Harrison Bauer

Harrison Bauer asked about the importance of volume in driving incremental margins for the expedited business, the directional outlook for pricing after prior actions, and potential mix-related pressure on net yields from improved weight per shipment. He also inquired about the driver behind the notable negative inflection in intermodal revenue per shipment.

Answer

CFO Jamie Pierson emphasized increasing network density and profitability, noting that excess capacity and cost-out actions create strong operating leverage, making incremental shipments highly profitable. For intermodal, he attributed the revenue per shipment change to simple supply and demand, with reduced port volumes leading to more elastic pricing. CEO Shawn Stewart added that storage revenues from depots helped support intermodal margins during the Q4 slowdown.

Harrison Bauer asked about the importance of volume in driving incremental margins for the Expedited business, questioning if it holds higher profit contribution than the price/cost outlook for 2026. He also sought a directional outlook for pricing in Expedited Freight as the company laps prior pricing actions and inquired about potential mix-related pressure on net yields if weight per shipment improves. Furthermore, he asked for the driver behind the notable negative inflection in Intermodal revenue per shipment this quarter.

Answer

Jamie Pierson, Chief Financial Officer, explained that the focus is on increasing network density and profitability margin. He emphasized that due to excess capacity and cost-out actions, incremental shipments in the ground network are "much more profitable" than previous ones, assuming consistent pricing. For Intermodal, Mr. Pierson attributed the revenue per shipment change to simple supply and demand, with port volumes down 5-10% and more elastic pricing. Shawn Stewart, President and Chief Executive Officer, added that Intermodal revenue includes both drayage and container storage in depots, with storage revenues helping to support margins during the Q4 port drayage slowdown.

Harrison Bauer asked about GATX's capital allocation priorities, considering the muted new build environment and the re-upped share authorization, especially during the integration of the Wells Fargo fleet.

Answer

Tom Ellman, Executive Vice President and Chief Financial Officer, reiterated GATX's consistent capital allocation philosophy: first, invest in economically accretive assets; second, maintain a proper balance sheet; and third, return excess capital to shareholders. He outlined anticipated investments of about $1.5 billion for 2026, including the initial equity in the JV and the first option exercise.

Harrison Bauer from Susquehanna asked about GATX's capital allocation priorities, considering the Wells Fargo transaction structure, the muted new build environment, and the re-upped share authorization.

Answer

Tom Ellman, EVP and CFO, reiterated the unchanged philosophy: invest in accretive assets, maintain a proper balance sheet, and return excess capital. He noted $1.3 billion invested in 2025, over $1 billion expected in 2026 outside Wells Fargo, and an anticipated $66 million for an additional 3.5% JV ownership on June 30th, totaling about $1.5 billion in investments.

Harrison Bauer asked about the current demand environment, including improving inquiry levels, conversion times for firm orders, customer sentiment regarding tariffs and trade clarity, and expectations for demand throughout 2026. He also inquired about the future lease rate differential (FLRD) moderation, renewal rates versus expiring rates, and the potential for further consolidation and private capital involvement in the railcar leasing space.

Answer

CEO Jean Savage noted that customer engagement is high, but decision cycles are longer, delaying orders rather than destroying demand. She highlighted strong replacement demand fundamentals and increased inquiry levels, though 2026 deliveries are expected to be lower. Ms. Savage also explained that the FLRD remains positive, with renewal rates significantly above expiring rates, and utilization improved. CFO Eric Marchetto addressed leasing consolidation, noting the attractiveness of the asset class to private capital and detailing the Napier Park partnership restructuring, which demonstrated fleet value and increased the Railcar Investment Vehicle (RIV) program's scale.

Harrison Bauer inquired about the current demand environment, including improving inquiry levels, conversion times for firm orders, and customer sentiment regarding tariffs and broader trade clarity. He also asked for expectations on incremental orders, margin cadence, and the performance of the Future Lease Rate Differential (FLRD) and sequential lease rates. Additionally, Bauer sought insights into potential leasing consolidation, private capital involvement, and competitive dynamics in the leasing space.

Answer

Jean Savage, CEO and President, noted that while customers are engaged, decision cycles are longer, delaying orders rather than destroying demand, with replacement demand fundamentals remaining strong. She highlighted increased inquiry levels, though 2026 delivery expectations remain at 25,000 units, with a potential return to replacement levels in 2027. Savage also stated that the rail product group's operating margin is expected to be 5-6% for 2026, with a fairly even cadence throughout the year, and that the FLRD remains positive, with renewal rates materially above expiring rates. Eric Marchetto, CFO, added that consolidation in the leasing space reflects the asset class's attractiveness, with active portfolio-level trading expected to continue, and an ongoing appetite for growth from private capital.

Harrison Bauer asked about Ryder's used vehicle sales (UVS) strategy for 2026, specifically if the guidance includes potential decisive actions like moving underutilized fleet to the wholesale channel, similar to Q2 2025 losses. He also inquired about Ryder's participation in bidding for First Fleet and its updated appetite for M&A.

Answer

John Diez, Executive Vice President and Chief Financial Officer, expects a stabilizing UVS environment with improving tractor pricing, not anticipating a dramatic downturn or impairment charges as residual values are appropriately set. He projects UVS performance similar to 2025, with potential quarterly unevenness due to retail/wholesale mix. Robert E. Sanchez, Chairman and CEO, stated that Ryder does not comment on specific deals but is actively seeking well-run companies in target areas, confirming ample balance sheet capacity for desired acquisitions.

Harrison Bauer revisited used vehicle sales in the context of Ryder's fleet strategy, asking if the forecast includes potential decisive actions like moving underutilized fleet to the wholesale channel, similar to Q2 2025 losses. He also inquired if Ryder participated in bidding for FirstFleet and for an updated appetite on M&A.

Answer

John Diez, Executive Vice President and Chief Financial Officer, stated that Ryder expects a stabilizing used vehicle sales environment with tractor pricing improving, and does not anticipate a dramatic downturn or impairment charges, as residual values are appropriately set. He expects used vehicle sales performance to be similar to 2025. Robert Sanchez, Chairman and Chief Executive Officer, declined to comment on specific deals but confirmed Ryder is actively looking for well-run companies in target areas, with ample balance sheet capacity for acquisitions.

Harrison Bauer asked if Ryder's stated peak-to-trough market improvement opportunity of $200 million might be closer to $300 million if rebased to 2025 transactional earnings. He also questioned how the displacement of drivers due to non-domicile CDL regulations might lead to additional trucks in the market and affect used vehicle prices or residual values.

Answer

John Diez, President and COO, confirmed that Harrison Bauer's observations were directionally accurate, suggesting the $200 million opportunity might be understated given the more depressed state of UBS gains and rental earnings in 2025 compared to 2024. Robert Sanchez, Chairman and CEO, stated that while more used trucks might enter the market due to fewer drivers, this would likely be offset by the need for newer trucks, and generally, a tightening driver market is positive for used trucks and the rental business.

Harrison Bauer from Susquehanna asked about the expected margin cadence for Ryder's business segments in the second half of the year and whether a pivot to growth in 2026 could create margin pressure. He also inquired about demand differences between tractors and trucks.

Answer

EVP & CFO Cristina Gallo-Aquino projected margin growth for FMS and SCS in H2, while DTS margins face pressure from lower fleet counts. Chairman & CEO Robert Sanchez added that FMS is not yet at its target margin, which requires a market recovery. President of FMS Tom Havens noted that in leasing, truck demand is up while tractor demand is facing headwinds, and the rental fleet mix has shifted to 60% trucks.

Harrison Bauer of Susquehanna Financial Group sought to clarify the primary driver behind the $0.35 reduction in the top end of Ryder's full-year EPS guidance. He also asked how the widening spread between new and used vehicle prices might affect used vehicle pricing later in the year.

Answer

Chairman and CEO Robert Sanchez confirmed the guidance reduction was almost entirely due to removing previous upside assumptions for the commercial rental business, reflecting a softer demand outlook. He stated that contractual earnings expectations remain intact. He also noted that high new truck prices support used values, and as market inventory declines, pricing power should increase. He pointed to Q1's sequential price increase for tractors (ex-aged inventory) as a positive sign.

Harrison Bauer asked a broad question about how U.S. trade policy and potential tariffs are impacting Ryder's business, including cross-border operations and indirect effects on the SCS segment. He also followed up on competitive pricing pressure in the Dedicated segment.

Answer

CEO Robert Sanchez stated that the primary current impact from trade policy uncertainty is the delay of customer decisions on long-term contracts. For the Dedicated segment, Steve Sensing, President of DTS, noted that as the freight market and driver availability tighten, they expect growth opportunities to return. Sanchez added that Ryder's customized dedicated solutions are less susceptible to being replaced by lower-cost truckload services.

Harrison Baier from Susquehanna asked if Wabtec foresees the need for investments in North American capacity to ramp up total new locomotive and modernization production, given the largest multi-year North American backlog. He also inquired about the realized tariff impact in 2025 and the implied incremental year-over-year tariff impact in the 2026 guidance.

Answer

Wabtec President and CEO Rafael Santana confirmed that Wabtec has sufficient capacity in North America and continues to invest in its quality and productivity. He noted that Class 1 CapEx is down for 2026, reflecting lower combined mod and new unit dynamics, but emphasized the significant payback opportunity for customers from modernizing fleets. Regarding tariffs, Santana stated that an absolute number is not provided, but the financial impact grew exponentially from Q3 to Q4 2025 and is expected to continue growing into the first half of 2026. He outlined a four-pronged mitigation approach including exemptions, supply chain adjustments, cost sharing with customers, and proactive cost management.

Harrison Bauer asked if Wabtec anticipates needing to invest in North American capacity to ramp up new locomotive and modernization production, and whether the company expects relatively stable or extended visibility for these activities over time. He also requested details on the realized tariff impact in 2025 and the implied incremental year-over-year tariff impact for the 2026 guidance.

Answer

President and CEO Rafael Santana confirmed that Wabtec has sufficient North American capacity and continues to invest in its quality. He noted that Class 1 CapEx is down for 2026, reflecting a decrease in combined modernizations and new units for the year, but highlighted the significant long-term opportunity for customers to improve operating ratios and reduce total cost of ownership. CFO John Olin stated that while an absolute tariff number isn't provided, the financial impact grew exponentially from Q3 to Q4 2025 and is expected to continue growing in H1 2026, with mitigants in place.

Harrison Bauer asked about Saia's expected incremental margins in the early stages of a growing tonnage environment, comparing them to peers' reported 40%+ figures, given Saia's significant network investments and ample capacity.

Answer

Matt Batteh, EVP and CFO, confirmed that Saia expects similar incremental margins of 30%-40% in a slight uptick environment, potentially higher if the market escalates. He attributed this to the fixed costs associated with the new terminals and the ability to scale investments without adding costs at a one-for-one level, referencing the successful execution seen during the Northeast expansion.

Harrison Bauer asked about Saia's expectations for incremental margins in the early stages of a growing tonnage environment, before significant capacity investments are needed, and whether these views align with peers' estimates of 40% or more.

Answer

EVP and CFO Matt Batteh confirmed that Saia expects similar incremental margins of 30%-40%+ in an uptick environment, potentially higher in new markets. He explained this is due to the ability to scale fixed costs and leverage existing investments, citing the past Northeast expansion as a precedent for such performance.

Harrison Bauer from Susquehanna asked about the syndication market, including customer reactions to economic uncertainty and visibility into future sales. He also inquired about the health of the secondary market for leased railcars, focusing on pricing, market depth, and liquidity.

Answer

EVP Brian Comstock described the syndication market as 'very robust and liquid,' a sentiment echoed by CEO Lorie Leeson, who noted investors look past short-term volatility for these long-lived assets. Executive Justin Roberts added that the timing of syndication is tied to production schedules. Regarding the secondary market, Brian Comstock confirmed it remains strong with high renewal rates and stable pricing, supported by a tight and aging North American railcar fleet.