Stephanie Moore

Stephanie Moore asked how ArcBest plans to leverage its AI initiatives and other productivity investments in a market recovery, and if these actions signify a different approach to an upcycle.

Answer

Seth Runser, President and CEO of ArcBest, highlighted the talented internal tech team and AI's potential for automating processes with human-assisted interactions. He noted that 2025 was a foundational year for AI, focusing on understanding processes and leveraging good data. Seth emphasized that AI initiatives are integrated across all projects and will allow ArcBest to scale without adding incremental costs when the market recovers. He mentioned that many examples provided are still in pilot stages, with full rollouts expected in 2026.

Stephanie Moore inquired about how ArcBest plans to leverage its AI initiatives and other productivity investments in a market recovery, and if these actions would lead to a different approach to an upcycle for both Asset-Based and Asset-Light segments.

Answer

President and CEO Seth Runser emphasized ArcBest's talented internal tech team and its tech-forward history, viewing AI as a means to automate processes and improve efficiency with human-assisted interactions. He noted that 2025 was an 'early stage' year for AI, with initiatives integrated into all projects, allowing ArcBest to scale without incremental costs when the market recovers, and many pilot projects are set for full rollout in 2026.

Stephanie Moore of Jefferies asked for a breakdown of cost factors in Q2, how staffing is being managed amid volume growth, and the outlook for labor costs in Q3, noting the operating ratio improvement was at the lower end of the historical range.

Answer

Matt Godfrey, President of ABF Freight, detailed how the company manages labor and outside resources to optimize service, leading to improved cost per shipment despite volume growth. CFO Matt Beasley added that while costs rose to serve new business, execution was efficient. He also highlighted a year-over-year increase of approximately $3 million in workers' compensation costs that impacted the quarter's results.

Stephanie Moore asked a high-level question about the strategic levers ArcBest can pull to navigate a potential 'stagflation' environment of persistent inflation and weaker macro conditions.

Answer

Chairman and CEO Judy McReynolds highlighted cost certainty from the union labor contract. President Seth Runser added that the company views weak markets as a growth opportunity and is leveraging a multi-year efficiency plan, technology like AI, and strategic investments to control costs and scale effectively, pointing to a 24% productivity gain in Asset-Light operations.

Joe Hafling, on behalf of Stephanie Moore, asked what gives ArcBest confidence in its ability to achieve outsized growth in a housing and construction recovery and what is specifically driving the 55% growth in its sales pipeline.

Answer

President Seth Runser stated that ArcBest's long-term focus on service, efficiency gains, and recent organizational changes will allow them to execute faster and capture growth. He noted that customers will seek capacity and reliable partners as the market turns. Regarding the pipeline, he explained the 55% growth is a lead indicator of future potential, showing that customers are actively seeking partners to navigate market disruptions, and reflects strong execution by the sales team.

Stephanie Benjamin Moore from Jefferies asked for the key factors in the Q3 to Q4 margin guidance and what could lead to performance exceeding expectations.

Answer

CFO Matt Beasley stated the guidance is based on the current macro view and could improve if the environment is stronger than expected, noting benefits from productivity projects will continue. CEO Judy McReynolds emphasized the company's confidence in its strong and growing customer pipeline across all services, which positions it well regardless of the economic climate.

Stephanie Moore inquired about the CAD 15 million in advisory fees related to industry consolidation, asking what prompted the decision to engage external advisors and what specific areas they are helping to evaluate, including potential further consolidation options.

Answer

Tracy Robinson, CEO, stated that industry consolidation is a 'big deal' and 'industry-changing,' necessitating expert advice to understand the detailed impacts without disrupting day-to-day business operations. Ghislain Houle, CFO, added that these fees are 'clearly non-recurring' and were non-GAAPed to distinguish them from operating performance.

Stephanie Moore asked for more color on the $15 million in advisory fees related to industry consolidation, specifically what drove the decision to bring in external advisors and what areas they are evaluating, including potential further consolidation options.

Answer

Tracy Robinson, President and CEO, explained that the decision to engage experts was driven by the significant, industry-changing nature of the proposed merger, requiring detailed analysis without disrupting day-to-day business operations. Ghislain Houle, Chief Financial Officer, clarified that these fees are non-recurring and were non-GAAPed to reflect their extraordinary nature.

Stephanie Moore asked about the expected cadence of operating ratio improvement in the second half of the year, given the numerous moving parts in the outlook.

Answer

CEO Tracy Robinson explained that the cadence of margin improvement is difficult to predict as it will depend on the timing and mix of returning volumes. She emphasized the team's focus on being nimble, adjusting resources quickly to both downside and upside scenarios, which will ultimately determine the margin progression through the second half.

Stephanie Benjamin Moore asked about CN's labor strategy, specifically how it is managing headcount and resources in response to varying growth outlooks across different business segments and in preparation for an expected second-half volume lift.

Answer

Derek Taylor, Chief Field Operations Officer, explained that CN maintains flexibility with approximately 470 T&E employees currently on furlough who can be recalled quickly. He emphasized that the company will be decisive in adjusting headcount down if needed but is comfortable chasing volume upside. This flexibility allows them to manage resources effectively in line with the demand they see developing in the second half.

Joe Hain, on for Stephanie Moore, asked for an update on the Falcon Premium intermodal service, specifically regarding customer acceptance and whether demand has met initial expectations.

Answer

Chief Commercial Officer Remi Lalonde reported that the service is performing well operationally. However, he noted that the northbound market from Mexico is highly competitive against established trucking lanes. He expects continued incremental growth but acknowledged it is a tough market to penetrate.

Stephanie Benjamin Moore from Jefferies inquired about the expected balance between macro-driven growth and CN-specific initiatives within the company's updated mid-term EPS outlook.

Answer

President and CEO Tracy Robinson reiterated that CN aims to grow faster than the macro economy, with about 50% of its volume growth expected to come from CN-specific initiatives. She indicated that more specific color on the 2025 outlook would be provided in January.

Stephanie Moore, SVP of Equity Research at Jefferies, followed up on capital allocation priorities, acknowledging the balanced approach but highlighting the significant free cash flow expected in 2027-2028 and the return to targeted leverage in 2026. She asked about specific areas of interest for M&A over the next couple of years, given the increased optionality.

Answer

CEO Jim Fish and CFO David Reed reiterated that WM sees plenty of good strategic acquisition opportunities, expecting to maintain a consistent range of $100-$200 million for acquisitions annually in the coming years, without straying outside core areas. David Reed emphasized that with the balance sheet in great shape and the share repurchase program resuming, capital allocation will remain balanced, with a disciplined approach to M&A pricing and continued shareholder returns.

Stephanie Moore followed up on capital allocation priorities, considering the significant cash flow expected in 2027-2028 and reaching targeted leverage this year. She asked about the M&A component and any particularly interesting areas for acquisitions in the next couple of years.

Answer

CEO Jim Fish indicated an expectation of $100 million-$200 million annually for tuck-in acquisitions, with plenty of good strategic opportunities within the core business, without straying outside. EVP and CFO David Reed reiterated a disciplined approach to acquisitions and a continued share repurchase program, emphasizing the company's strong balance sheet.

Stephanie Moore inquired about WM's appetite for M&A opportunities outside of the traditional solid waste space for 2026 and 2027, considering the integration work for the healthcare deal.

Answer

Jim Fish (CEO) stated that WM typically stays close to its core business, which includes solid waste, hazardous waste, and medical waste. He does not expect the company to venture into unrelated sectors and has enough on its plate in the near term.

Stephanie Moore asked about WM's M&A appetite for 2026 and 2027, specifically whether the company would consider opportunities outside of the traditional solid waste space, given the ongoing integration of the healthcare deal and current solid waste acquisitions.

Answer

CEO Jim Fish stated that WM typically stays close to its core business, which includes solid waste, hazardous waste, and medical waste. He indicated that while Stericycle was the farthest venture, it was still similar to the core, and the company does not expect to pursue acquisitions in unrelated sectors, having enough on its plate in the near term.

Stephanie Moore of Jefferies asked for a breakdown of the puts and takes affecting normal margin seasonality in the second half and requested an update on the M&A environment and pipeline.

Answer

EVP & CFO Devina Rankin explained that the typical H1 to H2 margin step-up will be slightly muted in C&D due to strong Q2 landfill volumes but will be aided by a lessening margin drag from the healthcare business and benefits from lower recycling commodity prices. President & COO John Morris confirmed a strong M&A pipeline with over $500 million expected for the year, including one sizable deal anticipated to close in H2.

Stephanie Benjamin Moore asked for an update on the company's multiyear labor initiatives, inquiring about current turnover rates, progress in optimizing the workforce through attrition, and the specific technologies being rolled out to achieve these goals.

Answer

EVP and COO John Morris reported that the company has eliminated the need to fill 2,600 roles to date through natural attrition and plans to eliminate another 940 in 2025, driven by automation in recycling and residential collection. He also mentioned new technology for fleet planning and scheduling, as well as tools to augment technician skills, as key drivers of reducing labor dependency.

Stephanie Moore asked for a quantification of the margin improvement at upgraded recycling facilities and the company's OCC pricing assumption for the fourth quarter.

Answer

EVP & CFO Devina Rankin quantified the impact of automation as a roughly 10 percentage point lift in the margin of the recycling business. SVP & Chief Sustainability Officer Tara Hemmer stated the Q4 guidance assumes a blended commodity basket price of $85 per ton.

Stephanie Moore asked about current market green shoots and Landstar's strategic plan for 2026 if the anticipated demand recovery (bull case) does not materialize, focusing on continued supply-side dynamics.

Answer

President and CEO Frank Lonegro noted that recent rate positivity is largely supply-side driven due to DOT regulations. He mentioned data center ecosystem, machinery, AA&E, HAZMAT, and energy as strong segments, while building products (excluding data centers), automotive, and cross-border were challenging. He affirmed that if the bull case doesn't materialize, Landstar will continue to double down on areas with competitive advantages like heavy haul, cross-border, HAZMAT, and cold chain, leveraging its ability to handle complex freight and sell safety, security, and service.

Stephanie Moore from Jefferies asked about current market conditions, specifically inquiring about any green shoots in end markets or supply-side factors contributing to better-than-seasonal trends observed in January. She followed up by asking about Landstar's strategic plan for 2026 if the anticipated "bull case" demand recovery does not materialize, but supply-side dynamics continue.

Answer

President and CEO Frank Lonegro attributed the better-than-seasonal trends to supply-side factors like DOT regulations impacting capacity and noted sequential improvements in DAT rates. He identified strong performance in the data center ecosystem, machinery, AANE, HAZMAT, and energy sectors, while acknowledging softness in building products (excluding data centers) and automotive. For a scenario where demand remains soft in 2026, Frank Lonegro outlined a strategy to focus on areas of competitive advantage such as heavy haul, cross-border, HAZMAT, and cold chain, leveraging the company's ability to provide superior safety, security, and service to customers.

Stephanie Moore from Jefferies asked what factors are needed for the demand environment to improve, if there's early optimism for 2026, and to identify any end-market strengths or weaknesses.

Answer

Frank Lonegro, CEO and President, suggested stable trade policy, a consumer shift back to goods, and the deployment of capital from infrastructure bills. He noted interest rates impact automotive and housing. Bright spots included the unsighted and heavy haul business (17% year-over-year revenue increase), the AI data center ecosystem, and an uptick in U.S.-Mexico cross-border business, though he expressed caution about 2026 optimism without concrete signs.

Stephanie Moore asked what factors are needed for the demand environment to improve, if there's any early optimism for 2026, and highlighted specific end market strengths or weaknesses.

Answer

CEO Frank Lonegro identified stable trade policy, a consumer shift back to goods, and the potential from infrastructure bills as key drivers for demand improvement. He noted bright spots in the unsighted and heavy haul business, the AI data center ecosystem, and improving U.S.-Mexico cross-border business. However, he cautioned that optimism for 2026 is currently 'on paper' without concrete signs of a market turn.

Stephanie Moore of Jefferies asked about capital allocation priorities, noting the slowdown in share buybacks in Q3, and inquired about any updated thoughts on potential M&A given the market environment.

Answer

CEO Frank Lonegro reiterated that core business investment in technology and equipment remains a priority. He explained that the Q3 buyback pace was slower because there were fewer opportunistic moments to repurchase shares at favorable prices due to lower stock volatility. On M&A, Lonegro stated that while the uniqueness of Landstar's model creates a narrow set of suitable targets, the company has begun internal discussions and would be open to an acquisition if a seamless fit emerged.

Stephanie Moore asked about Union Pacific's future pricing opportunities, considering the strong network performance and value provided to customers. She questioned whether an industry-wide change or an improving freight backdrop is necessary to bolster pricing, and how Union Pacific is positioned post-merger.

Answer

Kenny Rocker, EVP of Marketing, identified two structural factors impacting pricing: coal contract mechanisms (which provided a benefit in 2025) and the muted pricing uplift in domestic intermodal over the past three years. Despite these, he clarified that Union Pacific's strategy remains focused on pricing to value based on their strong service product, with no change in their aggressive pricing approach. Jim Vena, CEO, reiterated the principle that 'service drives price' and affirmed that rail remains more price-competitive than truck.

Stephanie Moore asked about Union Pacific's future pricing opportunity, given its strong network performance and customer value. She inquired if industry-wide changes or an improving freight backdrop are necessary, and Union Pacific's position post-merger.

Answer

Kenny Rocker, Executive Vice President of Marketing, identified two structural factors impacting pricing: coal contract mechanisms and muted domestic intermodal rates over the past three years. He clarified that despite these, Union Pacific's strategy is to price to value, with teams actively engaging customers on service and new markets. Jim Vena, Chief Executive Officer, emphasized that 'service drives price' and that rail remains more price-competitive than truck.

Stephanie Moore from Jefferies asked for insights into the sustainability of the company's cost performance into the second half of the year, requesting details on any puts and takes that could affect results and the path to hitting full-year targets.

Answer

EVP of Operations Eric Gehringer stated the game plan remains focused on executing against challenging goals and finding new efficiencies in areas like terminal dwell and locomotive productivity. EVP of Marketing & Sales Kenny Rocker highlighted expected strength in coal and new business wins. CFO Jennifer Hamann noted the one-time labor expense from Q2 will not repeat, but reminded that volume cadence will be unusual with expected sequential declines due to tough international intermodal comps.

Stephanie Benjamin Moore of Jefferies asked for a broader update on the Mexico business beyond grain, including the outlook and potential impacts from geopolitical or administrative changes.

Answer

EVP Kenny Rocker highlighted significant opportunities in Mexico for converting over-the-road truck freight, particularly in finished vehicles and auto parts. He emphasized Union Pacific's competitive advantages, including multiple partnerships, its own rail assets in the market, and being the only railroad with daily service. He expressed excitement about a pro-business environment supporting freight.

Stephanie Moore asked President and CEO Steve Angel about CSX's strategy and positioning regarding the ongoing major industry merger, specifically how the company plans to capitalize on opportunities during the review period and its long-term strategy if approved, making CSX the sole East Coast rail.

Answer

President and CEO Steve Angel emphasized focusing on running CSX's business to the best of its ability daily, independent of the merger's outcome, which he expects to be a long process. He stated that CSX will manage risks, mitigate challenges, and be prepared to present its case to authorities, reiterating that the primary focus is on improving CSX's operations and competitiveness.

Stephanie Moore asked about CSX's strategy and positioning in light of the major industry merger, inquiring about near-term opportunities and the long-term strategy if the deal is approved.

Answer

Steve Angel, President and CEO, CSX Corporation, emphasized focusing on running the business to the best of its ability daily, regardless of the merger's outcome. He noted that CSX would identify and leverage opportunities, mitigate risks, and prepare its case for authorities, ultimately prioritizing daily execution to create value.

Stephanie Moore inquired about how CSX is positioning itself to capitalize on the completion of major infrastructure projects and respond to strategic changes, such as industry consolidation.

Answer

Sean Pelkey, EVP and CFO, highlighted the network's strong recovery and cost momentum, with completed projects setting up CSX for future double-stack capacity and a well-run network. Steve Angel, President and CEO, discussed mitigating risks and capitalizing on opportunities arising from industry consolidation, referencing past mergers and STB standards.

Stephanie Moore from Jefferies LLC requested more details on the recent management reorganization, asking about the drivers behind the decision and its strategic goals, such as capturing new business or improving customer responsiveness.

Answer

President & CEO Joseph Hinrichs explained the reorganization was a proactive measure initiated months ago in response to revenue pressures. The goal was to drive approximately 5% efficiency by reprioritizing resources, particularly in engineering and technology, as part of a broader, disciplined approach to cost management.

Stephanie Benjamin Moore asked about the impact of volumes diverted from East Coast ports ahead of potential labor strikes and whether those volumes are now returning to normal flows.

Answer

CCO Kevin Boone described the volume shift to the West Coast as 'relatively modest.' He noted a brief impact from the short East Coast port shutdown but highlighted that the operations team ramped back up immediately, minimizing disruption. He expects the lost days of volume to be recovered during the remainder of the quarter.

Stephanie Moore requested more details on the peak season performance, specifically regarding the K-shaped recovery commentary and the strength of peak season, including insights on small business and B2B trends.

Answer

Brie Carere, EVP and Chief Customer Officer, FedEx, expressed satisfaction with peak season, noting it's tracking in line with forecasts for mid-single-digit year-over-year ADV growth (high single-digit total volume with an extra operating day). She observed small and medium businesses performing slightly ahead of forecast, while larger retailers were slightly below, which is favorable for revenue quality. She also highlighted strong time in transit and effective management of large package volume.

Stephanie Moore requested more color on peak season performance, including trends related to a K-shaped recovery, overall strength, and small business/B2B contributions.

Answer

EVP and Chief Customer Officer Brie Carere reported that peak season is tracking in line with forecasts, expecting mid-single-digit year-over-year ADV growth and high single-digit total volume growth. She noted that small and medium businesses are slightly ahead of forecast, while larger retailers are slightly below, which is favorable for revenue quality. She expressed confidence in a strong peak season despite ongoing challenges.

Stephanie Moore asked for an assessment of the company's ability to flex its network in response to intra-quarter demand shifts, given the material impact on earnings, and questioned if anything could have been done differently.

Answer

EVP and CFO John Dietrich stated that while the team does an excellent job monitoring trends, the mix shift during the quarter was dramatic and adjusting an expansive network takes time. He noted that it's difficult to 'flip a switch' but highlighted that the upcoming wind-down of the U.S. Postal Service contract will provide additional network flexibility and efficiency opportunities going forward.

Stephanie Moore asked how Cintas's record retention levels and strength in key verticals might inform its pricing strategy going forward, given the perceived stickiness of these customers.

Answer

President and CEO Todd Schneider reiterated that Cintas's long-term pricing strategy remains unchanged, operating at historical levels. He emphasized that Cintas focuses on growing margins by extracting inefficiencies and providing great value in a highly competitive market, rather than solely relying on price adjustments, as customers have many choices, including traditional competitors, e-commerce, and big-box retail.

Stephanie Moore asked how Cintas's record retention levels and strong performance in key verticals influence its future pricing strategy.

Answer

Todd Schneider, President and CEO, reiterated that Cintas's long-term pricing strategy remains consistent, operating at historical levels. He emphasized that margin growth is driven by extracting operational inefficiencies rather than solely through price adjustments, given the highly competitive market landscape that includes traditional competitors, e-commerce, and big box retail.

Stephanie Moore asked about Cintas' appetite to further expand its fire and safety business, exploring how the company leverages both organic growth and opportunistic M&A for this expansion.

Answer

Todd Schneider, President and CEO, stated that Cintas has a strong appetite for expanding its fire business, both organically and through M&A. He noted frequent acquisitions in this segment (some smaller, some tuck-ins, some for new footprints), which provide opportunities for sales organization investment, self-serving more customers, and back-office synergies by extracting inefficiencies. For a follow-up on technology investments, Mr. Schneider confirmed that technology investment is a long-standing and ongoing strategy, with SAP providing a valuable foundation. He explained that Cintas focuses its technology investments, including AI, analytics, algorithms, and large language models, in two main areas: making it easier for customers to do business and making employee partners more successful, viewing it as a competitive advantage and an ongoing opportunity.

Stephanie Moore inquired about Cintas's appetite to further expand its fire and safety business, leveraging both organic growth and opportunistic M&A, and asked about internal conversations regarding the opportunity to leverage AI and machine learning with their advanced tech stack for productivity or incremental business.

Answer

President and CEO Todd Schneider stated that the fire business has a bright future, with Cintas actively pursuing both organic growth and M&A (frequent, often smaller acquisitions for footprint expansion or tuck-in synergies). He confirmed that technology investment, including AI, analytics, and large language models, is ongoing and built upon their SAP foundation. The focus is on making it easier for customers (account management, purchasing) and making employee partners more successful (information, productivity, administrative time reduction), viewing it as a competitive advantage.

Stephanie Moore inquired about Cintas' appetite to further expand its fire and safety business, specifically how it leverages both organic growth and opportunistic M&A. She also asked about internal discussions regarding leveraging AI and machine learning, given Cintas' advanced tech stack, to improve productivity or drive incremental business.

Answer

Todd Schneider, President and CEO, stated that the fire business has a bright future, with Cintas actively pursuing both organic growth and M&A (frequent, smaller acquisitions for footprint expansion or tuck-ins) to leverage operational efficiencies. He explained that Cintas' ongoing technology investments (SAP, AI, analytics, LLMs) focus on two areas: making it easier for customers (account management, purchases) and making employee partners more successful (information, productivity, reducing administrative time).

Stephanie Moore from Jefferies asked about any signs of weakness or strength in specific end markets, such as manufacturing, and inquired if Cintas would consider M&A outside of its core business areas.

Answer

President & CEO Todd Schneider reported no real weakness across the company's broad customer base, though he noted goods-producing customers face more pressure than those in the services sector. Regarding M&A, he stated that Cintas is acquisitive in all three of its route-based businesses and sees no need to expand into new areas, given the significant untapped market opportunity that already exists.

Stephanie Moore of Jefferies inquired about any areas of strength or weakness across Cintas's end markets, particularly manufacturing, and asked about the potential for M&A outside of the company's core areas.

Answer

President & CEO Todd Schneider reported no significant weakness across the company's broad customer base, though he noted goods-producing customers face more pressure than service-providers. On M&A, he confirmed Cintas remains acquisitive within all three of its route-based businesses and sees no need to look externally, given the significant growth opportunities that remain in its current markets.

Stephanie Benjamin Moore of Jefferies inquired about the competitive environment, asking if there has been any stepped-up activity from rivals. She also asked how potential industry consolidation might impact Cintas's competitive positioning.

Answer

President and CEO Todd Schneider described the market as consistently competitive with no significant recent changes, reiterating that Cintas's primary focus is on the vast 'no-program' market. He and CFO Mike Hansen stated that they do not expect industry consolidation to fundamentally alter the competitive dynamics, as they compete against a wide range of traditional and non-traditional players daily.

Stephanie Moore asked for reflections on the overall insourcing versus outsourcing trend in fiscal 2025 compared to prior years, and insights into the competitive landscape, especially given recent changes with competitors.

Answer

CEO John Zillmer observed that the level of first-time outsourcing remains elevated, with the Penn contract being a significant example of a move to first-time outsourcing. He noted elevated outsourcing trends across multiple sectors, particularly in higher education and university athletic departments, driven by strategic alternatives and funding needs (e.g., NIL environment). Zillmer stated that Aramark has grown its market share against both self-operated entities and competitors, focusing on quality, consistency, program strength, and client relationships to win business. He expressed satisfaction with overall results while continuously striving for improvement and aggressive competition based on capabilities.

Stephanie Moore asked for insights into the overall insourcing versus outsourcing trend in fiscal 2025 compared to prior years, and also inquired about the competitive landscape, especially given recent changes with competitors.

Answer

CEO John Zillmer stated that first-time outsourcing remains elevated, with the Penn contract being a significant example. He noted strong opportunities in higher education, particularly athletic departments, driven by strategic alternatives and NIL environment needs. Zillmer emphasized Aramark's success in growing market share against both self-operated clients and competitors by focusing on quality, consistency, and strong client relationships, and expressed confidence in their ability to compete aggressively.

Stephanie Moore asked about the expectation for pricing to continue outpacing inflation and inquired about the largest drivers for incremental margin expansion over the next 12 to 18 months.

Answer

CFO Jim Tarangelo clarified that the company's goal is for pricing to be in line with inflation, not to use it for profit expansion. He identified the primary drivers for future margin improvement as ongoing supply chain efficiencies and economics, disciplined SG&A cost management, and effective control over food costs.

Stephanie Moore asked Patrick Dovigi about any additional actions GFL might consider to further unlock shareholder value, beyond the previously executed divestitures of Environmental Services (ES) and GIP, and ongoing share buybacks.

Answer

Patrick Dovigi, CEO and Founder of GFL, expressed his view on the market's undervaluation of the industry and GFL's shares, highlighting the significant returns from GIP and ES divestitures. He emphasized share buybacks as the best use of capital given the 'dislocated' share prices, alongside a strong M&A pipeline, anticipating an 'outsized' M&A year in 2026, well in excess of $1 billion.

Stephanie Moore asked Patrick Dovigi about any additional actions GFL might consider to unlock shareholder value, beyond the previously executed divestitures of ES and GIP, and the ongoing share buybacks.

Answer

Patrick Dovigi (CEO and Founder, GFL) reiterated his belief in the dislocated share price, emphasizing that the $2.8 billion-$2.9 billion in share buybacks year-to-date represents the best use of capital. He highlighted confidence in the operating plan, a robust M&A pipeline (expecting over $1 billion next year), and a flexible balance sheet to support both buybacks and M&A, asserting that the stock will eventually reflect its true value.

Stephanie Moore from Jefferies inquired about the M&A pipeline's focus on tuck-in acquisitions versus new markets and the visibility for deals in the second half of the year. She also asked for details on the drivers of the strong volume performance despite a weak industrial economy.

Answer

Founder, Chairman, President & CEO Patrick Dovigi stated the M&A focus remains on densifying existing markets and that GFL is on track to meet its capital deployment targets, setting up strong rollover growth for 2026. Executive VP & CFO Luke Pelosi attributed strong volume to strategic market selection in high-growth areas like the U.S. Southeast and benefits from EPR-related investments in Canada.

Stephanie Benjamin Moore asked for an explanation of the volume performance in the quarter, which exceeded expectations despite a challenging weather environment.

Answer

Executive Luke Pelosi explained that while weather negatively impacted U.S. roll-off and special waste volumes, this was more than offset by strong performance in Canada. The Canadian segment's volume growth was driven by a significant tailwind from new Extended Producer Responsibility (EPR) contracts, which contributed over 5.5% to volume, demonstrating the benefit of GFL's macro-agnostic growth investments.

On behalf of Stephanie Moore, her associate asked about the remaining steps to achieve an investment-grade credit rating and for details on pricing (open vs. restricted book) and volume expectations (shedding vs. specialty waste).

Answer

CEO Patrick Dovigi stated that achieving an investment-grade rating is up to the agencies (Moody's and S&P), who typically like to see performance roll through for a 12-month period, but he expects significant upgrades in the interim. Executive Luke Pelosi noted that collection pricing is still strong at 6%+, and post-collection pricing has a new floor in the mid-single digits. He added that intentional volume shedding is largely complete, and the guide includes a 50-basis-point margin drag from conservative special waste assumptions, which could be an area of upside.

Stephanie Benjamin Moore asked about the drivers behind the significant 170 basis point margin expansion in the 2024 guidance and questioned whether assets other than Environmental Services might be considered for sale.

Answer

CFO Luke Pelosi attributed the strong margin expansion to the quality of GFL's asset base, favorable price-cost spread, synergy realization, and deliberate volume shedding strategies. He noted that about half of the recent 70 basis point guidance increase comes from M&A and commodity prices, with the other half from underlying operational success. CEO Patrick Dovigi responded that any potential asset sale would be limited, strongly implying the focus is on the Environmental Services segment.

Stephanie Moore inquired about the sustainability of recent supply exits in the market and whether they are sufficient to structurally reduce supply. She also asked what actions RXO could take to manage gross profit per load in the coming quarters if demand does not materialize, assuming the current market squeeze is the bottom of the cycle.

Answer

Drew Wilkerson, Chairman and CEO of RXO, explained that the current regulatory enforcement on non-domiciled drivers and English language proficiency represents a significant structural change, potentially larger than ELD enforcement, which will remove substantial capacity. Jared Weisfeld, Chief Strategy Officer, highlighted the over $30 million in new cost initiatives and anticipated benefits from improved carrier representative productivity on RXO Connect and Freight Optimizer to manage gross profit per load.

Stephanie Moore questioned the underlying freight market assumptions for Q3, particularly for the automotive sector, and asked about the company's ability to outperform normal seasonality from Q3 to Q4.

Answer

CSO Jared Weisfeld stated the Q3 outlook assumes a continued soft freight market with persistent automotive headwinds. He noted that improvements in purchased transportation are helping the company outperform typical seasonality. For Q4, he expects sequential EBITDA growth, supported by ongoing business improvements, but cautioned that the magnitude depends on peak season consumer demand.

Stephanie Benjamin Moore inquired about RXO's updated mid-cycle earnings power following the Coyote integration and asked for the underlying freight market assumptions baked into the Q2 guidance.

Answer

CEO Drew Wilkerson explained that the business's long-term earnings power is dramatically improved through purchase transportation opportunities, increased scale, and productivity gains, leading to higher highs and lows. CSO Jared Weisfeld added that the Q2 outlook does not assume any seasonal volume ramp from the soft April levels, even at the high end of the range, providing a conservative base.

Stephanie Moore asked about the pricing contribution to Q3 revenue growth versus volume, and UL Solutions' general pricing strategy given the competitive environment. She also inquired if the 1% revenue headwind from the restructuring program for 2026 would still allow the company to grow in line with its long-term top-line growth algorithm.

Answer

CFO Ryan Robinson detailed strong growth in certification (8.7%) and non-certification (6.8%) testing, with similar contributions from both price and volume. He noted ongoing certification services particularly benefited from price increases, explaining that testing services are continuously priced based on value, while ongoing certification is annual. He confirmed that the 1% revenue headwind from exiting businesses does not materially change the overall growth rates for the remaining 99%+ of the business, allowing for better focus.

Stephanie Moore asked about the pricing contribution for Q3, seeking a breakdown between pricing and volume growth, and how to view pricing given the competitive environment and future practices. She also inquired if, despite the revenue headwind from the restructuring program in 2026, UL Solutions still expects to grow in line with its long-term top-line growth algorithm.

Answer

CFO Ryan Robinson detailed that certification testing and non-certification testing saw strong growth, with relatively similar contributions from both price and volume. He noted that ongoing certification services particularly benefited from price increases. Mr. Robinson confirmed that the 1% revenue headwind from discontinuing service lines in 2026 would not materially change the overall growth rates for the remaining 99%+ of the business, allowing for greater focus on core areas.

Stephanie Moore of Jefferies asked for perspective on the data center growth megatrend relative to others and questioned how UL Solutions plans to capitalize on it through capital allocation, such as lab investments or M&A.

Answer

President & CEO Jennifer Scanlon described the data center trend as a confluence of electrification, sustainability, and digitalization, highlighting the massive projected growth in energy consumption. She confirmed the company is evaluating both incremental lab capacity investments for new standards and potential M&A or partnerships to deepen relationships with key stakeholders in the data center ecosystem.

Stephanie Benjamin Moore inquired about the tangible impacts of tariffs on customer behavior, such as product redesigns or manufacturing shifts, and whether the uncertain macro environment has altered UL Solutions' M&A strategy.

Answer

CEO Jennifer Scanlon explained that customers, particularly in the industrial sector, have been adapting to tariffs for years and no material impact is currently visible. She affirmed that the company remains active in pursuing M&A opportunities to strengthen its market position, irrespective of the macro climate.

Stephanie Moore requested an update on the elevator and escalator business, including its organic growth, cross-selling progress, and integration status, and asked about the Specialty Services pipeline and its implications for 2026 organic growth.

Answer

Russ Becker, President and CEO, reported that the elevator business is performing 'really well' with high single-digit organic growth, pushing double-digits. He described cross-selling as being in the 'top of the second inning' but accelerating, and mentioned one 'tweener' acquisition operating independently. For Specialty Services, Mr. Becker stated that backlog is at record highs across both segments, and while the target is mid-single-digit organic growth, APi Group will capitalize on accretive opportunities. David Jackola, EVP and CFO, added that Q4 guidance implies strong mid-to-upper single-digit organic revenue growth and the highest margin expansion quarter, with project backlog fueling future inspection, service, and monitoring opportunities.

Stephanie Moore from Jefferies asked for a breakdown of the margin performance in the quarter and an update on the systems and business enablement investments discussed at the Analyst Day.

Answer

EVP & CFO David Jackola detailed that margin performance was driven by strong, accretive pricing in service and good fixed-cost leverage, partially offset by some margin erosion from rising material costs. He confirmed good progress on the systems investments, emphasizing that the project team is executing well and incorporating feedback from field leaders.

Stephanie Benjamin Moore of Jefferies Financial Group Inc. inquired about the key drivers for margin expansion for the year and the business's sensitivity to a weaker demand environment. She also asked about the company's appetite for a larger, platform-level acquisition.

Answer

President and CEO Russell Becker attributed margin expansion to an improved revenue mix toward services, disciplined project selection, Chubb value capture, pricing, procurement, and accretive M&A. He expressed confidence in achieving significant margin improvement beyond the current 13% target. On larger M&A, Becker stated that APi has demonstrated its capability with the Chubb deal and has the bandwidth for another large acquisition if the right opportunity, fit, and valuation arise, supported by the company's strong cash generation and balance sheet.

Stephanie Benjamin Moore asked for more color on management's confidence that project-side delays are temporary and limited to 2024, and also inquired about the key drivers of margin expansion in the Safety Services segment.

Answer

President and CEO Russ Becker explained that project delays are primarily timing-related due to external factors like engineering and permitting, with the exception of the federally-funded rural broadband program. He noted a 5% organic backlog growth supports confidence for 2025. For margins, Becker cited the 'inspection-first' strategy, improved service mix, and international branch optimization as key drivers. EVP and CFO Kevin Krumm also mentioned Chubb value capture and improved project execution.

Stephanie Moore asked about XPO's multi-year pricing opportunity, confidence in sustaining pricing strength through 2026 despite tougher comps, and the implications of moderating CapEx for free cash flow.

Answer

CEO Mario Harik explained that XPO aims to bridge an 11-point price differential with best-in-class carriers over five-plus years, driven by increasing assessorial revenue (from 12% to 15%), growing small-to-medium sized businesses (from 25% to 30%), and continued contract renewal price differentials. He expects these levers to drive above-market yield growth even in a soft macro. CFO Kyle Wismans noted CapEx would moderate to the midpoint of the 8-12% long-term range, leading to significantly higher free cash flow, projected to be north of $400 million in 2025.

Stephanie Moore asked about XPO's multi-year pricing opportunity, confidence in sustained pricing strength into 2026, and the free cash flow implications of moderating CapEx.

Answer

Mario Harik (CEO, XPO) outlined a 5+ year plan to bridge the 11-point pricing differential to best-in-class, leveraging assessorial revenue growth (to 15%), increasing small-to-medium businesses (to 30%), and contract renewal price increases. Kyle Wismans (CFO, XPO) noted CapEx will moderate from 15% of revenue to a couple of points lower this year, moving towards the 8-12% long-term range, expecting free cash flow to grow north of $400 million this year due to higher income, lower cash taxes, and reduced CapEx.

Stephanie Benjamin Moore from Jefferies requested an update on the performance of recently opened service centers and asked whether the revenue from these new sites was generated from new or existing customers.

Answer

Chief Strategy Officer Ali Faghri reported that the new sites are performing well and are expected to be accretive to the operating ratio this year, driving cost efficiencies. Executive Mario Harik added that the revenue is predominantly from existing customers, as the new facilities are in established markets. The primary benefits are improved service and a lower cost-to-serve, which in turn helps attract new business over time.

Stephanie Benjamin Moore of Jefferies requested an update on the performance of recently opened service centers and asked about the customer mix (new vs. existing) at these locations.

Answer

Chief Strategy Officer Ali Faghri reported that the new sites are performing well and are expected to be accretive to the operating ratio this year. CEO Mario Harik added that revenue is predominantly from existing customers, as most new terminals are in established markets. The primary benefits are improved service and efficiency, which in turn helps attract new customers over time.

Stephanie Moore from Jefferies inquired about the company's confidence in maintaining high service levels during a potential freight market upswing.

Answer

Executive Mario Harik expressed high confidence, emphasizing that service improvements are foundational and not dependent on low volumes. He pointed to their successful handling of the volume surge after the Yellow bankruptcy as proof. Furthermore, he stated that having over 30% excess door capacity and a larger fleet positions them perfectly to maintain service during a recovery.

Stephanie Moore asked about the M&A pipeline and environment, expectations for late 2025 and 2026, and the competitiveness, particularly concerning increased competition in specific industry aspects like door-to-door. She also inquired about the impact of AI initiatives on search engine optimization (SEO), including fewer clicks or less conversion, and how Rollins is adapting its customer acquisition strategies.

Answer

Jerry Gahlhoff (President and CEO) highlighted a strong M&A pipeline, with Rollins completing seven deals in Q3 after Saela, and noted continued opportunities despite increased PE entrants in the market of 19,000 pest control companies. Ken Krause (EVP and CFO) added that Rollins is often the 'acquirer of choice' due to fair pricing and care for acquired employees/brands. Jerry also acknowledged AI's disruption in SEO but noted improved close rates due to higher quality leads, with Rollins' marketing team continuously adjusting and leveraging diversified customer acquisition methods to avoid over-reliance on performance marketing.

Stephanie Moore asked about the levers Rollins can pull to maintain residential client retention in a recession and whether current market uncertainty could act as an enabler for its M&A strategy.

Answer

CEO Jerry Gahlhoff recalled the 2008 crisis, noting that strong technician-client relationships maintained solid retention. He explained they have playbooks to work with customers, such as payment plan adjustments, deployed on a market-by-market basis. On M&A, CFO Ken Krause stated their preferred targets are multi-generational businesses that do not base selling decisions on short-term macro events, suggesting a recession would not necessarily spur M&A activity.

Representing Stephanie Moore from Jefferies, Peter Sullivan asked about the strategy for new business wins, particularly the performance of digital versus traditional channels and any corresponding differences in customer retention. He also inquired about the labor environment, including technician turnover and the current hiring climate.

Answer

CFO Ken Krause explained that Rollins uses a multifaceted customer acquisition strategy and that while costs may vary by channel, customer retention is consistently healthy across all of them. CEO Jerry Gahlhoff described the 2024 hiring environment as favorable, allowing the company to be well-staffed. Krause added that improving retention among new employees (with tenure under six months) remains a key focus and opportunity.

An analyst on behalf of Stephanie Moore asked for an update on the progress of SG&A modernization and cost-cutting initiatives.

Answer

EVP and CFO Kenneth Krause confirmed that the company continues to make good progress, noting that the administrative cost component continues to improve as a percentage of sales. He expressed satisfaction with the returns generated from the restructuring efforts initiated over a year ago.

Stephanie Moore requested a breakdown of the significant increase in non-GAAP add-backs within the U.S. domestic segment for the quarter, specifically the delta from $66 million to $302 million, and the major components contributing to this change.

Answer

Brian Dykes, CFO, explained that approximately 80% of the increase in non-GAAP add-backs was attributed to the driver voluntary separation plan, including severance costs. Carol Tomé, CEO, specified that $166 million of the total $175 million driver buyout cost was recognized in Q3, indicating a lower amount would be seen in Q4. The total network reconfiguration and efficiency reimagined program remains within its previously stated cost range.

Stephanie Moore asked for a breakdown of the U.S. domestic segment's non-GAAP add-backs for the quarter, specifically the delta from $66 million to $302 million, and the major components contributing to this increase.

Answer

Brian Dykes, CFO, clarified that approximately 80% of the non-GAAP adjustment was associated with the driver voluntary separation plan, which incurred $166 million in Q3 out of a total $175 million cost. He confirmed that this charge falls within the previously communicated range of $400 million to $650 million for the total network reconfiguration and efficiency reimagined program. Carol Tomé, CEO, added that a similar amount of add-backs is not expected in Q4.

Stephanie Benjamin Moore asked about conversations with customers regarding peak season preparations, given the current inventory drawdowns and potential for a supply chain squeeze.

Answer

CEO Carol Tomé confirmed that peak season discussions are underway, noting that while large retailers can manage tariff impacts, smaller ones are more cautious. CFO Brian Dykes said UPS is modeling various scenarios, including a potential shift from ocean to air freight. Nando Cesarone, EVP and President, U.S., added that peak season costs are variable and can be adjusted based on actual volume.

Stephanie Benjamin Moore asked about conversations with customers regarding peak season planning, given the current environment of inventory drawdowns and supply chain disruptions.

Answer

CEO Carol Tomé acknowledged the timeliness of the question, noting that while large retailers can manage tariff impacts, some smaller ones are rethinking holiday orders. CFO Brian Dykes explained that UPS is modeling multiple peak scenarios, from a tariff resolution causing an air freight surge to further delays creating a supply shock. Executive Nando Cesarone added that peak season costs are variable and can be adjusted as volume forecasts become clearer.

Stephanie Benjamin Moore asked for details on the U.S. domestic revenue per piece (RPP) trend during Q3 and the outlook for Q4 and into 2025.

Answer

CFO Brian Dykes reported positive RPP momentum from Q2 to Q3, with base rates contributing 170 basis points to growth. He expects RPP to turn positive in Q4, driven by pricing actions from the 'Architecture of Tomorrow' (AOT) technology. CEO Carol Tomé provided a specific example of using an AOT modifier to increase RPP by 12% on a segment of volume, demonstrating a favorable trade-off between price and volume.

Stephanie Moore asked about Norfolk Southern's strategies to mitigate potential integration risks and network disruption from the proposed merger with Union Pacific, given both companies' strong service performance.

Answer

President and CEO Mark George emphasized a deliberate, cautious approach to integration, learning from past lessons, benchmarking, and leveraging talent to ensure no hiccups. Chief Operating Officer John Orr highlighted the team's successful PSR 2.0 transformation, which built momentum and value, providing a stable foundation for integration planning. Both stressed the importance of maintaining strong safety and service performance as a foundation of strength for the merger.

Stephanie Moore from Jefferies asked about Norfolk Southern's current plans and strategies to mitigate potential integration risks and network disruption associated with the proposed merger with Union Pacific, given both companies' strong service performance.

Answer

President and CEO Mark George emphasized that both he and Union Pacific's CEO are aligned on avoiding integration hiccups, planning to take their time, learn from past lessons, and leverage talent from both teams for deliberate planning. Chief Operating Officer John Orr highlighted the team's successful PSR 2.0 transformation since 2004, which has built momentum and resilience, providing a stable foundation for integration planning. He stressed the importance of both companies operating well as they enter the merger.

Stephanie Benjamin Moore asked about the industrial development pipeline, questioning if there have been any project pauses due to economic uncertainty, and also inquired about any signs of shipment pull-forwards in Q1 ahead of potential tariffs.

Answer

CCO Ed Elkins noted that while the top of the industrial development pipeline has expanded, some customers are extending decision timelines to evaluate the macro environment. Regarding Q1 volumes, he said there were many puts and takes, including weather recovery, making it difficult to isolate any tariff-related pull-forward. CEO Mark George added that the data does not scream 'pull-forward' and it was not a meaningful factor.

Stephanie Benjamin Moore of Jefferies Financial Group Inc. inquired about the industrial development pipeline, asking about project pauses and whether there was evidence of a Q1 shipment pull-forward due to tariffs.

Answer

CCO Ed Elkins noted an expanding industrial pipeline but said some customers are extending decision timelines. Regarding a tariff pull-forward, both Elkins and CEO Mark George stated it was not a meaningful factor in Q1, as customer feedback and data did not indicate a significant trend.

Stephanie Benjamin Moore of Jefferies asked if this year's productivity gains are 'loading the spring' for accelerated OR improvements in future years, particularly with a better freight backdrop.

Answer

Alan Shaw, CEO, affirmed that the company is executing the first year of a multiyear plan to achieve a sub-60% operating ratio and intends to continue beyond that. Mark George, CFO, added that any outsized top-line growth in the future would likely generate strong incremental margins and could accelerate their progress toward that goal.

Stephanie Moore asked about the specific drivers of Protiviti's gross margin compression year-over-year and the company's confidence in the business returning to a high 20s gross margin profile in the longer term, including market, demand, or pricing factors needed for this recovery.

Answer

CEO Keith Waddell attributed Protiviti's gross margin compression to meaningful cumulative inflation impacting staff costs, challenges in passing all costs through in a competitive market, efforts to maintain staff utilization (including reallocating full-time staff to contractor roles), and a lower mix of large, efficient, high-margin projects being replaced by smaller, shorter-duration, lower-margin projects. He reiterated commitment to Protiviti being a double-digit operating margin business, expecting improvements in 2026 and beyond through project mix, diligent staff management, and cost focus.

Stephanie Moore asked about the drivers of Protiviti's gross margin compression year-over-year and the company's confidence in the business returning to a high 20s gross margin profile longer-term, including the market conditions needed for such a recovery.

Answer

CEO Keith Waddell attributed past gross margin compression to cumulative inflation impacting staff costs, challenges in passing these costs through in a competitive market, commitment to staff retention affecting utilization, reallocation of full-time staff to contractor roles, and a mix shift towards smaller, shorter-duration projects. He expressed confidence in Protiviti's long-term potential as a double-digit operating margin business, expecting improvements in 2026 and beyond through a better project mix, diligent staff management, and a focus on cost efficiency.

Stephanie Moore asked how Robert Half is positioned to gain market share when the economic environment improves, particularly given its technology investments and the prolonged sluggishness impacting smaller competitors.

Answer

President & CEO M. Keith Waddell asserted that Robert Half is better positioned than ever to take share. He cited the company's AI-powered matching technology and its bench of full-time engagement professionals as key differentiators that smaller, regional competitors cannot match, allowing them to provide higher quality candidates and jobs.

Stephanie Benjamin Moore inquired about the demand environment for Protiviti, asking about the status of its project pipeline and whether clients were delaying project starts due to economic uncertainty. She also sought clarification on the demand trends for permanent placement services in the second-quarter outlook.

Answer

Executive M. Waddell confirmed that Protiviti's pipeline is up year-over-year but acknowledged that some project delays and pauses occurred in Q1, particularly from financial services clients, which have been factored into Q2 guidance. Regarding permanent placement, he noted that while April started stronger than March, it is a very short time period and less predictive of full-quarter results than contract trends.

Stephanie Moore asked about the specific drivers giving management confidence in reaching new peak margins in the next recovery cycle and inquired about any potential for gross margin pressure.

Answer

CEO M. Waddell cited three key drivers for future margin expansion: the retention of top-performing recruiters, productivity gains from technology investments, and the strong, market-share-gaining performance of Protiviti. He stated that the biggest upside for gross margin is a continued favorable mix shift toward higher-skilled, higher-margin placements, rather than any anticipated pressure.

Stephanie Moore questioned whether ManpowerGroup's technology advancements, including AI and digital core investments, would enable the company to capture future market growth with fewer people, leading to greater operating leverage in subsequent upswings.

Answer

Chairman and CEO Jonas Prising affirmed that the investments in a global digital core (90% revenue on common front office platform, 60-90% back office transactions on global platform) position the company uniquely. He expects these advancements to drive faster, higher-quality client delivery, streamline back and middle office processes for productivity and efficiency, and leverage AI for further automation, ultimately leading to greater operating leverage.

Stephanie Moore asked if ManpowerGroup's technology advancements and investments, including AI, will enable the company to capture future market growth with fewer personnel, leading to greater operating leverage and torque to the model during future upswings compared to past cycles.

Answer

Chairman and CEO Jonas Prising affirmed that the company's investments, including 90% of revenues flowing through a common global front office platform and extensive data lake, position them uniquely. He expects these advancements, combined with global back office centralization (e.g., Latin America), to drive improved productivity, efficiency, and operating leverage. The goal is to streamline transactional activity through automation and AI, allowing more focus on high-value human interactions with clients, candidates, and associates.

Stephanie Moore of Jefferies asked about how permanent placement activity trended during the quarter and what the expectations are for the third quarter, particularly in the U.S.

Answer

EVP & CFO Jack McGinnis stated that permanent placement activity was relatively stable, representing 15.3% of gross profit, in line with expectations after a reset in Q1. He noted that the U.S. saw flattish perm revenue, which is a sign of stabilization. The company anticipates this stability at current lower levels will continue into the third quarter.

Stephanie Benjamin Moore asked for color on hiring trends across specific industry verticals and whether any were showing signs of improvement that could indicate a broader inflection in demand.

Answer

CFO Jack McGinnis highlighted areas of relative strength, including aerospace (particularly in France) and food manufacturing, which has held up well in the U.S., France, and Italy. He noted that broader manufacturing and auto verticals remain sluggish, as does the public sector in the U.K. and Canada. He described the technology vertical as stable at lower levels after a significant decline a year ago, with clients taking a 'wait-and-see' approach.

Stephanie Moore from Jefferies inquired about the medium-term margin opportunities from the Rise technology platform and requested a performance update on the company's Polymer Centers.

Answer

CEO Jon Vander Ark explained that the Rise platform drives margin opportunity through enhanced customer connectivity, which improves retention, and through AI-powered route optimization, which creates significant cost efficiencies. Regarding the Polymer Centers, he noted that the Las Vegas facility had a learning curve but is now making great progress, with those learnings being applied to the new Indianapolis center. He expressed high confidence in the projects' returns due to strong demand for recycled PET.

Stephanie Moore of Jefferies inquired about the medium-term margin opportunities from leveraging the Rise platform and asked for a performance update on the company's Polymer Centers.

Answer

CEO Jon Vander Ark explained the Rise platform drives opportunity through enhanced digital customer communication, which improves retention, and through using AI to optimize routing, which improves efficiency. Regarding Polymer Centers, he noted the Las Vegas facility had a slower start but is now making great progress, with learnings applied to the Indianapolis center, which is 'hitting its marks.' He reiterated confidence in the returns profile due to strong demand for recycled PET.

Stephanie Moore inquired about the operational performance of the new Polymer Centers, the potential impact of a new administration on RNG projects, and the strategy for sourcing third-party volumes.

Answer

CEO Jon Vander Ark reported that the Polymer Centers are meeting expectations for volume and demand, with operational learnings from the Las Vegas facility accelerating the ramp-up in Indianapolis. He and CFO Brian DelGhiaccio emphasized that RNG projects are financially viable without federal incentives like the IRA, as state-level regulations are the primary driver. Vander Ark added that they plan to increase third-party volume as the centers reach full capacity over a 12-month period.

Stephanie Benjamin Moore from Jefferies inquired about the next phase of capabilities for the RISE digital platform in 2025 and asked about investment plans for retrofitting or automating traditional recycling facilities (MRFs).

Answer

CFO Brian DelGhiaccio explained the next phase of RISE involves optimizing route sequencing and ensuring driver adherence, noting every minute saved is worth $5 million annually. CEO Jon Vander Ark added that the company continuously invests in its MRFs with new optical sorters and automation, with the primary goal being to produce a higher quality, higher value product rather than simply reducing labor.

Stephanie Moore asked a high-level question about the company's long-term 'North Star' for earnings contribution and margin aspirations for the combined entity. She also followed up on the next steps to close the margin gap in the LTL business beyond the recent pricing actions.

Answer

CFO Jamie Pierson directed her to a competitive analysis on page 28 of the presentation, highlighting the significant margin improvement opportunity in the Expedited Freight segment, suggesting it could reach market-level margins of 18-20% over the next couple of years. President, CEO & Director Shawn Stewart added that the focus is on fine-tuning the organization for leanness and operational quality. Mr. Pierson also emphasized that achieving operating leverage by growing revenue without increasing SG&A is the key to closing the gap.

Stephanie Benjamin Moore from Jefferies inquired about the pricing performance run-rate in the Expedited segment following recent corrective actions and asked about margin expectations and the path to closing the profitability gap with LTL peers.

Answer

CEO Shawn Stewart noted that the full impact of pricing actions, finalized in February, was only partially felt in Q1. CFO Jamie Pierson added that year-over-year comps should be favorable. Both executives stated that the path to higher margins, comparable to peers and historical levels, now depends on leveraging the network's excess capacity by adding appropriately priced volume. Stewart concluded, 'We just got to grow.'

Stephanie Moore from Jefferies asked for the reasons behind the updated full-year EBITDA outlook, inquired about the overall demand environment and forward bookings, and followed up on how the used car price environment impacts expectations for vehicle gains and DPU.

Answer

EVP & CFO Scott Haralson explained the EBITDA revision was due to a delay in the anticipated pricing recovery, which is now showing early positive signs. EVP & CCO Sandeep Dube noted that demand from corporate, government, and inbound segments is improving, with forward bookings tracking ahead of planned fleet capacity. Haralson added that they expect stable residual values going forward, though gains on sale will likely be lower than in Q2 due to reduced sales volume.

Stephanie Benjamin Moore asked if the low-$30s DOE target is achievable with a smaller fleet, sought clarity on the Q2 liquidity forecast, and inquired about the size of the inbound international travel business.

Answer

CFO Scott Haralson acknowledged that scale will be required to hit the low-$30s DOE target, which the company aims for by 2027. He clarified the Q2 liquidity forecast of over $1 billion is net of expected cash burn and potential litigation payments but excludes any proceeds from the new ATM offering. CCO Sandeep Dube noted that inbound travel represents a single-digit percentage of the business.

An associate for Stephanie Moore asked about the results from implementing dynamic pricing strategies and requested quantification of the financial impact from recent hurricanes.

Answer

Chief Commercial Officer Sandeep Dube highlighted success with dynamic pricing in value-added services and noted the commercial team has increased the frequency and quantity of testing across the board to improve monetization. Dube also stated that the net impact from the hurricanes was not significant to the quarter and overall benign.

Stephanie Moore of Jefferies inquired about the current labor environment, asking for details on labor availability, costs, and any real-time trends the company is managing.

Answer

President and CEO Dale Asplund explained that reducing employee turnover by 40% has yielded $10-12 million in annual savings on hiring and onboarding, which has been reinvested into frontline employees through benefits like PTO and guaranteed hours. EVP & CFO Brett Urban added that while nominal wage increases are at the low end of the typical 3-5% range, the overall investment in employees has improved retention and is a key part of their strategy.

Stephanie Moore asked for an update on shifting snow contracts to a fixed model, current inflationary pressures, and the company's confidence in achieving its mid-single-digit organic growth target in a potentially weaker macro environment.

Answer

CEO Dale Asplund stated that this year's snow events should encourage more clients to adopt fixed-price contracts. He also noted that labor inflation is manageable at 2-3% and is offset by pricing and scope adjustments, with some commodity costs even deflating. He expressed confidence in long-term growth driven by internal initiatives, acknowledging that short-term macro 'noise' could affect the timing but not the trajectory.

Stephanie Moore of Jefferies inquired about the key drivers behind the acceleration in organic growth during the second quarter, asking for a breakdown by geography and market, and also touched upon the outlook for the upcoming peak season.

Answer

CEO Malcolm Wilson attributed the growth to improved volumes across all regions, with North America showing particular strength due to a favorable customer mix in aerospace and technology. He noted that inventory levels have normalized and that Q3 trends remain consistent. Wilson expressed strong confidence in the holiday season based on early customer commitments but emphasized that the company is maintaining a conservative full-year outlook to be prudent.

Stephanie Moore posed a high-level question on whether a more favorable M&A environment under the current administration would alter Casella's acquisition strategy. She also requested an update on the McKean landfill's development and its expected impact over the next two years.

Answer

CEO John Casella stated their M&A strategy remains unchanged, focusing on tuck-ins and new platforms on the Eastern Seaboard, though he noted tax law changes are very positive for M&A. President Edmond Coletta detailed that the McKean landfill is getting a new transfer building, expected to be complete in Q1 2026, which will expand its capabilities and allow it to be a positive volume contributor through 2026.

Stephanie Moore from Jefferies asked if a potentially more favorable administration for M&A would alter Casella's acquisition strategy and requested an update on the McKean landfill's progress and investment timeline.

Answer

Chairman & CEO John Casella responded that their M&A strategy remains unchanged, focusing on tuck-ins and new platforms on the East Coast, though he noted tax benefits are positive. President Edmond Coletta detailed that the McKean landfill is building a new transfer facility, expected to be complete in Q1 2026, which will allow it to accept more waste types and drive volume growth. EVP & CFO Bradford Helgeson confirmed this new investment is factored into the updated cash flow guidance.

Stephanie Benjamin Moore of Jefferies asked for clarification on the financial impact of weather in Q1 and requested a framework for modeling the potential EBITDA contribution from internalizing waste volumes.

Answer

Executive Ned Coletta stated that the company does not quantify the impact of a typical 'tough winter,' focusing instead on operational execution. CEO John Casella added that February volumes were weaker year-over-year but improved in March. Regarding internalization, Coletta explained that creating a simple model is difficult because the benefit is highly dependent on the specifics of each acquisition, including existing contracts and the multi-year timeline required to shift volumes and build out capacity.

Stephanie Benjamin Moore from Jefferies asked for clarification on the financial impact of weather in the first quarter and requested a framework for modeling the potential EBITDA contribution from internalizing volumes post-M&A.

Answer

Executive Ned Coletta stated that the company does not quantify the impact of a 'tough winter' unless it's a major, acute event. Regarding M&A-driven internalization, he explained that providing a general rule for EBITDA impact is difficult, as the benefit is highly dependent on the specifics of each acquisition, including existing disposal contracts and available transfer capacity, making it a multi-year, deal-specific process.

Stephanie Benjamin Moore asked for an update on synergy realization from prior acquisitions like GFL and Twin Bridges, as well as the potential from this year's deals. She also inquired about the primary drivers for the expected margin expansion across all business lines in 2025.

Answer

President Ned Coletta reported that synergies from the Twin Bridges acquisition are ahead of plan, while the GFL assets are behind due to transition complexities but are now on track. CFO Bradford Helgeson identified the key 2025 margin drivers as continued operating cost reductions in collection, the Willimantic MRF coming back online, and the normalization of the C&D market, which should allow the landfill business to be a positive contributor to margins.

Stephanie Moore of Jefferies inquired about the long-term full-service margin trajectory, asking if any structural barriers would prevent it from returning to pre-COVID levels of 9-10%. She also asked for an outlook on reaching targeted overall enrollment levels.

Answer

Chief Financial Officer Elizabeth Boland stated there are no structural reasons preventing a return to 9-10% margins. She explained that over half the centers are already at or above pre-COVID profitability. The main drag is the 10% of centers in the sub-40% occupancy cohort, and progress depends on improving or rationalizing this group. She expects the majority of the portfolio to be back to pre-COVID levels in the next year or two, excluding that bottom cohort.

Stephanie Moore from Jefferies asked if the STB would apply a similar 'protecting competition, not competitors' stance as in the CPKC deal and questioned how existing gateways would be preserved under a potential transcontinental merger.

Answer

CEO Keith Creel highlighted a critical distinction: the rules governing CPKC's merger required only 'protecting' competition, whereas the new 2001 rules applicable to any future merger mandate that the applicants must 'enhance' competition. He stressed this is a materially different and higher standard. Any remedy for affected customers must meet this 'enhance' test, not merely preserve the status quo, a fact he said the STB will want to get right given the potential for triggering industry-wide consolidation.

Stephanie Benjamin Moore of Jefferies sought clarification on the sequential OR improvement outlook and asked if there has been an increase in activity or plans for production moves to Mexico.

Answer

EVP & CFO Nadeem Velani confirmed the outlook was for sequential OR improvement off the Q1 level. EVP & CMO John Brooks responded that while they have seen some pause, the majority of industrial development projects in Mexico are pushing forward, and they have not seen a major change in investment plans on a grand scale.

Stephanie Moore from Jefferies asked for Old Dominion's perspective on how potential transcontinental railroad mergers could impact the LTL industry.

Answer

EVP & CFO Adam Satterfield stated that he does not expect any material impact on the LTL industry from potential railroad mergers. He views it as an issue for 'the other end of the supply chain' and noted that historically, changes in the rail industry have not shown a correlation to Old Dominion's business levels.

Stephanie Moore from Jefferies Financial Group Inc. inquired about the potential impact of a transcontinental railroad merger on the LTL industry.

Answer

EVP & CFO Adam Satterfield stated that he does not expect any material impact on the LTL industry from such a deal. He views it as an event on the 'other end of the supply chain' that is unlikely to have a direct, correlated effect on Old Dominion's business levels.

Stephanie Benjamin Moore requested more granular detail on end-market performance within verticals like automotive or building materials, beyond the broad industrial and retail categories.

Answer

CFO Adam Satterfield responded that ODFL does not typically provide that level of granular detail but emphasized the strength of their diversified customer base. He reiterated that the industrial segment outperformed the company average in Q1, aligning with broader ISM trends, and expressed confidence in growth once customers regain certainty.

Stephanie Benjamin Moore requested more granular commentary on end-market performance by specific sectors or subsectors beyond the broad industrial and retail categories.

Answer

CFO Adam Satterfield declined to provide granular detail, emphasizing instead the strength of ODFL's diversified business mix. He reiterated that the broader industrial vertical performed better than the company average in Q1, driven by earlier strength in the ISM index, and that the company is well-positioned for a recovery.

Representing Stephanie Moore, Joe Hafling asked about Old Dominion's network positioning for nearshoring trends and whether the company has any appetite for M&A.

Answer

CFO Adam Satterfield confirmed that M&A is not a priority, as the company is focused on its successful organic growth strategy. He affirmed that ODFL's extensive 261-center network is ideally positioned to capture both inbound and outbound freight opportunities arising from any increase in manufacturing in the U.S., Canada, or Mexico.

Stephanie Benjamin Moore asked for evidence that would suggest a true cyclical freight upside, rather than just a normalization of demand from high COVID-era comps.

Answer

CFO Adam Satterfield identified an increase in weight per shipment as the first key indicator of a cyclical recovery. He expressed confidence that the industry will emerge from the prolonged downturn, driven by structural trends like e-commerce and reshoring, which will support growth beyond simple normalization and allow ODFL to leverage its 30% excess capacity.

Stephanie Moore from Jefferies asked how Avis measures the success of its new strategic investments and what key metrics are used. She also requested early data on customer conversion and labor costs for the 'Avis First' service.

Answer

CEO Brian Choi detailed a three-part framework for measuring success: driving structural growth, maintaining free cash flow discipline, and enhancing the customer experience to earn pricing power. For 'Avis First,' he explained it is too early for conversion data but the goal is to match the airline industry's premium seat share. The service is priced to be margin-accretive, with the primary challenge being disciplined scaling to maintain service quality.

Stephanie Moore of Jefferies asked how Avis measures the success of its new structural growth initiatives and requested color on the customer conversion and labor cost implications of the Avis First service based on early pilots.

Answer

CEO Brian Choi outlined a three-part framework for measuring success: driving top-line growth, maintaining discipline on free cash flow generation, and enhancing the customer experience. For Avis First, he noted it was too early to share conversion data but emphasized the service is priced to be margin-accretive from day one. The goal is to make the upgrade accessible (e.g., $10/day) while providing a significant RPD lift, with the main constraint being the ability to scale the premium experience without compromising quality.

Stephanie Moore asked for an assessment of the current competitive landscape in the Americas and inquired about the levers available to offset potentially higher new vehicle acquisition costs in the future.

Answer

CEO Joseph Ferraro stated that while the environment remains highly competitive, he has not observed any significant changes in industry dynamics. He emphasized that focusing on internal execution is paramount. To offset higher vehicle costs, Ferraro highlighted improving vehicle utilization through technology to create more rentable days, which lessens the dependency on new car purchases, and using advanced modeling to optimize the total cost of ownership across various manufacturers.

Stephanie Moore of Jefferies asked for an update on the pricing environment, specifically the progress on repricing legacy freight and freight in new terminals. She followed up by asking for specific examples of actions taken in Q2 to optimize the newly national network.

Answer

President & CEO Frederick Holzgrefe stated that while pleased with progress, there is still significant runway for pricing improvement, citing public data showing Saia's revenue per shipment is below its national peers. For network optimization, he gave examples like running direct line haul from Minnesota to Seattle and deploying triples in Ohio to reduce line haul costs by 30%, which are now possible with the expanded footprint.

Stephanie Benjamin Moore of Jefferies posed a high-level question about whether structural industry dynamics, such as better technology or inventory management, could mean that less freight volume returns to the LTL industry in future economic recoveries compared to past cycles.

Answer

President and CEO Fritz Holzgrefe acknowledged that freight characteristics may change over time but argued that the fundamental need for LTL service remains strong. He pointed to factors like reshoring and the basic requirement for less-than-truckload deliveries to a wide range of businesses, from manufacturers to retail stores. He concluded that while the freight may look different, Saia's unique and permanent place in the supply chain, supported by an inflationary cost structure, is secure.

Stephanie Benjamin Moore from Jefferies asked how Saia is positioned to handle a potential inflection to a stronger macro environment in 2025 and whether it would require significant incremental hiring or equipment purchases.

Answer

CEO Fritz Holzgrefe explained that while a material increase in volume would require adding variable labor, the company is well-positioned to scale. He emphasized that the 21 new facilities opened this year provide significant operating leverage, making them much better prepared to capitalize on a stronger freight backdrop than in the past.

Stephanie Moore from Jefferies asked if a potentially more lenient regulatory environment for M&A would make Waste Connections more open to pursuing larger-scale deals.

Answer

CEO Ronald Mittelstaedt explained that regulatory scrutiny has not been an inhibitor to the company's M&A strategy, as evidenced by their 28-year history without a second request from the Department of Justice. Therefore, while a more favorable environment is welcome, it does not fundamentally change their approach or act as a major accelerant for their specific M&A activities.

Stephanie Benjamin Moore of Jefferies inquired about the potential impact of EPA deregulation on PFAS and landfill rules, and asked for an update on the Arrowhead Landfill's volume ramp.

Answer

Executive Ronald Mittelstaedt stated there has been no material impact from deregulation. He expressed confidence in handling any potential PFAS rules with existing technology, viewing it as a competitive advantage. Regarding the Arrowhead Landfill, he reported that daily tonnage has ramped significantly, from 2,700 to peak days of 7,500-8,000 tonnes, and the company is actively pursuing more third-party volume.

An associate for Stephanie Moore asked for more color on the increasing average deal size and the impact from Sterling, and also questioned if there was potential to raise the synergy target given the strong early progress.

Answer

CEO Scott Staples attributed larger deal sizes to increased 'package density' as clients focus on risk and compliance, noting that significant cross-sell opportunities into the Sterling base are just beginning. CFO Steven Marks stated that while they are pleased with actioning $37 million in run-rate synergies, they need to rebuild the synergy pipeline before considering an increase to the $60-$70 million target, though enhancing profitability remains a key focus.

Stephanie Benjamin Moore asked about the sales playbook for winning new business, particularly the mix of wins from competitors versus first-time outsourcers, and also confirmed if key sales and operations leaders were still with the company.

Answer

Interim CEO Phillip Holloman explained that the sales strategy is effective, citing Q2 results where 44% of over 7,500 new accounts were non-programmers (first-time outsourcers) and 56% were taken from competitors. He emphasized that they win by providing the best possible service and sometimes on price. Holloman also confirmed that Head of Sales Pete Rego and COO Bill Seward remain with the company.

An analyst on behalf of Stephanie Moore asked about the deleveraging plans for 2025, the impact of the AR securitization, and the implied customer retention rate in the fiscal 2025 guidance.

Answer

CFO Rick Dillon confirmed that excess cash will continue to be used for deleveraging, noting a $233 million operating cash benefit from the AR securitization and an additional $35 million from a recent asset sale. CEO Kim Scott declined to provide a specific retention target for 2025 but expects continued improvement, highlighting the October rate of 93.7% as a strong start.

Stephanie Moore asked about the company's playbook to maintain momentum and drive growth if the anticipated demand inflection does not materialize for much of the next year.

Answer

Michael Zechmeister, President of NAST, responded that the playbook is to "control what we can control" by executing the operating model, maintaining pricing discipline, and leveraging their people and technology to outperform the market. CEO Dave Bozeman added that the company's strong balance sheet allows for continued investment through a prolonged downcycle, ensuring they are positioned for strength when the market eventually rebounds.