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Published: 2023-07-26 00:00:00 ET
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023
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

Image1.jpg
RYDER SYSTEM, INC.
(Exact name of registrant as specified in its charter)
Florida59-0739250
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
11690 N.W. 105th Street
Miami,Florida33178
(305) 500-3726
(Address of principal executive offices, including zip code)(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Ryder System, Inc. Common Stock ($0.50 par value)RNew York Stock Exchange
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 filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No   
The number of shares of Ryder System, Inc. Common Stock outstanding at June 30, 2023, was 45,527,262.




RYDER SYSTEM, INC.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS
 
  Page No.
 

i

Table of Contents

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RYDER SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)

 Three months ended June 30,Six months ended June 30,
(In millions, except per share amounts)2023202220232022
Lease & related maintenance and rental revenue$976 $1,050 $1,955 $2,075 
Services revenue1,778 1,777 3,599 3,447 
Fuel services revenue130 207 282 366 
Total revenue2,884 3,034 5,836 5,888 
Cost of lease & related maintenance and rental661 688 1,335 1,387 
Cost of services1,507 1,523 3,114 2,973 
Cost of fuel services126 199 275 354 
Selling, general and administrative expenses343 361 706 703 
Non-operating pension costs, net10 2 20 5 
Used vehicle sales, net(55)(130)(127)(243)
Interest expense72 56 137 108 
Miscellaneous income, net(11)(14)(31)(14)
Currency translation adjustment loss188  188  
Restructuring and other items, net(1)11 (26)25 
2,840 2,696 5,591 5,298 
Earnings from continuing operations before income taxes44 338 245 590 
Provision for income taxes62 98 123 174 
Earnings (loss) from continuing operations(18)240 122 416 
Loss from discontinued operations, net of tax (1)(1)(1)
Net earnings (loss)$(18)$239 $121 $415 
Earnings (loss) per common share — Basic
Continuing operations$(0.39)$4.80 $2.64 $8.20 
Discontinued operations(0.01)(0.02)(0.02)(0.02)
Net earnings (loss)$(0.40)$4.78 $2.61 $8.18 
Earnings (loss) per common share — Diluted
Continuing operations$(0.39)$4.72 $2.60 $8.05 
Discontinued operations(0.01)(0.02)(0.02)(0.02)
Net earnings (loss)$(0.40)$4.70 $2.57 $8.03 
See accompanying Notes to Condensed Consolidated Financial Statements.
Note: EPS amounts may not be additive due to rounding.
1

Table of Contents

RYDER SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)

 Three months ended June 30,Six months ended June 30,
(In millions)2023202220232022
Net earnings (loss)$(18)$239 $121 $415 
Other comprehensive income:
Changes in cumulative translation adjustment and unrealized gains from cash flow hedges207 (44)216 (42)
Amortization of pension and postretirement items6 5 13 11 
Income tax expense related to amortization of pension and postretirement items(1)(2)(3)(3)
Amortization of pension and postretirement items, net of taxes5 3 10 8 
Change in net actuarial loss and prior service cost 2  2 
Income tax expense related to change in net actuarial loss and prior service cost (1) (1)
Change in net actuarial loss and prior service cost, net of taxes 1  1 
Other comprehensive income (loss), net of taxes212 (40)226 (33)
Comprehensive income$194 $199 $347 $382 
See accompanying Notes to Condensed Consolidated Financial Statements.

2

Table of Contents

RYDER SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) 
(In millions, except share amounts)June 30,
2023
December 31,
2022
Assets:
Current assets:
Cash and cash equivalents$218 $267 
Receivables, net1,572 1,610 
Inventories74 78 
Prepaid expenses and other current assets253 245 
Total current assets2,117 2,200 
Revenue earning equipment, net8,795 8,190 
Operating property and equipment, net of accumulated depreciation of $1,429 and $1,377
01,132 1,148 
Goodwill861 861 
Intangible assets, net281 295 
Operating lease right-of-use assets766 715 
Sales-type leases and other assets1,019 986 
Total assets$14,971 $14,395 
Liabilities and shareholders' equity:
Current liabilities:
Short-term debt and current portion of long-term debt$1,330 $1,349 
Accounts payable934 767 
Accrued expenses and other current liabilities1,147 1,200 
Total current liabilities3,411 3,316 
Long-term debt5,195 5,003 
Other non-current liabilities1,604 1,568 
Deferred income taxes1,665 1,571 
Total liabilities11,875 11,458 
Commitments and contingencies (Note 14)
Shareholders' equity:
Preferred stock, no par value per share — authorized, 3,800,917; none outstanding, June 30, 2023 and December 31, 2022
  
Common stock, $0.50 par value per share — authorized, 400,000,000; outstanding, June 30, 2023 — 45,527,262 and December 31, 2022 — 46,286,664
23 23 
Additional paid-in capital1,154 1,192 
Retained earnings2,489 2,518 
Accumulated other comprehensive loss(570)(796)
Total shareholders' equity3,096 2,937 
Total liabilities and shareholders' equity$14,971 $14,395 
See accompanying Notes to Condensed Consolidated Financial Statements.
3

Table of Contents

RYDER SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six months ended June 30,
(In millions)20232022
Cash flows from operating activities from continuing operations:
Net earnings $121 $415 
Less: Loss from discontinued operations, net of tax(1)(1)
Earnings from continuing operations122 416 
Depreciation expense857 854 
Used vehicle sales, net(127)(243)
Currency translation adjustment loss188  
Amortization expense and other non-cash charges, net44 50 
Non-cash lease expense124 93 
Non-operating pension costs, net and share-based compensation expense41 28 
Deferred income tax expense94 123 
Collections on sales-type leases63 64 
Changes in operating assets and liabilities:
Receivables92 (187)
Inventories4 (13)
Prepaid expenses and other assets(4)(31)
Accounts payable(2)82 
Accrued expenses and other liabilities(275)(133)
Net cash provided by operating activities from continuing operations1,221 1,103 
Cash flows from investing activities from continuing operations:
Purchases of property and revenue earning equipment(1,652)(1,195)
Sales of revenue earning equipment394 601 
Sales of operating property and equipment53 35 
Acquisitions, net of cash acquired (430)
Other investing activities(2)7 
Net cash used in investing activities from continuing operations(1,207)(982)
Cash flows from financing activities from continuing operations:
Net borrowings (repayments) of commercial paper and other(27)208 
Debt proceeds1,314 951 
Debt repayments(1,124)(1,111)
Dividends on common stock(63)(63)
Common stock issued(18)(9)
Common stock repurchased(133)(300)
Other financing activities(6)(6)
Net cash used in financing activities from continuing operations(57)(330)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(6)(15)
Decrease in cash, cash equivalents, and restricted cash(49)(224)
Cash, cash equivalents, and restricted cash at beginning of period267 672 
Cash, cash equivalents, and restricted cash at end of period$218 $448 

See accompanying Notes to Condensed Consolidated Financial Statements.
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RYDER SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited)


Three months ended June 30, 2023
 Preferred
Stock
Common StockAdditional
Paid-In Capital
Retained EarningsAccumulated
Other
Comprehensive Loss
 
(In millions, except share amounts in thousands)AmountSharesParTotal
Balance as of April 1, 2023$ 46,492 $23 $1,168 $2,596 $(782)$3,005 
Comprehensive income    (18)212 194 
Common stock dividends declared —$0.62 per share
    (29) (29)
Common stock issued under employee stock award and stock purchase plans and other (1)
 115 1 2   3 
Common stock repurchases (1,080)(1)(27)(60) (88)
Share-based compensation   11  — 11 
Balance as of June 30, 2023$ 45,527 $23 $1,154 $2,489 $(570)$3,096 

Three months ended June 30, 2022
 Preferred
Stock
Common StockAdditional
Paid-In Capital
Retained EarningsAccumulated
Other
Comprehensive Loss
 
(In millions, except share amounts in thousands)AmountSharesParTotal
Balance as of April 1, 2022$ 51,137 $26 $1,134 $2,171 $(682)$2,649 
Comprehensive income— — — — 239 (40)199 
Common stock dividends declared —$0.58 per share
— — — — (30)— (30)
Common stock issued under employee stock award and stock purchase plans and other (1)
— 58 — 3 — — 3 
Common stock repurchases— — — — — —  
Share-based compensation— — — 12 — — 12 
Balance as of June 30, 2022$ 51,195 $26 $1,149 $2,380 $(722)$2,833 
————————————
(1)Net of common shares delivered as payment for the exercise price or to satisfy the holders' withholding tax liability upon exercise of options.

See accompanying Notes to Condensed Consolidated Financial Statements.










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RYDER SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited)



Six months ended June 30, 2023
 Preferred
Stock
Common StockAdditional
Paid-In Capital
Retained EarningsAccumulated
Other
Comprehensive Loss
 
(In millions, except share amounts in thousands)AmountSharesParTotal
Balance as of January 1, 2023$ 46,287 $23 $1,192 $2,518 $(796)$2,937 
Comprehensive income    121 226 347 
Common stock dividends declared —$1.24 per share
    (59) (59)
Common stock issued under employee stock award and stock purchase plans and other (1)
 785 1 (21)2  (18)
Common stock repurchases (1,545)(1)(39)(93) (133)
Share-based compensation   22   22 
Balance as of June 30, 2023$ 45,527 $23 $1,154 $2,489 $(570)$3,096 

Six months ended June 30, 2022
 Preferred
Stock
Common StockAdditional
Paid-In Capital
Retained EarningsAccumulated
Other
Comprehensive Loss
 
(In millions, except share amounts in thousands)AmountSharesParTotal
Balance as of January 1, 2022$ 53,789 $27 $1,194 $2,266 $(689)$2,798 
Comprehensive income— — — — 415 (33)382 
Common stock dividends declared —$1.16 per share
— — — — (61)— (61)
Common stock issued under employee stock option and stock purchase plans and other (1)
— 458 — (9)— — (9)
Common stock repurchases— (3,052)(1)(59)(240)— (300)
Share-based compensation— — — 23 — — 23 
Balance as of June 30, 2022$ 51,195 $26 $1,149 $2,380 $(722)$2,833 
————————————
(1)Net of common shares delivered as payment for the exercise price or to satisfy the holders' withholding tax liability upon exercise of options.


See accompanying Notes to Condensed Consolidated Financial Statements.


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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. GENERAL

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements include the accounts of Ryder System, Inc. (Ryder) and all entities in which Ryder has a controlling voting interest (subsidiaries) and variable interest entities (VIE) where Ryder is determined to be the primary beneficiary in accordance with generally accepted accounting principles in the United States (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. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting policies described in our 2022 Annual Report on Form 10-K and should be read in conjunction with the consolidated financial statements and notes thereto. The year-end Condensed Consolidated Balance Sheet data was derived from our audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair statement have been included and the disclosures herein are adequate. The operating results for interim periods are not necessarily indicative of the results that can be expected for a full year. Certain prior period amounts have been reclassified to conform with the current period presentation. In the three and six months ended June 30, 2022, we previously reported certain costs in "Cost of services" that should have been included in the "Cost of fuel services" within the unaudited Condensed Consolidated Statement 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 added the "Operating lease right-of-use assets" financial statement line to the unaudited Condensed Consolidated Balance Sheets. These assets were previously included in "Sales-type leases and other assets" in the year-end Condensed Consolidated Balance Sheets.

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 the beginning of 2022, we announced our intention to exit our lower return FMS Europe (primarily United Kingdom (U.K.)) business. We completed the shutdown of operations as well as the sale of the remaining vehicles and properties as of June 30, 2023, generating cash proceeds of $394 million and recording gains of $95 million from the beginning of 2022 through the first six months of 2023. As a result of the shutdown, we reclassified $188 million ($183 million, net of tax) of cumulative currency translation adjustment charges from "Accumulated other comprehensive loss" in our Condensed Consolidated Balance Sheet into a one-time, non-cash charge in our Condensed Consolidated Statements of Earnings. The currency translation adjustment loss had no impact on our consolidated financial position or cash flows. Refer to Note 10, "Accumulated Other Comprehensive Loss" for a discussion on the currency translation adjustment loss.



2. SEGMENT REPORTING

Our primary measurement of segment financial performance, defined as segment "Earnings from continuing operations before income taxes" (EBT), includes an allocation of costs from Central Support Services (CSS) and excludes Non-operating pension costs, net, intangible amortization expense, and certain other items as discussed in Note 13, "Other Items Impacting Comparability." 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. In the first quarter of 2023, we revised our primary measure of segment financial performance to exclude intangible amortization expense. We revised the presentation of the prior period to conform to the current period presentation. This change did not have a material impact to segment results. 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.

7

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The following table sets forth financial information for each of our segments and provides a reconciliation between segment EBT and Earnings from continuing operations before income taxes:
Three months ended June 30,Six months ended June 30,
(In millions)2023202220232022
Revenue:
Fleet Management Solutions:
ChoiceLease$781 $763 $1,557 $1,527 
Commercial rental301 336 605 642 
SelectCare and other172 153 354 301 
FMS Europe (1)
 55  119 
Fuel services revenue205 314 446 561 
Fleet Management Solutions1,459 1,621 2,962 3,150 
Supply Chain Solutions1,179 1,174 2,380 2,263 
Dedicated Transportation Solutions440 450 894 875 
Eliminations (2)
(194)(211)(400)(400)
Total revenue$2,884 $3,034 $5,836 $5,888 
Earnings from continuing operations before income taxes:
Fleet Management Solutions$180 $286 $362 $535 
Supply Chain Solutions76 62 93 105 
Dedicated Transportation Solutions33 23 62 43 
Eliminations(24)(30)(49)(56)
265 341 468 627 
Unallocated Central Support Services(20)(24)(35)(40)
Intangible amortization expense (3)
(8)(9)(17)(19)
Non-operating pension costs, net (4)
(10)(2)(20)(5)
Other items impacting comparability, net (5)
(183)32 (151)27 
Earnings from continuing operations before income taxes$44 $338 $245 $590 
————————————
(1)Refer to Note 13, "Other Items Impacting Comparability" for further information on the FMS U.K. business exit.
(2)Represents the elimination of intercompany revenue in our FMS business segment.
(3)Included within "Selling, general and administrative expenses" in our Condensed Consolidated Statements of Earnings.
(4)Refer to Note 12, "Employee Benefit Plans," for a discussion on this item.
(5)Refer to Note 13, "Other Items Impacting Comparability," for a discussion of items excluded from our primary measure of segment performance.

Long-Lived Asset Impairment

During the first quarter of 2023, we identified impairment indicators primarily associated with specialized sortation and conveyor equipment used in the warehouse operations of a specific SCS customer. The impairment indicators were triggered by the credit deterioration and eventual bankruptcy of this customer in April 2023. These events resulted in a significant decline in the current forecasted operating cash flows associated with the equipment. We performed an asset impairment test under the income-based approach using a discounted cash flow method of valuation and determined we had a $30 million impairment. Events or changes in circumstances may occur in the near term resulting in a change in management’s estimates of undiscounted cash flows. Any such events or changes could ultimately impact the amount of the impairment loss. In the fourth quarter of 2022, we were notified by this customer of their intent to early terminate operations at one of their distribution centers and we recorded an impairment charge of $20 million in the fourth quarter of 2022.
8

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


The following table sets forth the capital expenditures paid for each of our segments:
Three months ended June 30,Six months ended June 30,
(In millions)2023202220232022
Fleet Management Solutions$971 $561 $1,592 $1,112 
Supply Chain Solutions32 40 44 66 
Dedicated Transportation Solutions1 1 1 1 
Central Support Services7 9 15 16 
Purchases of property and revenue earning equipment$1,011 $611 $1,652 $1,195 


3. REVENUE
The following tables present our revenue recognized by primary geographical market in our reportable business segments and by industry vertical for SCS. Refer to Note 2, "Segment Reporting," for the disaggregation of our revenue by major products/service lines.

Primary Geographical Markets
Three months ended June 30, 2023
(In millions)FMSSCSDTSEliminationsTotal
United States$1,381 $1,035 $440 $(185)$2,671 
Canada78 65  (9)134 
Mexico 79   79 
Total revenue$1,459 $1,179 $440 $(194)$2,884 



Three months ended June 30, 2022
(In millions)FMSSCSDTSEliminationsTotal
United States$1,485 $1,040 $450 $(201)$2,774 
Canada81 69  (10)140 
Europe (1)
55    55 
Mexico 65   65 
Total revenue$1,621 $1,174 $450 $(211)$3,034 
(1)Refer to Note 13, "Other Items Impacting Comparability" for further information on the exit of the FMS U.K. business.


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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)

Six months ended June 30, 2023
(In millions)FMSSCSDTSEliminationsTotal
United States$2,807 $2,103 $894 $(381)$5,423 
Canada155 127  (19)263 
Mexico 150   150 
Total revenue$2,962 $2,380 $894 $(400)$5,836 
Six months ended June 30, 2022
(In millions)FMSSCSDTSEliminationsTotal
United States$2,872 $2,012 $875 $(380)$5,379 
Canada159 129  (20)268 
Europe (1)
119    119 
Mexico 122   122 
Total revenue$3,150 $2,263 $875 $(400)$5,888 
(1)Refer to Note 13, "Other Items Impacting Comparability" for further information on the exit of the FMS U.K. business.
Industry

Beginning in the first quarter of 2023, we introduced the omnichannel retail industry vertical to provide better visibility to the revenue mix following recent acquisitions and organic growth. This new vertical includes retail, e-commerce, last mile services, and technology. Our SCS business segment included revenue from the following industries:

Three months ended June 30,Six months ended June 30,
(In millions)2023202220232022
Omnichannel retail$405 $451 $858 $869 
Automotive410 389 803 743 
Consumer packaged goods231 208 458 404 
Industrial and other133 126 261 247 
Total SCS revenue$1,179 $1,174 $2,380 $2,263 

Lease & Related Maintenance and Rental Revenue
The non-lease revenue from maintenance services related to our ChoiceLease product is recognized in "Lease & related maintenance and rental revenue" in the Condensed Consolidated Statements of Earnings. For the three months ended June 30, 2023 and 2022, we recognized $239 million and $262 million, respectively. For the six months ended June 30, 2023 and 2022, we recognized $483 million and $519 million, respectively.
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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)

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:
Six months ended June 30,
(In millions)20232022
Balance as of beginning of period$544 $593 
Recognized as revenue during period from beginning balance(93)(163)
Consideration deferred during period, net96 123 
Foreign currency translation adjustment and other2 11 
Balance as of end of period$549 $564 
Contracted Not Recognized Revenue

Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized (contracted not recognized revenue). Contracted not recognized revenue was $2.6 billion as of June 30, 2023, and primarily includes deferred revenue and amounts for ChoiceLease maintenance revenue that will be recognized as revenue in future periods as we provide maintenance services to our customers.


4. RECEIVABLES, NET

(In millions)June 30, 2023December 31, 2022
Trade$1,376 $1,476 
Sales-type lease124 120 
Other, primarily warranty and insurance106 55 
1,606 1,651 
Allowance for credit losses and other(34)(41)
Receivables, net$1,572 $1,610 


The following table provides a reconciliation of our allowance for credit losses and other:
Six months ended June 30,
(In millions)20232022
Balance as of beginning of period$41 $31 
Changes to provisions for credit losses9 18 
Write-offs and other(16)(11)
Balance as of end of period$34 $38 


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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)

5. REVENUE EARNING EQUIPMENT, NET

 
Estimated Useful Lives (In Years)
June 30, 2023December 31, 2022
(Dollars in millions)CostAccumulated
Depreciation
Net
CostAccumulated
Depreciation
Net
Held for use:
Trucks
3 — 7
$5,499 $(2,153)$3,346 $5,282 $(2,114)$3,168 
Tractors
   47.5
7,283 (2,972)4,311 7,153 (3,153)4,000 
Trailers and other
9.512
1,679 (686)993 1,610 (690)920 
Held for sale (1)
630 (485)145 388 (286)102 
Total$15,091 $(6,296)$8,795 $14,433 $(6,243)$8,190 
————————————
(1)Revenue earning equipment held for sale where net book values exceed fair values are adjusted to fair value on a nonrecurring basis and these adjustments are considered Level 3 fair value measurements. The fair value of revenue earning equipment held for sale adjusted with Level 3 fair value measurements was $3 million for both periods ending June 30, 2023, and December 31, 2022. The net book value of all other assets held for sale were below fair value.
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. For the six months ended June 30, 2023 and 2022, we did not adjust the estimated residual values and useful lives of existing revenue earning equipment.
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 exceeded 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 Condensed 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 components of "Used vehicle sales, net" were as follows:
 Three months ended June 30,Six months ended June 30,
(In millions)2023202220232022
Gains on used vehicle sales, net (1)
$(57)$(132)$(131)$(247)
Losses from valuation adjustments2 2 4 4 
Used vehicle sales, net$(55)$(130)$(127)$(243)
————————————
(1)For the six months ended June 30, 2023, Gains on used vehicle sales, net includes $2 million, recorded during the first quarter of 2023, related to the exit of the FMS U.K. business and $20 million and $28 million, for the three and six months ended June 30, 2022, respectively.
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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)


6. ACCRUED EXPENSES AND OTHER LIABILITIES
 June 30, 2023December 31, 2022
(In millions)Accrued
Expenses
Non-Current
Liabilities
TotalAccrued
Expenses
Non-Current
Liabilities
Total
Salaries and wages$155 $ $155 $259 $ $259 
Deferred compensation5 93 98 5 80 85 
Pension and other employee benefits19 183 202 29 179 208 
Insurance obligations, primarily self-insured
173 299 472 179 309 488 
Operating taxes
138  138 132  132 
Interest51  51 41  41 
Deposits, mainly from customers73  73 84  84 
Operating lease liabilities196 586 782 191 541 732 
Deferred revenue (1)
198 351 549 178 366 544 
Other
139 92 231 102 93 195 
Total$1,147 $1,604 $2,751 $1,200 $1,568 $2,768 
————————————
(1)Refer to Note 3, "Revenue," for additional information.



7. LEASES
Leases as Lessor
The components of lease income were as follows:
Three months ended June 30,Six months ended June 30,
(In millions)2023202220232022
Operating leases
Lease income related to ChoiceLease$368 $378 $728 $760 
Lease income related to commercial rental (1)
$287 $325 $575 $623 
Sales-type leases
Interest income related to net investment in leases$11 $10 $26 $21 
Variable lease income excluding commercial rental (1)
$70 $71 $142 $145 
————————————
(1)Lease income related to commercial rental includes both fixed and variable lease income. Variable income is approximately 15% to 20% of total commercial rental income based on management's internal estimates.

The components of net investment in sales-type leases, which are included in "Receivables, net" and "Sales-type leases and other assets" in the Condensed Consolidated Balance Sheets, were as follows:
(In millions)June 30, 2023December 31, 2022
Net investment in the lease — lease payment receivable$607 $598 
Net investment in the lease — unguaranteed residual value in assets65 43 
672 641 
Estimated loss allowance(4)(6)
Total$668 $635 


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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)

8. DEBT

 Weighted Average Interest Rate  
(Dollars in millions)June 30, 2023MaturitiesJune 30, 2023December 31, 2022
Debt:
U.S. commercial paper
5.50%2026$646 $672 
Trade receivables financing program6.02%202450 50 
Global revolving credit facility
2026  
Unsecured U.S. obligations4.16%2024-2027375 375 
Unsecured medium-term note issued February 2018
2023 450 
Unsecured medium-term note issued June 20182023 450 
Unsecured medium-term note issued October 20183.88%2023300 300 
Unsecured medium-term note issued February 20193.65%2024600 600 
Unsecured medium-term note issued August 20192.50%2024550 550 
Unsecured medium-term note issued April 20204.63%2025400 400 
Unsecured medium-term note issued May 20203.35%2025400 400 
Unsecured medium-term note issued December 19956.95%2025150 150 
Unsecured medium-term note issued November 2021 (1)
6.03%2026270 270 
Unsecured medium-term note issued November 20192.90%2026400 400 
Unsecured medium-term note issued February 2022 (1)
4.29%2027433 434 
Unsecured medium-term note issued May 20224.30%2027300 300 
Unsecured medium-term note issued February 20235.65%2028500  
Unsecured medium-term note issued May 20235.25%2028650  
Unsecured foreign obligations2.88%202450 50 
Asset-backed U.S. obligations (2)
3.22%2023-2030432 477 
Finance lease obligations and other2023-204144 42 
6,550 6,370 
Debt issuance costs and original issue discounts(25)(18)
Total debt (3)
6,525 6,352 
Short-term debt and current portion of long-term debt(1,330)(1,349)
Long-term debt$5,195 $5,003 
 ————————————
(1)Includes impact from the fair market values of hedging instruments on our notes, which was $47 million as of both June 30, 2023 and December 31, 2022, and was included in "Other non-current liabilities" within the Condensed Consolidated Balance Sheets. The notional amount of interest rate swaps designated as fair value hedges was $500 million as of both June 30, 2023 and December 31, 2022.
(2)Asset-backed U.S. obligations are related to financing transactions backed by a portion of our revenue earning equipment.
(3)The unsecured medium-term notes bear semi-annual interest.


The fair value of total debt (excluding finance lease and asset-backed U.S. obligations) was approximately $6.0 billion and $5.7 billion as of June 30, 2023 and December 31, 2022, 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.

As of June 30, 2023, there was $754 million available under the global revolving 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%, as defined in the credit facility agreement. As of June 30, 2023, the ratio was 164%.

On April 25, 2023, certain terms of our global revolving credit facility were amended. Pursuant to the amendment, among other items, (i) the definition of consolidated net worth was revised to exclude impacts from our exit of the FMS U.K. business,
14

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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)

(ii) LIBOR was replaced as an available benchmark interest rate with term secured overnight financing rate (SOFR), and (iii) the maximum absolute dollar amounts for our trade receivables financing program and asset-backed financings were removed and the percentage-based maximum amounts were substantially increased.

We had letters of credit and surety bonds outstanding of $466 million and $513 million as of June 30, 2023 and December 31, 2022, respectively, which primarily guarantee the payment of insurance claims.

As of June 30, 2023, the available proceeds under the trade receivables financing program were $217 million. As of June 30, 2023, utilization of this program included borrowing of $50 million and letters of credit outstanding of $33 million. On April 24, 2023, we extended the trade receivables financing program for an additional year to April 2024.

The following table summarizes our debt proceeds and repayments in 2023:

Six months ended June 30, 2023
(In millions)Debt ProceedsDebt Repayments
Medium-term notes (1)
$1,142 Medium-term notes$900 
U.S. and foreign term loans, finance lease obligations and other172 U.S. and foreign term loans, finance lease obligations and other224 
Total debt proceeds
$1,314 Total debt repaid$1,124 
 ————————————
(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.


9. SHARE REPURCHASE PROGRAMS

We maintain two share repurchase programs. The first 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 Program commenced October 14, 2021 and expires October 14, 2023. 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"). 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 three and six months ended June 30, 2023, we repurchased and retired 0.3 million and 0.8 million shares, respectively, for $25 million and $70 million, respectively, under the 2021 Anti-Dilutive Program. During the three and six months ended June 30, 2022, we did not repurchase any shares under this program.

During the three and six months ended June 30, 2023, we repurchased and retired 0.8 million shares for $63 million under the 2023 Discretionary Program.

In February 2022, our board of directors authorized an accelerated share repurchase program to repurchase up to $300 million of common stock, with final settlement scheduled to occur no later than the end of October 2022. During February 2022, we remitted $300 million to our agent for the accelerated share repurchase program. We received an initial share amount of approximately 3 million, representing approximately 80% of the total notional value of the accelerated share repurchase agreement.


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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)

10. 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 change in each component of Accumulated other comprehensive loss, net of tax (AOCI):

(In millions)Currency
Translation
Adjustments
Net Actuarial
(Loss) Gain
and Prior Service Costs
Unrealized Gain (Loss) from Cash Flow Hedges
Accumulated
Other
Comprehensive
(Loss) Gain
January 1, 2023$(238)$(566)$8 $(796)
Other comprehensive gain (loss), net of tax, before reclassifications35  1 36 
Amounts reclassified from AOCI, net of tax183 10 (3)190 
Net current-period other comprehensive gain (loss), net of tax218 10 (2)226 
June 30, 2023$(20)$(556)$6 $(570)


(In millions)Currency
Translation
Adjustments
Net Actuarial
(Loss) Gain
and Prior Service Costs
Unrealized Gain (Loss) from Cash Flow HedgesAccumulated
Other
Comprehensive
(Loss) Gain
January 1, 2022$(153)$(529)$(7)$(689)
Other comprehensive gain (loss), net of tax, before reclassifications(53) 8 (45)
Amounts reclassified from AOCI, net of tax 9 3 12 
Net current-period other comprehensive gain (loss), net of tax(53)9 11 (33)
June 30, 2022$(206)$(520)$4 $(722)

In the second quarter of 2023, we recognized a non-cash, cumulative currency translation adjustment loss of $183 million as a result of the FMS U.K. business exit, which is included in "Currency translation adjustment loss" in our Condensed Consolidated Statements of Earnings. The cumulative currency translation adjustment loss had no impact on our consolidated financial position or cash flows.
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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)

11. EARNINGS PER SHARE


The following table presents the calculation of basic and diluted earnings per common share from continuing operations:
 Three months ended June 30,Six months ended June 30,
(Dollars in millions)2023202220232022
Earnings per share — Basic:
Earnings (loss) from continuing operations$(18)$240 $122 $416 
Less: Distributed and undistributed earnings allocated to unvested stock (1)(1)(2)
Earnings (loss) from continuing operations available to common shareholders $(18)$239 $121 414 
Weighted average common shares outstanding 45,975 49,852 46,176 50,474 
Earnings (loss) from continuing operations per common share — Basic$(0.39)$4.80 $2.64 $8.20 
Earnings per share — Diluted:
Earnings (loss) from continuing operations$(18)$240 $122 $416 
Less: Distributed and undistributed earnings allocated to unvested stock    
Earnings (loss) from continuing operations available to common shareholders — Diluted$(18)$240 $122 $416 
Weighted average common shares outstanding — Basic45,975 49,852 46,176 50,474 
Effect of dilutive equity awards 1,073 980 1,226 
Weighted average common shares outstanding — Diluted45,975 50,925 47,156 51,700 
Earnings (loss) from continuing operations per common share — Diluted$(0.39)$4.72 $2.60 $8.05 
Anti-dilutive equity awards not included in diluted EPS2,531 1,068 1,579 765 
————————————
Note: Amounts may not be additive due to rounding.


12. EMPLOYEE BENEFIT PLANS

Components of net pension expense for defined benefit pension plans were as follows:
Three months ended June 30,Six months ended June 30,
(In millions)2023202220232022
Company-administered plans:
Interest cost$23 $16 $45 $32 
Expected return on plan assets(19)(18)(38)(37)
Amortization of net actuarial loss and prior service cost6 5 13 11 
Net pension expense$10 $3 $20 $6 
Company-administered plans:
U.S.$7 $4 $15 $7 
Non-U.S.3 (1)5 (1)
Net pension expense$10 $3 $20 $6 

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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)

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. During the six months ended June 30, 2023, we contributed $1 million to our pension plans. We do not have any required contributions to our pension plans for the year 2023. We also maintain other postretirement benefit plans that are not reflected in the table above as the amount of postretirement benefit expense for such plans was not material for any period presented.


13. OTHER ITEMS IMPACTING COMPARABILITY

Our primary measure of segment performance as shown in Note 2, "Segment Reporting," excludes unallocated corporate costs, intangible amortization expense, and certain items we do not believe are representative of the ongoing operations of our business segments. Excluding these items from our segment measure of performance allows for better year over year comparison:

 Three months ended June 30,Six months ended June 30,
(In millions)2023202220232022
FMS Europe results (1)
$(1)$ $3 $ 
Gains on sale of U.K. revenue earning equipment (2)
 (20)(2)(28)
Gains on sale of U.K. properties (3)
(4)(23)(9)(24)
Commercial claims proceeds, net of fees (1)
 5 (31)12 
Severance and other, net (1)
 6 3 9 
FMS U.K. exit(5)(32)(36)(31)
Currency translation adjustment loss188  188  
Other, net (1)
  (1)4 
Other items impacting comparability$183 $(32)$151 $(27)
________________________
(1)Included within "Restructuring and other items, net" in our Condensed Consolidated Statements of Earnings.
(2)Included within "Used vehicle sales, net" in our Condensed Consolidated Statements of Earnings.
(3)Included within "Miscellaneous income, net" in our Condensed Consolidated Statements of Earnings.



14.  CONTINGENCIES AND OTHER MATTERS

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 Condensed 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.

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
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RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)

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 trial shall commence in June 2024. On April 18, 2023, the parties reached an agreement in principle to resolve the Securities Class Action. On May 19, 2023, plaintiffs filed an unopposed Motion for Preliminary Approval of the settlement, and the parties filed corresponding settlement documentation, which are pending court approval. We expect that the settlement amount will be covered by insurance, and accordingly is not material to our financial position or results of operations.

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 derivative complaints are generally based on the allegations set forth in the Securities Class Action and allege breach of fiduciary duties, unjust enrichment, and waste of corporate assets. The derivative plaintiffs, on our behalf, seek 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, and were then consolidated into a single action (the "State Action"). Two of the derivative 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 continue to believe that the claims asserted in the complaints are without merit and intend to defend against them vigorously.


15. SUPPLEMENTAL CASH FLOW INFORMATION

Six months ended June 30,
(In millions)20232022
Interest paid$123 $100 
Income taxes paid$67 $67 
Cash paid for operating lease liabilities$115 $86 
Right-of-use assets obtained in exchange for lease obligations:
Finance leases$11 $5 
Operating leases$154 $118 
Capital expenditures acquired but not yet paid$361 $290 


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ITEM 2. 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 the unaudited Condensed Consolidated Financial Statements and notes thereto included under Item 1, as well as our audited Consolidated Financial Statements and notes thereto and related MD&A included in the 2022 Annual Report on Form 10-K. Certain prior period amounts have been reclassified to conform with the current period presentation. During the three and six months ended June 30, 2022, we previously reported certain costs in "Cost of services" that should have been included in the "Cost of fuel services" within the unaudited Condensed Consolidated Statement 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.


OVERVIEW

General

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 including food and beverage service, transportation and logistics, retail and consumer goods, automotive, industrial, housing, technology, and business and personal services.

Business Trends

During the three and six months ended June 30, 2023, market conditions for our used vehicle sales and rental continued to weaken, although used vehicle trends were moderately higher than expected. We are still experiencing favorable trends in logistics and transportation solutions due to secular trends including ongoing supply chain disruptions and a limited supply of vehicles available in the market. These secular trends, along with successful management of initiatives to increase long-term returns, are driving revenue growth and benefiting earnings in our Supply Chain Solutions (SCS) and Dedicated Transportation Solutions (DTS) business segments.

In our Fleet Management Solutions (FMS) North America business, used vehicle pricing declined from the historical highs of the prior year and rental utilization was 75% as compared to record 85% in the prior year. We anticipate that market conditions for used vehicle sales and rental will continue to weaken in the second half of 2023. ChoiceLease vehicle fleet grew during the first half of the year, and included the redeployment of units from our rental fleet into new ChoiceLease contracts in order to maintain optimal rental utilization and provide immediate availability to our lease customers. Our lease pricing initiatives are delivering improved portfolio returns. We expect to realize incremental earnings benefits as our remaining portfolio is renewed at higher returns.

In our SCS business, strong outsourcing trends in warehousing and distribution continue. Higher pricing and volumes drove strong revenue growth in SCS and DTS. SCS revenue growth also benefited from new contract wins in the prior year. Pricing adjustments and cost recovery initiatives benefited earnings in both segments. Profitability in SCS in line with our long-term target range in the second quarter, despite weaker volume trends and increased lost business in the omnichannel retail vertical. In the first half of 2023, DTS contract sales activity slowed, consistent with a softer freight environment. However, DTS profitability was at the high end of our target range. We expect SCS and DTS revenue growth to moderate over the remainder of the year.

While we are experiencing positive momentum in our businesses, other unknown effects from extended higher fuel prices, inflationary cost pressures, labor shortages, extended disruptions in vehicle and vehicle part production and rising interest rates may negatively impact demand for our business and financial results.

SELECTED OPERATING PERFORMANCE ITEMS

Total revenue of $2.9 billion in the second quarter of 2023, compared to $3.0 billion in prior year
Operating revenue (a non-GAAP measure) of $2.3 billion in the second quarter of 2023, up 1%, reflecting SCS and DTS revenue growth partially offset by the impact from FMS U.K. exit
Strong performance in all segments benefited EBT
Diluted EPS from continuing operations of $(0.39) in the second quarter of 2023 due to a non-cash UK exit charge compared to $4.72 in prior year
Comparable EPS (a non-GAAP measure) from continuing operations of $3.61 in the second quarter of 2023, as compared to a record $4.43 in prior year, largely reflecting weaker market conditions in used vehicles sales and rental
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Adjusted Return on Equity (ROE) (a non-GAAP measure) of 24% for the trailing twelve months ended June 30, 2023
Net cash provided by operating activities from continuing operations of $1.2 billion and free cash flow (a non-GAAP measure) of $16 million in the six months ended June 30, 2023


Total revenue was $2.9 billion in the second quarter of 2023, as compared to $3.0 billion in prior year and $5.8 billion in the six months ended June 30, 2023, as compared to $5.9 billion in prior year, reflecting lower fuel revenue and subcontracted transportation, largely offset by higher operating revenue. Operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation) increased 1% in the second quarter of 2023 and 3% in the six months ended June 30, 2023, primarily reflecting SCS and DTS revenue growth, partially offset by impacts from the FMS U.K. exit.

EBT and Comparable EBT (a non-GAAP measure) decreased in the second quarter of 2023, primarily due to lower gains on used vehicles sold in North America and decreased commercial rental results in FMS partially offset by higher earnings in SCS and DTS. EBT and Comparable EBT decreased in the six months ended June 30, 2023, primarily due to lower gains on used vehicles sold in North America, decreased commercial rental results in FMS and a first quarter $30 million asset impairment related to a SCS customer bankruptcy partially offset by higher earnings in DTS. EBT in the second quarter and the six months ended June 30, 2023, also reflects a one-time, non-cash $188 million currency translation adjustment loss related to the FMS U.K. exit.

The following discussion provides a summary of financial highlights that are discussed in more detail throughout our MD&A and within the Notes to Condensed Consolidated Financial Statements:
 Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions, except per share)2023202220232022Three MonthsSix Months
Total revenue$2,884 $3,034 $5,836 $5,888  (5)% (1)%
Operating revenue (1)
2,326 2,307 4,672 4,523  1% 3%
Earnings from continuing operations before income taxes (EBT)$44 $338 $245 $590  (87)% (58)%
Comparable EBT (1)
237 308 416 568  (23)% (27)%
Earnings (loss) from continuing operations(18)240 122 416 NM (71)%
Comparable earnings from continuing operations (1)
170 226 303 414  (25)% (27)%
Net earnings (loss)(18)239 121 415 NM (71)%
Comparable EBITDA (1)
674 688 1,302 1,335  (2)% (2)%
Earnings (loss) per common share (EPS) — Diluted
Continuing operations$(0.39)$4.72 $2.60 $8.05 NM (68)%
Comparable (1)
3.61 4.43 6.42 8.00  (19)% (20)%
Net earnings (loss)(0.40)4.70 2.57 8.03 NM (68)%
______________________
(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.

NM - Denotes Not Meaningful throughout the MD&A
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

CONSOLIDATED RESULTS
Lease & Related Maintenance and Rental
Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Lease & related maintenance and rental revenue$976 $1,050 $1,955 $2,075  (7)% (6)%
Cost of lease & related maintenance and rental661 688 1,335 1,387  (4)% (4)%
Gross margin$315 $362 $620 $688  (13)% (10)%
Gross margin %32%34%32%33%

Lease & related maintenance and rental revenue represent revenue from our ChoiceLease and commercial rental product offerings within our FMS business segment. Revenue decreased 7% in the second quarter of 2023 and 6% for the six months ended June 30, 2023, reflecting a 4% and 5%, respectively, negative impact from the exit of the FMS U.K. business and lower commercial rental demand.

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 Condensed Consolidated Statements of Earnings. Cost of lease & related maintenance and rental decreased 4% in the second quarter of 2023 and 4% for the six months ended June 30, 2023, primarily from the exit of the FMS U.K. business.

Lease & related maintenance and rental gross margin decreased in the second quarter of 2023 and for the six months ended June 30, 2023, primarily due to lower commercial rental demand partially offset by higher commercial rental pricing. Lease & related maintenance and rental gross margin percentage decreased in the second quarter of 2023 and for the six months ended June 30, 2023, primarily due to lower commercial rental utilization.

Services
Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Services revenue$1,778 $1,777 $3,599 $3,447  —% 4%
Cost of services1,507 1,523 3,114 2,973  (1)% 5%
Gross margin$271 $254 $485 $474  7% 2%
Gross margin %15%14%13%14%

Services revenue represents all the revenue associated with our SCS and DTS business segments, including subcontracted transportation and fuel, as well as SelectCare and fleet support services associated with our FMS business segment. Services revenue remained consistent with the prior year period as new business, increased pricing and higher volumes in SCS and DTS, as well as higher pricing in SelectCare, were offset by lower subcontracted transportation and fuel revenue passed through to customers in the second quarter of 2023. Services revenue increased 4% for the six months ended June 30, 2023, due to increases in revenue in SCS and DTS primarily driven by new business, higher volumes and increased pricing, as well as higher pricing in SelectCare.

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 decreased 1% in the second quarter and increased 5% for the six months ended June 30, 2023. The increase in the six months ended June 30, 2023, reflects a $30 million SCS asset impairment charge as a result of a customer bankruptcy in the first quarter of 2023.

Services gross margin increased 7% in the second quarter of 2023 and increased 2% for the six months ended June 30, 2023. Services gross margin as a percentage of revenue increased 1% in the second quarter of 2023. These increases reflect increased
22

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
pricing in DTS and new business in SCS and DTS. The services gross margin and gross margin as a percentage of revenue decreased 1% in the six months ended June 30, 2023, negatively impacted by the SCS asset impairment.

Fuel
Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Fuel services revenue$130 $207 $282 $366  (37)% (23)%
Cost of fuel services126 199 275 354  (37)% (22)%
Gross margin$4 $$7 $12  (50)% (42)%
Gross margin %3%4%2%3%

Fuel services revenue represents fuel services provided to our FMS customers. Fuel services revenue decreased 37% in the second quarter of 2023, and 23% for the six months ended June 30, 2023, reflecting lower fuel prices passed through to customers and fewer gallons sold.

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 decreased 37% in the second quarter of 2023 and 22% for the six months ended June 30, 2023, as a result of lower fuel prices and a fewer gallons sold.

Fuel services gross margin and gross margin as a percentage of revenue decreased in the second quarter of 2023 and for the six months ended June 30, 2023, compared to prior year. 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 for the second quarter of 2023 and six months ended June 30, 2023, was not significantly impacted by these price change dynamics as fuel prices fluctuated during the periods.

Selling, General and Administrative Expenses
Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Selling, general and administrative expenses (SG&A)$343$361$706 $703 (5)%—%
Percentage of total revenue12%12%12%12%

SG&A expenses decreased 5% in the second quarter and were consistent with the prior year period in the six months ended June 30, 2023. The decrease in second quarter of 2023 primarily reflects lower bad debt and incentive-based compensation expenses. SG&A expenses as a percentage of total revenue remained at 12% for the second quarter of 2023 and for the six months ended June 30, 2023.

Non-Operating Pension Costs, net
Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Non-operating pension costs, net$10 $$20 $NMNM


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 non-operating pension costs, net increased due to higher interest expense from a higher discount rate partially offset by an increase in expected return on plan assets.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Used Vehicle Sales, net
Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Used vehicle sales, net$(55)$(130)$(127)$(243)(58)%(48)%

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 values (referred to as "valuation adjustments"). Used vehicle sales, net decreased in the second quarter of 2023 and six months ended June 30, 2023, due to lower proceeds per unit on sales of used vehicles partially offset by higher volumes. Used vehicle sales, net for for the six months ended June 30, 2023, includes gains associated with the exit from the U.K. of $2 million recorded during the first quarter. Used vehicle sales, net for the three and six months ended June 30, 2022, includes gains associated with the exit from the U.K. of $20 million and $28 million, respectively. Refer to Note 13, "Other Items Impacting Comparability" for further details.

Average proceeds per unit decreased in the second quarter of 2023 and for the six months ended June 30, 2023. The following table presents the average used vehicle pricing changes for North America compared to the prior year:
Proceeds per unit change 2023/2022 (1)
Three MonthsSix Months
Tractors(41)%(38)%
Trucks(34)%(26)%
————————————
(1) Represents percentage change compared to prior year period in average sales proceeds on used vehicle sales using constant currency.
Interest Expense
 Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Interest expense$72 $56 $137 $108 29%27%
Effective interest rate4.5%3.4%4.3%3.3%

Interest expense in the second quarter of 2023 increased 29% from the prior year and increased 27% for the six months ended June 30, 2023,primarily reflecting higher interest rates.

Miscellaneous Income, net
 Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Miscellaneous income, net$(11)$(14)$(31)$(14)(21)%121%
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 income, net was $11 million in the second quarter of 2023 compared to $14 million in the prior year period, primarily reflecting higher gains on sales of properties in the prior year partially offset by higher investment income on securities used to fund certain benefit plans in the second quarter of 2023. Miscellaneous income, net was $31 million for the six months ended June 30, 2023, compared to $14 million in the prior year period, primarily due to higher investment income on securities used to fund certain benefit plans partially offset by higher gains on sales of properties in the prior year.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Currency Translation Adjustment Loss
 Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Currency translation adjustment loss$188 $— $188 $— NMNM
Refer to Note 10, "Accumulated Other Comprehensive Loss" for a discussion on the currency translation adjustment loss.

Restructuring and Other Items, net
Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Restructuring and other items, net$(1)$11 $(26)$25 NMNM
Refer to Note 13, "Other Items Impacting Comparability" in the Notes to Condensed Consolidated Financial Statements for a discussion of restructuring charges and other items.

Provision for Income Taxes
 Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Provision for income taxes$62 $98 $123 $174 (37)%(29)%
Effective tax rate on continuing operations140.8%29.0%50.0%29.5%
Comparable tax rate on continuing operations (1)
28.6%26.8%27.3%27.2%
————————————
(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.

Our effective tax rate on continuing operations was 140.8% in the second quarter of 2023, compared to 29.0% in the prior year, and 50.0% for the six months ended June 30, 2023, compared to 29.5%, primarily due to a one-time, nondeductible cumulative currency translation adjustment loss related to the completion of the FMS U.K. business exit in the second quarter of 2023.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
OPERATING RESULTS BY BUSINESS SEGMENT

 Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in thousands)2023202220232022Three MonthsSix Months
Revenue:
Fleet Management Solutions$1,459 $1,621 $2,962 $3,150 (10)%(6)%
Supply Chain Solutions1,179 1,174 2,380 2,263 —%5%
Dedicated Transportation Solutions440 450 894 875 (2)%2%
Eliminations(194)(211)(400)(400)8%—%
Total$2,884 $3,034 $5,836 $5,888 (5)%(1)%
Operating Revenue: (1)
Fleet Management Solutions$1,254 $1,307 $2,516 $2,589 (4)%(3)%
Supply Chain Solutions865 798 1,744 1,536 8%14%
Dedicated Transportation Solutions327 306 649 602 7%8%
Eliminations(120)(104)(237)(204)(15)%(16)%
Total$2,326 $2,307 $4,672 $4,523 1%3%
Earnings from continuing operations before income taxes:
Fleet Management Solutions$180 $286 $362 $535 (37)%(32)%
Supply Chain Solutions76 62 93 105 23%(11)%
Dedicated Transportation Solutions33 23 62 43 43%44%
Eliminations(24)(30)(49)(56)20%13%
265 341 468 627 (22)%(25)%
Unallocated Central Support Services(20)(24)(35)(40)(17)%(13)%
Intangible amortization expense (2)
(8)(9)(17)(19)(11)%(11)%
Non-operating pension costs, net (2)
(10)(2)(20)(5)NMNM
Other items impacting comparability, net (3)
(183)32 (151)27 NMNM
Earnings from continuing operations before income taxes$44 $338 $245 $590 (87)%(58)%
————————————
(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 12, "Employee Benefit Plans," for a discussion on this item.
(3)Refer to Note 13, "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 segment "Earnings from continuing operations before income taxes" (EBT), which includes an allocation of Central Support Services (CSS), and excludes Non-operating pension costs, net, intangible amortization expense, and certain other items as discussed in Note 13, "Other Items Impacting Comparability," in the Notes to Condensed 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. In the first quarter of 2023, we revised our primary measurement of segment financial performance to exclude intangible amortization expense. This change did not have a material impact to segment results. 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 corporate costs are not attributable to any segment and remain unallocated in CSS, including costs for investor relations, public affairs and certain executive compensation.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Our FMS segment leases revenue earning equipment and also 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"). 

The following table sets forth the benefits from equipment contribution included in EBT for our SCS and DTS business segments:
Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Equipment Contribution:
Supply Chain Solutions$11 $11 $21 $21  —% —%
Dedicated Transportation Solutions13 19 28 35  (32)% (20)%
Total
$24 $30 $49 $56  (20)% (13)%

The decrease in DTS equipment contribution in the second quarter of 2023 and in the six months ended June 30, 2023, was related to lower proceeds on sales of used vehicles and lower fuel prices passed through to customers.

Items excluded from our segment EBT measure and their classification within our Condensed Consolidated Statements of Earnings are as follows (in millions):
Three months ended June 30,Six months ended June 30,
DescriptionClassification2023202220232022
FMS Europe results (1)
Restructuring and other items, net$1 $— $(3)$— 
Gains on sale of U.K. revenue earning equipment (1)
Used vehicles sales, net 20 2 28 
Gains on sale of U.K. properties (1)
Miscellaneous income, net4 23 9 24 
Commercial claims proceeds, net of fees (1)
Restructuring and other items, net (5)31 (12)
Severance and other, net (1)
Restructuring and other items, net (6)(3)(9)
FMS U.K. exit (1)
5 32 36 31 
Currency translation adjustment loss (1)
Currency translation adjustment loss(188)— (188)— 
Other, net (1)
Restructuring and other items, net — 1 (4)
Other items impacting comparability, net(183)32 (151)27 
Non-operating pension costs (2)
Non-operating pension costs(10)(2)(20)(5)
$(193)$30 $(171)$22 
(1)Refer to Note 13, "Other Items Impacting Comparability," in the Notes to Condensed Consolidated Financial Statements for additional information.
(2)Includes 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.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

Fleet Management Solutions
  Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
ChoiceLease$781 $763 $1,557$1,527  2% 2%
Commercial rental (1)
301 336 605642  (10)% (6)%
SelectCare and other172 153 354301  12% 18%
FMS Europe 55 119 NMNM
Fuel services revenue205 314 446561  (35)% (20)%
FMS total revenue$1,459 $1,621 $2,962$3,150  (10)% (6)%
FMS operating revenue (2)
$1,254 $1,307 $2,516$2,589  (4)% (3)%
FMS EBT$180 $286 $362$535  (37)% (32)%
FMS EBT as a % of FMS total revenue12.3%17.6%12.2%17.0% (530) bps (480) bps
FMS EBT as a % of FMS operating revenue (2)
14.4%21.9%14.4%20.7% (750) bps (630) bps
Twelve months ended June 30,Change 2023/2022
20232022
FMS EBT as a % of FMS total revenue14.4 %16.1% (170) bps
FMS EBT as a % of FMS operating revenue (3)
17.2 %19.0% (180) bps
————————————
(1)For the three months ended June 30, 2023 and 2022, rental revenue from lease customers in place of a lease vehicle represented 35% and 32% of commercial rental revenue, respectively. For the six months ended June 30, 2023 and 2022, rental revenue from lease customers in place of a lease vehicle represented 36% and 33% of commercial rental revenue, respectively.
(2)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.

FMS total revenue decreased 10% in the second quarter of 2023 and 6% for the six months ended June 30, 2023, due to lower fuel services revenue passed through to customers and lower operating revenue (a non-GAAP measure excluding fuel and ChoiceLease liability insurance revenue). FMS operating revenue decreased 4% in the second quarter, reflecting a 4% negative impact from the UK business exit. North America remained unchanged in the second quarter as higher ChoiceLease and SelectCare revenue was offset by lower rental demand. FMS operating revenue decreased 3% for the six months ended June 30, 2023, reflecting a 5% negative impact from the UK business exit and a 2% decrease in North America due to lower rental demand partially offset by higher SelectCare and ChoiceLease revenue in the six months ended June 30, 2023.

FMS EBT decreased 37% to $180 million from $286 million in the second quarter of 2023 and decreased 32% to $362 million from $535 million in the six months ended June 30, 2023. FMS EBT decreased primarily from lower gains on used vehicle sales and lower commercial rental results. Lower North America gains reflect a 34% and 41% decrease in used truck and tractor pricing, respectively, in the second quarter of 2023 and a 26% and 38% decrease in used truck and tractor pricing, respectively, in the six months ended June 30, 2023. The decreases in used truck and tractor pricing were partially offset by higher volumes in the three and six months ended June 30, 2023. Rental power fleet utilization declined to 75% in both the second quarter of 2023 and in the six months ended June 30, 2023, as compared to the 85% and 83% in the three and six months ended June 30, 2022, respectively. The average power fleet was 1% smaller in the second quarter of 2023 and 3% larger in the six months ended June 30, 2023. Commercial rental results benefited from 2% and 3% increase in power-fleet pricing during the second quarter and six months ended June 30, 2023, respectively. In the first half of 2023, we redeployed 2,300 units from the rental fleet into new ChoiceLease contracts in order to maintain optimal rental utilization levels and to meet ChoiceLease customer needs for used equipment.


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

Our North America fleet of owned and leased revenue earning equipment and SelectCare vehicles, including vehicles under on-demand maintenance, is summarized as follows (number of units rounded to the nearest hundred):
    Change
 June 30, 2023December 31, 2022June 30, 2022June 2023/
Dec 2022
June 2023/
June 2022
End of period vehicle count
By type:
Trucks (1)
74,100 72,100 71,400  3% 4%
Tractors (2)
71,100 69,300 69,400  3% 2%
Trailers and other (3)
42,000 41,200 39,700  2% 6%
Total187,200 182,600 180,500  3% 4%
By product line:
ChoiceLease
139,000 134,600 133,400  3% 4%
Commercial rental
39,200 41,800 41,100  (6)% (5)%
 Service vehicles and other2,000 2,100 2,100  (5)% (5)%
180,200 178,500 176,600  1% 2%
Held for sale
7,000 4,100 3,900  71% 79%
Total187,200 182,600 180,500  3% 4%
Memo: U.K. Vehicle Count (excluded from above) 1,000 5,900  (100)% (100)%
Customer vehicles under SelectCare contracts (4)
51,700 54,600 55,200  (5)% (6)%
Quarterly average vehicle count
By product line:
ChoiceLease137,800 134,500 133,600  2% 3%
Commercial rental40,200 41,800 40,500  (4)% (1)%
Service vehicles and other2,100 2,000 2,000  5% 5%
180,100 178,300 176,100  1% 2%
Held for sale5,900 3,700 3,500  59% 69%
Total186,000 182,000 179,600  2% 4%
Customer vehicles under SelectCare contracts (4)
52,600 55,300 55,000  (5)% (4)%
Customer vehicles under SelectCare on-demand (5)
3,900 5,800 6,200  (33)% (37)%
Total vehicles serviced242,500 243,100 240,800  —% 1%
————————————
(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.
(5)Comprised of the number of unique vehicles serviced under on-demand maintenance agreements for the quarterly periods. 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: Quarterly amounts were computed using a 6-point average based on monthly information. 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
The following table provides information on our North America active ChoiceLease fleet (number of units rounded to nearest hundred) and our commercial rental power fleet (excludes trailers):
Change
June 30, 2023December 31, 2022June 30, 2022June 2023/
Dec 2022
June 2023/
June 2022
Active ChoiceLease fleet
End of period vehicle count (1)
130,500 128,400 128,900  2% 1%
Quarterly average vehicle count (1)
129,700 128,800 128,500  1% 1%
Commercial rental statistics
Quarterly commercial rental utilization - power fleet (2)
75 %82 %85 %(700) bps(1,000) bps
Year-to-date commercial rental utilization - power fleet (2)
75 %83 %83 %(800) bps(800) bps
————————————
(1)Active ChoiceLease vehicles are calculated as those units currently earning revenue and not classified as not yet earning (NYE) or no longer earning units (NLE). NYE units represent new vehicles on hand that are being prepared for deployment to a lease customer or into the rental fleet. Preparations include activities such as adding lift gates, paint, decals, cargo area and refrigeration equipment. NLE units represent all vehicles held for sale and vehicles for which no revenue has been earned in the previous 30 days. Accordingly, these vehicles may be temporarily out of service, being prepared for sale or awaiting redeployment.
(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
Beginning in the first quarter of 2023, we introduced the omnichannel retail industry vertical to provide better visibility to the revenue mix following recent acquisitions and organic growth. This new vertical includes retail, e-commerce, last mile services, and technology.
Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Omnichannel retail$275 $292 $586 $562 (6)%4%
Automotive262 217 516 412 21%25%
Consumer packaged goods223 198 441 385 13%15%
Industrial and other105 91 201 177 15%14%
Subcontracted transportation and fuel314 376 636 727 (16)%(13)%
SCS total revenue$1,179 $1,174 $2,380 $2,263 —%5%
SCS operating revenue (1)
$865 $798 $1,744 $1,536 8%14%
SCS EBT$76 $62 $93 $105 23%(11)%
SCS EBT as a % of SCS total revenue6.4%5.3%3.9%4.6%110 bps(70) bps
SCS EBT as a % of SCS operating revenue (1)
8.7%7.8%5.3%6.8%90 bps(150) bps
Memo:
End of period fleet count (2)
13,600 11,700 13,600 11,700 16%16%
Twelve months ended June 30,Change 2023/2022
20232022
SCS EBT as a % of SCS total revenue4.3%3.9% 40 bps
SCS EBT as a % of SCS operating revenue (1)
6.0%5.6% 40 bps
————————————
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
(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)End of period power fleet count is 4,100 and 3,800 as of June 30, 2023 and June 30, 2022, respectively.

SCS total revenue remained at $1.2 billion in the second quarter of 2023 and increased 5% in the six months ended June 30, 2023, primarily as a result of higher operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation) offset by lower subcontracted transportation. SCS operating revenue increased 8% in the second quarter of 2023 and increased 14% for the six months ended June 30, 2023, driven by new business, higher volumes and increased pricing.

SCS EBT increased 23% in the second quarter of 2023, primarily due to higher operating revenue, lower incentive-based compensation costs, as well as higher prior year customer accommodation charges. These increases were partially offset by lower volumes in the omnichannel retail vertical. For the six months ended June 30, 2023, SCS EBT decreased 11%, reflecting a $30 million asset impairment charge related to a customer bankruptcy. Refer to Note 2, "Segment Reporting," for additional discussion. The negative impact from the asset impairment was partially offset by revenue growth.


Dedicated Transportation Solutions
Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions, except fleet count)2023202220232022Three MonthsSix Months
DTS total revenue$440 $450 $894 $875 (2)%2%
DTS operating revenue (1)
$327 $306 $649 $602 7%8%
DTS EBT$33 $23 $62 $43 43%44%
DTS EBT as a % of DTS total revenue7.6%5.1%7.0%4.9%250 bps210 bps
DTS EBT as a % of DTS operating revenue (1)
10.3%7.5%9.6%7.1%280 bps250 bps
Memo:
End of period fleet count (2)
11,300 11,600 11,300 11,600 (3)%(3)%
Twelve months ended June 30,Change 2023/2022
20232022
DTS EBT as a % of DTS total revenue6.8%4.0% 280 bps
DTS EBT as a % of DTS operating revenue (1)
9.5%5.7% 380 bps
————————————
(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)End of period power fleet count is 5,300 as of both periods June 30, 2023 and June 30, 2022.

DTS total revenue decreased 2% in the second quarter of 2023, reflecting lower fuel revenue passed through to customers largely offset by higher operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation). DTS total revenue increased 2% for the six months ended June 30, 2023, primarily due to higher operating revenue partially offset by lower fuel revenue. DTS operating revenue increased 7% in the second quarter of 2023 and 8% in the six months ended June 30, 2023, primarily due to inflationary cost recovery and higher volumes.

DTS EBT increased 43% in second quarter of 2023 and 44% for the six months ended June 30, 2023, primarily due to operating revenue growth and improved labor productivity.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)

Central Support Services
Three months ended June 30,Six months ended June 30,Change 2023/2022
(Dollars in millions)2023202220232022Three MonthsSix Months
Total CSS104 107 207 204 (3)%1%
Allocation of CSS to business segments
(84)(83)(172)(164)1%5%
Unallocated CSS$20 $24 $35 $40 (17)%(13)%

Total CSS costs decreased 3% in the second quarter primarily due to lower incentive-based compensation costs and lower professional fees partially offset by strategic investments in marketing and information technology. Total CSS costs increased 1% in the six months ended June 30, 2023, primarily due to strategic investments in marketing and information technology, partially offset by lower incentive-based compensation costs. Unallocated CSS costs decreased 17% in the second quarter of 2023, primarily reflecting lower professional fees and incentive-based compensation costs. Unallocated CSS costs decreased 13% for the six months ended June 30, 2023, primarily reflecting lower incentive-based compensation costs and the first quarter gain from the sale of our corporate headquarters building.

FINANCIAL RESOURCES AND LIQUIDITY
Cash Flows
The following is a summary of our cash flows from continuing operations:
 Six months ended June 30,
(In millions)20232022
Net cash provided by (used in):
Operating activities$1,221 $1,103 
Investing activities(1,207)(982)
Financing activities(57)(330)
Effect of exchange rate changes on cash(6)(15)
Net change in cash, cash equivalents, and restricted cash$(49)$(224)
Six months ended June 30,
(In millions)20232022
Net cash provided by operating activities
Earnings from continuing operations$122 $416 
Non-cash and other, net1,033 905 
Currency translation adjustment loss188 — 
Collections on sales-type leases63 64 
Changes in operating assets and liabilities(185)(282)
Cash flows from operating activities from continuing operations$1,221 $1,103 

Cash provided by operating activities increased to $1.2 billion for the six months ended June 30, 2023, compared with $1.1 billion in 2022, driven by higher cash earnings and lower working capital needs. Cash used in investing activities increased to $1.2 billion for the six months ended June 30, 2023, compared with $982 million in 2022, primarily due to increased capital expenditures in 2023 and the accelerated timing of vehicle deliveries from OEMs as compared to the prior year, partially offset by the acquisition of the Whiplash business in 2022. Cash used in financing activities decreased to $57 million for the six months ended June 30, 2023, compared with $330 million in 2022, primarily reflecting lower common stock repurchases partially offset by higher borrowing needs.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
The following table shows our free cash flow (a non-GAAP measure) computation:
Six months ended June 30,
(In millions)20232022
Net cash provided by operating activities$1,221 $1,103 
Sales of revenue earning equipment (1)
394 601 
Sales of operating property and equipment (1)
53 35 
Other (1)
 
Total cash generated (2)
1,668 1,746 
Purchases of property and revenue earning equipment (1)
(1,652)(1,195)
Free cash flow (2)
$16 $551 
————————————
(1)Included in cash flows from investing activities.
(2)Non-GAAP financial measure. 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 this measure is important to investors.


Free cash flow (a non-GAAP measure) declined to $16 million for the six months ended June 30, 2023, compared to $551 million in 2022, primarily reflecting an increase in capital expenditures and lower proceeds from used vehicle sales.

The following table provides a summary of gross capital expenditures:
 Six months ended June 30,
(In millions)20232022
Revenue earning equipment:
ChoiceLease$1,382 $810 
Commercial rental310 364 
1,692 1,174 
Operating property and equipment121 133 
Gross capital expenditures 1,813 1,307 
Changes to liabilities related to purchases of property and revenue earning equipment(161)(112)
Cash paid for purchases of property and revenue earning equipment$1,652 $1,195 

Gross capital expenditures increased to $1.8 billion for the six months ended June 30, 2023, reflecting higher investments in lease partially offset by lower investments in commercial rental.

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 cash equivalents totaled $218 million as of June 30, 2023. As of June 30, 2023, $181 million was held outside the U.S. and is available to fund operations. Our intention is to permanently reinvest the earnings of our foreign subsidiaries, with the exception of our U.K. and Germany subsidiaries where the assertion was removed in 2021. 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 June 30, 2023, and there was no impact to deferred taxes. In February 2023, we repatriated $38 million of foreign earnings from the U.K.

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 or secure terms commercially acceptable to us. If we cease to have access to public bonds,
33

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
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 2023, we issued an aggregate principal amount of $500 million unsecured medium-terms notes that mature on March 1, 2028. The notes bear interest at a rate of 5.65% per year. In May 2023, we issued an aggregate principal amount of $650 million unsecured medium-terms notes that mature on June 1, 2028. The notes bear interest at a rate of 5.25% per year. Refer to Note 8, "Debt," in the Notes to Condensed Consolidated Financial Statements for additional information on our global revolving credit facility, trade receivables financing program, medium-term notes, and asset-backed financing obligations.

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 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 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 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 June 30, 2023, were as follows:
Rating Summary
 Short-termShort-term OutlookLong-termLong-term Outlook
Standard & Poor’s Ratings Services A2BBB+Stable
Moody’s Investors ServiceP2StableBaa2Stable
Fitch RatingsF2BBB+Stable


As of June 30, 2023, we had the following amounts available to fund operations under the following facilities:
(In millions)
Global revolving credit facility$754 
Trade receivables financing program$217 

In accordance with our funding philosophy, we 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 18% and 19% as of June 30, 2023 and December 31, 2022, respectively.

Our debt-to-equity ratio was 211% and 216% as of June 30, 2023 and December 31, 2022, respectively. The debt-to-equity ratio represents total debt divided by total equity.

Share Repurchases and Cash Dividends

As of June 30, 2023, we repurchased and retired 0.8 million shares for $70 million under the 2021 Anti-Dilutive program, and 0.8 million shares for $63 million under the 2023 Discretionary Program.

Refer to Note 9, "Share Repurchase Programs," in the Notes to Condensed Consolidated Financial Statements for a discussion on our share repurchase programs.

In April 2023 and 2022, our board of directors declared a quarterly cash dividend of $0.62 and $0.58 per share of common stock, respectively. In July 2023, the board of directors declared a regular quarterly cash dividend of $0.71 per share of common stock, an increase of 15% compared to the cash dividend we have paid since July 2022.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
NON-GAAP FINANCIAL MEASURES

This Quarterly Report on Form 10-Q includes information extracted from condensed consolidated financial information, but not required by generally accepted accounting principles in the United States (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 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-Q:

Non-GAAP Financial MeasureComparable GAAP Measure
Operating Revenue Measures:
Operating RevenueTotal Revenue
FMS Operating RevenueFMS Total Revenue
SCS Operating RevenueSCS Total Revenue
DTS Operating RevenueDTS Total Revenue
FMS EBT as a % of FMS Operating RevenueFMS EBT as a % of FMS Total Revenue
SCS EBT as a % of SCS Operating RevenueSCS EBT as a % of SCS Total Revenue
DTS EBT as a % of DTS Operating RevenueDTS EBT as a % of DTS Total Revenue
Comparable Earnings Measures:
Comparable Earnings Before Income TaxEarnings Before Income Tax
Comparable EarningsEarnings from Continuing Operations
Comparable Earnings Before Interest, Taxes, Depreciation
     and Amortization (EBITDA)
Net Earnings
Comparable EPSEPS from Continuing Operations
Comparable Tax RateEffective Tax Rate from Continuing Operations
Adjusted Return on Equity (ROE)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 Flow Measures:
Total Cash Generated and Free Cash FlowCash Provided by Operating Activities from Continuing Operations

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Set forth in the table below is an overview of each non-GAAP financial measure and why management believes that the 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 or each business segment (FMS, SCS and DTS) excluding any (1) fuel and (2) subcontracted transportation. 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.
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 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 adjusted net earnings and adjusted average shareholders' equity. We use adjusted ROE as an internal measure of how effectively we use the owned capital invested in our operations.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Comparable Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)
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.
Cash Flow Measures:
Total Cash Generated

Free Cash Flow
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.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
The following table provides a reconciliation of GAAP earnings before taxes (EBT), earnings, and earnings 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 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 Condensed Consolidated Financial Statements:

Continuing Operations
Three months ended June 30,Six months ended June 30,
(In millions, except per share amounts)2023202220232022
EBT$44 $338 $245 $590 
Non-operating pension costs, net10 20 
FMS U.K. exit (1)
(5)(32)(36)(31)
Currency translation adjustment loss188 — 188 — 
Other, net (1)
 — (1)
Comparable EBT$237 $308 $416 $568 
Earnings (loss) from continuing operations$(18)$240 $122 $416 
Non-operating pension costs, net8 16 
FMS U.K. exit (1)
(5)(32)(36)(31)
Currency translation adjustment loss183 — 183 — 
Other, net (1)
1  
Tax adjustments, net (2)
1 16 18 21 
Comparable Earnings$170 $226 $303 $414 
Diluted EPS$(0.39)$4.72 $2.60 $8.05 
Non-operating pension costs, net0.17 0.03 0.34 0.07 
FMS U.K. exit (1)
(0.11)(0.62)(0.77)(0.60)
Currency translation adjustment loss3.90 — 3.87 — 
Other, net (1)
0.02 (0.01) 0.07 
Tax adjustments, net (2)
0.02 0.31 0.38 0.41 
Comparable EPS (3)
$3.61 $4.43 $6.42 $8.00 
————————————
(1)Refer to Note 13, “Other Items Impacting Comparability,” in the Notes to Condensed Consolidated Financial Statements for additional information.
(2)Adjustments include the global tax impacts related to the FMS U.K. business exit in 2023, and gains on sales of U.K. revenue earning equipment and properties during 2022.
(3)For the three months ended June 30, 2023, Comparable EPS was calculated using the effect of dilutive equity awards. Diluted EPS did not use the effect of dilutive equity awards because the effect was anti-dilutive during the period. Refer to Note 11. "Earnings Per Share," in the Notes to Condensed Consolidated Financial Statements for detailed calculation of Diluted EPS.
Note: Amounts may not be additive due to rounding.

The following table provides a reconciliation of the effective tax rate to the comparable tax rate:
Three months ended June 30,Six months ended June 30,
2023202220232022
Effective tax rate on continuing operations (1)
140.8 %29.0 %50.0 %29.5 %
Tax adjustments and income tax effects of non-GAAP adjustments (2)
(112.2)%(2.2)%(22.7)%(2.3)%
Comparable tax rate on continuing operations (1)
28.6 %26.8 %27.3 %27.2 %
————————————
(1)The effective tax rate on continuing operations and comparable tax rate are based on EBT and comparable EBT, respectively, found on the previous page.
(2)Refer to the table above for more information on tax adjustments. Income tax effects of non-GAAP adjustments are calculated based on the marginal tax rates to which the non-GAAP adjustments are related.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)


The following table provides a reconciliation of earnings to comparable EBITDA:

Three months ended June 30,Six months ended June 30,
(In millions)2023202220232022
Net earnings (loss)$(18)$239 $121 $415 
Loss from discontinued operations, net of tax 1 
Provision for income taxes62 98 123 174 
EBT44 338 245 590 
Non-operating pension costs, net10 20 
FMS U.K. exit (1)
(5)(32)(36)(31)
Currency translation adjustment loss (1)
188 — 188 — 
Other, net (1)
 — (1)
Comparable EBT237 308 416 568 
Interest expense72 56 137 108 
Depreciation412 424 857 854 
Used vehicle sales, net (2)
(55)(109)(125)(214)
Amortization8 17 19 
Comparable EBITDA$674 $688 $1,302 $1,335 
————————————
(1)Refer to the table above in the Operating Results by Segment for a discussion on items excluded from our comparable measures and their classification within our Condensed Consolidated Statements of Earnings and Note 13,"Other Items Impacting Comparability," in the Notes to Condensed Consolidated Financial Statements for additional information.
(2)Refer to Note 5, "Revenue Earning Equipment, net," in the Notes to Condensed Consolidated Financial Statements for additional information.


The following table provides a reconciliation of total revenue to operating revenue:

 Three months ended June 30,Six months ended June 30,
(In millions)2023202220232022
Total revenue$2,884 $3,034 $5,836 $5,888 
Subcontracted transportation and fuel(558)(727)(1,164)(1,365)
Operating revenue$2,326 $2,307 $4,672 $4,523 



The following table provides a reconciliation of FMS total revenue to FMS operating revenue:

Three months ended June 30,Six months ended June 30,Twelve months ended June 30,
(Dollars in millions)202320222023202220232022
FMS total revenue$1,459 $1,621 $2,962 $3,150 $6,139 $6,086 
Fuel services revenue(205)(314)(446)(561)(999)(949)
FMS operating revenue$1,254 $1,307 $2,516 $2,589 $5,140 $5,137 
FMS EBT$180 $286 $362 $535 $884 $977 
FMS EBT as a % of FMS total revenue12.3%17.6%12.2%17.0%14.4%16.1%
FMS EBT as a % of FMS operating revenue 14.4%21.9%14.4%20.7%17.2%19.0%


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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
The following table provides a reconciliation of SCS total revenue to SCS operating revenue:

Three months ended June 30,Six months ended June 30,Twelve months ended June 30,
(Dollars in millions)202320222023202220232022
SCS total revenue$1,179 $1,174 $2,380 $2,263 $4,837 $3,935 
Subcontracted transportation and fuel(314)(376)(636)(727)(1,375)(1,225)
SCS operating revenue$865 $798 $1,744 $1,536 $3,462 $2,710 
SCS EBT$76 $62 $93 $105 $207 $152 
SCS EBT as a % of SCS total revenue6.4%5.3%3.9%4.6%4.3%3.9%
SCS EBT as a % of SCS operating revenue8.7%7.8%5.3%6.8%6.0%5.6%


The following table provides a reconciliation of DTS total revenue to DTS operating revenue:

Three months ended June 30,Six months ended June 30,Twelve months ended June 30,
(Dollars in millions)202320222023202220232022
DTS total revenue$440 $450 $894 $875 $1,805 $1,657 
Subcontracted transportation and fuel(113)(144)(245)(273)(519)(493)
DTS operating revenue$327 $306 $649 $602 $1,286 $1,164 
DTS EBT$33 $23 $62 $43 $122 $66 
DTS EBT as a % of DTS total revenue7.6%5.1%7.0%4.9%6.8%4.0%
DTS EBT as a % of DTS operating revenue10.3%7.5%9.6%7.1%9.5%5.7%


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:
Twelve months ended June 30,
(Dollars in millions)20232022
Net earnings$574 $734 
Other items impacting comparability, net (1)
96 (18)
Income taxes (2)
302 272 
Adjusted earnings before income taxes972 988 
Adjusted income taxes (3)
(264)(251)
Adjusted net earnings$708 $737 
Average shareholders' equity$2,976 $2,642 
Average adjustments to shareholders' equity (4)
(19)(7)
Adjusted average shareholders' equity$2,957 $2,635 
Adjusted return on equity (5)
24%28%
————————————
(1)Refer to the table below for a composition of Other items impacting comparability, net for the 12-month rolling period.
(2)Includes income taxes on discontinued operations.
(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.
(5)Adjusted return on equity is calculated by dividing Adjusted net earnings into Adjusted average shareholders' equity.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Twelve months ended June 30,
(In millions)20232022
FMS U.K. exit$(87)$(31)
Currency translation adjustment loss188 — 
Other, net(5)13
Other items impacting comparability (1)
$96 $(18)
————————————
(1)Refer to Note 13, "Other Items Impacting Comparability," in the Notes to Condensed Consolidated Financial Statements for additional information.




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 Quarterly Report contains forward-looking statements including statements regarding:

our expectations with respect to the effects of outsourcing trends in warehousing and distribution on our business and financial results;
our expectations with respect to a softening macroeconomic and freight environment;
our expectations regarding supply of vehicles and its effect on pricing and demand;
the expected pricing for used vehicles and sales channel mix;
our expectations regarding used vehicle sales and rental;
our expectations regarding the impact of labor shortages and subcontracted transportation costs;
our expectations in our FMS business segment regarding ChoiceLease;
our expectations in our SCS and DTS business segments related to revenue and earnings growth and contract sales activity;
our expectations with respect to weakening trends in our omnichannel retail vertical;
our expectations of cash flow from operating activities, free cash flow and capital expenditures;
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, the valuation of our pension plans, allowance for credit losses, and self-insurance loss reserves;
the adequacy of our fair value estimates of publicly traded debt and other debt;
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;
our ability to meet our objectives with the share repurchase programs;
the anticipated impact of fuel and energy prices, interest rate movements and exchange rate fluctuations;
our expectations as to return on pension plan assets, future pension expense and estimated contributions;
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
our expectations regarding the scope and anticipated outcomes with respect to certain claims, proceedings and lawsuits;
our ability to access commercial paper and other available debt financing in the capital markets;
our intent to permanently reinvest the earnings of our non U.K. & Germany foreign subsidiaries indefinitely;
our expectations regarding the benefits from our strategic investments and initiatives, including our maintenance and lease pricing initiatives;
our expectations regarding the achievement of our return on equity improvement initiatives;
our expectations with respect to the asset impairment charge related to a customer bankruptcy;
the anticipated impact of inflationary pressures;
our expectations of the long-term residual values of revenue earnings equipment, including the probability of incurring losses or having to decrease residual value estimates in the event of a potential cyclical downturn or changes to the estimated useful lives; and
our expectations regarding the U.S. federal, state and foreign tax positions and realizability of deferred tax assets.
These statements, as well as other forward-looking statements contained in this Quarterly 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.
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 may 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.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
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 our omnichannel retail vertical.
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 or inflationary cost 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, and supply chain disruptions.
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.
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.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
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 our 2022 Annual Report on Form 10-K and in "Item 1A.-Risk Factors" of this Quarterly 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, we cannot provide assurance 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 Quarterly Report. We do not intend, or assume any obligation, to update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to Ryder's exposures to market risks since December 31, 2022. Please refer to the 2022 Annual Report on Form 10-K for a complete discussion of Ryder's exposures to market risks.

ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures

As of the end of the second quarter of 2023, 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 the end of the second quarter of 2023, Ryder's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) were effective.

Changes in Internal Control over Financial Reporting

During the three months ended June 30, 2023, 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.


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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a description of our material pending legal proceedings, please refer to Note 14, "Contingencies and Other Matters," in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.


ITEM 1A. RISK FACTORS

To our knowledge and except to the extent additional factual information disclosed in this Quarterly Report on Form 10-Q relates to such risk factors, there have been no material changes in the risk factors described in "Item 1A. Risk Factors" in our Form 10-K for the year ended December 31, 2022, filed with the SEC on February 15, 2023. Our operations could also be affected by additional risk factors that are not presently known to us or by factors that we currently consider not material to our business.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information with respect to purchases we made of our common stock during the three months ended June 30, 2023:
(Dollars in millions, except per share)
Total 
Number
of Shares
Purchased (1)
Average 
Price Paid
per Share
Total 
Number
of Shares
Purchased as
Part of
Publicly
Announced
Programs
Maximum
Number of
Shares
That May
Yet Be
Purchased
Under the
Discretionary and
Anti-Dilutive
Programs (2)
April 1 through April 30, 202349,818 $78.45 49,596 3,059,901 
May 1 through May 31, 20231,030,417 80.60 1,030,400 2,029,501 
June 1 through June 30, 20235,402 84.38  2,029,501 
Total1,085,637 $80.52 1,079,996 
 ————————————
(1)During the three months ended June 30, 2023, we purchased an aggregate of 5,641 shares of our common stock in employee-related transactions. 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.

(2)Our board of directors authorized management to repurchase up to 2.5 million shares of common stock, issued to employees under the company's employee stock plans since September 1, 2021 (the "2021 Anti-Dilutive Program"). The 2021 Anti-Dilutive Program was 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. 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"). 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.


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ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans and Non-Rule 10b5-1 Trading Arrangements

Certain of our officers or directors, as applicable, have made elections to participate in, and are participating in, our dividend reinvestment plan and 401(k) savings plan, and have made, and may from time to time make, elections to purchase shares, have shares withheld to cover withholding taxes, or pay the exercise price of options, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On July 21, 2023, our board of directors approved entering into amended and restated severance agreements (the “Severance Agreements”) with named executive officers Robert C. Sanchez, John J. Diez, Robert D. Fatovic, Thomas M. Havens and J. Steve Sensing (together, the “Executives”).

The Severance Agreements have an effective date of August 1, 2023, and amend and restate each Executive’s existing severance agreement to: (1) remove the requirement for each Executive to be employed for one year before they are eligible to receive benefits under the Severance Agreement; (2) revise the definition of “Good Reason” to include any material and adverse change in the Executive’s position or reporting relationship; (3) provide that, in the event that an Executive terminates his employment for “Good Reason” (as defined in the Severance Agreements) within the two-year period commencing on a Change of Control (as defined in the Severance Agreements), the pro-rata bonus provided to each Executive will be based on target performance; and (4) implement other ministerial changes (collectively, the “Amendments”).

The foregoing description of the Amendments do not purport to be complete and are qualified in their entirety by reference to the Form of Amended and Restated Severance Agreement for Executive Officers (other than the Chief Executive Officer), attached hereto as Exhibit 10.3, and the Amended and Restated Severance Agreement for the Chief Executive Officer, attached hereto as Exhibit 10.4, in each case, incorporated by reference herein.

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ITEM 6. EXHIBITS
Exhibit NumberDescription
10.1*
10.2*
10.3*
10.4*
31.1
31.2
32
101.INSXBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover 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.




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SIGNATURE


Pursuant to the requirements 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.
 
RYDER SYSTEM, INC.
(Registrant)
Date:July 26, 2023By:/s/ JOHN J. DIEZ
John J. Diez
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date:July 26, 2023By:/s/ CRISTINA GALLO-AQUINO
Cristina Gallo-Aquino
Senior Vice President and Controller
(Principal Accounting Officer)

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