RYDER SYSTEM INC (R)

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:

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(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)Includes capital expenditures that have been accrued, but not yet paid.

(3)Represents total debt divided by total equity.

Total revenue increased 5% in the second quarter of 2026, and 2% in the six months ended June 30, 2026, reflecting higher operating revenue and fuel revenue due to higher prices passed through to customers. Operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation) increased 3% in the second quarter of 2026, and 2% for the six months ended June 30, 2026, reflecting contractual revenue growth in SCS and FMS, partially offset by lower DTS fleet count.

EBT and comparable EBT increased in the second quarter primarily due to improved FMS performance, partially offset by lower SCS results and a non-cash intangible asset impairment charge. The increase in EBT was also partially offset by an $8 million non-cash charge for the partial settlement of our Canadian pension plan’s projected benefit obligation.

EBT and comparable EBT decreased in the six months ended June 30, 2026. The decrease in EBT is primarily due to lower SCS results and a non-cash intangible asset impairment charge, partially offset by improved FMS performance. The decrease in EBT also includes an $8 million non-cash charge for the partial settlement of our Canadian pension plan’s projected benefit obligation.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

CONSOLIDATED RESULTS

Services

Services revenue represents all the revenues associated with our SCS and DTS business segments, including subcontracted transportation and fuel, as well as SelectCare and fleet support services associated with our FMS business segment. Services revenue increased 5% in the second quarter and increased 2% in the six months ended June 30, 2026, primarily driven by new business in SCS.

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, lease expense, insurance and maintenance costs. Cost of services increased slightly more than revenue for the three and six months ended June 30, 2026, primarily due to costs incurred to ramp up new business in SCS.

Services gross margin increased slightly in the second quarter and remained consistent for the six months ended June 30, 2026. Service gross margin percentage slightly decreased in the second quarter and remained consistent for the six months ended June 30, 2026.

Lease & Related Maintenance and Rental

Lease & related maintenance and rental revenue represent revenue from our ChoiceLease and commercial rental product offerings within our FMS business segment. Revenue increased 1% in the second quarter and for the six months ended June 30, 2026, reflecting contractual revenue growth, partially offset by lower rental demand.

Cost of lease & related maintenance and rental represents the direct costs related to Lease & related maintenance and rental revenue and is 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 increased 2% in the second quarter and six months ended June 30, 2026, primarily reflecting revenue growth and higher maintenance and insurance costs.

Lease & related maintenance and rental gross margin decreased 2% in the second quarter and the six months ended June 30, 2026, due to higher maintenance and insurance costs. Lease & related maintenance and rental gross margin percentage slightly decreased in the second quarter primarily due to higher maintenance costs and remained consistent for the six months ended June 30, 2026.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Fuel Services

Fuel services revenue represents fuel services provided to our FMS customers. Fuel services revenue increased 45% in the second quarter and increased 24% in the six months ended June 30, 2026, primarily reflecting higher fuel prices passed through to customers.

Cost of fuel services includes the direct costs associated with providing our customers with fuel. These costs include fuel, salaries and employee-related costs of fuel island attendants and depreciation of our fueling facilities and equipment. Cost of fuel services increased 48% in the second quarter and increased 23% in the six months ended June 30, 2026, primarily due to higher fuel prices.

Fuel services gross margin and fuel services gross margin as a percentage of revenue decreased in the second quarter and increased for the six months ended June 30, 2026. Fuel is largely a pass-through to customers for which we realize minimal changes in margin during periods of steady market fuel prices. However, fuel services margin is impacted by sudden increases or decreases in market fuel prices during a short period of time, as customer pricing for fuel is established based on current market fuel costs. Fuel services gross margin and fuel services gross margin as a percentage of revenue in the second quarter of 2026 were positively impacted by these price change dynamics but were impacted more favorably in the prior year. Fuel services gross margin and fuel services gross margin as a percentage of revenue for the six months ended June 30, 2026 were positively impacted by these price change dynamics.

Selling, General and Administrative Expenses

SG&A expenses increased 3% in the second quarter of 2026 and for the six months ended June 30, 2026, primarily reflecting a non-cash impairment charge related to an intangible asset and higher compensation-related expenses. SG&A expenses as a percentage of total revenue remained consistent at 12% for the second quarter and for the six months ended June 30, 2026.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS — (Continued)

Non-Operating Pension Costs, net

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NM - Denotes Not Meaningful throughout the MD&A

"Non-operating pension costs, net" include the amortization of net actuarial loss and prior service cost, interest cost and expected return on plan assets components of pension and postretirement benefit costs, as well as any significant charges for settlements or curtailments if recognized. The second quarter of 2026 and the six months ended June 30, 2026, includes an $8 million non-cash charge for the partial settlement of our Canadian pension plan’s projected benefit obligation. Refer to Note 13, Employee Benefit Plans," for further discussion.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Trends

During 2025, the strength and resiliency of our transformed business model as well as consistent execution of strategic initiatives delivered earnings growth and helped mitigate the impact of weak market conditions on used vehicle sales and commercial rental demand. The continued execution of our strategic initiatives focused on lease pricing, maintenance cost savings, acquisitions synergies and optimization of our Omnichannel network drove contractual earnings growth in all business segments.

We continue to benefit from favorable long-term secular trends in logistics and transportation solutions; however, we are experiencing near-term revenue growth headwinds that reflect the extended freight downturn and overall economic uncertainty. These favorable secular trends and the value our solutions bring to our customers remain strong and provide long-term revenue and earnings growth opportunities for all of our business segments. Our balanced growth strategy provides a solid foundation for ongoing contractual earnings growth while also positioning us to benefit from a cycle upturn. In 2026, we are well positioned for growth in SCS as we achieved record sales in 2025. In FMS and DTS, we expect contractual sales trends to improve as freight markets normalize.

While we are experiencing positive momentum in our businesses, other unknown effects from inflationary cost pressures, regulatory uncertainty, labor interruptions, introduction of tariffs and taxes, and the continued higher interest rate environment may negatively impact demand for our business, financial results, and significant judgments and estimates.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS SUMMARY

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(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)Book value per share is calculated using Total shareholders’ equity divided by common shares outstanding.

(3)Includes capital expenditures that have been accrued, but not yet paid.

In 2025, total revenue was $12.7 billion, consistent with prior year. Operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation) increased 1% to $10.4 billion, primarily reflecting contractual revenue growth in SCS and FMS.

EBT increased to $685 million and comparable EBT (a non-GAAP measure) increased to $730 million, primarily due to higher contractual earnings, partially offset by lower used vehicle sales and rental results reflecting weaker market conditions.

FULL YEAR CONSOLIDATED RESULTS

Services

Services revenue represents all the revenues associated with our SCS and DTS business segments, including subcontracted transportation and fuel, as well as SelectCare and fleet support services associated with our FMS business segment. Services revenue in 2025, remained consistent with prior year as new business and higher customer volumes in SCS was largely offset by lost business in DTS.

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, lease expense, insurance and maintenance costs. Cost of services in 2025 remained consistent with the prior year.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Services gross margin and gross margin as a percentage remained consistent in 2025.

Lease & Related Maintenance and Rental

Lease & related maintenance and rental revenue represent revenue from our ChoiceLease and commercial rental product offerings within our FMS business segment. Revenue increased 1% in 2025, reflecting ChoiceLease revenue growth, partially offset by lower rental demand.

Cost of lease & related maintenance and rental represents the direct costs related to Lease & related maintenance and rental revenue and are comprised of depreciation of revenue earning equipment, maintenance costs (primarily repair parts and labor), and other costs such as licenses, insurance and operating taxes. Cost of lease & related maintenance and rental excludes interest costs from vehicle financing, which are reported within "Interest expense" in our Consolidated Statements of Earnings. Cost of lease & related maintenance and rental decreased 1% in 2025, primarily reflecting lower maintenance costs and a smaller lease and rental fleet.

Lease & related maintenance and rental gross margin and gross margin as a percentage of revenue increased primarily due to higher ChoiceLease pricing and maintenance cost-savings initiatives.

Fuel Services

Fuel services revenue represents fuel services provided to our FMS customers. Fuel services revenue decreased 11% in 2025, primarily reflecting lower fuel costs passed through to customers and fewer gallons sold.

Cost of fuel services includes the direct costs associated with providing our customers with fuel. These costs include fuel, salaries and employee-related costs of fuel island attendants and depreciation of our fueling facilities and equipment. Cost of fuel services decreased 11% in 2025, reflecting lower fuel costs and fewer gallons sold.

Fuel services gross margin remained consistent and gross margin as a percentage of revenue increased in 2025. Fuel is largely a pass-through to customers for which we realize minimal changes in margin during periods of steady market fuel prices. However, fuel services margin is impacted by sudden increases or decreases in market fuel prices during a short period of time, as customer pricing for fuel is established based on current market fuel costs. Fuel services gross margin as a percentage of revenue was positively impacted by these price change dynamics in 2025.

Selling, General and Administrative Expenses

SG&A expenses decreased 1% primarily reflecting lower travel expenses and acquisition synergies, partially offset by higher medical costs. SG&A expenses as a percentage of total revenue remained at 12% in 2025.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Non-Operating Pension Costs, net

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 19, "Employee Benefit Plans" for further discussion.

Used Vehicle Sales, net

Used vehicle sales, net includes gains or losses from sales of used vehicles, selling costs associated with used vehicles and write-downs of vehicles held for sale to fair market value (referred to as "valuation adjustments"). Used vehicle sales, net decreased in 2025, due to lower pricing and volume, reflecting weaker market conditions, and lower retail sales mix.

Average proceeds per unit decreased in 2025 from the prior year. The following table presents the average used vehicle proceeds per unit changes, using constant currency, compared with the prior year:

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(1) Represents percentage change compared to prior year period in average sales proceeds on used vehicle sales using constant currency.

Interest Expense

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