Richa Harned

Richa Harne asked if there's upside risk to GXO's 2026 margin outlook beyond the guided 20 basis points expansion, given current productivity enhancements, or if these are longer-term projects. She also sought an update on GXO's data center strategy, its market opportunity, and how automation plans differentiate its service in this vertical.

Answer

CEO Patrick Kelleher indicated that while guidance reflects current initiatives, higher pipeline conversion could improve performance, driven by focus on high-margin verticals, pricing, site productivity, and SG&A leverage. CSO Kristine Kubacki detailed the significant and growing data center market opportunity, emphasizing its complexity, high-value nature, and GXO's success in securing multiple contracts and expanding its pipeline across regions.

Richa Harne asked if there's upside risk to the 2026 margin outlook (20 bps expansion) if productivity enhancements perform exceptionally well, or if these are longer-term projects. She also requested an update on momentum in the data center market and how GXO's automation plans differentiate its service in this vertical.

Answer

Patrick Kelleher (CEO, GXO) stated that guidance reflects current initiatives, emphasizing focus on high-margin B2B verticals, pricing for value, site-level productivity (global operating standards, labor planning, AI), and effective SG&A leverage, noting higher pipeline conversion could lead to better performance. Kristine Kubacki (Chief Strategy Officer, GXO) highlighted the $28 billion TAM for tech/data centers, its complexity fitting GXO's expertise, and its high-value nature. She noted the pipeline more than doubled in 6 months, with 5 contracts signed in Q4 across multiple regions, demonstrating global scaling ability.

Richa Harned asked for January's tonnage data excluding weather impacts and inquired about the trends in cost per shipment, noting it was higher than historical sequential averages, questioning if this was due to network expansion and the amount of excess capacity available.

Answer

EVP and CFO Matt Batteh stated that January tonnage, excluding weather, would have been down about 4%-4.5%. He explained that Q4's cost per shipment increase was influenced by the timing of wage increases, fewer workdays, and volume decline, despite effective headcount management. Matt Batteh estimated Saia has 20%-25% broad excess capacity, varying by market, and is well-prepared for an inflection in demand.

Richa Harned asked about the stickiness of recent market share gains, especially with a peer expecting to recover lost business, and questioned if Norfolk Southern could still grow operating profit if revenue were to be flat or down.

Answer

CEO Mark George affirmed the goal is to grow operating profit even in a down-revenue scenario by trimming costs and remaining nimble. CCO Ed Elkins addressed the share gain question, stating that as they deliver reliable service, the business becomes sticky because rail is a more efficient and cost-effective mode for customers, helping them save money and build trust.

Richa Harned of Deutsche Bank AG asked about the stickiness of recent market share gains and whether Norfolk Southern could grow operating profit even if revenue is flat or down.

Answer

CCO Ed Elkins asserted that share gains will be 'sticky' as they are based on providing a reliable and cost-effective service. President and CEO Mark George confirmed the company's goal is 'absolutely' to grow operating profit in a flat or down revenue scenario by leveraging cost-out programs and operational agility.

Richa Harne of Deutsche Bank inquired about FedEx's exposure to de minimis shipments, how the company is preparing for potential changes to the tax code, and how this is factored into the Q4 revenue outlook.

Answer

EVP and Chief Customer Officer Brie Carere stated that FedEx is operationally ready for any changes, having prepared its clearance teams and worked with customers, particularly those in Asia. She emphasized that the Q4 outlook assumes volume trends similar to Q3, also noting one fewer operating day in Q4.