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2020-03-31

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 MARCH 31, 2021
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO
Commission File Number: 1-4364
RYDER SYSTEM, INC.
(Exact name of registrant as specified in its charter)

Florida | 59-0739250
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
11690 N.W. 105th Street |  |  |  |
| Miami, | Florida | 33178 |  |  | (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 class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock | R | New 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant 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 ($0.50 par value per share) outstanding as of March 31, 2021 was 53,870,387.

RYDER SYSTEM, INC.
FORM 10-Q QUARTERLY REPORT
TABLE OF CONTENTS

|  | Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. | Financial Statements (unaudited) |
| Condensed Consolidated Statements of Earnings | 1
| Condensed Consolidated Statements of Comprehensive Income | 2
| Condensed Consolidated Balance Sheets | 3
| Condensed Consolidated Statements of Cash Flows | 4
| Condensed Consolidated Statements of Shareholders' Equity | 5
| Notes to Condensed Consolidated Financial Statements | 6
ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20
ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | 51
ITEM 4. | Controls and Procedures | 51
PART II. OTHER INFORMATION
ITEM 1. | Legal Proceedings | 52
ITEM 1A. | Risk Factors | 52
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 52
ITEM 6. | Exhibits | 53
SIGNATURE |  | 54

i

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

| Three months ended March 31,
| 2021 |  | 2020
| (In thousands, except per share amounts)
Lease & related maintenance and rental revenues | $ | 940,422 |  |  | $ | 927,756 |
Services revenue | 1,165,488 |  |  | 1,112,188 |
Fuel services revenue | 115,712 |  |  | 121,362 |
Total revenues | 2,221,622 |  |  | 2,161,306 |
Cost of lease & related maintenance and rental | 730,144 |  |  | 818,292 |
Cost of services | 999,792 |  |  | 954,429 |
Cost of fuel services | 114,706 |  |  | 120,449 |
Other operating expenses | 33,900 |  |  | 33,565 |
Selling, general and administrative expenses | 241,742 |  |  | 224,119 |
Non-operating pension costs, net | (9) |  |  | 1,221 |
Used vehicle sales, net | (28,851) |  |  | 20,684 |
Interest expense | 54,706 |  |  | 62,566 |
Miscellaneous (income) loss, net | (5,434) |  |  | 8,668 |
Restructuring and other items, net | 10,659 |  |  | 30,947 |
| 2,151,355 |  |  | 2,274,940 |
Earnings (loss) from continuing operations before income taxes | 70,267 |  |  | (113,634) |
Provision for (benefit from) income taxes | 18,683 |  |  | (4,505) |
Earnings (loss) from continuing operations | 51,584 |  |  | (109,129) |
Earnings (loss) from discontinued operations, net of tax | (759) |  |  | (484) |
Net earnings (loss) | $ | 50,825 |  |  | $ | (109,613) |
Earnings (loss) per common share — Basic |  |  |
Continuing operations | $ | 0.98 |  |  | $ | (2.09) |
Discontinued operations | (0.01) |  |  | (0.01) |
Net earnings (loss) | $ | 0.97 |  |  | $ | (2.10) |
Earnings (loss) per common share — Diluted |  |  |
Continuing operations | $ | 0.97 |  |  | $ | (2.09) |
Discontinued operations | (0.01) |  |  | (0.01) |
Net earnings (loss) | $ | 0.95 |  |  | $ | (2.10) |

See accompanying Notes to Condensed Consolidated Financial Statements.
Note: EPS amounts may not be additive due to rounding.
1

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

| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Net earnings (loss) | $ | 50,825 |  |  | $ | (109,613) |
Other comprehensive income (loss): |  |  |
Changes in cumulative translation adjustment and unrealized losses from cash flow hedges | 8,940 |  |  | (84,620) |
Amortization of pension and postretirement items | 7,016 |  |  | 7,779 |
Income tax expense related to amortization of pension and postretirement items | (1,518) |  |  | (1,613) |
Amortization of pension and postretirement items, net of taxes | 5,498 |  |  | 6,166 |
Other comprehensive income (loss), net of taxes | 14,438 |  |  | (78,454) |
Comprehensive income (loss) | $ | 65,263 |  |  | $ | (188,067) |

See accompanying Notes to Condensed Consolidated Financial Statements.
2

RYDER SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

| March 31, 2021 |  | December 31, 2020
| (In thousands, except share amounts)
Assets: |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 91,738 |  |  | $ | 151,294 |
Receivables, net | 1,194,557 |  |  | 1,182,350 |
Inventories | 60,649 |  |  | 61,191 |
Prepaid expenses and other current assets | 184,703 |  |  | 200,694 |
Total current assets | 1,531,647 |  |  | 1,595,529 |
Revenue earning equipment, net | 8,567,387 |  |  | 8,777,015 |
Operating property and equipment, net of accumulated depreciation of $1,217,211 and $1,212,164 | 930,501 |  |  | 927,058 |
Goodwill | 475,400 |  |  | 475,245 |
Intangible assets, net | 41,473 |  |  | 43,216 |
Sales-type leases and other assets | 1,128,205 |  |  | 1,113,891 |
Total assets | $ | 12,674,613 |  |  | $ | 12,931,954 |
Liabilities and shareholders’ equity: |  |  |
Current liabilities: |  |  |
Short-term debt and current portion of long-term debt | $ | 789,928 |  |  | $ | 516,581 |
Accounts payable | 547,532 |  |  | 547,389 |
Accrued expenses and other current liabilities | 947,791 |  |  | 989,178 |
Total current liabilities | 2,285,251 |  |  | 2,053,148 |
Long-term debt | 5,582,232 |  |  | 6,093,655 |
Other non-current liabilities | 1,384,156 |  |  | 1,403,861 |
Deferred income taxes | 1,143,287 |  |  | 1,125,733 |
Total liabilities | 10,394,926 |  |  | 10,676,397 |
Commitments and contingencies (Note 16) |  |  |
Shareholders’ equity: |  |  |
Preferred stock, no par value per share — authorized, 3,800,917; none outstanding, March 31, 2021 and December 31, 2020 | — |  |  | — |
Common stock, $0.50 par value per share — authorized, 400,000,000; outstanding, March 31, 2021 — 53,870,387 and December 31, 2020 — 53,732,033 | 26,935 |  |  | 26,866 |
Additional paid-in capital | 1,135,644 |  |  | 1,132,954 |
Retained earnings | 1,919,875 |  |  | 1,912,942 |
Accumulated other comprehensive loss | (802,767) |  |  | (817,205) |
Total shareholders’ equity | 2,279,687 |  |  | 2,255,557 |
Total liabilities and shareholders’ equity | $ | 12,674,613 |  |  | $ | 12,931,954 |

See accompanying Notes to Condensed Consolidated Financial Statements.
3

RYDER SYSTEM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

| Three months ended March 31, |  |
| 2021 |  | 2020 |  |
| (In thousands) |  |
Cash flows from operating activities from continuing operations: |  |  |  |  |
Net earnings (loss) | $ | 50,825 |  |  | $ | (109,613) |  |  |
Less: Loss from discontinued operations, net of tax | (759) |  |  | (484) |  |  |
Earnings (loss) from continuing operations | 51,584 |  |  | (109,129) |  |  |
Depreciation expense | 461,162 |  |  | 523,223 |  |  |
Used vehicle sales, net | (28,851) |  |  | 20,684 |  |  |
Amortization expense and other non-cash charges, net | 15,133 |  |  | 42,698 |  |  |
Non-cash lease expense | 23,250 |  |  | 22,460 |  |  |
Non-operating pension costs, net and share-based compensation expense | 10,668 |  |  | 4,312 |  |  |
Deferred income tax expense (benefit) | 15,477 |  |  | (13,598) |  |  |
Collections on sales-type leases | 30,374 |  |  | 26,597 |  |  |
Changes in operating assets and liabilities: |  |  |  |  |
Receivables | (4,597) |  |  | (14,634) |  |  |
Inventories | 1,070 |  |  | 15,409 |  |  |
Prepaid expenses and other assets | 892 |  |  | (36,482) |  |  |
Accounts payable | (25,642) |  |  | (25,707) |  |  |
Accrued expenses and other non-current liabilities | (84,809) |  |  | (17,247) |  |  |
Net cash provided by operating activities from continuing operations | 465,711 |  |  | 438,586 |  |  |
Cash flows from investing activities from continuing operations: |  |  |  |  |
Purchases of property and revenue earning equipment | (381,051) |  |  | (430,960) |  |  |
Sales of revenue earning equipment | 154,144 |  |  | 101,099 |  |  |
Sales of operating property and equipment | 2,357 |  |  | 1,883 |  |  |
Other | (1,412) |  |  | (5,000) |  |  |
Net cash used in investing activities from continuing operations | (225,962) |  |  | (332,978) |  |  |
Cash flows from financing activities from continuing operations: |  |  |  |  |
Net borrowings (repayments) of commercial paper and other | (130,763) |  |  | 104,027 |  |  |
Debt proceeds | — |  |  | 855,353 |  |  |
Debt repayments | (114,317) |  |  | (697,550) |  |  |
Dividends on common stock | (31,257) |  |  | (30,594) |  |  |
Common stock repurchased | (19,444) |  |  | (11,924) |  |  |
Other | (2,316) |  |  | (1,692) |  |  |
Net cash provided by (used in) financing activities from continuing operations | (298,097) |  |  | 217,620 |  |  |
Effect of exchange rate changes on cash and cash equivalents | (1,202) |  |  | 725 |  |  |
Increase (decrease) in cash and cash equivalents from continuing operations | (59,550) |  |  | 323,953 |  |  |
Increase (decrease) in cash and cash equivalents from discontinued operations | (6) |  |  | (302) |  |  |
Increase (decrease) in cash and cash equivalents | (59,556) |  |  | 323,651 |  |  |
Cash and cash equivalents at beginning of year | 151,294 |  |  | 73,584 |  |  |
Cash and cash equivalents at end of period | $ | 91,738 |  |  | $ | 397,235 |  |  |

See accompanying Notes to Condensed Consolidated Financial Statements.
4

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

|  | Three months ended March 31, 2021
|  | Preferred Stock |  | Common Stock |  | Additional Paid-In Capital |  | Retained Earnings |  | Accumulated Other Comprehensive Loss |  |
|  | Amount |  | Shares |  | Par |  |  |  |  | Total
|  | (In thousands, except share amounts)
Balance at January 1, 2021 |  | $ | — |  |  | 53,732,033 |  |  | $ | 26,866 |  |  | $ | 1,132,954 |  |  | $ | 1,912,942 |  |  | $ | (817,205) |  |  | $ | 2,255,557 |
Comprehensive income (loss) |  | — |  |  | — |  |  | — |  |  | — |  |  | 50,825 |  |  | 14,438 |  |  | 65,263 |
Common stock dividends declared —$0.56 per share |  | — |  |  | — |  |  | — |  |  | — |  |  | (30,569) |  |  | — |  |  | (30,569) |
Common stock issued under employee stock award and stock purchase plans and other (1) (2) |  | — |  |  | 426,311 |  |  | 213 |  |  | (2,010) |  |  | — |  |  | — |  |  | (1,797) |
Common stock repurchases |  | — |  |  | (287,957) |  |  | (144) |  |  | (5,977) |  |  | (13,323) |  |  | — |  |  | (19,444) |
Share-based compensation |  | — |  |  | — |  |  | — |  |  | 10,677 |  |  | — |  |  | — |  |  | 10,677 |
Balance as of March 31, 2021 |  | $ | — |  |  | 53,870,387 |  |  | $ | 26,935 |  |  | $ | 1,135,644 |  |  | $ | 1,919,875 |  |  | $ | (802,767) |  |  | $ | 2,279,687 |

|  | Three months ended March 31, 2020
|  | Preferred Stock |  | Common Stock |  | Additional Paid-In Capital |  | Retained Earnings |  | Accumulated Other Comprehensive Loss |  |
|  | Amount |  | Shares |  | Par |  |  |  |  | Total
|  | (In thousands, except share amounts)
Balance at January 1, 2020 |  | $ | — |  |  | 53,278,316 |  |  | $ | 26,639 |  |  | $ | 1,108,649 |  |  | $ | 2,177,513 |  |  | $ | (836,491) |  |  | $ | 2,476,310 |
Adoption of new accounting standard |  | — |  |  | — |  |  | — |  |  | — |  |  | (5,077) |  |  | — |  |  | (5,077) |
Comprehensive income (loss) |  | — |  |  | — |  |  | — |  |  | — |  |  | (109,613) |  |  | (78,454) |  |  | (188,067) |
Common stock dividends declared —$0.56 per share |  | — |  |  | — |  |  | — |  |  | — |  |  | (30,379) |  |  | — |  |  | (30,379) |
Common stock issued under employee stock award and stock purchase plans and other (1) (2) |  | — |  |  | 760,746 |  |  | 380 |  |  | (1,598) |  |  | — |  |  | — |  |  | (1,218) |
Common stock repurchases |  | — |  |  | (303,098) |  |  | (152) |  |  | (6,214) |  |  | (5,558) |  |  | — |  |  | (11,924) |
Share-based compensation |  | — |  |  | — |  |  | — |  |  | 3,091 |  |  | — |  |  | — |  |  | 3,091 |
Balance at March 31, 2020 |  | $ | — |  |  | 53,735,964 |  |  | $ | 26,867 |  |  | $ | 1,103,928 |  |  | $ | 2,026,886 |  |  | $ | (914,945) |  |  | $ | 2,242,736 |

__________________
(1)Net of common shares delivered as payment for the exercise price or to satisfy the holders’ withholding tax liability upon exercise of options.
(2)Represents open-market transactions of common shares by the trustee of our deferred compensation plans.
See accompanying Notes to Condensed Consolidated Financial Statements.
5

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) required to be consolidated in accordance with generally accepted accounting principles in the United States (GAAP). The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the accounting policies described in our 2020 Annual Report on Form 10-K and should be read in conjunction with the Consolidated Financial Statements and notes thereto. The year-end condensed 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. We adjusted our presentation of the revolving credit facility proceeds and repayments in the Condensed Consolidated Statements of Cash Flows for 2020 from a net basis to reflect a gross basis.
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.), Canada and the United Kingdom (U.K.); (2) Supply Chain Solutions (SCS), which provides integrated logistics solutions, including distribution management, dedicated transportation, transportation management, last mile and professional services in North America; and (3) Dedicated Transportation Solutions (DTS), which provides turnkey transportation solutions in the U.S. that includes dedicated vehicles, 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.
The COVID-19 pandemic negatively impacted several areas of our businesses, particularly in the first half of 2020. While we are experiencing positive momentum in our businesses, any additional negative effects of the pandemic may have a further impact on our business and financial results, as well as on significant judgments and estimates, including those related to 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, and allowance for credit losses.
2. RECENT ACCOUNTING PRONOUNCEMENTS
Reference Rate Reform
In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update No. 2020-04, Reference Rate Reform (Topic 848). This update provides optional expedients for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another rate expected to be discontinued at the end of 2021 because of reference rate reform. The update is effective for all entities from March 12, 2020 through December 31, 2022. We are currently evaluating the impact on our consolidated financial position, results of operations, and cash flows.
3. REVENUE
Disaggregation of Revenue
The following tables disaggregate our revenue recognized by primary geographical market by our reportable business segments and by industry for SCS. Refer to Note 18, "Segment Reporting," for the disaggregation of our revenue by major products/service lines.
6

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

| Three months ended March 31, 2021
| FMS |  | SCS |  | DTS |  | Eliminations |  | Total
| (In thousands)
United States | $ | 1,197,984 |  |  | $ | 601,298 |  |  | $ | 320,507 |  |  | $ | (136,727) |  |  | $ | 1,983,062 |
Canada | 70,413 |  |  | 56,088 |  |  | — |  |  | (4,343) |  |  | 122,158 |
Europe | 67,088 |  |  | — |  |  | — |  |  | — |  |  | 67,088 |
Mexico | — |  |  | 49,314 |  |  | — |  |  | — |  |  | 49,314 |
Total Revenues | $ | 1,335,485 |  |  | $ | 706,700 |  |  | $ | 320,507 |  |  | $ | (141,070) |  |  | $ | 2,221,622 |

| Three months ended March 31, 2020
| FMS |  | SCS |  | DTS |  | Eliminations |  | Total
| (In thousands)
United States | $ | 1,197,521 |  |  | $ | 522,525 |  |  | $ | 334,888 |  |  | $ | (137,295) |  |  | $ | 1,917,639 |
Canada | 70,765 |  |  | 53,552 |  |  | — |  |  | (4,971) |  |  | 119,346 |
Europe | 71,951 |  |  | — |  |  | — |  |  | — |  |  | 71,951 |
Mexico | — |  |  | 52,370 |  |  | — |  |  | — |  |  | 52,370 |
Total Revenues | $ | 1,340,237 |  |  | $ | 628,447 |  |  | $ | 334,888 |  |  | $ | (142,266) |  |  | $ | 2,161,306 |

Industry
Our SCS business segment included revenue from the below industries:

| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Automotive | $ | 271,555 |  |  | $ | 249,925 |
Technology and healthcare | 97,085 |  |  | 91,133 |
Consumer packaged goods and retail | 273,224 |  |  | 229,932 |
Industrial and other | 64,836 |  |  | 57,457 |
Total SCS Revenues | $ | 706,700 |  |  | $ | 628,447 |

Maintenance Revenues
For the three months ended March 31, 2021 and 2020, we recognized non-lease revenue from maintenance services of $250 million and $240 million, respectively, related to our FMS business segment, which was included in "Lease & related maintenance and rental revenues" in the Condensed Consolidated Statements of Earnings.
7

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:

| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Balance as of beginning of period | $ | 629,739 |  |  | $ | 603,687 |
Recognized as revenue during period from beginning balance | (59,031) |  |  | (59,280) |
Consideration deferred during period, net | 51,759 |  |  | 66,714 |
Foreign currency translation adjustment and other | 709 |  |  | (4,585) |
Balance as of end of period | $ | 623,176 |  |  | $ | 606,536 |

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 primarily includes deferred revenue and amounts for full service ChoiceLease maintenance revenue that will be recognized as revenue in future periods as we provide maintenance services to our customers. Contracted not recognized revenue excludes (1) variable consideration as it is not included in the transaction price consideration allocated at contract inception, (2) revenues from our lease component of our ChoiceLease product and commercial rental product, (3) revenues from contracts with an original duration of one year or less, including SelectCare contracts, and (4) revenue from SCS, DTS and other contracts where there are remaining performance obligations when we have the right to invoice but the revenue to be recognized in the future corresponds directly with the value delivered to the customer. Contracted not recognized revenue was $2.6 billion as of March 31, 2021.
4. RECEIVABLES, NET

| March 31, 2021 |  | December 31, 2020
| (In thousands)
Trade | $ | 1,055,550 |  |  | $ | 1,051,618 |
Sales-type leases | 134,726 |  |  | 132,003 |
Other, primarily warranty and insurance | 41,481 |  |  | 41,753 |
| 1,231,757 |  |  | 1,225,374 |
Allowance for credit losses and other | (37,200) |  |  | (43,024) |
Total | $ | 1,194,557 |  |  | $ | 1,182,350 |

The following table provides a reconciliation of our allowance for credit losses and other:

| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Balance as of beginning of period | $ | 43,024 |  |  | $ | 22,761 |
Changes to provisions for credit losses | (1,800) |  |  | 19,286 |
Impact of adoption of new accounting standard, write-offs, and other | (4,024) |  |  | (1,485) |
Balance as of end of period | $ | 37,200 |  |  | $ | 40,562 |

8

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)
5. REVENUE EARNING EQUIPMENT, NET

|  | Estimated Useful Lives |  | March 31, 2021 |  | December 31, 2020
|  |  | Cost |  | Accumulated Depreciation |  | Net |  | Cost |  | Accumulated Depreciation |  | Net
|  | (In years) |  | (In thousands)
Held for use: |  |  |  |
Trucks |  | 3 — 7 |  | $ | 5,030,474 |  |  | $ | (1,850,029) |  |  | $ | 3,180,445 |  |  | $ | 5,061,266 |  |  | $ | (1,818,594) |  |  | $ | 3,242,672 |
Tractors |  | 4 — 7.5 |  | 7,020,010 |  |  | (2,919,190) |  |  | 4,100,820 |  |  | 7,013,595 |  |  | (2,853,591) |  |  | 4,160,004 |
Trailers and other |  | 9.5 — 12 |  | 2,006,980 |  |  | (829,791) |  |  | 1,177,189 |  |  | 2,046,768 |  |  | (804,006) |  |  | 1,242,762 |
Held for sale |  |  |  | 514,389 |  |  | (405,456) |  |  | 108,933 |  |  | 644,132 |  |  | (512,555) |  |  | 131,577 |
Total |  |  |  | $ | 14,571,853 |  |  | $ | (6,004,466) |  |  | $ | 8,567,387 |  |  | $ | 14,765,761 |  |  | $ | (5,988,746) |  |  | $ | 8,777,015 |

Policy and Accelerated Depreciation
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. A reduction in estimated residual values or useful lives will result in an increase in depreciation expense over the remaining life of the vehicle. Our review of the estimated residual values and useful lives of revenue earning equipment is established with a long-term view, which we refer to as "policy depreciation," and is based on vehicle class, generally subcategories of trucks, tractors and trailers, by weight, usage and other factors. These other factors include, but are not limited to, historical, current, and expected future market prices; expected lives of vehicles; and expected sales of used vehicles in the wholesale and retail markets. Factors that could cause actual results to materially differ from estimates include, but are not limited to, changes in technology; changes in supply and demand; competitor pricing; regulatory requirements; driver shortages, 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.
We also assess estimates of residual values of vehicles expected to be made available for sale in the near-term (generally 12 to 24 months) based on near-term market rates and conditions and may adjust estimates of residual values for these vehicles, which we refer to as "accelerated depreciation."
The following table provides a summary of amounts that have been recorded for accelerated and policy depreciation related to our prior residual value estimate changes in 2019 and 2020, as well as used vehicle sales results (rounded to the closest million):

|  | Three months ended March 31,
|  | 2021 |  | 2020 |  |
|  | (In thousands)
Accelerated depreciation |  | $ | 30,000 |  |  | $ | 79,000 |  |  |
Policy depreciation |  | 58,000 |  |  | 51,000 |  |  |
Used vehicle sales, net |  | (29,000) |  |  | 21,000 |  |  |

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. In addition, we also consider expected declines in market prices when valuing the vehicles held for sale, as well as the forecasted sales channel mix (retail/wholesale).
9

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)
The following table presents our assets held for sale that are measured at fair value on a nonrecurring basis and considered a Level 3 fair value measurement:

|  |  | Valuation Adjustments
|  |  |  |  | Three months ended March 31,
| March 31, 2021 |  | December 31, 2020 (2) |  | 2021 |  | 2020
| (In thousands)
Revenue earning equipment held for sale (1): |  |  |  |  |  |  |
Trucks | $ | 5,998 |  |  | $ | 3,848 |  |  | $ | 890 |  |  | $ | 11,062 |
Tractors | 2,508 |  |  | 2,211 |  |  | 84 |  |  | 8,453 |
Trailers and other | 2,254 |  |  | 4,092 |  |  | 2,047 |  |  | 1,993 |
Total assets at fair value | $ | 10,760 |  |  | $ | 10,151 |  |  | $ | 3,021 |  |  | $ | 21,508 |

————————————
(1)Revenue earning equipment held for sale in the table above only includes the portion where net book values exceeded fair values and valuation adjustments were recorded. The net book value of assets held for sale that were less than fair value was $98 million and $121 million as of March 31, 2021 and December 31, 2020, respectively.
(2)Adjusted the presentation of the vehicles held for sale that were recorded to fair value to now exclude vehicles that previously recognized accumulated accelerated depreciation.
The components of used vehicle sales, net were as follows:

| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Losses (gains) on vehicle sales, net | $ | (31,872) |  |  | $ | (824) |
Losses from valuation adjustments | 3,021 |  |  | 21,508 |
Used vehicle sales, net | $ | (28,851) |  |  | $ | 20,684 |

10

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)
6. ACCRUED EXPENSES AND OTHER LIABILITIES

| March 31, 2021 |  | December 31, 2020
| Accrued Expenses |  | Non-Current Liabilities |  | Total |  | Accrued Expenses |  | Non-Current Liabilities |  | Total
| (In thousands)
Salaries and wages | $ | 124,772 |  |  | $ | — |  |  | $ | 124,772 |  |  | $ | 158,122 |  |  | $ | — |  |  | $ | 158,122 |
Deferred compensation | 5,214 |  |  | 78,947 |  |  | 84,161 |  |  | 5,117 |  |  | 77,823 |  |  | 82,940 |
Pension benefits | 3,782 |  |  | 260,939 |  |  | 264,721 |  |  | 3,776 |  |  | 265,178 |  |  | 268,954 |
Other postretirement benefits | 1,383 |  |  | 20,312 |  |  | 21,695 |  |  | 1,381 |  |  | 20,245 |  |  | 21,626 |
Other employee benefits | 7,696 |  |  | — |  |  | 7,696 |  |  | 20,599 |  |  | — |  |  | 20,599 |
Insurance obligations (1) | 173,788 |  |  | 295,423 |  |  | 469,211 |  |  | 169,936 |  |  | 292,298 |  |  | 462,234 |
Operating taxes (2) | 159,403 |  |  | 41,683 |  |  | 201,086 |  |  | 164,293 |  |  | 41,687 |  |  | 205,980 |
Income taxes | 6,734 |  |  | 15,962 |  |  | 22,696 |  |  | 4,588 |  |  | 15,598 |  |  | 20,186 |
Interest | 42,670 |  |  | — |  |  | 42,670 |  |  | 38,887 |  |  | — |  |  | 38,887 |
Deposits, mainly from customers | 82,114 |  |  | 3,066 |  |  | 85,180 |  |  | 79,840 |  |  | 3,014 |  |  | 82,854 |
Operating lease liabilities | 79,496 |  |  | 181,215 |  |  | 260,711 |  |  | 78,785 |  |  | 186,429 |  |  | 265,214 |
Deferred revenue (3) | 183,540 |  |  | 439,636 |  |  | 623,176 |  |  | 183,474 |  |  | 446,265 |  |  | 629,739 |
Restructuring liabilities | 5,071 |  |  | — |  |  | 5,071 |  |  | 7,683 |  |  | — |  |  | 7,683 |
Other | 72,128 |  |  | 46,973 |  |  | 119,101 |  |  | 72,697 |  |  | 55,324 |  |  | 128,021 |
Total | $ | 947,791 |  |  | $ | 1,384,156 |  |  | $ | 2,331,947 |  |  | $ | 989,178 |  |  | $ | 1,403,861 |  |  | $ | 2,393,039 |

————————————
(1)Insurance obligations are primarily comprised of self-insured claim liabilities.
(2)Operating taxes included the deferral of certain payroll taxes in current and non-current liabilities allowed under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
(3)Refer to Note 3, "Revenue," for additional information.
11

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)
7. INCOME TAXES
Effective Tax Rate
Our effective income tax rate from continuing operations for the first quarter of 2021 was an expense of 26.6% as compared to a benefit of 4.0% in the first quarter of 2020. The tax rate in the prior year was impacted by the recognition of a valuation allowance of $13 million related to our U.K. deferred tax assets, as well as the reduction of earnings due to accelerated depreciation charges and the COVID-19 economic effects. In addition, we recorded a charge of $7 million related to expiring state net operating losses in the prior year.
8. LEASES
Leases as Lessor
The components of lease income were as follows:

|  | Three months ended March 31,
|  | 2021 |  | 2020
|  | (In thousands)
Operating leases |  |  |  |
Lease income related to ChoiceLease |  | $ | 389,611 |  |  | $ | 399,588 |
Lease income related to commercial rental (1) |  | 210,284 |  |  | 195,695 |
Sales-type leases |  |  |  |
Interest income related to net investment in leases |  | $ | 14,415 |  |  | $ | 11,644 |
Variable lease income excluding commercial rental (1) |  | $ | 71,993 |  |  | $ | 65,507 |

————————————
(1)Lease income related to commercial rental includes both fixed and variable lease income. Variable lease income is approximately 15% to 25% of total commercial rental income 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:

| March 31, 2021 |  | December 31, 2020 |  |
| (In thousands)
Net investment in the lease — lease payment receivable | $ | 594,469 |  |  | $ | 589,120 |  |  |
Net investment in the lease — unguaranteed residual value in assets | 45,429 |  |  | 44,704 |  |  |
| 639,898 |  |  | 633,824 |  |  |
Estimated loss allowance | (4,025) |  |  | (4,025) |  |  |
Total | $ | 635,873 |  |  | $ | 629,799 |  |  |

12

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

| Weighted Average Interest Rate |  |  |  |  |  |
| March 31, 2021 |  | Maturities |  | March 31, 2021 |  | December 31, 2020
|  |  |  |  | (In thousands)
Debt: |  |  |  |  |  |  |
U.S. commercial paper | 0.22% |  | 2023 |  | $ | 90,075 |  |  | $ | 214,375 |
Canadian commercial paper | 0.39% |  | 2023 |  | 57,301 |  |  | 62,800 |
Trade receivables program | —% |  | 2022 |  | — |  |  | — |
Global revolving credit facility | —% |  | 2023 |  | — |  |  | 200 |
Unsecured U.S. obligations | 3.47% |  | 2024 |  | 200,000 |  |  | 200,000 |
Unsecured U.S. notes — Medium-term notes (1) | 3.41% |  | 2021-2026 |  | 5,153,471 |  |  | 5,174,180 |
Unsecured foreign obligations | 1.82% |  | 2022-2024 |  | 193,690 |  |  | 254,259 |
Asset-backed U.S. obligations (2) | 2.55% |  | 2021-2026 |  | 654,058 |  |  | 682,383 |
Finance lease obligations and other |  |  | 2021-2073 |  | 47,802 |  |  | 48,418 |
|  |  |  |  | 6,396,397 |  |  | 6,636,615 |
Debt issuance costs and original issue discounts |  |  |  |  | (24,237) |  |  | (26,379) |
Total debt |  |  |  |  | 6,372,160 |  |  | 6,610,236 |
Short-term debt and current portion of long-term debt |  |  |  |  | (789,928) |  |  | (516,581) |
Long-term debt |  |  |  |  | $ | 5,582,232 |  |  | $ | 6,093,655 |

————————————
(1)Included the impact from the fair market values of hedging instruments on our notes, which were not material as of March 31, 2021 and December 31, 2020. The notional amount of interest rate swaps designated as fair value hedges was $150 million as of March 31, 2021 and December 31, 2020.
(2)Asset-backed U.S. obligations are related to financing transactions backed by a portion of our revenue earning equipment.
The fair value of total debt (excluding finance lease and asset-backed U.S. obligations) was approximately $6.0 billion and $6.3 billion as of March 31, 2021 and December 31, 2020, 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 other debt were classified within Level 2 of the fair value hierarchy.
As of March 31, 2021, there was $1.3 billion available under the global 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 of March 31, 2021, the ratio was 188%.
In April 2021, we extended the maturity of the trade receivables program to April 2022. As of March 31, 2021, the available proceeds under the program were $300 million.
We had letters of credit and surety bonds outstanding of $457 million and $519 million as of March 31, 2021 and December 31, 2020, respectively, which primarily guarantee the payment of insurance claims.
10. SHARE REPURCHASE PROGRAMS
In December 2019, our Board of Directors authorized a share repurchase program intended to mitigate the dilutive impact of shares issued under our employee stock plans (the 2019 program). Under the 2019 program, we are authorized to repurchase up to 1.5 million shares of common stock, the sum of which will not exceed the number of shares issued to employees under our employee stock plans from December 1, 2019 to December 11, 2021. Share repurchases of common stock are made periodically in open-market transactions and are subject to market conditions, legal requirements, and other factors. We may establish prearranged written plans under Rule 10b5-1 of the Securities Exchange Act of 1934 as part of the program, which allow for share repurchases during our quarterly blackout periods as set forth in the trading plan.
13

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)
During the three months ended March 31, 2021 and March 31, 2020, we repurchased approximately 288,000 shares for $19 million and 303,000 shares for $12 million, respectively.
11. ACCUMULATED OTHER COMPREHENSIVE LOSS
Comprehensive income (loss) presents a measure of all changes in shareholders’ equity except for changes resulting from transactions with shareholders in their capacity as shareholders. The following summary sets forth the components of accumulated other comprehensive loss, net of tax:

|  | March 31,
|  | 2021 |  | 2020
|  | (In thousands)
Cumulative translation adjustments |  | $ | (140,302) |  |  | $ | (237,013) |
Net actuarial loss and prior service cost |  | (649,542) |  |  | (661,293) |
Unrealized gain (loss) from cash flow hedges |  | (12,923) |  |  | (16,639) |
Accumulated other comprehensive loss |  | $ | (802,767) |  |  | $ | (914,945) |

12. EARNINGS PER SHARE
The following table presents the calculation of basic and diluted earnings per common share from continuing operations:

|  | Three months ended March 31,
|  | 2021 |  | 2020
|  | (In thousands, except per share amounts)
Earnings (loss) from continuing operations |  | $ | 51,584 |  |  | $ | (109,129) |
Less: Distributed and undistributed earnings allocated to unvested stock |  | (240) |  |  | (118) |
Earnings (loss) from continuing operations available to common shareholders |  | $ | 51,344 |  |  | $ | (109,247) |
Weighted average common shares outstanding — Basic |  | 52,289 |  |  | 52,284 |
Effect of dilutive equity awards |  | 1,111 |  |  | — |
Weighted average common shares outstanding — Diluted |  | 53,400 |  |  | 52,284 |
Earnings (loss) from continuing operations per common share — Basic |  | $ | 0.98 |  |  | $ | (2.09) |
Earnings (loss) from continuing operations per common share — Diluted |  | $ | 0.97 |  |  | $ | (2.09) |
Anti-dilutive equity awards not included in diluted EPS |  | 1,499 |  |  | 3,134 |

14

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)
13. SHARE-BASED COMPENSATION PLANS
The following table provides information on share-based compensation expense and income tax benefit recognized:

| Three months ended March 31, |  |
| 2021 |  | 2020 |  |
| (In thousands) |  |
Stock option and stock purchase plans | $ | 1,001 |  |  | $ | 1,357 |  |  |
Unvested stock awards | 9,676 |  |  | 1,734 |  |  |
Share-based compensation expense | 10,677 |  |  | 3,091 |  |  |
Income tax benefit | (1,532) |  |  | (178) |  |  |
Share-based compensation expense, net of tax | $ | 9,145 |  |  | $ | 2,913 |  |  |

Total unrecognized pre-tax compensation expense related to all share-based compensation arrangements at March 31, 2021 was $75 million and is expected to be recognized over a weighted-average period of 2.3 years.
We generally grant share-based awards in the first quarter of each year during our annual equity award process. The following table is a summary of the awards granted in the annual equity award process in the first quarter of 2021:

| Shares Granted |  | Weighted-Average Fair Market Value
| (Shares in thousands) |  |  |  |
Performance-based restricted stock rights | 119 |  |  |  | $ | 67.11 |  |  |
Time-vested restricted stock rights | 391 |  |  |  | 64.89 |  |  |
Total | 510 |  |  |  | $ | 65.41 |  |  |

Restricted stock awards are unvested stock rights granted to employees that entitle the holder to shares of common stock as the award vests. Time-vested restricted stock rights typically vest ratably over three years regardless of company performance. The fair value of the time-vested awards is determined and fixed based on Ryder’s stock price on the date of grant.
Performance-based restricted stock rights (PBRSRs) are generally granted to executive management and include a performance-based vesting condition. PBRSRs are awarded based on various revenue, return-based and cash flow performance targets and may include a total shareholder return (TSR) modifier for certain members of management. The fair values of PBRSRs that include a TSR modifier are estimated using a lattice-based option-pricing valuation model that incorporates a Monte-Carlo simulation. The fair value of PBRSRs that do not include a TSR modifier is determined and fixed on the grant date based on our stock price on the date of grant. Share-based compensation expense for PBRSRs is recognized on a straight-line basis over the vesting period, based upon the probability that the performance target will be met. In the first quarter of 2021, PBRSRs awarded contained vesting conditions based on return on equity, strategic revenue growth and free cash flow.
15

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)
14. EMPLOYEE BENEFIT PLANS
Components of net pension expense were as follows:

| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Company-administered plans: |  |  |
Service cost | $ | 368 |  |  | $ | 3,213 |
Interest cost | 14,535 |  |  | 17,532 |
Expected return on plan assets | (21,694) |  |  | (24,263) |
Amortization of net actuarial loss and prior service cost | 7,097 |  |  | 7,902 |
| 306 |  |  | 4,384 |
Multi-employer plans | 2,641 |  |  | 2,779 |
Net pension expense | $ | 2,947 |  |  | $ | 7,163 |
Company-administered plans: |  |  |
U.S. | $ | 2,363 |  |  | $ | 6,778 |
Non-U.S. | (2,057) |  |  | (2,394) |
| 306 |  |  | 4,384 |
Multi-employer plans | 2,641 |  |  | 2,779 |
Net pension expense | $ | 2,947 |  |  | $ | 7,163 |

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 three months ended March 31, 2021, we contributed $1 million to our pension plans. In 2021, the expected total contributions to our pension plans are approximately $7 million. 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.
15. OTHER ITEMS IMPACTING COMPARABILITY
Our primary measure of segment performance as shown in Note 18, "Segment Reporting," excludes certain items we do not believe are representative of the ongoing operations of the segment. Excluding these items from our segment measure of performance allows for better year over year comparison:

| Three months ended March 31, |
| 2021 |  | 2020 |
| (In thousands) |
Restructuring and other, net | $ | 3,028 |  |  | $ | 20,621 |  |
ERP implementation costs | 7,631 |  |  | 10,326 |  |
Restructuring and other items, net | 10,659 |  |  | 30,947 |  |
Gains on sale of properties | (1,505) |  |  | — |  |
ChoiceLease liability insurance revenue (1) | (777) |  |  | (9,358) |  |
Other items impacting comparability, net | $ | 8,377 |  |  | $ | 21,589 |  |

————————————
(1) Refer to Note 18, "Segment Reporting," for additional information.
16

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)
During the three months ended March 31, 2021 and 2020, other items impacting comparability included:
•Restructuring and other, net — For the three months ended March 31, 2021, this item primarily included professional fees related to the pursuit of a discrete commercial claim. For the three months ended March 31, 2020, this item primarily included expenses related to restructuring activities undertaken in late 2019 and professional fees related to the pursuit of a discrete commercial claim, as well as expenses of $15 million related to our ChoiceLease liability insurance program which was discontinued in January 2020 and exited in the first quarter of 2021.
•ERP implementation costs — This item related to charges in connection with the implementation of an Enterprise Resource Planning (ERP) system. In July 2020, we went live with the first module of our ERP system for human resources. In April 2021, we went live with our financial module.
16. 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 reserves and estimates 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, captioned Key West Policy & Fire Pension Fund v. Ryder System, Inc., et al. The complaint alleges, among other things, that the defendants misrepresented Ryder’s depreciation policy and residual value estimates for its vehicles during the Class Period in violation of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, and seeks to recover, among other things, unspecified compensatory damages and attorneys' fees and costs. On August 3, 2020, the State of Alaska, Alaska Permanent Fund, the City of Fort Lauderdale General Employees’ Retirement System, and the City of Plantation Police Officers Pension Fund were appointed lead plaintiffs. On October 5, 2020, the lead plaintiffs filed an amended complaint. On December 4, 2020, Ryder and the other named defendants in the case filed a Motion to Dismiss the amended complaint. On April 7, 2021, the court held a hearing on defendants’ Motion to Dismiss, and reserved decision.
On June 26, 2020, August 6, 2020, and February 2, 2021, three shareholder derivative complaints purportedly on behalf of Ryder were filed in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida, against us as nominal defendant and certain of our current and former officers and our current directors, relating to the allegations set forth in the securities class action complaint and alleging breaches of fiduciary duties and unjust enrichment. The plaintiffs, on our behalf, are seeking an award of monetary damages and restitution to us, improvements in our corporate governance and internal procedures, and legal fees. These derivative cases have all been consolidated and are stayed pending resolution of the Motion to Dismiss in the securities class action described above.
Also, on January 19, 2021 (as amended on March 26, 2021), and February 8, 2021, two shareholder derivative complaints purportedly on behalf of Ryder were filed in U.S. District Court for the Southern District of Florida against us as nominal defendant and certain of our current and former officers and directors. The complaints allege breach of fiduciary duties, unjust enrichment, and waste of corporate assets. Both complaints are based on the allegation set forth in the securities class action complaint, seek similar relief on our behalf to that sought in the derivative complaints that were filed in Florida state court, and have been stayed pending resolution of the Motion to Dismiss in the securities class action.
We believe the claims asserted in the complaints are without merit and intend to defend against them vigorously.
17

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)
17. SUPPLEMENTAL CASH FLOW INFORMATION

| As of and For the three months ended March 31, |  |
| 2021 |  | 2020 |  |
| (In thousands) |  |
Interest paid | $ | 48,039 |  |  | $ | 60,566 |  |  |
Income taxes paid | 4,885 |  |  | 5,096 |  |  |
Right-of-use assets obtained in exchange for lease obligations: |  |  |  |  |
Finance leases | $ | 2,851 |  |  | $ | 3,744 |  |  |
Operating leases | 16,645 |  |  | 23,877 |  |  |
Capital expenditures acquired but not yet paid | $ | 134,384 |  |  | $ | 144,538 |  |  |

18. SEGMENT REPORTING
Our primary measurement of segment financial performance, defined as segment “Earnings (loss) from continuing operations before taxes” (EBT), includes an allocation of Central Support Services (CSS) and excludes non-operating pension costs, net and certain other items as discussed in Note 15, “Other Items Impacting Comparability.” 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.
18

RYDER SYSTEM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(unaudited)
The following table sets forth financial information for each of our segments and provides a reconciliation between segment EBT and earnings (loss) from continuing operations before income taxes:

| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Revenue: |  |  |
Fleet Management Solutions: |  |  |
ChoiceLease | $ | 797,088 |  |  | $ | 792,206 |
SelectCare | 130,668 |  |  | 136,146 |
Commercial rental | 223,009 |  |  | 205,766 |
Other | 17,348 |  |  | 23,426 |
Fuel services revenue | 166,595 |  |  | 173,335 |
ChoiceLease liability insurance revenue (1) | 777 |  |  | 9,358 |
Fleet Management Solutions | 1,335,485 |  |  | 1,340,237 |
Supply Chain Solutions | 706,700 |  |  | 628,447 |
Dedicated Transportation Solutions | 320,507 |  |  | 334,888 |
Eliminations (2) | (141,070) |  |  | (142,266) |
Total revenue | $ | 2,221,622 |  |  | $ | 2,161,306 |
Earnings (loss) from continuing operations before income taxes: |  |  |
Fleet Management Solutions | $ | 63,402 |  |  | $ | (114,574) |
Supply Chain Solutions | 32,957 |  |  | 31,025 |
Dedicated Transportation Solutions | 12,982 |  |  | 12,180 |
Eliminations | (12,274) |  |  | (10,069) |
| 97,067 |  |  | (81,438) |
Unallocated Central Support Services | (18,432) |  |  | (9,386) |
Non-operating pension costs, net (3) | 9 |  |  | (1,221) |
Other items impacting comparability, net (4) | (8,377) |  |  | (21,589) |
Earnings (loss) from continuing operations before income taxes | $ | 70,267 |  |  | $ | (113,634) |

————————————
(1)In the first quarter of 2020, we announced our plan to exit the extension of our liability insurance coverage for ChoiceLease customers. The exit of this program was completed in the first quarter of 2021.
(2)Represents the elimination of intercompany revenues in our FMS business segment.
(3)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. Refer to Note 14, "Employee Benefit Plans," for a discussion on these items.
(4)Refer to Note 15, “Other Items Impacting Comparability,” for a discussion of items excluded from our primary measure of segment performance.
The following table sets forth the capital expenditures paid for each of our segments:

| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Fleet Management Solutions | $ | 367,708 |  |  | $ | 423,116 |
Supply Chain Solutions | 8,530 |  |  | 6,006 |
Dedicated Transportation Solutions | 306 |  |  | 424 |
Central Support Services | 4,507 |  |  | 1,414 |
Purchases of property and revenue earning equipment | $ | 381,051 |  |  | $ | 430,960 |

19

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. In addition, refer to our audited Consolidated Financial Statements and notes thereto and related MD&A included in the 2020 Annual Report on Form 10-K.
OVERVIEW
Ryder is a leading logistics and transportation company. Our operating segments are aggregated into reportable business segments based upon similar economic characteristics, products, services, customers and delivery methods. 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.), Canada and the United Kingdom (U.K.); (2) Supply Chain Solutions (SCS), which provides integrated logistics solutions, including distribution management, dedicated transportation, transportation management, last mile and professional services in North America; and (3) Dedicated Transportation Solutions (DTS), which provides turnkey transportation solutions in the U.S. that includes dedicated vehicles, 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.
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.
Our results of operations and financial condition are influenced by a number of factors including: used vehicle sales; macroeconomic and other market conditions, including pricing and demand; customer contracting activity and retention; rental demand; maintenance costs; residual value estimates and other depreciation changes; currency exchange rate fluctuations; customer preferences; inflation; fuel and energy prices; general economic conditions; insurance costs; interest rates; labor costs; unemployment levels; tax rates; changes in accounting or regulatory requirements; and cybersecurity attacks.
Our business has, and may continue to be, impacted by the coronavirus (COVID-19) pandemic. For a detailed discussion of its impact on our results and future considerations, refer to our “Consolidated Results” and “Operating Results by Business Segment” discussions below. In addition, for a detailed description of certain risk factors that impact our business, including those related to the COVID-19 pandemic, refer to “Item 1A. Risk Factors” section in our 2020 Annual Report on Form 10-K.
This MD&A includes certain non-GAAP financial measures. Refer to the “Non-GAAP Financial Measures” section of this MD&A for information on the non-GAAP measures, including reconciliations to the most comparable GAAP financial measure and the reasons why we believe each measure is useful to investors. In addition, this MD&A may include certain forward-looking statements regarding our outlook. These statements 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. Refer to the “Special Note Regarding Forward-Looking Statements” section in this Quarterly Report on Form 10-Q for more information.
20

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
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 March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands, except per share amounts)
Total revenue | $ | 2,221,622 |  |  | $ | 2,161,306 |  |  |  |  |  |  | 3% |  |
Operating revenue (1) | 1,817,363 |  |  | 1,771,247 |  |  |  |  |  |  | 3% |  |
Earnings (loss) from continuing operations before income taxes (EBT) (2) | $ | 70,267 |  |  | $ | (113,634) |  |  |  |  |  |  | NM |  |
Comparable EBT (1) (2) | 78,635 |  |  | (90,824) |  |  |  |  |  |  | NM |  |
Earnings (loss) from continuing operations | 51,584 |  |  | (109,129) |  |  |  |  |  |  | NM |  |
Comparable earnings (loss) from continuing operations (1) (2) | 58,190 |  |  | (72,104) |  |  |  |  |  |  | NM |  |
Net earnings (loss) | 50,825 |  |  | (109,613) |  |  |  |  |  |  | NM |  |
Comparable EBITDA (1) (4) | 567,415 |  |  | 517,694 |  |  |  |  |  |  | 10% |  |
Earnings (loss) per common share (EPS) — Diluted |  |  |  |  |  |  |  |  |  |  |
Continuing operations | $ | 0.97 |  |  | $ | (2.09) |  |  |  |  |  |  | NM |  |
Comparable (1) | 1.09 |  |  | (1.38) |  |  |  |  |  |  | NM |  |
Net earnings (loss) | 0.95 |  |  | (2.10) |  |  |  |  |  |  | NM |  |
Net cash provided by operating activities from continuing operations | $ | 465,711 |  |  | $ | 438,586 |  |  |  |  |  |  | 6% |  |
Free cash flow (1) | 241,287 |  |  | 110,608 |  |  |  |  |  |  | NM |  |
Gross capital expenditures (3) | 406,635 |  |  | 391,990 |  |  |  |  |  |  | 4% |  |

NM - Denotes Not Meaningful throughout the MD&A
(1)Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for reconciliations of the most comparable GAAP measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.
(2)Included additional accelerated and policy depreciation of $59 million and $151 million for the first quarter of 2021 and 2020, respectively, from the impact of prior residual value estimate changes. These amounts included (gains) losses on used vehicle sales, net of ($29) million and $21 million in the first quarter of 2021 and 2020, respectively.
(3)Includes capital expenditures that have been accrued, but not yet paid.
(4)Comparable EBITDA has been recast to exclude gains/losses from the sale of used vehicles.
Total revenue and operating revenue (a non-GAAP measure excluding fuel, subcontracted transportation and ChoiceLease liability insurance revenues) both increased 3% in the first quarter of 2021 primarily due to an increase in SCS and rental revenue.
EBT increased to earnings of $70 million in the first quarter of 2021 as compared to a loss of $114 million in the prior year period. Comparable EBT (a non-GAAP measure) increased to earnings of $79 million in the first quarter of 2021 as compared to a loss of $91 million in the prior year period. These increases were primarily due to higher gains on used vehicles sold and a declining impact of depreciation expense from prior residual value estimate changes totaling $92 million. EBT also benefited from improved lease and rental results.
The COVID-19 pandemic negatively impacted several areas of our businesses, particularly in the first half of 2020. In our FMS business segment, we experienced lower demand for commercial rental and declines in the used vehicle market through the second quarter of 2020. In our SCS business segment, we experienced temporary shutdowns in the automotive industry, which restarted their operations during the second quarter of 2020. This was followed by increased consumer demand in the second half of 2020, particularly in the fourth quarter of 2020, which helped contribute to a worldwide semiconductor supply shortage in early 2021, as semiconductor suppliers have been unable to rapidly reallocate production to respond to demand across multiple industries, particularly the automotive industry. The semiconductor shortage impacted the production activity of our automotive SCS customers and our automotive revenue growth in the first quarter of 2021.
While we are experiencing positive momentum in our businesses, any additional negative effects of the pandemic may have a further impact on our business and financial results, as well as on significant judgments and estimates, including those related to 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, and allowance for credit losses.
21

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Cash provided by operating activities increased in the first quarter of 2021 reflecting higher net earnings. Free cash flow (a non-GAAP financial measure) increased primarily due to higher proceeds from the sale of revenue earning equipment, lower cash paid for capital expenditures and higher cash provided by operating activities. Gross capital expenditures increased in the first quarter of 2021 reflecting higher planned investments in the rental fleet, partially offset by lower lease expenditures as compared to the prior year period.
Our debt to equity ratio was 280% and 293% as of March 31, 2021 and December 31, 2020, respectively. As of March 31, 2021, our debt balance decreased 4% from the prior year-end to $6.4 billion.
Adjusted return on equity (ROE) was 4.5% and (4.8)% as of March 31, 2021 and 2020, respectively. Our interim target is 11% and long-term target over the cycle is 15%. The increase in ROE is primarily due to the diminishing impact from the 2019 and 2020 residual value estimate changes, as well as commercial rental business recovery and higher lease pricing.
22

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 March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |  |  |  |  |
Lease & related maintenance and rental revenues | $ | 940,422 |  |  | $ | 927,756 |  |  |  |  |  |  | 1% |  |
Cost of lease & related maintenance and rental | 730,144 |  |  | 818,292 |  |  |  |  |  |  | (11)% |  |
Gross margin | $ | 210,278 |  |  | $ | 109,464 |  |  |  |  |  |  | 92% |  |
Gross margin % | 22% |  | 12% |  |  |  |  |  |  |  |

Lease & related maintenance and rental revenues represent revenues from our ChoiceLease and commercial rental product offerings within our FMS business segment. Revenues increased 1% to $940 million in the first quarter of 2021 primarily due to an increase in commercial rental revenue from higher pricing.
Cost of lease & related maintenance and rental represents the direct costs related to lease & related maintenance and rental revenues 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 11% in the first quarter of 2021 due to declining depreciation expense impacts from prior residual value estimate changes and lower maintenance costs on a smaller fleet.
Lease & related maintenance and rental gross margin increased 92% in the first quarter of 2021 primarily due to declining depreciation expense impacts from prior residual value estimate changes, as well as higher lease results and commercial rental pricing and utilization, as the prior year rental utilization was negatively impacted by COVID-19. Gross margin as a percentage of revenue, which includes the negative impact of prior residual value estimate changes, increased to 22% in the first quarter of 2021.
Services

| Three months ended March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |  |  |  |  |
Services revenue | $ | 1,165,488 |  |  | $ | 1,112,188 |  |  |  |  |  |  | 5% |  |
Cost of services | 999,792 |  |  | 954,429 |  |  |  |  |  |  | 5% |  |
Gross margin | $ | 165,696 |  |  | $ | 157,759 |  |  |  |  |  |  | 5% |  |
Gross margin % | 14% |  | 14% |  |  |  |  |  |  |  |

Services revenue represents all the revenues associated with our SCS and DTS business segments, as well as SelectCare and fleet support services associated with our FMS business segment. Services revenue increased 5% in the first quarter of 2021 due to an increase in revenue in SCS, which was negatively impacted by COVID-19 in the prior year. This increase was partially offset by a decrease in revenue in DTS as compared to the prior year period.
Cost of services represents the direct costs related to services revenue and is primarily comprised of salaries and employee-related costs, subcontracted transportation (purchased transportation from third parties), fuel, vehicle liability costs and maintenance costs. Cost of services increased 5% in the first quarter of 2021 primarily due to the growth in revenues.
Services gross margin increased 5% in the first quarter of 2021 primarily due to the increase in revenue. Gross margin as a percentage of revenue remained flat at 14% in the first quarter of 2021.
23

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

| Three months ended March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
Fuel services revenue | $ | 115,712 |  |  | $ | 121,362 |  |  |  |  |  |  | (5)% |  |
Cost of fuel services | 114,706 |  |  | 120,449 |  |  |  |  |  |  | (5)% |  |
Gross margin | $ | 1,006 |  |  | $ | 913 |  |  |  |  |  |  | 10% |  |
Gross margin % | 1% |  | 1% |  |  |  |  |  |  |  |

Fuel services revenue represents fuel services provided to our FMS customers. Fuel services revenue decreased 5% in the first quarter of 2021 primarily reflecting lower gallons sold, partially offset by higher fuel prices passed through to customers.
Cost of fuel services includes the direct costs associated with providing our customers with fuel. These costs include fuel, salaries and employee-related costs of fuel island attendants and depreciation of our fueling facilities and equipment. Cost of fuel services decreased 5% in the first quarter of 2021 as a result of lower gallons sold, partially offset by higher fuel prices.
Fuel services gross margin increased 10% in the first quarter of 2021. Fuel services gross margin as a percentage of revenue remained flat at 1% in the first quarter of 2021. 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 trailing market fuel costs. Fuel services gross margin for the first quarter of 2021 was not significantly impacted by these price change dynamics as fuel prices fluctuated during the period.
Other Operating Expenses

| Three months ended March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
Other operating expenses | $ | 33,900 |  |  | $ | 33,565 |  |  |  |  |  |  | 1% |  |

Other operating expenses include costs related to our owned and leased facilities within the FMS segment, such as facility depreciation, rent, purchased insurance, utilities and taxes. These facilities are utilized to provide maintenance to our ChoiceLease, commercial rental, and SelectCare customers. Other operating expenses remained relatively flat in the first quarter of 2021.
Selling, General and Administrative Expenses

| Three months ended March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
Selling, general and administrative expenses (SG&A) | $ | 241,742 |  |  | $ | 224,119 |  |  |  |  |  |  | 8% |  |
Percentage of total revenue | 11% |  | 10% |  |  |  |  |  |  |  |

SG&A expenses increased 8% in the first quarter of 2021. The increase in SG&A expenses in the first quarter of 2021 primarily reflects higher incentive compensation-related expenses due to improved company performance, partially offset by lower bad debt expense. SG&A expenses as a percentage of total revenue increased to 11% for the first quarter of 2021.
24

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Non-Operating Pension Costs, Net

| Three months ended March 31, |  |  |  | Change 2021/2020 |  |  |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |  |  |
| (In thousands) |  |  |  |  |  |
Non-operating pension costs, net | $ | (9) |  |  | $ | 1,221 |  |  |  |  |  |  | NM |  |  |  |

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.
Used Vehicle Sales, Net

| Three months ended March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
(Gains) losses on used vehicle sales, net | $ | (28,851) |  |  | $ | 20,684 |  |  |  |  |  |  | NM |  |

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 was a gain of $29 million in the first quarter of 2021 as compared to a loss of $21 million in the prior year period due to higher gains on sales of used vehicles and lower valuation adjustments.
Average proceeds per unit for tractors and trucks in the first quarter of 2021 increased from the prior year reflecting higher retail pricing and higher sales volumes in the retail markets as compared to the prior year. The following table presents the used vehicle pricing changes compared with the prior year period:

| Proceeds per unit change 2021/2020 (1) |  |
| Three Months |  |
Tractors | 25% |  |
Trucks | 35% |  |

————————————
(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 March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
Interest expense | $ | 54,706 |  |  | $ | 62,566 |  |  |  |  |  |  | (13)% |  |
Effective interest rate | 3.4% |  | 3.1% |  |  |  |  |  |  |  |

Interest expense decreased 13% in the first quarter of 2021 primarily reflecting lower average outstanding debt partially offset by a higher portion of fixed rate debt. The decrease in average outstanding debt reflects lower vehicle capital spending in 2020 and lower borrowings under our trade receivable program and global revolving credit facility in 2021.
25

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

| Three months ended March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
Miscellaneous (income) loss, net | $ | (5,434) |  |  | $ | 8,668 |  |  |  |  |  |  | NM |  |

Miscellaneous (income) loss, 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) loss, net was income of $5 million in the first quarter of 2021 as compared to a loss of $9 million in the prior year primarily due to higher rabbi trust investment income in 2021 and foreign currency transaction remeasurement losses in 2020.
Restructuring and other items, net

| Three months ended March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
Restructuring and other items, net | $ | 10,659 |  |  | $ | 30,947 |  |  |  |  |  |  | (66)% |  |

Refer to Note 15, "Other Items Impacting Comparability," in the Notes to Condensed Consolidated Financial Statements for a discussion of restructuring charges and other items.
Provision for (benefit from) income taxes

| Three months ended March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
Provision for (benefit from) income taxes | $ | 18,683 |  |  | $ | (4,505) |  |  |  |  |  |  | NM |  |
Effective tax rate from continuing operations | 26.6% |  | (4.0)% |  |  |  |  |  |  |  |
Comparable tax rate on continuing operations (1) | 26.0% |  | (20.6)% |  |  |  |  |  |  |  |

————————————
(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.
We recorded expense of $19 million in the first quarter of 2021 as compared to a benefit of $5 million in the prior year. The tax rate in the prior year was impacted by the recognition of a valuation allowance of $13 million related to our U.K. deferred tax assets, as well as the reduction of earnings due to accelerated depreciation charges and the COVID-19 economic effects. In addition, we recorded a charge of $7 million related to expiring state net operating losses in the prior year.
26

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

| Three months ended March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
Revenue: |  |  |  |  |  |  |  |  |  |  |
Fleet Management Solutions | $ | 1,335,485 |  |  | $ | 1,340,237 |  |  |  |  |  |  | —% |  |
Supply Chain Solutions | 706,700 |  |  | 628,447 |  |  |  |  |  |  | 12% |  |
Dedicated Transportation Solutions | 320,507 |  |  | 334,888 |  |  |  |  |  |  | (4)% |  |
Eliminations | (141,070) |  |  | (142,266) |  |  |  |  |  |  | 1% |  |
Total | $ | 2,221,622 |  |  | $ | 2,161,306 |  |  |  |  |  |  | 3% |  |
Operating Revenue: (1) |  |  |  |  |  |  |  |  |  |  |
Fleet Management Solutions | $ | 1,168,113 |  |  | $ | 1,157,544 |  |  |  |  |  |  | 1% |  |
Supply Chain Solutions | 502,598 |  |  | 467,311 |  |  |  |  |  |  | 8% |  |
Dedicated Transportation Solutions | 236,839 |  |  | 236,685 |  |  |  |  |  |  | —% |  |
Eliminations | (90,187) |  |  | (90,293) |  |  |  |  |  |  | —% |  |
Total | $ | 1,817,363 |  |  | $ | 1,771,247 |  |  |  |  |  |  | 3% |  |
Earnings (loss) from continuing operations before income taxes: |  |  |  |  |  |  |  |  |  |  |
Fleet Management Solutions | $ | 63,402 |  |  | $ | (114,574) |  |  |  |  |  |  | NM |  |
Supply Chain Solutions | 32,957 |  |  | 31,025 |  |  |  |  |  |  | 6% |  |
Dedicated Transportation Solutions | 12,982 |  |  | 12,180 |  |  |  |  |  |  | 7% |  |
Eliminations | (12,274) |  |  | (10,069) |  |  |  |  |  |  | (22)% |  |
| 97,067 |  |  | (81,438) |  |  |  |  |  |  | NM |  |
Unallocated Central Support Services | (18,432) |  |  | (9,386) |  |  |  |  |  |  | (96)% |  |
Non-operating pension costs, net | 9 |  |  | (1,221) |  |  |  |  |  |  | NM |  |
Other items impacting comparability, net (2) | (8,377) |  |  | (21,589) |  |  |  |  |  |  | 61% |  |
Earnings (loss) from continuing operations before income taxes | $ | 70,267 |  |  | $ | (113,634) |  |  |  |  |  |  | NM |  |

————————————
(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 15, "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 (loss) from continuing operations before income taxes” (EBT), which includes an allocation of Central Support Services (CSS), and excludes non-operating pension costs, net and certain other items as discussed in Note 15, "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 segment and, ultimately, to hold leadership of each business segment accountable for their allocated share of CSS costs. Segment results are not necessarily indicative of the results of operations that would have occurred had each segment been an independent, stand-alone entity during the periods presented. Certain costs are not attributable to any segment and remain unallocated in CSS, including costs for investor relations, public affairs and certain executive compensation.
Our FMS segment leases revenue earning equipment, as well as provides rental vehicles, fuel, maintenance and other ancillary services to the SCS and DTS segments. 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
27

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
consolidation (presented as “Eliminations”). Inter-segment EBT allocated to SCS and DTS includes earnings related to equipment used in providing services to SCS and DTS customers.
The following table sets forth the benefits from equipment contribution included in EBT for our SCS and DTS business segments:

| Three months ended March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
Equipment Contribution: |  |  |  |  |  |  |  |  |  |  |
Supply Chain Solutions | $ | 5,223 |  |  | $ | 4,560 |  |  |  |  |  |  | 15% |  |
Dedicated Transportation Solutions | 7,051 |  |  | 5,509 |  |  |  |  |  |  | 28% |  |
Total (1) | $ | 12,274 |  |  | $ | 10,069 |  |  |  |  |  |  | 22% |  |

————————————
(1)Total amoun t is also included in FMS EBT.
The increase in SCS and DTS equipment contribution in the first quarter of 2021 is primarily related to a declining impact associated with the prior residual value estimate changes on vehicles used to provide services to SCS and DTS customers.
Items excluded from our segment EBT measure and their classification within our Condensed Consolidated Statements of Earnings are as follows:

|  |  |  | Three months ended March 31, |  |
Description |  | Classification |  | 2021 |  | 2020 |  |  |  |
|  |  |  | (In thousands)
Restructuring and other, net (1) |  | Restructuring and other items, net |  | $ | (3,028) |  |  | $ | (20,621) |  |  |  |  |
ERP implementation costs (1) |  | Restructuring and other items, net |  | (7,631) |  |  | (10,326) |  |  |  |  |
Gains on sale of properties (1) |  | Miscellaneous (income) loss, net |  | 1,505 |  |  | — |  |  |  |  |
ChoiceLease liability insurance revenue (1) |  | Revenue |  | 777 |  |  | 9,358 |  |  |  |  |
Other items impacting comparability, net |  | (8,377) |  |  | (21,589) |  |  |  |  |
Non-operating pension costs, net (2) |  | Non-operating pension costs, net |  | 9 |  |  | (1,221) |  |  |  |  |
|  |  |  | $ | (8,368) |  |  | $ | (22,810) |  |  |  |  |

———————————
(1)Refer to Note 15, “Other Items Impacting Comparability,” in the Notes to Condensed Consolidated Financial Statements for additional information.
(2)Refer to Note 14, "Employee Benefit Plans," in the Notes to Condensed Consolidated Financial Statements for additional information.
28

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

| Three months ended March 31, |  |  |  | Change 2021/2020
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
ChoiceLease | $ | 797,088 |  |  | $ | 792,206 |  |  |  |  |  |  | 1% |  |
SelectCare | 130,668 |  |  | 136,146 |  |  |  |  |  |  | (4)% |  |
Commercial rental | 223,009 |  |  | 205,766 |  |  |  |  |  |  | 8% |  |
Other | 17,348 |  |  | 23,426 |  |  |  |  |  |  | (26)% |  |
Fuel services revenue | 166,595 |  |  | 173,335 |  |  |  |  |  |  | (4)% |  |
ChoiceLease liability insurance revenue (1) | 777 |  |  | 9,358 |  |  |  |  |  |  | (92)% |  |
FMS total revenue (2) | $ | 1,335,485 |  |  | $ | 1,340,237 |  |  |  |  |  |  | —% |  |
FMS operating revenue (3) | $ | 1,168,113 |  |  | $ | 1,157,544 |  |  |  |  |  |  | 1% |  |
FMS EBT | $ | 63,402 |  |  | $ | (114,574) |  |  |  |  |  |  | NM |  |
FMS EBT as a % of FMS total revenue | 4.7% |  | (8.5)% |  |  |  |  |  | NM |  |
FMS EBT as a % of FMS operating revenue (3) | 5.4% |  | (9.9)% |  |  |  |  |  | NM |  |
| Twelve months ended March 31, |  |  |  | Change 2021/2020
| 2021 |  | 2020 |  |  |  |  |  |  |  |
FMS EBT as a % of FMS total revenue | 0.7% |  | (4.4)% |  |  |  |  |  | NM |  |
FMS EBT as a % of FMS operating revenue (3) | 0.8% |  | (5.2)% |  |  |  |  |  | NM |  |

————————————
(1)In the first quarter of 2020, we announced our plan to exit the extension of our liability insurance coverage for ChoiceLease customers. The exit of this program was completed in the first quarter of 2021.
(2)Includes intercompany fuel sales from FMS to SCS and DTS.
(3)Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for reconciliations of the most comparable GAAP measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.
The following table summarizes the components of the change in FMS revenue on a percentage basis versus the prior year:

| Three months ended March 31, 2021 |  |
| Total |  | Operating (1) |  |  |  |
Organic, including price and volume | —% |  | —% |  |  |  |
Fuel | (1)% |  | —% |  |  |  |
Foreign exchange | 1% |  | 1% |  |  |  |
Net increase (decrease) | —% |  | 1% |  |  |  |

————————————
(1)Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for reconciliations of the most comparable GAAP measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.
29

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
The following table provides commercial rental statistics on our global fleet:

| Three months ended March 31, |  |  |  | Change 2021/2020
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
Rental revenue from non-lease customers (1) | $ | 152,185 |  |  | $ | 125,285 |  |  |  |  |  |  | 21% |  |
Rental revenue from lease customers (2) | $ | 70,824 |  |  | $ | 80,481 |  |  |  |  |  |  | (12)% |  |
Average commercial rental power fleet size — in service (3) (4) | 29,400 |  |  | 33,400 |  |  |  |  |  |  | (12)% |  |
Commercial rental utilization — power fleet (3) (4) | 72.9% |  | 64.4% |  |  |  |  |  | 850 bps |  |

————————————
(1)Also includes additional vehicles rented to lease customers, incremental to the lease fleet.
(2)Represents revenue from rental vehicles provided to our existing ChoiceLease customers, generally in place of a lease vehicle.
(3)Number of units rounded to the nearest hundred and calculated using quarterly average unit counts. Rental utilization is calculated using the number of days units are rented divided by the number of days units available to rent based on the days in a calendar year.
(4)Excluding trailers.
FMS total revenue remained flat at $1.3 billion in the first quarter of 2021 primarily due to higher operating revenue offset by lower ChoiceLease liability insurance revenue as the product was fully exited in the first quarter of 2021, as well as lower fuel revenue. FMS operating revenue in the first quarter remained relatively flat primarily due to an increase in commercial rental revenue and positive impacts from foreign currency offset by decreases in SelectCare and other revenue.
ChoiceLease revenue increased 1% in the first quarter of 2021 primarily due to positive impacts from foreign currency and higher prices on new vehicles partially offset by a smaller fleet. SelectCare revenue decreased 4% in the first quarter primarily due to less vehicles serviced as a result of lost business. Commercial rental revenue increased 8% in the first quarter primarily due to higher pricing. Fuel services revenue decreased 4% in the first quarter primarily reflecting lower gallons sold partially offset by higher fuel prices passed through to customers.
FMS EBT increased to earnings of $63 million in the first quarter of 2021 from a loss of $115 million in the prior year period. The increase reflects lower depreciation expense of $92 million resulting from residual value estimate changes in previous years, including higher used vehicle sales results, as well as higher lease and commercial rental results. Lease results increased due to the redeployment of non-revenue earning equipment and higher pricing. Higher commercial rental results were primarily due to higher pricing and increased utilization on a smaller average power fleet in the first quarter of 2021. Rental power fleet utilization increased to 72.9% from 64.4%, which included a negative impact from COVID-19, in the prior year. EBT in the first quarter of 2021 also benefited from lower maintenance costs and lower bad debt expense. In 2020, EBT was negatively impacted by COVID-19 including lower incremental rental performance and the need for higher bad debt expense.
30

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Our global 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
| March 31, 2021 |  | December 31, 2020 |  | March 31, 2020 |  | Mar 2021/ Dec 2020 |  | Mar 2021/ Mar 2020
End of period vehicle count |  |  |  |  |  |  |  |  |
By type: |  |  |  |  |  |  |  |  |
Trucks (1) | 76,100 |  |  | 77,300 |  |  | 84,800 |  |  | (2)% |  | (10)%
Tractors (2) | 71,900 |  |  | 73,300 |  |  | 81,600 |  |  | (2)% |  | (12)%
Trailers and other (3) | 43,500 |  |  | 44,100 |  |  | 46,300 |  |  | (1)% |  | (6)%
Total | 191,500 |  |  | 194,700 |  |  | 212,700 |  |  | (2)% |  | (10)%
By product line: |  |  |  |  |  |  |  |  |
ChoiceLease | 147,300 |  |  | 149,600 |  |  | 158,800 |  |  | (2)% |  | (7)%
Commercial rental | 35,600 |  |  | 35,000 |  |  | 39,600 |  |  | 2% |  | (10)%
Service vehicles and other | 2,400 |  |  | 2,400 |  |  | 2,700 |  |  | —% |  | (11)%
| 185,300 |  |  | 187,000 |  |  | 201,100 |  |  | (1)% |  | (8)%
Held for sale | 6,200 |  |  | 7,700 |  |  | 11,600 |  |  | (19)% |  | (47)%
Total | 191,500 |  |  | 194,700 |  |  | 212,700 |  |  | (2)% |  | (10)%
Customer vehicles under SelectCare contracts (4) | 52,300 |  |  | 50,300 |  |  | 56,900 |  |  | 4% |  | (8)%
Quarterly average vehicle count |  |  |  |  |  |  |  |  |
By product line: |  |  |  |  |  |  |  |  |
ChoiceLease | 148,800 |  |  | 150,400 |  |  | 159,600 |  |  | (1)% |  | (7)%
Commercial rental | 35,000 |  |  | 35,100 |  |  | 40,500 |  |  | —% |  | (14)%
Service vehicles and other | 2,400 |  |  | 2,500 |  |  | 2,700 |  |  | (4)% |  | (11)%
| 186,200 |  |  | 188,000 |  |  | 202,800 |  |  | (1)% |  | (8)%
Held for sale | 6,800 |  |  | 9,000 |  |  | 10,300 |  |  | (24)% |  | (34)%
Total | 193,000 |  |  | 197,000 |  |  | 213,100 |  |  | (2)% |  | (9)%
Customer vehicles under SelectCare contracts (4) | 51,200 |  |  | 52,700 |  |  | 56,400 |  |  | (3)% |  | (9)%
Customer vehicles under SelectCare on-demand (5) | 6,700 |  |  | 6,400 |  |  | 8,100 |  |  | 5% |  | (17)%
Total vehicles serviced | 250,900 |  |  | 256,100 |  |  | 277,600 |  |  | (2)% |  | (10)%

————————————
(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.
31

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
The following table provides information on our global active ChoiceLease fleet (number of units rounded to nearest hundred):

|  |  |  |  |  |  | Change
| March 31, 2021 |  | December 31, 2020 |  | March 31, 2020 |  | Mar 2021/ Dec 2020 |  | Mar 2021/ Mar 2020
End of period active ChoiceLease vehicle count (1) | 141,800 |  |  | 142,300 |  |  | 148,400 |  |  | —% |  | (4)%
Quarterly average active ChoiceLease vehicle count (1) | 142,100 |  |  | 143,100 |  |  | 148,200 |  |  | (1)% |  | (4)%
Quarterly revenue per active ChoiceLease vehicle(2) | $ | 5,600 |  |  | $ | 5,700 |  |  | $ | 5,300 |  |  | (2)% |  | 6%

————————————
(1)Active ChoiceLease vehicles are calculated as those units currently earning revenue and not classified as not yet earning or no longer earning units.
(2)Calculated based on the reported quarterly ChoiceLease revenue.
The following table provides a breakdown of our non-revenue earning equipment included in our end of period global fleet count (number of units rounded to nearest hundred):

|  |  |  |  |  |  | Change
| March 31, 2021 |  | December 31, 2020 |  | March 31, 2020 |  | Mar 2021/ Dec 2020 |  | Mar 2021/ Mar 2020
Not yet earning revenue (NYE) | 2,000 |  |  | 1,900 |  |  | 2,600 |  |  | 5% |  | (23)%
No longer earning revenue (NLE): |  |  |  |  |  |  |  |  |
Units held for sale | 6,200 |  |  | 7,700 |  |  | 11,600 |  |  | (19)% |  | (47)%
Other NLE units | 3,200 |  |  | 3,200 |  |  | 9,000 |  |  | —% |  | (64)%
Total NLE | 9,400 |  |  | 10,900 |  |  | 20,600 |  |  | (14)% |  | (54)%
Total | 11,400 |  |  | 12,800 |  |  | 23,200 |  |  | (11)% |  | (51)%

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. NYE units decreased 23% compared to March 31, 2020 reflecting lower lease sales.
NLE units represent 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. NLE units decreased 54% compared to March 31, 2020 due to a lower number of vehicles being prepared for sale or redeployment and a decrease in units held for sale.
32

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

| Three months ended March 31, |  |  |  | Change 2021/2020
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
Automotive | $ | 171,872 |  |  | $ | 171,741 |  |  |  |  |  |  | —% |  |
Technology and healthcare | 54,705 |  |  | 57,666 |  |  |  |  |  |  | (5)% |  |
Consumer packaged goods and retail | 220,486 |  |  | 188,036 |  |  |  |  |  |  | 17% |  |
Industrial and other | 55,535 |  |  | 49,868 |  |  |  |  |  |  | 11% |  |
Subcontracted transportation | 180,134 |  |  | 135,728 |  |  |  |  |  |  | 33% |  |
Fuel | 23,968 |  |  | 25,408 |  |  |  |  |  |  | (6)% |  |
SCS total revenue | $ | 706,700 |  |  | $ | 628,447 |  |  |  |  |  |  | 12% |  |
SCS operating revenue (1) | $ | 502,598 |  |  | $ | 467,311 |  |  |  |  |  |  | 8% |  |
SCS EBT | $ | 32,957 |  |  | $ | 31,025 |  |  |  |  |  |  | 6% |  |
SCS EBT as a % of SCS total revenue | 4.7% |  | 4.9% |  |  |  |  |  | (20) bps |  |
SCS EBT as a % of SCS operating revenue (1) | 6.6% |  | 6.6% |  |  |  |  |  | — bps |  |
Memo: |  |  |  |  |  |  |  |  |  |  |
Average fleet | 9,400 |  | 9,600 |  |  |  |  |  | (2)% |  |
| Twelve months ended March 31, |  |  |  | Change 2021/2020
| 2021 |  | 2020 |  |  |  |  |  |  |  |
SCS EBT as a % of SCS total revenue | 6.2% |  | 5.7% |  |  |  |  |  | 50 bps |  |
SCS EBT as a % of SCS operating revenue (1) | 8.5% |  | 7.7% |  |  |  |  |  | 80 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.
The following table summarizes the components of the change in SCS revenue on a percentage basis versus the prior year:

| Three months ended March 31, 2021 |  |
| Total |  | Operating (1) |  |  |  |
Organic, including price and volume | 5% |  | 8% |  |  |  |
Subcontracted transportation | 7% |  | —% |  |  |  |
Net increase (decrease) | 12% |  | 8% |  |  |  |

————————————
(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.
SCS total revenue and operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation) increased 12% and 8%, respectively, in the first quarter of 2021. Total revenue increased primarily due to higher subcontracted transportation and operating revenue. Operating revenue increased primarily due to new business in our consumer packaged goods and retail and industrial businesses and higher volumes in our consumer packaged goods and retail business. Automotive revenue was flat as the plant shutdowns in the first quarter of 2021 related to weather and semiconductor shortages were offset by lower volumes in the prior year due to negative impacts of COVID-19.
SCS EBT increased 6% in the first quarter of 2021 primarily due to higher pricing and volumes. EBT also benefited from the estimated negative impacts of COVID-19, particularly in our automotive business, in the prior year period. These were partially offset by higher overhead expenses including continued investments in marketing and technology. In the prior year, SCS customer volumes in the automotive business significantly declined due to temporary production shutdowns beginning late in the first
33

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
quarter of 2020 related to the COVID-19 pandemic. While these operations restarted during the second quarter of 2020, this was followed by increased consumer demand in the second half of 2020, which helped contribute to a worldwide semiconductor supply shortage in early 2021 and impacted the production activity of our automotive customers in the first quarter of 2021. We expect this shortage to negatively impact our SCS results in 2021.
Dedicated Transportation Solutions

| Three months ended March 31, |  |  |  | Change 2021/2020
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
DTS total revenue | $ | 320,507 |  |  | $ | 334,888 |  |  |  |  |  |  | (4)% |  |
DTS operating revenue (1) | $ | 236,839 |  |  | $ | 236,685 |  |  |  |  |  |  | —% |  |
DTS EBT | $ | 12,982 |  |  | $ | 12,180 |  |  |  |  |  |  | 7% |  |
DTS EBT as a % of DTS total revenue | 4.1% |  | 3.6% |  |  |  |  |  | 50 bps |  |
DTS EBT as a % of DTS operating revenue (1) | 5.5% |  | 5.1% |  |  |  |  |  | 40 bps |  |
Memo: |  |  |  |  |  |  |  |  |  |  |
Average fleet | 9,700 |  | 9,400 |  |  |  |  |  | 3% |  |
| Twelve months ended March 31, |  |  |  | Change 2021/2020
| 2021 |  | 2020 |  |  |  |  |  |  |  |
DTS EBT as a % of DTS total revenue | 6.1% |  | 5.4% |  |  |  |  |  | 70 bps |  |
DTS EBT as a % of DTS operating revenue (1) | 8.0% |  | 7.8% |  |  |  |  |  | 20 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.
The following table summarizes the components of the change in DTS revenue on a percentage basis versus the prior year:

| Three months ended March 31, 2021 |  |
| Total |  | Operating (1) |  |  |  |
Organic including price and volume | —% |  | —% |  |  |  |
Subcontracted transportation | (4)% |  | —% |  |  |  |
Fuel | —% |  | —% |  |  |  |
Net increase (decrease) | (4)% |  | —% |  |  |  |

————————————
(1)Non-GAAP financial measure. Refer to the “Non-GAAP Financial Measures” section of this MD&A for reconciliations of the most comparable GAAP measure to the non-GAAP financial measure and the reasons why management believes this measure is important to investors.
DTS total revenue decreased 4% in the first quarter of 2021 due to lower subcontracted transportation. DTS operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation) remained flat as compared to prior year as new business and higher pricing were offset by lower volumes.
DTS EBT increased 7% in the first quarter of 2021 due to improved operating performance partially offset by higher insurance costs.
34

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

| Three months ended March 31, |  |  |  | Change 2021/2020 |  |
| 2021 |  | 2020 |  |  |  |  |  | Three Months |  |
| (In thousands) |  |  |  |
Human resources | $ | 5,588 |  |  | $ | 5,853 |  |  |  |  |  |  | (5)% |  |
Finance and procurement | 18,896 |  |  | 19,239 |  |  |  |  |  |  | (2)% |  |
Corporate services and public affairs | 1,696 |  |  | 1,984 |  |  |  |  |  |  | (15)% |  |
Information technology | 26,419 |  |  | 25,365 |  |  |  |  |  |  | 4% |  |
Legal and safety | 7,432 |  |  | 7,963 |  |  |  |  |  |  | (7)% |  |
Marketing | 9,121 |  |  | 5,275 |  |  |  |  |  |  | 73% |  |
Other | 19,406 |  |  | 8,202 |  |  |  |  |  |  | NM |  |
Total CSS | 88,558 |  |  | 73,881 |  |  |  |  |  |  | 20% |  |
Allocation of CSS to business segments | (70,126) |  |  | (64,495) |  |  |  |  |  |  | 9% |  |
Unallocated CSS | $ | 18,432 |  |  | $ | 9,386 |  |  |  |  |  |  | NM |  |

Total CSS costs increased 20% in the first quarter of 2021. Unallocated CSS was $18 million in the first quarter of 2021 as compared to $9 million in the prior year period. Both total and unallocated CSS costs increased primarily due to higher incentive compensation-related expenses in 2021 due to improved performance.
35

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
FINANCIAL RESOURCES AND LIQUIDITY
Cash Flows
The following is a summary of our cash flows from continuing operations:

| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Net cash provided by (used in): |  |  |
Operating activities | $ | 465,711 |  |  | $ | 438,586 |
Investing activities | (225,962) |  |  | (332,978) |
Financing activities | (298,097) |  |  | 217,620 |
Effect of exchange rate changes on cash | (1,202) |  |  | 725 |
Net change in cash and cash equivalents | $ | (59,550) |  |  | $ | 323,953 |
| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Net cash provided by operating activities |  |  |
Earnings (loss) from continuing operations | $ | 51,584 |  |  | $ | (109,129) |
Non-cash and other, net | 496,839 |  |  | 599,779 |
Collections on sales-type leases | 30,374 |  |  | 26,597 |
Changes in operating assets and liabilities | (113,086) |  |  | (78,661) |
Cash flows from operating activities from continuing operations | $ | 465,711 |  |  | $ | 438,586 |

Cash provided by operating activities increased to $466 million in the three months ended March 31, 2021 compared with $439 million in 2020 reflecting higher earnings. Our working capital needs are primarily driven by the timing of collections of our receivables and payments of our trade payables, as well as changes in other assets and liabilities. The unfavorable impact from changes in operating assets and liabilities was primarily due to higher insurance-related payments and recognition of deferred revenue in 2021. Cash used in investing activities decreased to $226 million in the three months ended March 31, 2021 compared with $333 million in 2020 primarily due to higher proceeds from the sale of revenue earning equipment and a decrease in cash paid for capital expenditures. Cash provided by (used in) financing activities was ($298) million in the three months ended March 31, 2021 compared to $218 million in 2020 due to lower borrowing needs.
The following table shows our free cash flow computation:

| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Net cash provided by operating activities | $ | 465,711 |  |  | $ | 438,586 |
Sales of revenue earning equipment (1) | 154,144 |  |  | 101,099 |
Sales of operating property and equipment (1) | 2,357 |  |  | 1,883 |
Other (1) | 126 |  |  | — |
Total cash generated (2) | 622,338 |  |  | 541,568 |
Purchases of property and revenue earning equipment (1) | (381,051) |  |  | (430,960) |
Free cash flow (2) | $ | 241,287 |  |  | $ | 110,608 |

————————————
(1)Included in cash flows from investing activities.
(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.
36

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Free cash flow (a non-GAAP measure) increased to $241 million in the three months ended March 31, 2021 from $111 million in 2020 primarily due to higher proceeds from the sale of revenue earning equipment and a decrease in cash paid for capital expenditures and, to a lesser extent, higher cash flows from operations in 2021.
Capital expenditures generally represent the purchase of revenue earning equipment (trucks, tractors and trailers) within our FMS segment. These expenditures primarily support the ChoiceLease and commercial rental product lines. The level of capital required to support the ChoiceLease product line varies based on customer contract signings for replacement vehicles and growth. These contracts are long-term agreements that result in predictable cash flows typically over three to seven years for trucks and tractors and ten years for trailers. We utilize capital for the purchase of vehicles in our commercial rental product line to replenish and expand the fleet available for shorter-term use by contractual or occasional customers. Operating property and equipment expenditures primarily relate to spending on items such as vehicle maintenance facilities and equipment, computer and telecommunications equipment, investments in technologies, and warehouse facilities and equipment.
The following table provides a summary of gross capital expenditures:

| Three months ended March 31,
| 2021 |  | 2020
| (In thousands)
Revenue earning equipment: |  |  |
ChoiceLease | $ | 217,113 |  |  | $ | 312,873 |
Commercial rental | 157,743 |  |  | 52,886 |
| 374,856 |  |  | 365,759 |
Operating property and equipment | 31,779 |  |  | 26,231 |
Gross capital expenditures (1) | 406,635 |  |  | 391,990 |
Changes in accounts payable related to purchases of property and revenue earning equipment | (25,584) |  |  | 38,970 |
Cash paid for purchases of property and revenue earning equipment | $ | 381,051 |  |  | $ | 430,960 |

————————————
(1)Gross capital expenditures excluded approximately $3 million and $4 million during the three months ended March 31, 2021 and 2020, respectively, of assets held under finance leases resulting from new or the extension of existing finance leases and other additions.
Gross capital expenditures increased 4% to $407 million in the first quarter of 2021 reflecting higher planned investments in the rental fleet, partially offset by lower lease expenditures as compared to the prior year period.
37

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
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 commercial paper and medium-term notes.
Cash and cash equivalents totaled $92 million as of March 31, 2021. As of March 31, 2021, approximately $54 million was held outside the U.S. and is available to fund operations and other growth of non-U.S. subsidiaries. If we decide to repatriate cash and cash equivalents held outside the U.S., we may be subject to additional income taxes and foreign withholding taxes. However, our intent is to permanently reinvest these foreign amounts outside the U.S. and our current plans do not demonstrate a need to repatriate these foreign amounts to fund our U.S. operations.
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, there can be no assurance that volatility and disruption in the public unsecured debt market or the commercial paper market would not impair our ability to access these markets on terms commercially acceptable to us or at all. If we cease to have access to public bonds, commercial paper and other sources of unsecured borrowings, we would meet our liquidity needs by drawing upon contractually committed lending agreements and/or by seeking other funding sources.
Refer to Note 9, “Debt,” in the Notes to Condensed Consolidated Financial Statements for information on our net worth covenant, global revolving credit facility, trade receivables 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 at March 31, 2021 were as follows:

| Rating Summary
| Short-term |  | Short-term Outlook |  |  | Long-term |  | Long-term Outlook
Standard & Poor’s Ratings Services | A2 |  | — |  |  | BBB |  | Stable
Moody’s Investors Service | P2 |  | Stable |  |  | Baa2 |  | Stable
Fitch Ratings | F2 |  | — |  |  | BBB+ |  | Negative
DBRS | R-1 (Low) |  | Negative |  |  | A (Low) |  | Negative

As of March 31, 2021, we had the following amounts available to fund operations under the following facilities:

| (In millions)
Global revolving credit facility | $ | 1,253 |
Trade receivables program | $ | 300 |

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 assets. We utilize both fixed-rate and variable-rate debt to achieve this alignment and generally target a mix of 20% - 40% va riable-rate debt as a percentage of total debt outstanding. The variable-rate portion of our total debt (including notional value of swap agreeme nts) was 7% and 9% as of March 31, 2021 and December 31, 2020, respectively.
Our debt to equity ratio was 280% and 293% as of March 31, 2021 and December 31, 2020, respectively. The debt to equity ratio represents total debt divided by total equity.
38

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Share Repurchases and Cash Dividends
Refer to Note 10, “Share Repurchase Programs,” in the Notes to Condensed Consolidated Financial Statements for a discussion of share repurchases.
In both February 2021 and 2020, our Board of Directors declared a quarterly cash dividend of $0.56 per share of common stock. The dividends were paid during the first quarter of each respective year.
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note 2, “Recent Accounting Pronouncements," in the Notes to Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements.
NON-GAAP FINANCIAL MEASURES
This Quarterly Report on Form 10-Q includes information extracted from c ondensed 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 our results and liquidity discussions above. We also provide the reasons why management believes each non-GAAP financial measure is useful to investors in this section.
39

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Specifically, we refer to the following non-GAAP financial measures in this Form 10-Q:

Non-GAAP Financial Measure | Comparable GAAP Measure
Operating Revenue Measures:
Operating Revenue | Total Revenue
FMS Operating Revenue | FMS Total Revenue
SCS Operating Revenue | SCS Total Revenue
DTS Operating Revenue | DTS Total Revenue
FMS EBT as a % of FMS Operating Revenue | FMS EBT as a % of FMS Total Revenue
SCS EBT as a % of SCS Operating Revenue | SCS EBT as a % of SCS Total Revenue
DTS EBT as a % of DTS Operating Revenue | DTS EBT as a % of DTS Total Revenue
Comparable Earnings Measures:
Comparable Earnings (Loss) Before Income Tax | Earnings (Loss) Before Income Tax
Comparable Earnings (Loss) | Earnings (Loss) from Continuing Operations
Comparable Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) | Net Earnings (Loss)
Comparable EPS | EPS from Continuing Operations
Comparable Tax Rate | Effective 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 Flow | Cash Provided by Operating Activities

40

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 System, Inc. or each business segment (FMS, SCS and DTS) excluding any (1) fuel and (2) subcontracted transportation, as well as (3) revenue from our ChoiceLease liability insurance program which was discontinued in early 2020. We believe operating revenue provides useful information to investors as we use it to evaluate the operating performance of our core businesses and as a measure of sales activity at the consolidated level for Ryder System, Inc., as well as for each of our business segments. We also use segment EBT as a percentage of segment operating revenue for each business segment for the same reason. Note: FMS EBT, SCS EBT and DTS EBT, our primary measures of segment performance, are not non-GAAP measures. Fuel: We exclude FMS, SCS and DTS fuel from the calculation of our operating revenue measures, as fuel is an ancillary service that we provide our customers, which 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 trailing market fuel costs. Subcontracted transportation: We exclude subcontracted transportation from the calculation of our operating revenue measures, as these services are also typically a pass-through to our customers and, therefore, fluctuations result in minimal changes to our profitability. While our SCS and DTS business segments subcontract certain transportation services to third party providers, our FMS business segment does not engage in subcontracted transportation and, therefore, this item is not applicable to FMS. ChoiceLease liability insurance: We exclude ChoiceLease liability insurance as we announced our plan in the first quarter of 2020 to exit the extension of our liability insurance coverage for ChoiceLease customers. The exit of this program was completed in the first quarter of 2021. We are excluding the revenues associated with this program for better comparability of our on-going operations.

41

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

Comparable Earnings Measures:
Comparable Earnings (Loss) before Income Taxes (EBT) Comparable Earnings (Loss) Comparable Earnings (Loss) 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) any other significant items that are not representative of our business operations. 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, which include the amortization of net actuarial loss and prior service cost, interest cost and expected return on plan assets components of pension and postretirement benefit costs, as well as any significant charges for settlements or curtailments if recognized. We exclude non-operating pension costs, net because we consider these to be impacted by financial market performance and outside the operational performance of our business. Other Items Impacting Comparability: Our comparable and adjusted earnings measures also exclude other significant items that are not representative of our business operations as detailed in the reconciliation table below. These other significant items vary from period to period and, in some periods, there may be no such significant items. Comparable tax rate is computed using the same methodology as the GAAP provision for income taxes. Income tax effects of non-GAAP adjustments are calculated based on the marginal tax rates to which the non-GAAP adjustments are related. Adjusted ROE is defined as adjusted net earnings divided by adjusted average shareholders' equity and represents the rate of return on shareholders' investment. Other items impacting comparability described above are excluded, as applicable, from the calculation of net earnings and average shareholders' equity. We use adjusted ROE as an internal measure of how effectively we use the owned capital invested in our operations.

42

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 (loss), 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 (loss), earnings (loss) from continuing operations before income taxes or earnings (loss) from continuing operations determined in accordance with GAAP, as an indicator of the Company’s 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 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.

43

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
The following table provides a reconciliation of GAAP earnings (loss) before taxes (EBT), earnings (loss), and earnings (loss) per diluted share (Diluted EPS) from continuing operations to comparable EBT, comparable earnings, and comparable EPS. Certain items included in EBT, earnings, and diluted EPS from continuing operations have been excluded from our comparable EBT, comparable earnings and comparable diluted EPS measures. The following table lists a summary of these items, which are discussed in more detail throughout our MD&A and within the Notes to Condensed Consolidated Financial Statements:

|  | Continuing Operations |  |  |  |
|  | Three months ended March 31, |  |  |  |
|  | 2021 |  | 2020 |  |  |  |
|  | (In thousands, except per share amounts)
EBT |  | $ | 70,267 |  |  | $ | (113,634) |  |  |  |  |
Non-operating pension costs, net |  | (9) |  |  | 1,221 |  |  |  |  |
Restructuring and other, net (1) |  | 3,028 |  |  | 20,621 |  |  |  |  |
ERP implementation costs (1) |  | 7,631 |  |  | 10,326 |  |  |  |  |
Gains on sale of properties (1) |  | (1,505) |  |  | — |  |  |  |  |
ChoiceLease liability insurance revenue (1) |  | (777) |  |  | (9,358) |  |  |  |  |
Comparable EBT |  | $ | 78,635 |  |  | $ | (90,824) |  |  |  |  |
Earnings (loss) |  | $ | 51,584 |  |  | $ | (109,129) |  |  |  |  |
Non-operating pension costs, net |  | (755) |  |  | 100 |  |  |  |  |
Restructuring and other, net (including ChoiceLease liability insurance results) (1) |  | 2,579 |  |  | 8,898 |  |  |  |  |
ERP implementation costs (1) |  | 5,666 |  |  | 7,664 |  |  |  |  |
Gains on sale of properties (1) |  | (1,187) |  |  | — |  |  |  |  |
Tax adjustments, net (2) |  | 303 |  |  | 20,363 |  |  |  |  |
Comparable Earnings |  | $ | 58,190 |  |  | $ | (72,104) |  |  |  |  |
Diluted EPS |  | $ | 0.97 |  |  | $ | (2.09) |  |  |  |  |
Non-operating pension costs, net |  | (0.01) |  |  | — |  |  |  |  |
Restructuring and other, net (including ChoiceLease liability insurance results) (1) |  | 0.03 |  |  | 0.17 |  |  |  |  |
ERP implementation costs (1) |  | 0.11 |  |  | 0.15 |  |  |  |  |
Gains on sale of properties (1) |  | (0.02) |  |  | — |  |  |  |  |
Tax adjustments, net (2) |  | 0.01 |  |  | 0.39 |  |  |  |  |
Comparable EPS |  | $ | 1.09 |  |  | $ | (1.38) |  |  |  |  |

————————————
(1)Refer to Note 15, “Other Items Impacting Comparability,” in the Notes to Condensed Consolidated Financial Statements for additional information.
(2)Refer to the reconciliation of the comparable provision for income taxes table below for information on adjustments related to tax matters.
44

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
The following table provides a reconciliation of the provision for income taxes and effective tax rate to the comparable provision for income taxes and comparable tax rate:

| Three months ended March 31, |  |
| 2021 |  | 2020 |  |  |  |
| (In thousands)
Provision for (benefit from) income taxes | $ | 18,683 |  |  | $ | (4,505) |  |  |  |  |
Tax adjustments, net (2) | (303) |  |  | (20,363) |  |  |  |  |
Income tax effects of non-GAAP adjustments (1) | 2,065 |  |  | 6,148 |  |  |  |  |
Comparable provision for (benefit from) income taxes (1) | $ | 20,445 |  |  | $ | (18,720) |  |  |  |  |
Effective tax rate on continuing operations (3) | 26.6% |  | (4.0)% |  |  |  |
Tax adjustments and income tax effects of non-GAAP adjustments (1) (2) | (0.6)% |  | (16.6)% |  |  |  |
Comparable tax rate on continuing operations (1) (3) | 26.0% |  | (20.6)% |  |  |  |

————————————
(1)The comparable provision for income taxes is computed using the same methodology as the GAAP provision of 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.
(2)In the first quarter of 2021, we recorded tax expense related to expiring state net operating losses. In the first quarter of 2020, we recorded tax expenses of $7 million and $13 million related to expiring state net operating losses and a valuation allowance on our U.K. deferred tax assets, respectively.
(3)The effective tax rate on continuing operations and comparable tax rate are based on EBT and comparable EBT, respectively, found on the previous page.
The following table provides a reconciliation of earnings (loss) to comparable EBITDA:

|  | Three months ended March 31,
|  | 2021 |  | 2020
|  | (In thousands)
Net earnings (loss) |  | $ | 50,825 |  |  | $ | (109,613) |
(Earnings) loss from discontinued operations, net of tax |  | 759 |  |  | 484 |
Provision for (benefit from) income taxes |  | 18,683 |  |  | (4,505) |
EBT |  | 70,267 |  |  | (113,634) |
Non-operating pension costs, net |  | (9) |  |  | 1,221 |
Other items impacting comparability, net (1) |  | 8,377 |  |  | 21,589 |
Comparable EBT |  | 78,635 |  |  | (90,824) |
Interest expense |  | 54,706 |  |  | 62,566 |
Depreciation |  | 461,161 |  |  | 523,223 |
Used vehicle sales, net (2) (3) |  | (28,851) |  |  | 20,684 |
Amortization |  | 1,764 |  |  | 2,045 |
Comparable EBITDA(3) |  | $ | 567,415 |  |  | $ | 517,694 |

————————————
(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 15,“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.
(3)Comparable EBITDA has been recast to exclude gains/losses from the sale of used vehicles.
45

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

| Three months ended March 31, |  |
| 2021 |  | 2020 |  |  |  |
| (In thousands)
Total revenue | $ | 2,221,622 |  |  | $ | 2,161,306 |  |  |  |  |
Subcontracted transportation | (231,271) |  |  | (201,953) |  |  |  |  |
Fuel | (172,211) |  |  | (178,748) |  |  |  |  |
ChoiceLease liability insurance revenue (1) | (777) |  |  | (9,358) |  |  |  |  |
Operating revenue | $ | 1,817,363 |  |  | $ | 1,771,247 |  |  |  |  |

————————————
(1)In the first quarter of 2020, we announced our plan to exit the extension of our liability insurance coverage for ChoiceLease customers. The exit of this program was completed in the first quarter of 2021.
The following table provides a reconciliation of FMS total revenue to FMS operating revenue:

| Three months ended March 31, |  | Twelve months ended March 31, |  |
| 2021 |  | 2020 |  | 2021 |  | 2020 |  |  |  |
| (In thousands)
FMS total revenue | $ | 1,335,485 |  |  | $ | 1,340,237 |  |  | $ | 5,165,715 |  |  | $ | 5,560,041 |  |  |  |  |
Fuel (1) | (166,595) |  |  | (173,335) |  |  | (562,334) |  |  | (781,831) |  |  |  |  |
ChoiceLease liability insurance revenue (2) | (777) |  |  | (9,358) |  |  | (15,236) |  |  | (36,098) |  |  |  |  |
FMS operating revenue | $ | 1,168,113 |  |  | $ | 1,157,544 |  |  | $ | 4,588,145 |  |  | $ | 4,742,112 |  |  |  |  |
FMS EBT | $ | 63,402 |  |  | $ | (114,574) |  |  | $ | 36,019 |  |  | $ | (245,759) |  |  |  |  |
FMS EBT as a % of FMS total revenue | 4.7% |  | (8.5)% |  | 0.7% |  | (4.4)% |  |  |  |
FMS EBT as a % of FMS operating revenue | 5.4% |  | (9.9)% |  | 0.8% |  | (5.2)% |  |  |  |

————————————
(1)Includes intercompany fuel sales from FMS to DTS and SCS.
(2)In the first quarter of 2020, we announced our plan to exit the extension of our liability insurance coverage for ChoiceLease customers. The exit of this program was completed in the first quarter of 2021.
The following table provides a reconciliation of SCS total revenue to SCS operating revenue:

| Three months ended March 31, |  | Twelve months ended March 31, |  |
| 2021 |  | 2020 |  | 2021 |  | 2020 |  |  |  |
| (In thousands)
SCS total revenue | $ | 706,700 |  |  | $ | 628,447 |  |  | $ | 2,622,673 |  |  | $ | 2,544,047 |  |  |  |  |
Subcontracted transportation | (180,134) |  |  | (135,728) |  |  | (638,343) |  |  | (562,411) |  |  |  |  |
Fuel | (23,968) |  |  | (25,408) |  |  | (78,677) |  |  | (111,449) |  |  |  |  |
SCS operating revenue | $ | 502,598 |  |  | $ | 467,311 |  |  | $ | 1,905,653 |  |  | $ | 1,870,187 |  |  |  |  |
SCS EBT | $ | 32,957 |  |  | $ | 31,025 |  |  | $ | 161,872 |  |  | $ | 143,768 |  |  |  |  |
SCS EBT as a % of SCS total revenue | 4.7% |  | 4.9% |  | 6.2% |  | 5.7% |  |  |  |
SCS EBT as a % of SCS operating revenue | 6.6% |  | 6.6% |  | 8.5% |  | 7.7% |  |  |  |

46

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

| Three months ended March 31, |  | Twelve months ended March 31, |  |
| 2021 |  | 2020 |  | 2021 |  | 2020 |  |  |  |
| (In thousands)
DTS total revenue | $ | 320,507 |  |  | $ | 334,888 |  |  | $ | 1,214,993 |  |  | $ | 1,402,750 |  |  |  |  |
Subcontracted transportation | (51,137) |  |  | (66,225) |  |  | (176,819) |  |  | (288,914) |  |  |  |  |
Fuel | (32,531) |  |  | (31,978) |  |  | (108,773) |  |  | (140,077) |  |  |  |  |
DTS operating revenue | $ | 236,839 |  |  | $ | 236,685 |  |  | $ | 929,401 |  |  | $ | 973,759 |  |  |  |  |
DTS EBT | $ | 12,982 |  |  | $ | 12,180 |  |  | $ | 74,244 |  |  | $ | 75,917 |  |  |  |  |
DTS EBT as a % of DTS total revenue | 4.1% |  | 3.6% |  | 6.1% |  | 5.4% |  |  |  |
DTS EBT as a % of DTS operating revenue | 5.5% |  | 5.1% |  | 8.0% |  | 7.8% |  |  |  |

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 March 31, |  |  |  |
|  | 2021 |  | 2020 |  |  |  |
|  | (In thousands)
Net earnings (loss) (12-month rolling period) |  | $ | 38,189 |  |  | $ | (179,384) |  |  |  |  |
Other items impacting comparability, net (4) |  | 77,168 |  |  | 53,365 |  |  |  |  |
Income taxes (1) |  | 4,856 |  |  | (45,721) |  |  |  |  |
Adjusted earnings (loss) before income taxes |  | 120,213 |  |  | (171,740) |  |  |  |  |
Adjusted income taxes (2) |  | (18,657) |  |  | 53,243 |  |  |  |  |
Adjusted net earnings (loss) [A] |  | $ | 101,556 |  |  | $ | (118,497) |  |  |  |  |
Average shareholders’ equity |  | $ | 2,217,505 |  |  | $ | 2,474,100 |  |  |  |  |
Average adjustments to shareholders’ equity (3) |  | 54,758 |  |  | 17,738 |  |  |  |  |
Adjusted average shareholders’ equity [B] |  | $ | 2,272,263 |  |  | $ | 2,491,838 |  |  |  |  |
Adjusted return on equity [A/B] |  | 4.5% |  | (4.8)% |  |  |  |

————————————
(1)Includes income taxes on discontinued operations.
(2)Represents provision for income taxes plus income taxes on other items impacting comparability.
(3)Represents the impact of other items impacting comparability, net of tax, to equity for the respective period.
(4)Refer to the table below for a composition of Other items impacting comparability, net for the 12-month rolling period:

|  | Twelve months ended March 31, |  |  |  |
|  | 2021 |  | 2020 |  |  |  |
|  | (In thousands)
Restructuring and other, net |  | $ | 58,772 |  |  | $ | 53,341 |  |  |  |  |
ERP Implementation costs |  | 31,556 |  |  | 27,996 |  |  |  |  |
Gains on sale of properties |  | (6,923) |  |  | (18,614) |  |  |  |  |
Early redemption of medium-term notes |  | 8,999 |  |  | — |  |  |  |  |
ChoiceLease liability insurance revenue |  | (15,236) |  |  | (9,358) |  |  |  |  |
Other items impacting comparability, net |  | $ | 77,168 |  |  | $ | 53,365 |  |  |  |  |

47

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
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 regarding the impact of COVID-19 on our business and financial results including revenue and cash flow;
•our expectations in our FMS business segment regarding anticipated ChoiceLease revenue, fleet growth and earnings and commercial rental revenue and demand;
•our expectations in our SCS and DTS business segments regarding anticipated operating revenue, trends, earnings, sales activity and growth rates;
•our expectations of the long-term residual values of revenue earning equipment;
•the expected pricing for used vehicles and vehicle replacement parts;
•our expectations of cash flow from operating activities, free cash flow, and capital expenditures through the end of 2021;
•the adequacy of our accounting estimates and reserves for pension expense, compensation expense and employee benefit plan obligations, depreciation and residual value guarantees, goodwill impairment, accounting changes, and income taxes;
•our expected future contractual cash obligations and commitments;
•the adequacy of our fair value estimates of employee incentive awards under our share-based compensation plans, 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;
•the anticipated impact of fuel price and exchange rate fluctuations;
•our expectations as to return on pension plan assets, future pension expense and estimated contributions;
•our expectations regarding the scope and anticipated outcomes with respect to certain claims, proceedings and lawsuits;
•the ultimate disposition of estimated environmental liabilities;
•our ability to access commercial paper and other available debt financing in the capital markets;
•the size and impact of our strategic investments;
•our expectations regarding the achievement of our return on equity improvement initiatives;
•our expectations regarding the diminishing impact of prior residual value estimate changes on return on equity improvement;
•our expectations regarding maintenance costs and the benefits of maintenance cost initiatives;
•our expectations regarding the benefits of terminating lease insurance;
•our expectations regarding the adequacy of credit reserves;
•the status of our unrecognized tax benefits related to the U.S. federal, state and foreign tax positions;
48

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
•our estimates for self-insurance loss reserves;
•our expectations regarding losses under guarantees;
•our expectation on the realizability of our deferred tax assets; and
•our expectations regarding the completion and ultimate outcome of certain tax audits.
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 include, but are not limited to, 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 that 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 serviced by our SCS business.
◦Changes in current financial, tax or regulatory requirements that could negatively impact our financial results.
•Competition:
◦Advances in technology may impact demand for our services or may require increased investments to remain competitive.
◦Competition from other service providers, who 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 in which we operate, which may create large competitors with greater financial resources.
◦Our inability to maintain current pricing levels due to economic conditions, demand for services, customer acceptance or competition.
•Profitability:
◦Our inability to obtain adequate profit margins for our services.
◦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.
◦Our inability to adapt our product offerings to meet changing consumer preferences on a cost-effective basis.
◦The inability of our legacy information technology systems to provide timely access to data.
◦Sudden changes in fuel prices and fuel shortages.
49

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
◦Higher prices for vehicles, diesel engines and fuel as a result of new regulations.
◦Higher than expected maintenance costs and lower than expected benefits associated with our maintenance initiatives.
◦Lower than expected revenue growth due to production delays at our automotive SCS customers, primarily related to the worldwide semiconductor supply shortage.
◦The inability of an OEM or supplier to provide vehicles or components, primarily related to the worldwide semiconductor supply shortage.
◦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 of our SCS and DTS contracts prove to be inaccurate.
◦Increased unionizing, labor strikes and work stoppages.
◦Difficulties in attracting and retaining drivers and technicians due to driver and technician 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 natural occurrences.
•Financing Concerns:
◦Higher borrowing costs.
◦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.
◦Withdrawal liability as a result of our participation in multi-employer plans.
◦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.
◦Difficulties and delays in implementing our Enterprise Resource Planning system and related processes.
•Other risks detailed from time to time in our SEC filings including our 2020 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.
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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, 2020. Please refer to the 2020 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 first quarter of 2021, 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 first quarter of 2021, 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 Controls over Financial Reporting
During the three months ended March 31, 2021, 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 see Item 1, Note 16, “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, 2020, filed with the SEC on February 19, 2021. 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 March 31, 2021:

| 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 Anti-Dilutive Program (2)
January 1 through January 31, 2021 | 9,194 |  |  | $ | 61.76 |  |  | — |  |  | 863,002 |
February 1 through February 28, 2021 | 418,003 |  |  | 67.07 |  |  | 287,957 |  |  | 575,045 |
March 1 through March 31, 2021 | 143 |  |  | 75.48 |  |  | — |  |  | 575,045 |
Total | 427,340 |  |  | $ | 66.96 |  |  | 287,957 |  |  |

————————————
(1)During the three months ended March 31, 2021, we purchased an aggregate of 139,383 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 employees' 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)In December 2019, our Board of Directors authorized a new share repurchase program intended to mitigate the dilutive impact of shares issued under our employee stock plans. Under the December 2019 program, we are authorized to repurchase up to 1.5 million shares of common stock issued to employees under our employee stock plans from December 1, 2019 to December 11, 2021. Share repurchases are made periodically in open-market transactions using the Company's working capital, and are subject to market conditions, legal requirements, and other factors. In addition, we have been granted the authority to establish prearranged written trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934 as part of the repurchase program.
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ITEM 6. EXHIBITS

Exhibit Number |  | Description
31.1 |  | Certification of Robert E. Sanchez pursuant to Rule 13a-14(a) or Rule 15d-14(a)
31.2 |  | Certification of Scott T. Parker pursuant to Rule 13a-14(a) or Rule 15d-14(a)
32 |  | Certification of Robert E. Sanchez and Scott T. Parker pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C Section 1350
101.INS |  | XBRL 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.SCH |  | XBRL Taxonomy Extension Schema Document
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

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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: | April 28, 2021 | By: | /s/ SCOTT T. PARKER
|  |  | Scott T. Parker
|  |  | Executive Vice President and Chief Financial Officer
|  |  | (Principal Financial Officer)
Date: | April 28, 2021 | By: | /s/ CRISTINA GALLO-AQUINO
|  |  | Cristina Gallo-Aquino
|  |  | Senior Vice President and Controller
|  |  | (Principal Accounting Officer)

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