Jeffrey Kauffman • Vertical Research Partners

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CEO Preston Feight explained that trucks for South America are similar to European models but with some heavier-duty specs that could slightly increase selling price. However, both he and President and CFO Harrie Schippers advised against trying to parse fine ASP changes from a mix shift between vocational and on-highway trucks, noting the wide range of prices within the vocational segment itself.

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CEO & Director R. Preston Feight confirmed that customers are beginning to engage on this topic, as the legislation improves their cash flow for capital purchases, contributing to PACCAR's optimism for later in the year. CFO & SVP Brice Poplawski added that the bill is also positive for PACCAR, projecting cash tax benefits of $300 million to $400 million.

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CEO & Director R. Preston Feight confirmed that customers are beginning to engage on 2026 orders, citing the bill's positive impact on their cash flow and ability to purchase capital assets. CFO & SVP Brice Poplawski added that the bill would also provide PACCAR with a cash tax benefit of $300-$400 million.

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CEO Preston Feight agreed with the observation, stating that over 70% of U.S. freight moves by truck, a fact he doesn't see changing. He believes the number of trucks needed over that period will be constant, and PACCAR expects its share to grow because it builds the best trucks with the best dealers, which bodes well for the future.

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President and CFO Harrie Schippers reiterated that currency effects were about half the impact, with the remainder due to a heavier Q4 regional mix towards Europe, where trucks have lower average sales prices. On other regulations, CEO Preston Feight framed them as opportunities, while Schippers highlighted that PACCAR's 'local-for-local' production strategy provides strong protection against risks like tariffs.

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CFO Baris Oran stated that GXO does not hedge revenue, so spot rates will apply, noting a 4% FX tailwind in Q2. He described the Wincanton divestiture as immaterial (~$100M revenue) and said integration can proceed. For leverage, he indicated the short-term focus is on organic growth and deleveraging, with an ideal long-term target of 1.5x to 2.0x net debt to EBITDA to maintain flexibility.

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Chief Strategy and Innovation Officer Arun Rajan highlighted the significant opportunity in technology, specifically the evolution from GenAI to 'AgenTeq AI,' to drive evergreen productivity and margin optionality. CFO Damon Lee added that these tech improvements also enable market share outgrowth, a key part of the strategy that is sometimes overlooked.

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Arun Rajan, Chief Strategy and Innovation Officer, explained that market uncertainty highlights Robinson's value. He noted a long-term supply chain diversification trend away from China, which C.H. Robinson has mirrored by reducing its Transpacific lane dependence from 35% to 25% of its Global Forwarding business. He confirmed that customs activity has seen an uptick, and the company provides expertise in this area.

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Executive Charles Ives clarified that any pull-forward was not material overall, noting there was some impact in Global Forwarding but not in the truckload business. CFO Damon Lee added that Q4 is typically a seasonally weaker quarter. Ives pushed back on the idea that Q4 would revert to Q2 levels, stating that Global Forwarding rates were expected to slow down.

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Chairman & CEO Robert Sanchez and President of FMS Tom Havens highlighted a focus on retail mobile maintenance through their TORQ product, which is growing rapidly, as a key opportunity. Regarding M&A, Sanchez stated that Ryder is patiently seeking well-run companies in its core businesses and that Ryder Ventures is primarily for exploring new technologies, not a major capital draw.

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President and COO John Diez identified rental as the primary indicator, noting softer conditions but also early positive signs of stabilization in the over-the-road tractor class. This was supported by higher lease miles and sequential price improvement for used tractors. Chairman and CEO Robert Sanchez addressed M&A, stating that while it's a good time to buy, Ryder remains selective. The wish list includes companies with new supply chain capabilities, dedicated transportation opportunities similar to Cardinal, or lease business tuck-ins.

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Chairman and CEO Robert Sanchez stated that the market is not yet showing an upturn, but rather moving sideways. Tom Havens, President of Fleet Management Solutions, added that customer sentiment remains cautious due to economic and tariff uncertainty, causing decision delays. Regarding SelectCare, Havens clarified that Q4 revenue was up 3% year-over-year and that the full-year slowdown was due to two large fleets downsizing with minimal financial impact, with growth expected to return to the mid-single-digit range in 2025.

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CEO Robert Sanchez explained that maintaining the rental fleet size is a deliberate strategy to ensure Ryder is prepared for the next market upturn and can capitalize on it, avoiding past instances of being short on vehicles. Tom Havens, President of Fleet Management Solutions, added that the rental fleet is already down 7,000 units from its peak. Regarding SelectCare, Havens clarified that while vehicle counts have decreased, margins have improved as the units being removed were very low-revenue and low-margin.

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CFO Tripp Grant projected a Q3 average share count around 26.2 million. CEO David Parker outlined long-term OR targets of 83-93% for Expedited and the low 90s for Dedicated, depending on market conditions. Parker expressed optimism that a combination of government focus on economic growth, falling interest rates boosting housing, and tightening truck capacity will serve as a significant catalyst for freight demand, potentially around October.

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President Paul Bunn explained that the recent avian flu season was one of the worst in 15 years, hurting both long-haul and feed-haul volumes. He projects the business will return to 100% capacity by June. Bunn described the recent acquisition as a small, 60-70 truck specialty dedicated fleet with a defensible niche and growth potential. He noted Warehouse margins were temporarily hit by weather but should improve, while Managed Freight is benefiting from new operational strategies under COO Dustin Koehl, with revenue and margin growth expected.

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CEO David Parker stated that both factors are at play: rising business optimism is generating activity, while tightening capacity is evident in recent bid wins at higher rates. Executive James Grant noted that operations and maintenance costs are moderating as the fleet gets younger. He identified insurance as a prior headwind that is improving, while citing fuel and driver pay as potential inflation wildcards for 2025, which could be offset by higher freight rates.

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Executive M. Bunn identified the proliferation of brokers and well-capitalized small carriers as a structural headwind. CEO David Parker stated the strategy is twofold: manage costs while preparing for a turn, which he believes could be aided by Fed rate cuts impacting housing and auto freight. Both executives reiterated the focus on specialized businesses and niche acquisitions as a core long-term strategy, with M. Bunn adding that a pickup in industrial production would be a major catalyst.

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CFO Jennifer Hamann stated that restoring 100% bonus depreciation would be a benefit, estimating an incremental annual cash impact of $250 million to $300 million. CEO Jim Vena added that the administration's broader focus on deregulation is also important, as it helps U.S. businesses, including Union Pacific, compete more effectively domestically and internationally.

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EVP of Marketing and Sales Kenny Rocker emphasized the fluidity of supply chains and the strength of the UNP franchise. He explained that most commodities have multiple origin and destination points, and the commercial team is focused on preparedness to capture freight flows regardless of how they might shift, ensuring the product ultimately moves on the Union Pacific network.

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EVP & CFO Sean Pelkey confirmed the $10 million per month is an 'all-in' cost for reroutes that will persist until the network projects are completed in Q4. He added that Q1 had an additional $20-25 million in weather-related costs. These combined headwinds of over $100 million for the year are expected to go away in 2026, creating a significant tailwind.

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EVP and CCO Kevin Boone described it as difficult to quantify precisely but suggested it was likely concentrated in international intermodal. He estimated the impact might be "a few points, a couple of points" of the current international volume growth, before pivoting to the broader strategic benefits of shifting trade flows for the East Coast.

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EVP and CFO Sean Pelkey stated that the projects will turn into a 'very nice positive.' He estimated that between cost savings and initial growth opportunities, the company would fully recover the roughly $100 million in 2025 operating expenses within a couple of years. He emphasized that this recovery is based on just the initial growth, with more capacity being added beyond that.

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CEO Drew Wilkerson expressed confidence in the forecast, stating the company has a playbook for various scenarios, including a focus on purchase transportation if volume declines. He emphasized that the company is very agile, has realized synergies faster than expected, and is currently staffed to handle approximately 15% overnight growth, providing significant operational flexibility.

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CFO Mark Smith stated that the net P&L impact from currency is very modest (under $10 million) due to hedging strategies. Executive Christopher Clulow explained that the Power Systems ASP increase is primarily a function of product mix, with strong demand for large, high-priced data center generators skewing the average, making it a less reliable performance indicator.

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President Seth Runser responded that the focus is on providing a broad suite of solutions for customers, with Asset-Light being a key part. He highlighted how managed solutions feed business across all segments. He declined to provide a specific revenue breakeven, stating the focus is on margin, productivity, and technology to ensure the cost structure is scaled appropriately. The goal is to return the business to profitability in the current year.

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Chairman & CEO Derek Leathers and EVP, Treasurer & CFO Chris Wikoff highlighted the company's vertically integrated driver school network, which has expanded 50% during the downturn, as a key asset for rapid growth. Mr. Leathers also stated that Werner is well-positioned with a young fleet, avoiding 'fleet age debt' and allowing CapEx to be focused on growth. He added that the EDGE TMS platform will help manage compliance with new emissions rules.

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An executive, likely COO John Orr, highlighted that the new agreements provide predictability for the workforce, are complementary to the PSR 2.0 strategy, and, most importantly, unlock discretionary effort from employees. This effort is seen as critical for optimizing the network and creating value.

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Alan Shaw, President and CEO, stated that Norfolk Southern's balanced strategy of improving service, reducing costs, and growing revenue is well-aligned with the STB's focus. An executive added that recent meetings with STB commissioners reinforced that the company's business plan and focus on resiliency are in lockstep with the regulator's vision.

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CFO Adam Satterfield responded that the primary variance remains between weaker industrial accounts and stronger retail accounts, without significant deviation within those groups. He stressed that the most positive sign is the consistency of ODFL's market share and customer relationships, which positions the company to capture volume when their customers' order books recover.

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