- Revenue and Profit Growth: Q4 2025 revenue declined 2% YoY, but operating income rose 19% GAAP, with diluted EPS up 24%, while full-year 2025 revenue fell 1% but operating income increased 4%.
- Cost-Saving Initiative: Achieved $100M+ annualized cost savings via "lowering cost to serve" efforts, with a $25M quarterly run rate, exceeding initial targets.
- Capital Allocation: Spent $575M in CapEx and $923M on share repurchases in 2025, retiring 6.3M shares, signaling financial discipline and shareholder returns.
- Intermodal Performance: Q4 intermodal volumes dropped 2% YoY (transcontinental -6%, Eastern +5%), but the company remains confident in its leading intermodal franchise and growth opportunities.
- 2026 Strategic Focus: Plans $600–800M net CapEx, disciplined growth through operational excellence, and leveraging AI/technology for efficiency, targeting margin repair and expansion in backhaul markets.
Operational Highlights
The company's business segments reported updates, with final mile demand remaining soft, but the company is focused on providing high levels of service. Highway businesses saw strong service and focus on operations lead to double-digit volume growth. The dedicated business delivered flat operating income despite a lower fleet count, with a strong sales pipeline and opportunities for future growth. As CEO Shelley Simpson emphasized, the team's efforts to maintain high service levels and prioritize operational excellence have been key to the company's success.
Guidance and Outlook
CFO Brad Delco discussed the company's plan for 2026, with net CapEx expected to be between $600 million and $800 million. The company anticipates disciplined growth through operational excellence, leveraging investments in people, technology, and capacity into competitive advantages, and continuing to repair margins. Analysts estimate next year's revenue growth at 7.0%, indicating a positive outlook for the company's future performance.
Valuation Metrics
With a P/E Ratio of 35.49 and an EV/EBITDA of 13.48, the company's valuation appears to be reasonable, considering its strong operational performance and growth prospects. Additionally, the company's ROE of 15.16% and ROIC of 9.14% indicate a strong ability to generate returns for shareholders. The company's financial discipline, including a strong balance sheet and record share repurchases, supports shareholder value.
Segment Performance
The intermodal business saw a 2% year-over-year decrease in volumes in the fourth quarter, with transcontinental volumes down 6% and Eastern loads up 5%. The company has a strong pipeline and visibility to growth, and remains confident in its industry-leading intermodal franchise. The dedicated business is expected to see modest operating income growth in 2026, with more momentum likely in 2027, due to a wave of new truck growth.
Cost Savings Initiatives
The company has made progress on lowering its cost to serve, with a $25 million quarterly run rate and a $100 million annual target. Executives expect to continue executing above this target, driving efficiency in overhead and people, scaling investments, and challenging costs. The company's focus on reimagining its business with technology, including AI, aims to empower teams and drive further cost savings.