Rosa: It was a good quarter, but the second-half guide raised real questions

Core Viewpoint - The recent quarter showed strong performance, but there are concerns about the guidance for the second half of the fiscal year due to various operational challenges and broader industrial weakness [3][4]. Company Performance - The company reported a good quarter, with a notable increase in US ground home delivery volumes up 8% and pricing up 5%, indicating strong domestic performance [10][11]. - The freight business experienced a year-over-year margin decline of 300 basis points, raising concerns about efficiency and operational costs associated with the upcoming freight spin-off planned for June 2026 [6][8]. Guidance and Future Outlook - The guidance for the second half was effectively lowered despite a strong fiscal second quarter, influenced by issues such as the grounding of MD11 planes and increased incentive compensation for employees [3][4]. - The company is preparing for a significant spin-off, which involves hiring a salesforce and incurring IT expenses, contributing to margin pressures [8][9]. Industry Context - The transport sector has been experiencing a rally, with companies like CH Robinson benefiting from technology-driven improvements in freight matching [14][15]. - Regulatory changes, such as restrictions on non-US citizens driving trucks, are expected to push up freight rates, potentially improving the transport sector's setup for 2026 [16].