions)
Beginning balance at January 1
Return on plan assets:
Relating to assets still held at the reporting date
Relating to assets sold during the period
Purchases, sales, settlements and expenses
Ending balance at December 31
Funding Policy and Contributions
2022
2021
$
122 $
123
(9)
—
2
$
115 $
25
—
(26)
122
The funding policy for these plans is to make contributions when required by statute. We may, from time to time, make
voluntary contributions to our pension plans, which exceed the amount required by statute. The majority of the plans’ assets are
invested in a master trust that, in turn, is invested primarily in commingled funds whose investments are listed stocks and
bonds. During 2022, total global pension contributions were $23 million compared with $7 million in 2021. We estimate total
2023 required contributions to our pension plans to be approximately $5 million, and we do not expect to make voluntary
contributions.
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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Estimated Future Benefits Payments
The following table details pension benefits expected to be paid in each of the next five fiscal years and in the aggregate
for the five fiscal years thereafter:
2023
2024
2025
2026
2027
2028-2032
Savings Plans
(In millions)
$
118
118
120
123
125
628
Employees who do not actively participate in pension plans and are not covered by union-administered plans are
generally eligible to participate in enhanced savings plans. These plans provide for (1) a company contribution even if
employees do not make contributions for employees hired before January 1, 2016, (2) a company match of employee
contributions of eligible pay, subject to tax limits and (3) a discretionary company match. Savings plan costs totaled $49
million, $45 million and $40 million in 2022, 2021 and 2020, respectively.
Deferred Compensation and Long-Term Compensation Plans
We have deferred compensation plans that permit eligible U.S. employees, officers and directors to defer a portion of
their compensation. The deferred compensation liability, including Ryder matching amounts and accumulated earnings, was
$85 million and $97 million as of December 31, 2022 and 2021, respectively.
We have established grantor trusts (Rabbi Trusts) to provide funding for benefits payable under the supplemental pension
plan, deferred compensation plans and long-term incentive compensation plans. The assets held in the trusts were $85 million
and $98 million as of December 31, 2022 and 2021, respectively. The Rabbi Trusts’ assets consist of short-term cash
investments and a managed portfolio of equity securities, including our common stock. These assets, except for the investment
in our common stock, are included in “Sales-type leases and other assets” because they are available to our general creditors in
the event of insolvency. The equity securities are classified as trading securities and stated at fair value. The realized and
unrealized investment income (loss) recognized in "Miscellaneous (income) loss, net" was a $15 million loss for 2022 and
$11 million of income for 2021 and 2020. The Rabbi Trusts’ investments in our common stock as of both December 31, 2022
and 2021 were not material.
Investments held in Rabbi Trusts are assets measured at fair value on a recurring basis. All investments are considered
Level 1 of the fair value hierarchy, except for the fixed income mutual funds, which are considered Level 2 investments. The
following table presents the asset classes as of December 31, 2022 and 2021:
(In millions)
Cash and cash equivalents
U.S. equity mutual funds
Foreign equity mutual funds
Fixed income mutual funds
Total investments held in Rabbi Trusts
20. ENVIRONMENTAL MATTERS
December 31,
2022
2021
$
26 $
44
8
7
$
85 $
22
53
11
10
96
Our operations involve storing and dispensing petroleum products, primarily diesel fuel, regulated under environmental
protection laws. These laws require us to eliminate or mitigate the effect of such substances on the environment. In response to
these requirements, we continually upgrade our operating facilities and implement various programs to detect and minimize
contamination. In addition, we have received notices from the Environmental Protection Agency (EPA) and others that we have
been identified as a potentially responsible party under the Comprehensive Environmental Response, Compensation, and
102
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Liability Act; the Superfund Amendments and Reauthorization Act; and similar state statutes. We may be required to share in
the cost of cleanup of 22 identified disposal sites.
Our environmental expenses consist of remediation costs as well as normal recurring expenses such as licensing, testing
and waste disposal fees and were not material for 2022, 2021 and 2020. Our asset retirement obligations of $25 million as of
December 31, 2022 and $27 million as of December 31, 2021, primarily relate to fuel tanks to be removed and replaced.
The ultimate cost of our environmental liabilities cannot presently be projected with certainty due to the presence of
several unknown factors, primarily the level of contamination, the effectiveness of selected remediation methods, the stage of
investigation at individual sites, the determination of our liability in proportion to other responsible parties and the
recoverability of such costs from third parties. Based on information presently available, we believe that the ultimate disposition
of these matters, although potentially material to the results of operations in any one year, will not have a material adverse
effect on our financial condition or liquidity.
21. OTHER ITEMS IMPACTING COMPARABILITY
Our primary measure of segment performance as shown in Note 3, "Segment Reporting," excludes certain items we do
not believe are representative of the ongoing operations of the segment. Excluding these items from our segment measure of
performance allows for better year over year comparison:
(In millions)
Restructuring and other, net
ERP implementation costs
Restructuring and other items, net
Gains on sale of U.K. revenue earning equipment
Gains on sale of properties
Early redemption of medium-term notes
ChoiceLease liability insurance revenue (1)
Other items impacting comparability, net
_______________
(1) Refer to Note 3, "Segment Reporting," for additional information.
In 2022, 2021 and 2020, other items impacting comparability included:
Years ended December 31,
2022
2021
2020
$
2 $
19 $
—
2
(49)
(36)
—
—
13
32
—
(42)
—
—
$
(83) $
(10) $
77
34
111
—
(6)
9
(24)
90
•
Restructuring and other, net — In 2022, this item primarily included the recovery of $40 million related to the pursuit of a
discrete commercial claim, partially offset by professional fees incurred to pursue the claim of approximately $28 million.
Restructuring and other, net also included $12 million of U.K. severance costs as part of our plan to exit the FMS U.K.
business and $6 million of transaction costs primarily related to the acquisition of Whiplash.
In 2021, this item primarily included transaction costs related to the acquisitions of Midwest Warehouse and Distribution
(Midwest) and Whiplash and $8 million of severance costs incurred as part of our plan to exit the FMS U.K. business.
Restructuring and other, net in 2021 also includes professional fees related to the pursuit of a discrete commercial claim
and the offsetting related recovery of the claim during 2021.
In 2020, this item primarily included expenses of $44 million associated with our discontinued ChoiceLease liability
insurance program, professional fees related to the pursuit of a commercial claim and expenses related to the shutdown of
several leased locations in the North America and U.K. FMS operations. We completed the exit of the ChoiceLease
liability insurance program in the first quarter of 2021. In addition, we recorded severance costs of $13 million in 2020
related to actions to reduce headcount, primarily in our North American and U.K. FMS operations.
•
ERP implementation costs — This item relates to charges in connection with the implementation of an Enterprise Resource
Planning (ERP) system. In July 2020, we went live with the first module of our ERP system for human resources. In April
2021, we went live with the financial module to replace the existing core financial system.
103
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
• Gains on sale of U.K. revenue earning equipment and properties — In 2022, we recorded gains on the sale of U.K.
revenue earning equipment and properties as part of our plan to exit the FMS U.K. business. We recorded gains on sale of
properties in 2021 and 2020, on the sale of certain FMS maintenance properties in the U.K. and U.S. that were restructured
as part of cost reduction activities in prior periods. The gains on sale of U.K. revenue earning equipment are reflected
within "Used vehicle sales, net" and the gains on sale of properties are reflected within "Miscellaneous income, net" in our
Consolidated Statements of Earnings.
•
Early redemption of medium-term notes — We recognized a charge related to the early redemption of two medium term-
notes in the fourth quarter of 2020. This charge is reflected within "Interest expense" in the Consolidated Statements of
Earnings.
The following table summarizes the activities within, and components of, restructuring liabilities for 2022:
(In millions)
Balance as of beginning of period
Workforce reduction charges
Utilization (1)
Balance as of end of period (2)
_________________
(1) Principally represents cash payments.
(2)
Included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets.
22. CONTINGENCIES AND OTHER MATTERS
December 31, 2022
$
$
10
10
(7)
13
We are a party to various claims, complaints and proceedings arising in the ordinary course of our continuing business
operations including those relating to commercial and employment claims, environmental matters, risk management matters
(e.g., vehicle liability, workers’ compensation, etc.), and administrative assessments primarily associated with operating taxes.
We have established loss provisions for matters in which losses are probable and can be reasonably estimated. We believe that
the resolution of these claims, complaints and legal proceedings will not have a material effect on our consolidated financial
statements.
Our estimates regarding potential losses and materiality are based on our judgment and assessment of the claims utilizing
currently available information. Although we will continue to reassess our estimated liability based on future developments, our
objective assessment of the legal merits of such claims may not always be predictive of the outcome and actual results may vary
from our current estimates. In 2020, we recorded a loss of $8 million related primarily to adverse developments in several cases
related to payments for transportation services in Brazil. In December 2022, we had a favorable development in one of these
cases and recorded a $6 million benefit. These items were recorded within "Gain (loss) from discontinued operations, net of
tax," in the Consolidated Statement of Earnings.
Securities Litigation Relating to Residual Value Estimates
On May 20, 2020, a putative class action on behalf of purchasers of our securities who purchased or otherwise acquired
their securities between July 23, 2015 and February 13, 2020, inclusive (Class Period), was commenced against Ryder and
certain of our current and former officers in the U.S. District Court for the Southern District of Florida (the "Securities Class
Action"). The complaint alleges, among other things, that the defendants misrepresented Ryder’s depreciation policy and
residual value estimates for its vehicles during the Class Period in violation of Section 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and seeks to recover, among other things, unspecified
compensatory damages and attorneys' fees and costs. On August 3, 2020, the State of Alaska, Alaska Permanent Fund, the City
of Fort Lauderdale General Employees’ Retirement System, and the City of Plantation Police Officers Pension Fund were
appointed lead plaintiffs. On October 5, 2020, the lead plaintiffs filed an amended complaint. On December 4, 2020, Ryder and
the other named defendants in the case filed a Motion to Dismiss the amended complaint. On May 12, 2022, the court denied
the defendants' motion to dismiss. The court entered a case management schedule on June 27, 2022, which, among other things,
provides that discovery shall be completed by October 2023 and the commencement of trial in June 2024.
As previously disclosed, between June 2020 and February 2, 2021, five shareholder derivative complaints were filed
purportedly on behalf of Ryder against us as nominal defendant and certain of our current and former officers and our current
directors. The complaints are generally based on allegations set forth in the Securities Class Action complaint and allege breach
104
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
of fiduciary duties, unjust enrichment, and waste of corporate assets. The plaintiffs, on our behalf, are seeking an award of
monetary damages and restitution to us, improvements in our corporate governance and internal procedures, and legal fees.
Three of these derivative complaints were filed in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County,
Florida, which were then consolidated into a single action (the "State Action"). Two of the complaints were filed in U.S.
District Court for the Southern District of Florida (the "Federal Actions", and together with the State Action, the "Derivative
Cases"). All of the Derivative Cases were stayed (stopped) pending the resolution of the motion to dismiss the Securities Class
Action described in the paragraph above. On July 18, 2022, the Federal Actions were further stayed pending the final resolution
of the State Action. On July 26, 2022, the State Action was further stayed until the conclusion of summary judgment
proceedings in the Securities Class Action (except that certain discovery would be permitted).
We believe the claims asserted in the complaints are without merit and intend to defend against them vigorously.
23. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information was as follows:
(In millions)
Interest paid (1)
Income taxes paid
Cash paid for operating lease liabilities
Right-of-use assets obtained in exchange for lease obligations:
Finance leases
Operating leases
Capital expenditures acquired but not yet paid
________________
As of and For the years ended December 31,
2022
2021
2020
$
214 $
208 $
115
184
12
340
199
45
98
15
108
179
246
14
90
14
125
109
(1) Excludes cash paid for prepayment penalty related to the early redemption of two medium-term notes in 2020.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the
Consolidated Balance Sheets to the amounts shown in the Consolidated Statements of Cash Flows:
(In millions)
Cash and cash equivalents
Restricted cash included in prepaid expenses and other current assets
Total cash, cash equivalents, and restricted cash
24. ACQUISITIONS
December 31,
2022
2021
$
$
267 $
—
267 $
234
438
672
On January 1, 2022, we acquired all the outstanding equity of Whiplash, a leading national provider of omnichannel
fulfillment and logistics services for a purchase price of $483 million. The acquisition is included in our SCS business segment,
and will expand our e-commerce and omnichannel fulfillment network.
We believe that we have sufficient information to provide a reasonable basis for estimating the fair values of assets
acquired and liabilities assumed. The purchase price allocation of estimated fair values reflected were finalized during the
fourth quarter of 2022. The following table provides the final purchase price allocation of the fair value of the assets and
liabilities for Whiplash as of the acquisition date:
105
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(In millions)
Assets:
Current assets:
Cash and cash equivalents
Receivables, net
Prepaid expenses and other current assets
Total current assets
Revenue earning equipment, net
Operating property and equipment, net
Goodwill
Intangible assets, net
Sales-type leases and other assets
Total assets
Liabilities and shareholders' equity:
Current liabilities:
Accounts payable
Accrued expenses and other current liabilities
Total current liabilities
Other non-current liabilities
Deferred income tax
Total liabilities
Net assets acquired
January 1, 2022
$
$
9
79
4
92
1
40
280
150
195
758
28
78
106
131
38
275
483
The excess of the purchase consideration over the aggregate estimated fair values of identifiable assets acquired and
liabilities assumed was recorded as goodwill. The goodwill recognized reflects anticipated supply chain services growth
opportunities and expected synergies of combining Whiplash with our business. None of the goodwill is deductible for income
tax purposes. Customer relationship intangible assets are expected to be amortized over 13 years. The purchase price included
$438 million of restricted cash placed in escrow and the remaining amount classified as a deposit as of December 31, 2021.
These amounts were recorded in "Prepaid expenses and other current assets" in the Consolidated Balance Sheet as of December
31, 2021. The cash paid from escrow during the first quarter of 2022 is reflected in "Acquisitions, net of cash acquired" in the
Consolidated Statement of Cash Flows for the year ended December 31, 2022.
On November 1, 2021, we acquired all the outstanding equity of Midwest, a warehousing, distribution, and transportation
company based in Woodbridge, IL for a purchase price of $284 million, of which $283 million was paid in 2021. The
acquisition is included in our SCS business segment. The acquisition will expand our supply chain services, including multi-
customer warehousing and distribution.
The following table provides the final purchase price allocation of the fair value of the assets and liabilities for Midwest
as of the acquisition date:
106
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(In millions)
Assets:
Current assets:
Cash and cash equivalents
Receivables, net
Prepaid expenses and other current assets
Total current assets
Revenue earning equipment, net
Operating property and equipment, net
Goodwill
Intangible assets, net
Sales-type leases and other assets
Total assets
Liabilities and shareholders' equity:
Current liabilities:
Accounts payable
Accrued expenses and other current liabilities
Total current liabilities
Other non-current liabilities
Deferred income tax
Total liabilities
Net assets acquired
November 1, 2021
6
27
2
35
10
16
95
134
72
362
6
14
20
60
(2)
78
284
The excess of the purchase consideration over the aggregate estimated fair values of identifiable assets acquired and
liabilities assumed was recorded as goodwill. The goodwill recognized reflects supply chain services growth opportunities and
expected cost synergies of combining Midwest with our business. All of the goodwill is expected to be deductible for income
tax purposes.
For the year ended December 31, 2022, we paid $32 million, net of cash acquired, related to other business combinations,
primarily within the SCS segment, which resulted in additions to goodwill and intangible assets of $11 million and $6 million,
respectively.
107
RYDER SYSTEM, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In millions)
2022
Self-insurance accruals (3)
Valuation allowance on deferred tax assets
2021
Self-insurance accruals (3)
Valuation allowance on deferred tax assets
2020
Self-insurance accruals (3)
Valuation allowance on deferred tax assets
_______________
Additions
Balance at
Beginning
of Period
Charged to
Earnings
Transferred
from Other
Accounts (1)
Deductions (2)
Balance
at End
of Period
$
$
$
$
$
$
466
24
444
42
411
18
497
64
478
(18)
426
26
95
—
89
—
89
—
595 $
— $
545 $
— $
482 $
2 $
463
88
466
24
444
42
(1) Transferred from other accounts includes employee contributions made to the medical and dental self-insurance plans.
(2) Deductions represent write-offs and insurance claim payments during the period.
(3)
Self-insurance accruals include vehicle liability, workers’ compensation, property damage, cargo and medical and dental, which comprise our self-
insurance programs. Amounts charged to earnings included developments in prior years' selected loss development factors, which benefited earnings by
$25 million and $6 million in 2022 and 2021, respectively, and charged earnings by $18 million in 2020.
108
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Evaluation of Disclosure Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the
participation of management, including Ryder’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of Ryder’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange
Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of
December 31, 2022, Ryder’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange
Act of 1934) were effective.
Management’s Report on Internal Control over Financial Reporting
We excluded PLG Investments I, LLC (Whiplash) from our assessment of internal control over financial reporting as of
December 31, 2022, because it was acquired in a purchase business combination during the year ended December 31, 2022.
The total assets and total revenues of Whiplash, a wholly-owned subsidiary, represented 2.7% and 5.0%, respectively, of the
related consolidated financial statement amounts as of and for the year ended December 31, 2022.
Management’s Report on Internal Control over Financial Reporting and the Report of Independent Registered Certified
Public Accounting Firm thereon are set out in Item 8 of Part II of this Form 10-K Annual Report.
Changes in Internal Controls over Financial Reporting
During the three months ended December 31, 2022, there were no changes in Ryder’s internal control over financial
reporting that have materially affected or are reasonably likely to materially affect such internal control over financial reporting.
None.
ITEM 9B. OTHER INFORMATION
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
109
RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 with respect to executive officers is included within Item 1 in Part I under the
caption “Information about our Executive Officers” of this Form 10-K Annual Report.
The information required by Item 10 with respect to directors, audit committee, audit committee financial experts and
Section 16(a) beneficial ownership reporting compliance (to the extent applicable) is included under the captions “Election of
Directors,” “Audit Committee,” and “Delinquent Section 16(a) Reports,” respectively, in our definitive proxy statement, which
will be filed with the Commission within 120 days after the close of the fiscal year, and is incorporated herein by reference.
Ryder has adopted a code of conduct applicable to all employees, including its Chief Executive Officer, Chief Financial
Officer, Controller and Senior Financial Management. We will provide a copy of our code of conduct to anyone, free of charge,
upon request through our Investor Relations Page, on our website at www.ryder.com.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is included under the captions “Compensation Discussion and Analysis,” “Executive
Compensation,” “Compensation Committee,” “Compensation Committee Report on Executive Compensation” and “Director
Compensation” in our definitive proxy statement, which will be filed with the Commission within 120 days after the close of
the fiscal year, and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by Item 12 with respect to security ownership of certain beneficial owners and management is
included under the captions “Security Ownership of Officers and Directors” and “Security Ownership of Certain Beneficial
Owners” in our definitive proxy statement, which will be filed with the Commission within 120 days after the close of the fiscal
year, and is incorporated herein by reference.
Securities Authorized for Issuance under Equity Compensation Plans
The following table includes information as of December 31, 2022 about certain plans that provide for the issuance of
common stock in connection with the exercise of stock options and other share-based awards.
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
Weighted-
Average Exercise
Price of
Outstanding
Options,
Warrants and
Rights
Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans Excluding
Securities
Reflected in
Column (a)
Plans
Equity compensation plans approved by security holders:
Broad based employee and non-employee directors' stock plan
2,803,986 (1)
$74.18 (2)
1,567,422 (3)
(a)
(b)
(c)
Employee stock purchase plan
Total
_______________
—
2,803,986
—
$74.18
1,705,371
3,272,793
(1)
Includes broad based employee stock options and other share-based awards of 1,189,313 stock options, 886,678 time-vested restricted stock units and
443,674 performance-based restricted stock units calculated at target. Includes non-employee directors' units of 278,483 time-vested restricted stock
units, as well as 5,838 time-vested restricted stock units awarded to non-executive directors and vested but not exercisable until six months after the
director's retirement. Refer to Note 18, "Share-Based Compensation Plans", for additional information.
(2) Weighted-average exercise price of outstanding options excludes restricted stock units.
(3) Calculated by reducing shares authorized for issuance by a ratio of two shares for each share issued (on a 1:2 ratio) other than with respect to shares
delivered pursuant to a stock option which shall reduce the shares available by one share (on a 1:1 ratio) as set forth under the terms of the 2019 Equity
and Incentive Compensation Plan and assuming maximum performance for the performance-based restricted stock units. All future awards issued will
reduce the shares available for issuance by the terms set forth in the 2019 Equity and Incentive Compensation Plan, as described in the previous
sentence.
110
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
The information required by Item 13 is included under the captions “Board of Directors” and “Related Person
Transactions” in our definitive proxy statement, which will be filed with the Commission within 120 days after the close of the
fiscal year, and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by Item 14 is included under the caption “Ratification of Independent Auditor” in our definitive
proxy statement, which will be filed with the Commission within 120 days after the close of the fiscal year, and is incorporated
herein by reference.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
Items A through H and Schedule II are presented on the following pages of this Form 10-K Annual Report:
1. Financial Statements for Ryder System, Inc. and Consolidated Subsidiaries:
A) Management’s Report on Internal Control over Financial Reporting .....................................
B) Report of Independent Registered Certified Public Accounting Firm .....................................
C) Consolidated Statements of Earnings ......................................................................................
D) Consolidated Statements of Comprehensive Income ..............................................................
E) Consolidated Balance Sheets ...................................................................................................
F) Consolidated Statements of Cash Flows ..................................................................................
G) Consolidated Statements of Shareholders’ Equity ..................................................................
H) Notes to Consolidated Financial Statements ...........................................................................
Page No.
59
60
62
63
64
65
66
67
2. Consolidated Financial Statement Schedule for the Years Ended December 31, 2022, 2021 and 2020
Schedule II — Valuation and Qualifying Accounts ................................................................
108
All other schedules are omitted because they are not applicable or the required information is shown in the consolidated
financial statements or notes thereto.
3. Exhibits:
The following exhibits are filed with this report or, where indicated, incorporated by reference (Forms 10-K, 10-Q and 8-
K referenced herein have been filed under the Commission’s file No. 1-4364). Ryder will provide a copy of the exhibits filed
with this report at a nominal charge to those parties requesting them.
None.
ITEM 16. FORM 10-K SUMMARY
111
Exhibit
Number
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
10.1*
10.2*
10.3*
10.4*
10.5*
10.6*
EXHIBIT INDEX
Description
The Ryder System, Inc. Restated Articles of Incorporation (conformed copy incorporating all amendments through May 3,
2019), previously filed with the Commission on May 9, 2019 as an exhibit to Ryder's Quarterly Report on Form 10-Q, is
incorporated by reference in this report.
The Ryder System, Inc. By-Laws, as amended through May 3, 2019, previously filed with the Commission on May 9, 2019
as an exhibit to Ryder's Quarterly Report on Form 10-Q, is incorporated by reference in this report.
Ryder hereby agrees, pursuant to paragraph (b)(4)(iii) of Item 601 of Regulation S-K, to furnish the Commission with a
copy of any instrument defining the rights of holders of long-term debt of Ryder, where such instrument has not been filed
as an exhibit hereto and the total amount of securities authorized there under does not exceed 10% of the total assets of
Ryder and its subsidiaries on a consolidated basis.
The First Supplemental Indenture between Ryder System, Inc. and The Chase Manhattan Bank (National Association) dated
October 1, 1987, previously filed with the Commission as an exhibit to Ryder's Annual Report on Form 10-K for the year
ended December 31, 1994, is incorporated by reference into this report.
The Form of Indenture between Ryder System, Inc. and The Chase Manhattan Bank (National Association) dated as of
May 1, 1987, and supplemented as of November 15, 1990 and June 24, 1992, filed with the Commission on July 30, 1992 as
an exhibit to Ryder's Registration Statement on Form S-3 (No. 33-50232), is incorporated by reference into this report.
The Form of Indenture between Ryder System, Inc. and J.P. Morgan Trust Company (National Association) dated as of
October 3, 2003 filed with the Commission on August 29, 2003 as an exhibit to Ryder's Registration Statement on Form S-3
(No. 333-108391), is incorporated by reference into this report.
Form of Medium-Term Note - Master Note, previously filed with the Commission on July 30, 2019, as an exhibit to Ryder’s
Quarterly Report on Form 10-Q, is incorporated by reference in this report.
Description of Ryder System, Inc.'s Securities Registered Under Section 12 of the Securities Exchange Act of 1934,
previously filed with the Commission on February 27, 2020 as an exhibit to Ryder's Annual Report on Form 10-K, is
incorporated by reference in this report.
The Ryder System, Inc. 2005 Equity Compensation Plan, previously filed with the Commission on March 21, 2008, as
Appendix A to Ryder's Definitive Proxy Statement on Schedule 14A, is incorporated by reference into this report.
The Ryder System, Inc. Stock Purchase Plan for Employees, previously filed with the Commission on March 29, 2010, as
Appendix B to Ryder System, Inc.'s Definitive Proxy Statement on Schedule 14A, is incorporated by reference into this
report.
Terms and Conditions applicable to restricted stock units granted under the Ryder System, Inc. 2005 Equity Compensation
Plan, previously filed with the Commission as an exhibit to Ryder's Quarterly Report on Form 8-K filed with the
Commission on May 11, 2005, are incorporated by reference into this report.
Ryder System, Inc. 2012 Equity and Incentive Compensation Plan, previously filed with the Commission as an exhibit to
Ryder's Current Report on Form 8-K filed with the Commission on May 10, 2012, is incorporated by reference into this
report.
Terms and Conditions applicable to non-qualified stock options granted under the Ryder System, Inc. 2012 Equity and
Incentive Compensation Plan, previously filed with the Commission as an exhibit to Ryder's Current Report on Form 8-K
filed with the Commission on May 10, 2012, are incorporated by reference into this report.
Terms and Conditions applicable to restricted stock units granted under the Ryder System, Inc. 2012 Equity and Incentive
Compensation Plan, previously filed with the Commission as an exhibit to Ryder's Current Report on Form 8-K filed with
the Commission on May 10, 2012, are incorporated by reference into this report.
112
Exhibit
Number
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
Description
Amended and Restated Ryder System, Inc. 2012 Equity and Incentive Compensation Plan, previously filed with the
Commission on May 10, 2016 as an exhibit to Ryder’s Quarterly Report on Form 8-K, is incorporated by reference to this
report.
Form of Terms and Conditions applicable to non-qualified stock options granted under the Amended and Restated Ryder
System, Inc. 2012 Equity and Incentive Compensation Plan, previously filed with the Commission on July 27, 2016 as an
exhibit to Ryder’s Quarterly Report on Form 10-Q, is incorporated by reference to this report.
Form of Terms and Conditions applicable to restricted stock units for non-employee directors granted under the Amended
and Restated Ryder System, Inc. 2012 Equity and Incentive Compensation Plan, previously filed with the Commission on
July 27, 2016 as an exhibit to Ryder’s Quarterly Report on Form 10-Q, is incorporated by reference to this report.
The Form of Amended and Restated Severance Agreement for Chief Executive Officer, previously filed with the
Commission on February 14, 2017 as an exhibit to Ryder's Annual Report on Form 10-K for the year ended December 31,
2016, is incorporated by reference into this report.
The Ryder System, Inc. Executive Severance Plan, effective as of January 1, 2017, previously filed with the Commission on
February 14, 2017 as an exhibit to Ryder's Annual Report on Form 10-K for the year ended December 31, 2016, is
incorporated by reference into this report.
Form of Terms and Conditions applicable to non-qualified stock options granted under the Amended and Restated Ryder
System, Inc. 2012 Equity and Incentive Compensation Plan, previously filed with the Commission on April 25, 2017 as an
exhibit to Ryder’s Quarterly Report on Form 10-Q, is incorporated by reference to this report.
Form of Terms and Conditions applicable to restricted stock units for non-employee directors granted under the Amended
and Restated Ryder System, Inc. 2012 Equity and Incentive Compensation Plan, previously filed with the Commission on
April 25, 2017 as an exhibit to Ryder’s Quarterly Report on Form 10-Q, is incorporated by reference to this report.
Form of Terms and Conditions applicable to performance-based restricted stock rights granted under the Amended and
Restated Ryder System, Inc. 2012 Equity and Incentive Compensation Plan, previously filed with the Commission on
February 20, 2018 as an exhibit to Ryder’s Annual Report on Form 10-K, is incorporated by reference to this report.
The Form of Amended and Restated Severance Agreement for Executive Officers (other than the Chief Executive Officer)
Form of Terms and Conditions applicable to stock-awards for non-employee directors issued under the Amended and
Restated Ryder System, Inc. 2012 Equity and Incentive Compensation Plan, previously filed with the Commission on July
25, 2018 as an exhibit to Ryder’s Quarterly Report on Form 10-Q, is incorporated by reference to this report.
Form of Terms and Conditions applicable to deferred stock awards for non-employee directors issued under the Amended
and Restated Ryder System, Inc. 2012 Equity and Incentive Compensation Plan, previously filed with the Commission on
October 26, 2018 as an exhibit to Ryder’s Quarterly Report on Form 10-Q, is incorporated by reference to this report.
The Ryder System, Inc. Directors Stock Award Plan, as amended and restated at February 10, 2005, previously filed with the
Commission on February 24, 2005 as an exhibit to Ryder's Annual Report on Form 10-K for the year ended December 31,
2004, is incorporated by reference into this report.
The Ryder System, Inc. Directors Stock Plan, as amended and restated at May 7, 2004, previously filed with the Commission
on February 24, 2005 as an exhibit to Ryder's Annual Report on Form 10-K for the year ended December 31, 2004, is
incorporated by reference into this report.
The Ryder System Benefit Restoration Plan, as amended and restated, previously filed with the Commission as an exhibit to
Ryder's Current Report on Form 8-K filed with the Commission on February 11, 2009, is incorporated by reference into this
report.
Form of Indemnification Agreement for independent directors, effective as of February 24, 2016, previously filed with the
Commission as an exhibit to Ryder's Current Report on Form 8-K filed with the Commission on February 29, 2016, is
incorporated by reference into this report.
113
Exhibit
Number
10.22*
10.23
10.24*
10.25*
10.26*
10.27*
10.28*
10.29*
10.30*
10.31*
10.32*
10.33*
10.34*
10.35*
10.36*
10.37*
10.38*
10.39*
21.1
23.1
Description
The Ryder System, Inc. Deferred Compensation Plan, effective as of January 1, 2009, previously filed with the Commission
as an exhibit to Ryder's Current Report on Form 8-K filed with the Commission on February 11, 2009, is incorporated by
reference to this report.
Third Amended and Restated Global Revolving Credit Agreement, dated as of December 14, 2021, by and among Ryder
System, Inc., certain Ryder subsidiaries, and the lenders and agents named therein, previously filed with the Commission as
an exhibit to Ryder’s Current Report on Form 8-K filed with the Commission on December 20, 2021, is incorporated by
reference to this report.
Ryder System, Inc. 2019 Equity and Incentive Compensation Plan, previously filed with the Commission on March 18,
2019, as Appendix A to Ryder System, Inc.'s Definitive Proxy Statement on Schedule 14A, is incorporated by reference into
this report.
Employment Offer Letter for Scott T. Parker, previously filed with the Commission on March 27, 2019, as an exhibit to
Ryder's Current Report on Form 8-K filed with the Commission on March 27, 2019, is incorporated by reference in this
report.
Form of Terms and Conditions Applicable to Deferred Stock Awards for Non-Employee Directors issued under the Ryder
System, Inc. 2019 Equity and Incentive Compensation Plan, previously filed with the Commission on May 9, 2019 as an
exhibit to Ryder's Quarterly Report on Form 10-Q, is incorporated by reference in this report.
Form of Terms and Conditions Applicable to Non-Qualified Stock Options issued under the Ryder System, Inc. 2019 Equity
and Incentive Compensation Plan, previously filed with the Commission on May 9, 2019 as an exhibit to Ryder's Quarterly
Report on Form 10-Q, is incorporated by reference in this report.
Form of Terms and Conditions Applicable to Performance-Based Restricted Stock Rights issued under the Ryder System,
Inc. 2019 Equity and Incentive Compensation Plan, previously filed with the Commission on May 9, 2019 as an exhibit to
Ryder's Quarterly Report on Form 10-Q, is incorporated by reference in this report.
Form of Terms and Conditions Applicable to Restricted Stock Rights issued under the Ryder System, Inc. 2019 Equity and
Incentive Compensation Plan, previously filed with the Commission on May 9, 2019 as an exhibit to Ryder's Quarterly
Report on Form 10-Q, is incorporated by reference in this report.
Form of Terms and Conditions Applicable to Stock Awards for Non-Employee Directors issued under the Ryder System,
Inc. 2019 Equity and Incentive Compensation Plan, previously filed with the Commission on May 9, 2019 as an exhibit to
Ryder's Quarterly Report on Form 10-Q, is incorporated by reference in this report.
Ryder System, Inc. Non-Qualified Stock Option Award Granted as an “Employment Inducement Grant” under New York
Stock Exchange Listing Rule 303A.08, previously filed with the Commission on May 9, 2019 as an exhibit to Ryder's
Quarterly Report on Form 10-Q, is incorporated by reference in this report.
Ryder System, Inc. Restricted Stock Rights Award Granted as an “Employment Inducement Grant” under New York Stock
Exchange Listing Rule 303A.08, previously filed with the Commission on May 9, 2019 as an exhibit to Ryder's Quarterly
Report on Form 10-Q, is incorporated by reference in this report.
Forms of Terms and Conditions Applicable to Non-Qualified Stock Options issued under the Ryder System, Inc. 2019
Equity and Incentive Compensation Plan, previously filed with the Commission on February 27, 2020 as an exhibit to
Ryder's Annual Report on Form 10-K, is incorporated by reference in this report.
Form of Terms and Conditions Applicable to Performance-Based Restricted Stock Rights issued under the Ryder System,
Inc. 2019 Equity and Incentive Compensation Plan, previously filed with the Commission on February 27, 2020 as an
exhibit to Ryder's Annual Report on Form 10-K, is incorporated by reference in this report.
Form of Terms and Conditions Applicable to Restricted Stock Rights issued under the Ryder System, Inc. 2019 Equity and
Incentive Compensation Plan, previously filed with the Commission on February 27, 2020 as an exhibit to Ryder’s Annual
Report on Form 10-K, is incorporated by reference in this report.
The Ryder System, Inc. Stock Purchase Plan for Employees, previously filed with the Commission on March 16, 2020, as
Appendix A to Ryder System, Inc.'s Definitive Proxy Statement on Schedule 14A, is incorporated by reference into this
report.
Form of Annual Cash Incentive Award Agreement for Executive Officers.
Form of Terms and Conditions Applicable to Restricted Stock Rights issued under the Amended and Restated Ryder System,
Inc. 2019 Equity and Incentive Compensation Plan, previously filed with the Commission on March 15, 2021 as Appendix A
to Ryder System, Inc.’s Definitive Proxy Statement on Schedule 14A, is incorporated by reference to this report.
Ryder System, Inc. Amended and Restated 2019 Equity and Incentive Compensation Plan, previously filed with the
Commission on March 15, 2021 as Appendix A to Ryder System, Inc.’s Definitive Proxy Statement on Schedule 14A, is
incorporated by reference into this report.
List of subsidiaries of the registrant, with the state or other jurisdiction of incorporation or organization of each, and the
name under which each subsidiary does business.
PricewaterhouseCoopers LLP consent to the incorporation by reference in certain Registration Statements on Form S-8 and
on Form S-3 of their report on the financial statements and financial statement schedule and effectiveness of internal control
over financial reporting of Ryder System, Inc.
114
Exhibit
Number
Description
24.1
Manually executed powers of attorney for each of:
Robert J. Eck
Robert A. Hagemann
Michael F. Hilton
Tamara L. Lundgren
Luis P. Nieto, Jr.
David G. Nord
Abbie J. Smith
E. Follin Smith
Dmitri L. Stockton
Hansel E. Tookes, II
Charles M. Swoboda
31.1
31.2
32
Certification of Robert E. Sanchez pursuant to Rule 13a-14(a) or Rule 15d-14(a).
Certification of John J. Diez pursuant to Rule 13a-14(a) or Rule 15d-14(a).
Certification of Robert E. Sanchez and John J. Diez pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C.
Section 1350.
101.INS
Inline XBRL Instance Document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).
* Management contract or compensation plan arrangement pursuant to Item 601(b)(10) of Regulation S-K.
115
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date:
February 15, 2023
RYDER SYSTEM, INC.
By: /s/ ROBERT E. SANCHEZ
Robert E. Sanchez
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Date:
February 15, 2023
Date:
February 15, 2023
Date:
February 15, 2023
Date:
February 15, 2023
Date:
February 15, 2023
Date:
February 15, 2023
By: /s/ ROBERT E. SANCHEZ
Robert E. Sanchez
Chairman, President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ JOHN J. DIEZ
John J. Diez
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
By: /s/ CRISTINA GALLO-AQUINO
Cristina Gallo-Aquino
Senior Vice President and Controller
(Principal Accounting Officer)
By: ROBERT J. ECK *
Robert J. Eck
Director
By: ROBERT A. HAGEMANN *
Robert A. Hagemann
Director
By: MICHAEL F. HILTON*
Michael F. Hilton
Director
116
Date:
February 15, 2023
By: TAMARA L. LUNDGREN*
Date:
February 15, 2023
Date:
February 15, 2023
Date:
February 15, 2023
Tamara L. Lundgren
Director
By: LUIS P. NIETO, JR. *
Luis P. Nieto, Jr.
Director
By: DAVID G. NORD *
David G. Nord
Director
By: ABBIE J. SMITH *
Abbie J. Smith
Director
Date:
February 15, 2023
By: E. FOLLIN SMITH *
Date:
February 15, 2023
Date:
February 15, 2023
Date:
February 15, 2023
E. Follin Smith
Director
By: DMITRI L. STOCKTON *
Dmitri L. Stockton
Director
By: CHARLES M. SWOBODA *
Charles M. Swoboda
Director
By: HANSEL E. TOOKES, II *
Hansel E. Tookes, II
Director
Date:
February 15, 2023
*By: /s/ ROBERT D. FATOVIC
Robert D. Fatovic
Attorney-in-Fact, pursuant to a power of attorney
117
Ryder Headquarters
11690 NW 105th Street
Miami, FL 33178
www.ryder.com