Ryder Reports First Quarter 2018 Results

• Q1 GAAP EPS from Continuing Operations Down $0.08 or 11% to $0.64,
  Includes $0.29 UK Goodwill Impairment Charge
• Q1 Comparable EPS (non-GAAP) from Continuing Operations Up $0.08 or
  10% to $0.91, Reflects Lower Tax Rate from Tax Reform
• Record Q1 Total Revenue Grows 10% to $1.9 Billion; Record Q1
  Operating Revenue (non-GAAP) Up 7% to $1.5 Billion
• Revised Full-Year 2018 GAAP EPS Forecast Range of $4.55 to $4.80
  vs. Prior Forecast of $5.34 to $5.64, Driven by a Tax Reform-Related
  Adjustment and UK Goodwill Impairment Charge
• Revised Full-Year 2018 Comparable EPS Forecast Range (non-GAAP) of
  $5.45 to $5.70 vs. Prior Forecast of $5.40 to $5.70

Ryder System, Inc. (NYSE:R), a leader in commercial fleet
management, dedicated
transportation, and supply
chain solutions, today reported first quarter earnings and revenue.
Results for the three months ended March 31 were as follows:

In the first quarter, the Company reported record total revenue and
record operating revenue (a non-GAAP measure excluding all fuel and
subcontracted transportation). Total revenue and operating revenue grew
across all three business segments reflecting new business and higher
volumes. Total revenue also grew due to higher fuel costs passed through
to customers. Total and operating revenue for the three months ended
March 31 were as follows:

Commenting on the Company's first quarter results, Ryder Chairman and
CEO Robert Sanchez said, "Our results were at the high-end of our
expectations in the first quarter, driven by stronger than expected
results in our rental, supply chain, and dedicated businesses. Rental
demand continued at a very robust level, with first quarter utilization
at the highest level in a decade. These improvements were partially
offset by lower than expected results in used vehicle sales.

"Continuing our momentum from record sales in 2017, we again achieved
record sales in the first quarter, driven by ChoiceLease and Dedicated
Transportation Solutions. We are pleased with our revenue growth across
the Company and growth in the ChoiceLease fleet, which increased by
1,700 vehicles this quarter. We continue to successfully penetrate the
non-outsourced market and are now also seeing fleet expansion with
current customers driven by a strong freight market.

"We recently announced several strategic initiatives to further
capitalize on the disruption we are seeing in the market and to drive
long-term growth for the business. We acquired MXD Group earlier this
month to leverage significant growth opportunities in e-commerce and
expand Ryder's omni-channel fulfillment capabilities, including final
mile services. Additionally, in the Atlanta market we launched COOP by
Ryder™, the first asset sharing platform of its kind for commercial
vehicles, which enables fleet owners to generate revenue from their
underutilized vehicles and provides a future asset-light earnings source
for Ryder.

"Finally, due to the recent tax reform, we raised Ryder's quarterly cash
dividend to $0.52 per share of common stock, an increase of 13% from the
amount Ryder had been paying quarterly since July of 2017."

First Quarter Business Segment Operating Results

Fleet Management Solutions

In the Fleet Management Solutions (FMS) business segment, total revenue
was $1.24 billion, up 10% compared with $1.13 billion in the
year-earlier period. FMS operating revenue (a non-GAAP measure excluding
fuel) was $1.04 billion, up 8% from the year-earlier period. Ryder
ChoiceLease^TM (lease) revenue increased 5% reflecting a
larger average fleet size and higher prices on replacement vehicles. The
lease fleet increased by 1,700 vehicles year-to-date. Commercial
rental revenue increased 18% from the year-earlier period due to
higher demand and higher pricing. Fuel services revenue increased 20%,
primarily reflecting higher fuel costs passed through to customers.

FMS earnings before tax were $49.8 million, down 5% compared with $52.3
million in the same period of 2017. Higher commercial rental and
ChoiceLease performance was more than offset by higher depreciation of
$10 million due to vehicle residual value changes implemented January 1,
2018, used vehicle sales results, and overhead spending. Used vehicle
sales comparisons reflect higher inventory valuation adjustments and
lower units sold. Commercial rental performance improved due to
increased utilization reflecting stronger demand and higher pricing.
Rental power fleet utilization was 74.8% for the first quarter, up 760
basis points from the year-earlier period. Lease results benefited from
fleet growth but were partially offset by higher maintenance costs on
certain older model year vehicles and weather-related expenses. Overhead
comparisons reflect the timing of spending, including commissions and
investments in sales, marketing, and technology to fund growth. FMS
earnings before tax as a percentage of FMS total revenue and FMS
operating revenue (a non-GAAP measure) were 4.0% and 4.8%, respectively,
both down 60 basis points from the prior year, primarily reflecting
higher depreciation due to vehicle residual value policy changes and
lower used vehicle sales results.

Dedicated Transportation Solutions

In the Dedicated Transportation Solutions (DTS) business segment, total
revenue was up 12% to $299 million and DTS operating revenue (a non-GAAP
measure excluding fuel and subcontracted transportation) was up 4% to
$201 million compared with the year-earlier period. DTS total revenue
growth reflects higher subcontracted transportation revenue and
operating revenue. DTS operating revenue growth reflects increased
volumes and new business.

DTS earnings before tax of $13.1 million increased 16% compared with
$11.3 million in 2017, due to revenue growth and operating performance,
as well as favorable developments related to self-insurance claims from
prior years. DTS earnings before tax as a percentage of DTS total
revenue and DTS operating revenue (a non-GAAP measure) were 4.4% and
6.5%, respectively, up 20 and 70 basis points from the year-earlier
period.

Supply Chain Solutions

In the Supply Chain Solutions (SCS) business segment, total revenue was
up 10% to $495 million and SCS operating revenue (a non-GAAP measure
excluding fuel and subcontracted transportation) was up 6% to $383
million compared with the year-earlier period. SCS total revenue growth
reflects higher operating revenue and subcontracted transportation
revenue. SCS operating revenue growth largely reflects new business.

SCS earnings before tax of $26.2 million decreased 7% in the first
quarter of 2018 compared with $28.0 million in 2017, reflecting an
unusually strong quarter in the prior year. First quarter results were
driven by lower volumes primarily in the automotive business, as well as
ongoing lower performance in one customer account. These impacts were
partially offset by earnings on operating revenue growth in CPG/Retail
and Technology/Healthcare and lower insurance costs. SCS earnings before
tax as a percentage of SCS total revenue and SCS operating revenue (a
non-GAAP measure) were 5.3% and 6.8%, respectively, both down 90 basis
points from the prior year.

Corporate Financial Information

Central Support Services

Central Support Services (CSS) are overhead costs incurred to support
all business segments and product lines. Most CSS costs are allocated to
the business segments. In the first quarter of 2018, unallocated CSS
costs were $11 million, consistent with the year-earlier period.

Income Taxes

The Company's effective income tax rate and comparable effective income
tax rate (a non-GAAP measure) from continuing operations for the first
quarter of 2018 decreased to 29.5% and 25.6%, reflecting a lower federal
tax rate related to the 2017 Tax Cuts and Jobs Act (Tax Reform). The
decrease in the effective income tax rate was offset by the impact of a
non-deductible UK goodwill impairment charge, as well as a deferred tax
liability adjustment of $1.4 million or $0.02 per diluted share related
to the prior provisional estimate from Tax Reform. During the first
quarter, we also determined that certain uncertain tax positions should
have been reversed in prior periods when the statutes of limitations
expired. We recognized a $3.3 million benefit to the tax provision
related to this reversal.

On April 2, 2018, the Internal Revenue Service issued Notice 2018-26,
which will require the Company to increase the provisional estimate
related to the one-time transition tax associated with Tax Reform. The
Company currently estimates the additional tax provision to be
approximately $30 million or $0.57 per diluted share in the second
quarter. This charge will be excluded from comparable earnings for the
second quarter.

Items Excluded from Segment and Comparable Earnings

Non-operating components of pension costs are excluded from both segment
earnings before tax and comparable earnings (a non-GAAP measure) to more
accurately reflect the operating performance of the business.
Non-operating pension costs totaled $1.2 million ($0.6 million after
tax) or $0.01 per diluted share in the first quarter of 2018, down from
$7.3 million ($4.2 million after tax) or $0.08 per diluted share in the
year-earlier period.

First quarter 2018 results reflect a non-cash, pre-tax charge of $15.5
million ($15.5 million after tax) or $0.29 per diluted share, related to
the impairment of goodwill in our FMS Europe reporting unit, which
predominantly operates in the UK. In connection with a downturn in
market conditions impacting these operations, the Company performed an
impairment analysis of goodwill in this reporting unit and concluded
that a charge was required. The UK business represents approximately 5%
of total revenue.

First quarter 2018 results also reflect acquisition transaction costs of
$0.6 million ($0.4 million after tax) or $0.01 per diluted share, and
restructuring and other charges, net of $0.5 million ($0.4 million after
tax) or $0.01 per diluted share. These impacts were partially offset by
Tax Reform-related adjustments, net of $0.8 million ($0.6 million after
tax) or $0.01 per diluted share related to a one-time employee bonus
previously announced.

Capital Expenditures

Capital expenditures increased to $711 million in the first quarter of
2018, compared with $436 million in the first quarter of 2017. The
increase in capital expenditures reflects higher planned investments to
grow and refresh the lease and rental fleets. Proceeds of $90 million,
primarily from used vehicle sales, decreased 7% compared with $97
million in 2017, reflecting fewer units sold. Net capital expenditures
(including proceeds from the sale of assets) were $621 million in 2018,
up from $340 million in 2017. The Company is increasing its forecast for
gross capital expenditures from $2.9 billion to $3.0 billion, primarily
reflecting increased contractual lease sales activity. The Company is
also revising its forecast for net capital expenditures to go from $2.5
billion to $2.6 billion.

Cash Flow and Leverage

Operating cash flow was $315 million in the first quarter of 2018,
compared with $331 million in the first quarter of 2017. Total cash
generated (a non-GAAP measure that includes proceeds from used vehicle
sales) was $425 million, compared with $444 million in 2017. Free cash
flow (a non-GAAP measure) was negative $238 million, compared with $83
million in 2017, reflecting increased net capital spending. The
Company's full-year 2018 forecast for operating cash flow remains
unchanged at approximately $1.8 billion. The Company is revising its
full-year free cash flow forecast from negative $600 million to negative
$750 million, primarily reflecting increased growth-related capital
spending.

Total debt as of March 31, 2018 was $5.7 billion, up from $5.4 billion
in 2017. Debt to equity for the first quarter of 2018 was 199% compared
with 191% at year-end 2017, and just below Ryder's long-term target
range of 200% to 250%. The Company is revising its year-end debt to
equity forecast from 199% to 210%, reflecting increased growth capital
spending and a recent acquisition.

2018 Earnings Forecast

Commenting on the Company's outlook, Mr. Sanchez said, "We expect
year-over-year pre-tax earnings to be higher for the balance of the
year. The improved earnings reflect continued strong rental and
contractual sales results, driven by the healthy freight environment and
our sales and marketing initiatives, as well as cost reductions. These
improvements will more than offset the impact from used vehicle sales
and higher depreciation. Our overall earnings expectation for the
balance of the year remains in-line with our prior forecast.

"We are pleased with our contractual sales performance across all three
business segments. We now expect record full-year ChoiceLease fleet
growth of 7,500 vehicles, up by 1,000 units from our prior forecast.
Based on our robust sales pipeline, we anticipate potential upside to
this forecast. Due to longer manufacturer lead times, most of the
additional fleet growth above our original forecast is expected to occur
later in the year, positioning us well for revenue and earnings growth
in 2019. In addition to organic growth opportunities, we are excited
about the opportunity to cross-sell the capabilities acquired through
the MXD purchase. We now anticipate double-digit revenue growth in both
DTS and SCS in the second half of the year.

"We expect the first quarter used vehicle pricing challenges to continue
throughout the year. We also expect continued solid used vehicle sales
volumes, and are forecasting used vehicle inventory to be around the
midpoint of our target range."

In view of these factors, Ryder is revising its full-year 2018 GAAP EPS
forecast to a range of $4.55 to $4.80, as compared to the prior forecast
of $5.34 to $5.64, primarily reflecting an increase to the provisional
estimate of the transition tax related to Tax Reform. In 2017, full-year
GAAP EPS was $14.88 and included a benefit from tax reform. The Company
is also revising its forecast for full-year 2018 comparable EPS from
continuing operations to $5.45 to $5.70, from the prior forecast of
$5.40 to $5.70, and compared with $4.53 in 2017.

Ryder is establishing a second quarter 2018 GAAP EPS forecast of $0.62
to $0.72, compared with $0.97 in the second quarter 2017. The 2018 GAAP
EPS forecast includes a one-time transition tax adjustment of $0.57. The
Company is also establishing a second quarter 2018 forecast for
comparable EPS from continuing operations of $1.20 to $1.30, compared
with $1.00 in the second quarter 2017.

Supplemental Company Information

Business Description

Ryder System, Inc. is a FORTUNE 500® commercial fleet management,
dedicated transportation, and supply chain solutions company. Ryder's
stock (NYSE:R) is a component of the Dow Jones Transportation Average
and the Standard & Poor's 500 Index. The Company's financial performance
is reported in the following three, inter-related business segments:

• Fleet
  Management Solutions - Ryder's FMS business segment
  provides a broad range of services to help businesses of all sizes,
  across virtually every industry, deliver for their customers. From
  leasing, maintenance, and fueling, to commercial rental and used
  vehicle sales, customers rely on Ryder's expertise to help them lower
  their costs, redirect capital to other parts of their business, and
  focus on what they do best - so they can grow.
• Dedicated
  Transportation Solutions - Ryder's DTS business segment combines
  the best of Ryder's leasing and maintenance capability with the safest
  and most professional drivers in the industry. With a dedicated
  transportation solution, Ryder helps customers increase their
  competitive position, reduce risk, and integrate their transportation
  needs with their overall supply chain.
• Supply
  Chain Solutions - Ryder's SCS business segment optimizes
  logistics networks to make them more responsive and able to be
  leveraged as a competitive advantage. Globally-recognized brands in
  the automotive, consumer goods, food and beverage, healthcare,
  industrial, oil and gas, technology, and retail industries rely on
  Ryder's leading-edge technologies and world-class logistics engineers
  to help them deliver the goods that consumers use every day.

Notations

Earnings Before Tax (EBT): Ryder's primary measurement of
business segment financial performance, earnings before tax (EBT),
allocates Central Support Services to each business segment and excludes
restructuring and other items, as well as non-operating pension costs.

Capital Expenditures: In Ryder's business, capital
expenditures are generally used to purchase revenue earning equipment
(trucks, tractors, and trailers) primarily to support the ChoiceLease
product line and secondarily to support the commercial rental product
line within Ryder's FMS business segment. The level of capital required
to support the ChoiceLease product line varies directly with customer
contract signings for growth and replacement vehicles. These contracts
are long-term agreements that result in ongoing revenues and cash flows
to Ryder, typically over a three- to ten-year term. The commercial
rental product line utilizes capital for the purchase of vehicles to
replenish and expand the Company's fleet available for shorter-term use
by contractual or occasional customers.

For more information on Ryder System, Inc., visit http://investors.ryder.com/.

Note Regarding Forward-Looking Statements:

Certain statements and information included in this news release are
"forward-looking statements" under the Federal Private Securities
Litigation Reform Act of 1995, including our expectations regarding
market trends, earnings performance, revenue in our business segments,
fleet growth, performance in our product lines and segments, the
strength of our sales pipeline, demand and pricing trends in commercial
rental and used vehicle sales, used vehicle inventory levels, residual
values, return on capital spread, operating cash flow, free cash flow,
capital expenditures, our ability to make investments in sales,
marketing, IT and new product initiatives, the impact from tax reform on
our earnings and demand for our services, and the impact and
adequacy of steps we have taken to address our cost structure.
Accordingly, these forward-looking statements should be evaluated with
consideration given to the many risks and uncertainties inherent in our
business that could cause actual results and events to differ materially
from those in the forward-looking statements. Important factors that
could cause such differences include, among others, our ability to adapt
to changing market conditions, lower than expected contractual sales,
decreases in commercial rental demand or poor acceptance of rental
pricing, our ability to return out of service vehicles to the fleet,
availability of rental vehicles to meet demand and availability of labor
to maintain our fleet at normalized levels, worsening of market demand
for used vehicles impacting current pricing and our anticipated
proportion of retail versus wholesale sales, lack of customer demand for
our services, higher than expected maintenance costs due to, among other
things, lower than expected benefits from maintenance initiatives and a
newer fleet, setbacks or uncertainty in the economic market,
implementation or enforcement of regulations, decreases in freight
demand or volumes, poor operational execution particularly with new
accounts and product launches, our ability to obtain adequate
profit margins for our services, our inability to maintain current
pricing levels due to soft economic conditions, business interruptions
or expenditures due to severe weather or natural occurrences,
competition from other service providers and new entrants, customer
retention levels, loss of key customers, driver and technician shortages
resulting in higher procurement costs and turnover rates, unexpected bad
debt reserves or write-offs, changes in customers' business environments
that will limit their ability to commit to long-term vehicle leases, a
decrease in credit ratings, increased debt costs, adequacy of accounting
estimates, reserves and accruals particularly with respect to pension,
taxes, depreciation, insurance and revenue, sudden or unusual changes in
fuel prices, unanticipated currency exchange rate fluctuations, our
ability to manage our cost structure, and the risks described in our
filings with the Securities and Exchange Commission. The risks included
here are not exhaustive. New risks emerge from time to time and it is
not possible for management to predict all such risk factors or to
assess the impact of such risks on our business. Accordingly, we
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, or
otherwise.

Note Regarding Non-GAAP Financial Measures: This news release
includes certain non-GAAP financial measures as defined under SEC rules,
including:

Comparable Earnings Measures, including comparable earnings
from continuing operations, comparable earnings per share from
continuing operations (as well as forecasts), comparable earnings before
income tax and comparable effective income tax rate. Additionally, our
adjusted return on average capital (ROC) and adjusted return on capital
spread (ROC spread) measures are calculated based on comparable earnings
items.

Operating Revenue Measures, including operating revenue and
operating revenue growth excluding foreign exchange for Ryder and its
business segments, and segment EBT as a percentage of operating revenue.

Cash Flow Measures, including total cash generated and free
cash flow.

Refer to Appendix - Non-GAAP Financial Measure Reconciliations at the
end of the tables following this press release for reconciliations of
the non-GAAP financial measures contained in this release to the nearest
GAAP measure. Additional information regarding non-GAAP financial
measures as required by Regulation G and Item 10(e) of Regulation S-K
can be found in our most recent Form 10-K, Form 10-Q and our Form 8-K
filed as of the date of this release with the SEC, which are available
at http://investors.ryder.com.

Conference Call and Webcast Information:

Ryder's earnings conference call and webcast is scheduled for Tuesday,
April 24, 2018, from 11:00 a.m. to 12:00 noon Eastern Time. Speakers
will be Chairman and Chief Executive Officer Robert Sanchez, and
Executive Vice President and Chief Financial Officer Art Garcia. To join
please click the below URL five minutes prior to the start of the
webcast. You will need to complete the registration page to gain access
to the webcast.

Ryder First Quarter Earnings Call Webcast URL: https://pgi.webcasts.com/starthere.jsp?ei=1186438&tp_key=07f06e843e

If you do not have computer speakers or headphones and/or would like to
dial-into the webcast, please dial into the phone bridge below. In
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