Ryder System, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This 10-K reports annual results; it does not provide a standalone Q4 summary in the supplied filing text. Ryder provides fleet management, supply chain logistics and dedicated transportation services.
Financial performance
| Metric | FY2022 | FY2021 |
|---|---|---|
| Total revenue | $12.011 billion | $9.663 billion |
| Operating revenue (non-GAAP) | $9.280 billion | $7.828 billion |
| Continuing-operations pre-tax earnings | $1.216 billion | $693 million |
| Continuing-operations earnings | $863 million | $522 million |
| Diluted continuing-operations EPS | $16.96 | $9.70 |
| Comparable diluted EPS (non-GAAP) | $16.37 | $9.58 |
| Cash from operating activities | $2.310 billion | $2.175 billion |
| Free cash flow (non-GAAP) | $921 million | $1.057 billion |
Revenue increased 24% and operating revenue increased 19%. Higher used-vehicle gains, rental performance, pricing and segment growth drove earnings improvement. Used-vehicle sales, net, contributed $450 million in gains, including $49 million associated with the U.K. exit. Lease and related maintenance/rental gross margin rose to 34% from 28%; services gross margin increased to 14% from 13%. Fuel services gross margin remained 3%.
- FMS: Revenue was $6.327 billion (+11%); segment EBT was $1.054 billion (+59%). Strong used-vehicle results and rental demand/utilization were key contributors. Rental power-fleet utilization was 83%, compared with 80%.
- SCS: Revenue was $4.720 billion (+50%); segment EBT was $186 million (+59%). Acquisitions, new business, pricing and volumes supported growth; EBT margin on operating revenue was 5.7%, up from 5.3%.
- DTS: Revenue was $1.786 billion (+23%); segment EBT was $102 million (+108%). Pricing, new business and higher volumes improved results; EBT margin on operating revenue was 8.2%, up from 4.6%.
Cash, debt and liquidity
Capital expenditures were $2.652 billion, up from $2.012 billion. Cash from investing activities was negative $1.850 billion and cash from financing activities was negative $861 million. Year-end cash and cash equivalents were $267 million. Total debt was $6.352 billion, versus $6.580 billion a year earlier; debt-to-equity was 216%, down from 235%. Ryder reported $727 million available under its revolving credit facility and $168 million under its receivables financing program. The current portion of debt was $1.349 billion.
Material changes, outlook and risks
- Ryder acquired Whiplash and other businesses during 2022, expanding SCS e-commerce and omnichannel fulfillment. Cash consideration for acquisitions, net of cash acquired, was $458 million in the cash-flow statement.
- Ryder substantially completed its FMS U.K. wind-down by year-end, selling more than 90% of U.K. revenue-earning equipment and operating property and receiving approximately $400 million in proceeds. It expected to complete the remaining exit in 2023 and anticipated a material foreign-currency cumulative translation adjustment loss, with no expected effect on consolidated financial position or cash flows.
- Management expected 2023 operating cash flow of approximately $2.4 billion, capital expenditures of approximately $3.0 billion and free cash flow of approximately $200 million. It anticipated strong but reduced earnings, with weaker used-vehicle and rental results amid a slowing economy, partly offset by tight vehicle capacity. These are forecasts, not reported results.
- Key risks include economic and freight-market cyclicality; volatile used-vehicle residual values; inflation, labor shortages and subcontracted transportation costs; OEM supply constraints; customer and industry concentration in SCS and DTS; competition; interest rates and capital-market access; safety, environmental and regulatory obligations; and cybersecurity risks.
- Residual values are a particularly significant estimate: management said a hypothetical 10% reduction in fleet residual values would increase depreciation over the fleet’s remaining life by approximately $320 million. The auditor identified residual values as a critical audit matter.
- A securities class action concerning historical residual-value disclosures remained pending; the court denied the defendants’ motion to dismiss, with trial scheduled to begin in June 2024. Ryder said it believed the claims were without merit. Management stated that ordinary-course claims, in aggregate, were not expected to materially affect consolidated financial condition or liquidity.
Investor verification priorities
- Track used-vehicle prices, residual-value assumptions, depreciation and gains on vehicle disposals as market conditions normalize.
- Compare 2023 guidance with actual operating cash flow, capital spending and free cash flow, including the effect of vehicle-delivery delays.
- Assess debt maturities, borrowing costs, facility availability and liquidity against the capital intensity of FMS.
- Review SCS/DTS customer concentration, labor-cost recovery and acquisition integration, including the contribution from Whiplash.
- Monitor completion and financial effects of the U.K. exit, and developments in the securities litigation.
Operating revenue, comparable EPS and free cash flow are non-GAAP measures; Ryder cautions that they supplement, and are not substitutes for, GAAP measures.