R 10-K & 10-Q changes, risk factors and insider trading

The transportation industry is highly cyclical and susceptible to trends in economic activity. Our business relies on the strength of our customers' businesses and their level of confidence in current and future economic conditions. In our FMS business, vehicles are leased or rented to customers that transport goods commercially, hence, the demand for our products and services is directly tied to the production and sale of goods by our customers, and more generally, the health of the North American economy. In our SCS and DTS businesses, our logistics and transportation services are tied to the demand offor our customers' goods. If demand for our customers' products declines,declines such as due to increased prices as a result of tariffs, our customers may experience a decline in volumes, which may impact our financial results. As a result, our business may begin to slow before overall market slowdowns, at the point of customer uncertainty, and may recover later than overall market recoveries, as our customers may continue to feel uncertain about future market conditions. If uncertainty around macroeconomic conditions and the transportation and logistics industries increase,increases, such as due to recessionary conditions, changes in international trade policy, labor shortages, tariffs, interest rate fluctuationsfluctuations, inflationary pressures or inflationarychanges pressures,in technology, our future growth prospects, business and results of operations could be materially adversely affected.

Among our services and product offerings, demand for used vehicles, rental and contractual servicessales are particularly susceptible to changes in economic and market conditions. In a weak or volatile economy (such as during an economic recession or downturn), our customers may not need additional vehicles, may experience reduced shipping or warehousing needs, or are often unwilling to commit or unable to fulfill long-term contracts. For example, we make real estate commitments to support our SCS multi-clientmulti client warehouse network based on anticipated customer demand to drive the highest level of utilization and revenue per warehouse. If customer demand is lower than expected we miss our projections andmay have excess capacity in our warehouses,warehouses. itThis could result in a decrease in revenue that could adversely affect our financial condition and operating results. Accordingly, any sustained weakness in demand or a protracted economic downturn can negatively impact performance and operating results in used vehicle sales, rental and contractual services across our business segments.

Any material decrease in residual value accounting estimates could have a material adverse impact on our financial results. In the past, we have realized losses on sales of used vehicles at the end of a vehicle's useful life when our residual value estimates were above used vehicle market prices such as due to rapidly changing market conditions. In addition, when we have materially decreased residual value estimates, our earnings over the vehicle's remaining useful life have decreased due to an increase in depreciation expense. Alternatively, we may realize gains on sales of used vehicles at the end of a vehicle's useful life when our residual value estimates are below used vehicle market prices. While management determines residual value estimates with the goal of minimizing losses on sales of used vehicles and to record the best estimate of fair value at the end of a vehicle's useful life, there is no assurance our residual value estimates will be at or below used vehicle market sales.prices.

For a detailed discussion on our accounting policies and assumptions relating to depreciation and residual values, please see "Critical Accounting Estimates - Vehicle Residual Value Estimates and DepreciationValues" in Management's Discussion and Analysis of Financial Condition and Results of Operations.

If we are incorrect in our operational assumptions, or, as a result of subsequent changes in customer demand or other market forces that are outside of our control, these assumptions prove to be invalid, we could have lower margins than anticipated in a contract or segment, lose business, or be unable to offer competitive products and services. Although these contracts include indexed price escalation clauses or permit renegotiation upon a material change, there is no assurance that we will be successful in obtaining the necessary price adjustments or that pricing will be sufficient to cover the risk. For example, our SCS and DTS services are highly customized and offer a high degree of specialization to meet the needs of our customers. We may not be able to adjust the pricing terms in some of our SCS and DTS contracts in the event any of our assumptions prove to be invalid. As a result, if we do not accurately predict our costs to execute SCS or DTS contracts, it could result in a significant decrease in revenue or loss that could adversely affect our operating results and financial condition.

Our business is highly susceptible to disruptions in global supply chains as our services are directly tied to the production and sale of goods. Disruptions in global supply chains have impacted each of our business segments as the supply and demand of commercial vehicles and vehicle parts directly impacts our FMS business, and the production and supply of certain goods impacts the businesses of our customers in SCS and DTS, and therefore our own business. Measures implemented in response to public health crises, geopolitical developments, labor strikes, and changes in international trade policy, among others, may disrupt global supply chains which may then adversely affect our business and results of operations.

To the extent that customers are prohibited from continuing or are unable to continue their operations, whether due to measures implemented in response to a public health or safety crisis or to labor strikes or geopolitical developments, our business and results of operations may be adversely affected. For example, when COVID-19 measures prohibited many of our customers from continuing their operations, our business was initially adversely impacted because we experienced lower demand for commercial rental and used vehicles in our FMS business and reduced volumes in our SCS business. On the other hand, whenWhen global supply chain disruptions later caused a semiconductor shortage, we then experienced a significant increase in demand for rental and used vehicles, as well as lease, due to the limited supply of commercial vehicles. However, if there is a limited supply of commercial vehicles for an extended period of time, we may experience limited rental and lease fleet growth and have a limited inventory of used vehicles for sale during an extended period of limited supply of commercial vehicles. After a period of limited commercial vehicle supply, ifIf OEMs then produce an oversupply of new commercial vehicles, our FMS business may experience reduced rental demand and used vehicle salessales. in the future. In addition,Moreover, when global supply chains have been disrupted, we have experienced increased inflationary pressures that increased costs in certain other areas like payroll, real estate or lease costs and other third-party services.

We make significant investments in vehicles to support our rental business based on anticipated customer demand. We make commitments to purchase the vehicles many months in advance of the expected use of the vehicle and seek to optimize the size and mix of the commercial rental fleet based on demand projections and various other factors. As a result, our business is dependent on our ability to accurately estimate future levels of rental activity and consumer preferences to effectively capitalize on market demand in order to drive the highest levels of utilization and revenue per unit. Missing our projections could result in too much or too little capacity in our rental fleet. Overcapacity could require us to deploy or sell vehicles at lower than anticipated pricing levels, which may result in higher depreciation or losses on vehicle sales. In addition, overcapacity could result in lower revenues and higher costs and have an adverse impact on profitability. Undercapacity could impact our ability to reliably provide rental vehicles to our customers and may negatively affect our reputation. We employ a sales force and operations team on a full-time basis to manage and optimize this product line; however, their efforts may not be sufficient to overcome unforeseen changes in market demand in the rental business. In contrast, in our ChoiceLease product line, we typically do not purchase vehicles until we have an executed contract with a customer.

For example, advancedthe vehicle technologies include electric vehicles, autonomous or semi-autonomous vehicles, as well as driver assist technologies. Additionally, e-commerce services, last-mile home delivery,transportation and asset-logistics and freight-sharing services continue to garner demand and interest. In addition, thereindustries may be otherimpacted by innovations thatin couldadvanced impact the transportation, trucking and supply chain and logistics industries, such asvehicle, machine learning and artificial intelligence,intelligence technologies (e.g., zero-emission vehicles, autonomous or driver-assist technologies, and warehouse automation), as well as other technologies we cannot yet foresee. OurIf inabilitywe are unable to quickly adapt to and adopt innovations desired by our customerscustomers, it may result in a significant loss of demand for our service offerings. AnCertain innovations, such as an increase in customer use of electriczero-emission vehicles, for example, could reduce the demand for our diesel vehicle and related maintenance and other offerings. Likewise, certain advancementsAdvancements in warehouse automation technology, such as autonomous vehiclesmobile robots (AMRs), have impacted, and may continue to impact, our supply chain business. If warehouse automation technologies reduce the number of warehouse associates needed at a facility, it could adversely affect our financial condition and operational results as it could decrease SCS revenue or lead to a decrease in demand for our dedicated service offerings, where, in addition to a vehicle, we provide a professional driver as part of an integrated, full service customer solution.services. Moreover, advances in technology may require us to increase investments in order to remain competitive, and our customers may not be willing to accept higher prices to cover the cost of these investments. In addition, thepublic politicalpolicy or regulatory environmentchanges may affect the requirements or timing of adopting new technologies.technologies, as well as product availability from manufacturers. These changes could further increase our investment costs, operating complexity and our ability to offer such technologies to our customers in the jurisdictions in which we operate.

We are substantially self-insured for vehicle liability and workers' compensation claims. Our self-insurance accruals are based on actuarially estimated, undiscounted cost of claims, which includes claims incurred but not reported. While we believe that our estimation processes are well designed and comply with generally accepted accounting principles in the United States, actuarial techniques and best practices, any projection of losses concerning workers' compensation and vehicle coverage is subject to a considerable degree of variability. The causes of this variability include litigation trends, claim settlement patterns, rising medical and other costs, as well as fluctuations in the frequency or severity of accidents. If actual losses incurred are greater than those anticipated, our self-insurance reserves may be insufficient, and additional costs could be recorded in our consolidated financial statements. If we suffer a substantial loss in excess of our self-insured limits, the loss and related expenses may be covered by traditional insurance and excess insurance we have in place, but if not covered or above such coverage amounts, losses could harm our business, financial condition or results of operations. For a detailed discussion on our accounting policies and assumptions relating to our self-insurance reserves, please see the "Critical Accounting Estimates - Self-Insurance AccrualsObligations" section in Management's Discussion and Analysis of Financial Condition and Results of Operations.

We are also subject to credit risk associated with the concentration of our accounts receivable from our SCS and DTS customers. We have had to take an asset impairment charge in the past when one of our SCS customers filed for bankruptcy, which adversely impacted our operating results. If one or more of our customers were to become bankrupt, insolvent or otherwise were unable to pay for the services we provide, we may incur significant write-offs of accounts receivable or incur lease or asset impairment charges that could adversely affect our operating results and financial condition.

LegalLegal, Regulatory and RegulatoryFinancial Risks

We face litigation risks regarding a variety of issues, including accidents involving our trucks and injuries to employees, alleged violations of federal and state labor and employment law includingsuch as class-action lawsuits alleging wage and hour violations, independent contractor misclassification and improper pay, intellectual property infringement, securities laws, environmental liability, commercial claims, cyber and other matters. These proceedingsmatters may be time-consuming, expensive and disruptive to normal business operations. The defense of such lawsuitsmatters could result in significant expense and the diversion of our management's time and attention from the operation of our business,business. andIn addition, our involvement could negatively impact our business reputation and our relationships with our customers, suppliers or employees. In recent years, several insurance companies have stopped offering coverage to trucking companies and reduced capacity limits as a result of increases in the severity of automobile liability claims and higher costs of settlements and verdicts, causing the cost of such insurance to increase. This trend could adversely affect our ability to obtain suitable insurance coverage or significantly increase the cost of such coverage, each of which may adversely affect our financial condition, results of operations, liquidity or cash flows. Costs we incur to defend or to satisfy a judgment or settlement of these claims may not be covered by insurance or could exceed the amount of that coverage or increase our insurance costs and could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.

We operate in a highly regulated industry, and changes in existinglaws and regulations or costs of compliance with, or liability for violation of, existing or future laws or regulations could have a material adverse effect on our business.

Our business is subject to laws and regulationregulations in the jurisdictions in which we operate and is regulated by various federal,agencies, state,including localthe DOL, DOT, HHS, USDA and foreign governmental agencies.SEC. For example, in the U.S., the DOT exercises broad powers over our motor carrier operations and safety. We are also subject to safety, health and safety regulations imposed by state and federal agencies, such as the FDA, the USDA and OSHA. Additionally, we are subject to environmental laws and regulations imposed by various statejurisdictions and federal jurisdictions,agencies, such as the EPA,FDA, USDA, EPA and OSHA, including requirements related to emissions and vehicle mandates.specifications. We must also comply with domestic and international laws and regulations related to tax, and we are further subject to anti-bribery, anti-corruption and anti-money laundering laws, includingsuch as the U.S. Foreign Corrupt Practices Act and Office of Foreign Assets Control (OFAC) restrictions. With respect to our operations in Canada and Mexico, we are subject to local laws and regulatory requirements, including tax and anti-bribery laws, which may vary significantly from country to country. Our failure to comply with applicable laws and regulationsregulations, which may vary significantly by jurisdiction, may expose us to legal liability, fines or other penalties.

Compliance with laws and regulations has involved, and we expect will continue to involve, significant time commitments and costs, and in recent years, we have seen an increase in proactive regulatory enforcement.costs. For example, the DOT, through the FMCSA, periodically conducts compliance reviews and evaluates the safety rating assessed to motor carriers ("satisfactory," "conditional" or "unsatisfactory"). The receipt of a final "conditional" or "unsatisfactory" safety rating could have a material adverse effect on certain customer relationships. Moreover, if we fail to comply with DOT regulations, including failing to maintain a "satisfactory" safety rating, the DOT could levy fines and require us to cease all transportation services, which could have a material adverse effect on our business. In addition, compliance and enforcement initiatives implemented by the FMCSA related to driverdrivers' time,hours of service, fitness and safety may shrink the industry's pool of professional drivers.

In addition, new laws or regulations may be adopted or interpretative changes to existing laws and regulations could be issued at any time.time, Any changeswhich could further increase our costs or operating complexity and our ability to offer certain services in the jurisdictions in which we operate. Our failure to comply with any existing or future laws or regulations, whether actual or alleged, could have a material adverse effect on our business and on our ability to access the capital required to operate our business. Among other things, any such failure could expose us to reputational harm, loss of business, fines, penalties or potential litigation liabilities, and the loss of operating authority and restrictions on our operations. For example, compliance with new laws or regulations related to employee and independent contractor classification may cause us to incur additional exposure under federal and state tax and employment laws. Similarly, compliance with new environmental laws or regulations may also impose new restrictions on our business or require us to take certain actions that may increase our costs and adversely affect our business.

ForSimilarly, instance,compliance with environmental laws or regulations mandatingmay thealso useimpose new restrictions on our business or require us to take certain actions that may increase our costs and adversely affect our business, such as emission reduction and zero-emission vehicle requirements. These and other similar efforts may impose restrictions on our activities or require us to take certain actions, all of zero-emissionwhich vehiclesmay, orover restrictingtime, theincrease useour costs and adversely affect our business and results of diesel- or gasoline-powered vehicles could reduce the resale value or availability and demand for certain of our vehicles.operations. Additionally, the demand for maintenance services in FMS and offerings in our SCS and DTS businesses may also be adversely affected. In addition,Further, compliance with environmental regulationslaws and the associated potential costregulations is complicated by the fact thatvarious jurisdictions are following different approaches to the regulation of climate change. As a result, we cannot predict the ultimate effect on our operating results or cost structure until the timing, scope and extent of any such regulations become known. In addition, any adverse publicity about emissions by the transportation industry, for example, could accelerate the adoption of new technology and potentially decrease customer demand for some of our services and used vehicles.

If we do not correctly anticipate changes in social, political or regulatory conditions or their impact on the transportation and logistics industries, we may not alter our business practices in time to avoid adverse effects. For example, in our FMS business, the recent introduction of tariffs has modestly increased our maintenance costs as the prices of certain vehicle parts has increased. To the extent we are unable to mitigate these or other cost increases, our operating results in our FMS business could be adversely affected. Additionally, the occurrence or consequences of any of these factors may restrict our ability to operate in the affected region or decrease the profitability of our operations in that region.

Volatility in assumptions, discount rates and assetinvestment valuesreturns related to our pension plans may adversely affect the valuationfunding status of our obligations, the currentpension plans, future funding levelsrequirements and our pension expense under our defined benefit pension plans.

We historically sponsoredsponsor a number of defined benefit plans for employees not covered by union-administered plans, including certain employees in foreign countries. As of December 31, 2024,2025, the aggregate projectedpresent benefitvalue of obligations of our global defined pension plans was $1.6 billion, and the fair value of the plan assets of our global defined benefit pension plans was $1.5 billion. The calculation of pension expense and pension plan funding requirements are influenced by multiple factors, including the funded status of theour plans, equalwhich toequals the difference between the presentplans' projected benefit obligations and the fair value of plan obligations and assets, is a significant factor in determining pension expense and the ongoingplans' funding requirements of those plans.assets. Macroeconomic factors, as well as changes in investment returns and discount rates used to calculate pension expense and related assets and liabilities,rates, can be volatile and may have an unfavorable impact on the funded status of our costspension plans, our pension expense and future funding requirements. Although we are actively seeking to control increases in theseour costspension expense and future funding requirements through annuitization transactions, liability-driven investment policiesstrategies and plan contributions, there can be no assurance that we will succeed, and continued cost and funding requirement pressure could reduce the profitability of our business and negatively impact our cash flows.

Our success dependsis built on our ability to consistently deliver operational excellence and strong customer service. Our inability to deliver our services and solutions as promised on a consistent basis, or our customers having a negative experience or otherwise becoming dissatisfied, can negatively impact our relationships with new or existing customers and adversely affect our brand and reputation, which could adversely affect revenue and earnings growth. Adverse publicity (whether or not justified) relating to activities by our employees, contractors, agents or others with whom we do business, such as customer service mishaps or noncompliance with laws, including misconduct, fraud or other improper activities, could tarnish our reputation and reduce the value of our brand. With the increase in the use of social media outlets,and citizen journalism, adverse publicity can be disseminated quickly and broadly, making it increasingly difficult to effectivelyrespond respond.effectively. This unfavorable publicity could also require us to allocate significant resources to rebuildreinforce and protect our reputation.

ITEMRyder 7.is MANAGEMENT'Sa DISCUSSIONleading ANDlogistics ANALYSISand OFtransportation company. We report our financial performance based on three business segments: (1) Fleet Management Solutions (FMS), which provides full service leasing, commercial rental and vehicle maintenance services; (2) Supply Chain Solutions (SCS), which provides fully integrated logistics solutions; and (3) Dedicated Transportation Solutions (DTS), which provides turnkey transportation solutions, including dedicated vehicles, professional drivers, management and administrative support. Dedicated transportation services provided as part of an operationally integrated, multi-service supply chain solution to SCS customers are primarily reported in the SCS business segment.

20242025 HIGHLIGHTS COMPARED WITH 2023

•Diluted EPS from continuing operations of $11.06,$11.99, up 8% from $8.73 in prior year, which reflected a non-cash FMS U.K. business exit chargeyear

•Comparable EPS (a non-GAAP measure) from continuing operations of $12.00$12.92, comparedup to8% $12.95 infrom prior year, reflecting higher contractual earnings inacross contractualall lease,business supplysegments, chain,as andwell dedicatedas businessesshare andrepurchases, weakerpartially marketoffset conditionsby in rental andlower used vehicle sales and rental results

•Total revenue of $12.6 billion, up 7%, and operatingOperating revenue (a non-GAAP measure) of $10.3$10.4 billion, up 8%,1%, primarily reflecting acquisitionscontractual revenue growth in SCS and FMS

During 2024, the strength and diversification of our contractual portfolio in lease, supply chain and dedicated helped mitigate the impact of weak market conditions from used vehicle sales and commercial rental demand. We continue to benefit from favorable long-term secular trends in logistics and transportation solutions; however, we are experiencing near-term salesrevenue growth headwinds that reflect the extended freight downturn and overall economic uncertainty. TheThese 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 FMS, SCS, and DTS business segments,segments. andOur webalanced expectgrowth strategy provides a solid foundation for ongoing contractual earnings growth while also positioning us to benefit from thea 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 from long-term secular trends in our businesses, other unknown effects from inflationary cost pressures, regulatory uncertainty, labor interruptions, disruptionsintroduction inof vehicletariffs and vehicle part productiontaxes, and the continued higher interest rate environment may negatively impact demand for our business, financial results, and significant judgments and estimates.

In 2024,2025, total revenue increasedwas 7% to $12.6$12.7 billion, reflectingconsistent higherwith operatingprior revenue and higher subcontracted transportation.year. Operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation) increased 8%1% to $10.3$10.4 billion, primarily reflecting recent acquisitions, partially offset by lower commercial rentalcontractual revenue growth in SCS and FMS.

Services revenue represents all the revenues associated with our SCS and DTS business segments, including subcontracted transportation and fuel, as well as SelectCare.SelectCare and fleet support services associated with our FMS business segment. Services revenue increasedin 14%2025, remained consistent with prior year as new business and higher customer volumes in 2024,SCS duewas tolargely increasesoffset by lost business in DTS and SCS revenue primarily driven by recent acquisitions.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, vehiclelease liabilityexpense, costsinsurance and maintenance costs. Cost of services in 2025 remained consistent with the prior year.

Lease & related maintenance and rental revenue represent revenue from our ChoiceLease and commercial rental product offerings within our FMS business segment. Revenue decreasedincreased 3%1% in 2024,2025, reflecting lowerChoiceLease commercialrevenue rental demandgrowth, partially offset by ChoiceLeaselower growth.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 2%1% in 20242025, primarily reflecting lower operating costs on a 10% smaller average commercial rental fleet, lower maintenance costs onand a youngersmaller fleetlease and maintenancerental cost savings initiatives.fleet.

Lease & related maintenance and rental gross margin decreased primarily due to lower commercial rental demand. Lease & related maintenance and rental gross margin as a percentage of revenue remainedincreased consistentprimarily atdue 32%to ashigher lowerChoiceLease commercial rental utilization was offset by improved lease performancepricing and maintenance cost savingscost-savings initiatives.

Fuel services revenue represents fuel services provided to our FMS customers. Fuel services revenue decreased 17%11% in 2024,2025, primarily reflecting lower fuel pricescosts 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 17%11% in 20242025, as a result of 11%reflecting lower fuel pricescosts and 2% lowerfewer gallons sold.

Fuel services gross margin remained consistent at $15 million and gross margin as a percentage of revenue remained unchanged at 3%increased in 2024.2025. 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 not significantlypositively impacted by these price change dynamics in 2024.2025.

Our effective tax rate from continuing operations was 26.0%26.8% in 20242025 as compared to 34.3%26.0% in the prior year, and our comparable tax rate on continuing operations was 26.0% in 2025 compared to 25.7% in the prior year. The higherincreases effectivein ratetax rates were primarily due to discrete tax benefits in 2024. Refer to Note 11, “Income Taxes” in the prior year is dueNotes to Consolidated Financial Statements for a one-time, nondeductible cumulative currency translation adjustment loss related to the completion of the FMS U.K. business exit. Our comparable tax rate on continuing operations, which excludes the impact of the prior year currency translation adjustment loss, declined slightly to 25.7% in 2024 from 26.1% in the prior year. Refer to our discussion of changes in our provision for income taxes and effective tax rate from continuing operations in Note 11, “Income Taxes” in the Notes to Consolidated Financial Statements.operations.

As part of management’s evaluation of segment operating performance, we define the primary measurement of our segment financial performance as segment "Earnings from continuing operations before income taxes" (Segment EBT), which includes an allocation of costs from Central Support Services (CSS) and excludes Non-operating pension costs, net, intangibleIntangible amortization expense, and certain other significant items that are not representative of our business operations and vary from period to period as discussed in Note 20, “Other Items Impacting Comparability,” in the Notes to Consolidated Financial Statements. CSS represents those costs incurred to support all business segments, including information technology, finance, marketing, human resources, legal, and safety.

The objective of the Segment EBT measurement is to provide clarity on the profitability of each business segment and, ultimately, to hold leadership of each business segment accountable for their allocated share of CSS costs. 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. Refer to Note 3, “Segment Reporting,” in the Notes to Consolidated Financial Statements for a description of the methodology for allocating the remainder of CSS costs to the business segments.

Our FMS segment leases revenue earning equipment and provides rental vehicles, fuel, maintenance and other ancillary services to the SCS and DTS segments. Inter-segment EBT allocated to SCS and DTS includes earnings related to equipment used in providing services to SCS and DTS customers. EBT related to inter-segment equipment and services billed to SCS and

Selected Operating Performance Items For The FirstSecond Quarter 2026

•Comparable EPS (a non-GAAP measure) from continuing operations of $2.54,$3.73, up 3%12% from prior year, reflectingreflects share repurchases,repurchases partiallyand offset by lowerhigher earnings in Fleet Management Solutions (FMS)

•Total revenue of $3.1$3.3 billion, consistentup with5% from prior yearyear, updue —%to higher revenue in Supply Chain Solutions (SCS) and FMS

•Operating revenue (a non-GAAP measure) of $2.6$2.7 billion, consistentup with3% from prior yearyear, primarily reflecting contractual revenue growth in SCS

During the three and six months ended MarchJune 31,30, 2026, the strength and resiliency of our transformed business model enabled the business to deliver solid results in the current environment. FMS had earnings growth driven by itsstrong performance in our contractual business,business as well as better used vehicle sales results. In addition, SCS and DTS delivered solid earnings reflecting benefits from the ongoingconsistent execution of our strategic initiatives. In addition, SCS delivered another quarter of strong earnings performance, although results were down relative to a record quarter in the prior year. DTS continued to be impacted by a lower fleet count due to the prolonged freight downturn.

We continue to benefit from favorable long-term secular trends in logistics and transportation solutions and have experienced positive momentum instrong contractual sales inactivity theacross firstall quarterthree of 2026,our withbusiness record sales performance in SCS and stronger sales in FMS and DTS above prior year and ahead of expectations, in segments that had been experiencing sales headwinds from freight market conditions.segments. We also experienced improving trends in used vehicle sales,sales as market conditions continued to strengthen, and rental demandutilization reflectedreturned historicalto seasonalnormalized patterns.levels Wedriven by our planned asset management actions. In addition, we remain on track to deliverachieve $70 million in expected earnings benefits from strategic initiatives this year, and are well positioned for growth from a cycle upturn with the largest impact expected in our transactional rental and used vehicle sales businesses. 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.upturn.

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. While we are experiencing positive momentum in our businesses, other unknown effects from inflationary cost pressures, regulatory changes, geopolitical events, labor interruptions, introductionchanges ofin tariffstariff, andtrade taxesor tax policies and the continued higher interest rate environment may negatively impact demand for our business, financial results and significant judgments and estimates.

________________________ (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.

Total revenue increased 5% in the firstsecond quarter of 20262026, wasand consistent2% within priorthe year.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 1%3% in the firstsecond quarter of 2026, and 2% for the six months ended June 30, 2026, reflecting newcontractual businessrevenue growth in SCS,SCS and FMS, partially offset by lower DTS fleet count.

Services revenue represents all the revenuerevenues associated with our SCS and DTS business segments, including subcontracted transportation and fuel, as well as SelectCare revenueand fleet support services associated with our FMS business segment. Services revenue decreasedincreased 1%5% in the firstsecond quarter ofand increased 2% in the six months ended June 30, 2026, primarily driven by lower fleet count in DTS, partially offset 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, equipmentlease expense, insurance and maintenance costs. Cost of services decreasedincreased slightly lessmore than revenue infor the firstthree quarterand ofsix 2026.months ended June 30, 2026, primarily due to costs incurred to ramp up new business in SCS.

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 firstsecond quarter ofand 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 areis 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 firstsecond quarter ofand six months ended June 30, 2026, primarily reflecting revenue growth,growth and higher equipment costsmaintenance and unfavorable development of prior year rental insurance claims.costs.

Lease & related maintenance and rental gross margin decreased 3%2% in the firstsecond quarter ofand the six months ended June 30, 2026, primarily due to lowerhigher commercial rental demandmaintenance and unfavorable development of prior year rental insurance claims, partially offset by improved contractual performance.costs. Lease & related maintenance and rental gross margin percentage remainedslightly at 31%decreased in the firstsecond quarter ofprimarily due to higher maintenance costs and remained consistent for the six months ended June 30, 2026.

Fuel services revenue represents fuel services provided to our FMS customers. Fuel services revenue increased 5%45% in the firstsecond quarter ofand increased 24% in the six months ended June 30, 2026, primarily reflecting higher fuel prices passed through to customers, partially offset by lower gallons sold.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 remainedincreased unchanged48% in the firstsecond quarter ofand increased 23% in the six months ended June 30, 2026, primarily due to higher fuel prices offset by lower gallons sold.prices.

Fuel services gross margin and fuel services gross margin as a percentage of revenue increaseddecreased in the firstsecond quarter ofand 2026,increased comparedfor tothe priorsix year.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 firstsix quartermonths ofended June 30, 2026 were positively impacted by these price change dynamics as fuel prices rapidly increased during the period.dynamics.

SG&A expenses increased 3% in the first quarter of 2026. The increase in SG&A expenses in the firstsecond quarter of 2026 and for the six months ended June 30, 2026, primarily reflectsreflecting a non-cash impairment charge related to an intangible asset and higher incentive-based compensationcompensation-related expenses. SG&A expenses as a percentage of total revenue remained consistent at 12% for the firstsecond quarter ofand for the six months ended June 30, 2026.

"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. Non-operatingThe pension costs, net remained consistent in the firstsecond quarter of 2026.2026 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.

Miscellaneous Loss,Income, net

Miscellaneous loss,income, net consists of investment income or loss on securities used to fund certain benefit plans, interest income, gains or losses on sales of operating property, foreign currency transaction remeasurement and other non-operating items. Miscellaneous loss,income, net wasincreased $1to $22 million in the firstsecond quarter of 2026, comparedand increased to $6$21 million infor priorthe year,six months ended June 30, 2026, primarily due to reducedbetter investmentmarket portfolioperformance losses.of investments classified as trading securities used to fund certain benefit plans.

OurIn the second quarter of 2026, our effective tax rate on continuing operations and comparable effective tax rate on continuing operations was 21.0%28.2% and 20.9% in the first quarter of 2026,27.7%, respectively, compared to 26.8%28.3% and 25.6%,28.0%, respectively, in the prior year. For the six months ended June 30, 2026, our effective tax rate on continuing operations and comparable effective tax rate on continuing operations was 25.4% and 25.1% respectively, compared to 27.7% and 27.0%, respectively, in the prior year. The decrease in tax rates for both periods was primarily due to higher excess tax benefits on stock-based compensation in the first quarter of 2026.compensation.

Our FMS segment leases revenue earning equipment, and provides rental vehicles, fuel, maintenance and other ancillary services to the SCS and DTS segments. Inter-segment EBT allocated to SCS and DTS includes earnings related to equipment used in providing services to SCS and DTS customers. EBT related to inter-segment equipment and services billed to SCS and DTS customers (Equipment Contribution) are included in both FMS and the segment that served the customer and then eliminated upon consolidation (presented as "Eliminations").

(1)For the three months ended MarchJune 31,30, 2026 and 2025, rental revenue from lease customers in place of a lease vehicle represented 31%28% of commercial rental revenue for both periods. For the six months ended June 30, 2026 and 2025, rental revenue from lease customers in place of a lease vehicle represented 29% of commercial rental revenue for both periods.

FMS total revenue increased 6% in the second quarter of 2026 and increased 4% for the six months ended June 30, 2026, due to higher fuel prices passed through to customers and higher operating revenue. FMS operating revenue increased 1% in the firstsecond quarter ofand for the six months ended June 30, 2026, dueprimarily to higher fuel pricing passed through to customers. FMS operating revenue (a non-GAAP measure excluding fuel) was consistent with prior year asreflecting contractual revenue growthgrowth, waspartially offset by lower commercial rental demand.

Our North America fleet of owned and leased revenue earning equipment and SelectCare vehicles, including vehicles under on-demand maintenance, is summarized as follows (number of units rounded to the nearest hundred):

The following table provides information on our North America active ChoiceLease fleet (number of units rounded to nearest hundred) and our commercial rental power fleet utilization (excludes trailers):

DTS total revenue decreased 8%1% in the firstsecond quarter of 2026 and 5% for the six months ended June 30, 2026, primarily due to lower subcontracted transportation costs and operating revenue (a non-GAAP measure excluding fuel and subcontracted transportation) and subcontracted transportation andcosts passed through to customers, partially offset by higher fuel). revenue in the second quarter of 2026. DTS operating revenue decreased 5%3% in the firstsecond quarter of 2026 and 4% in the six months ended June 30, 2026, reflecting lower fleet countcount, duepartially tooffset prolongedby freighthigher market downturn.pricing.

DTS EBT decreased 15%4% in the firstsecond quarter of 2026, and 8% for the six months ended June 30, 2026, primarily reflecting lower operating revenue,revenue and adverse development of prior year insurance claims, partially offset by benefits from strategic initiatives.

Total CSS and Unallocated CSS costs increaseddecreased 4% and 7%, respectively,3% in the firstsecond quarter of 2026, primarily due to higherlower incentive-basedmarketing compensationexpense, costs.and was relatively consistent for the six months ended June 30, 2026.

Net cash provided by operating activities from continuing operations was $583$1.3 millionbillion for the threesix months ended MarchJune 31,30, 2026, compared to $651$1.4 millionbillion in the prior year, primarily reflecting workingan capital needs. Our working capital needs are primarily influenced by the timingincrease of accounts receivable collections and vendor payments, as well as other changes in operatingconjunction assetswith andrevenue liabilities. During the period, we had unfavorable impacts from the timing of receivable collections in our DTS and SCS segmentsgrowth and the timing of vendor payments. Net cash used in investing activities from continuing operations decreased to $321$588 million for the threesix months ended MarchJune 31,30, 2026, compared with $393$943 million in 2025, primarily reflecting lower capital expenditures. Net cash used in financing activities from continuing operations was $277$650 million for the threesix months ended MarchJune 31,30, 2026, compared with $261$444 million in 2025, primarily reflecting higher share repurchases partially offset with net borrowings in 2026 compared to net debt paymentsrepayments inand 2025.share repurchases.

Free cash flow (a non-GAAP measure) increased to $273$684 million for the threesix months ended MarchJune 31,30, 2026, compared to $259$461 million in 2025, primarily reflecting reduced cash capital expenditures, partially offset by lower cash provided by operating activities.expenditures.