All right, let's maybe give me a thumbs up. All right. Let's go ahead and get started with the next presentation. For those of you that do not know me, I'm Tyler Brown. I'm the senior analyst here at Raymond James. I cover transportation, garbage industry. I do some heavy construction materials. I do quite a few things, I'm very excited still mourning, to have J.B. Hunt with us. Actually, you guys are my first transports. I'm kind of excited to kind of get going on transports. Presenting today, the company's CEO, Shelley Simpson, COO, President of also Highway and Final Mile, Nick Hobbs, Senior Director of Finance, Mr. Brad Delco. I think, Shelley, this is a generalist conference, I think that you've got a couple of.
Sorry.
All good. All good. I think you've got a couple of slides. I think we've got a couple slides. Maybe I was hoping that you could kind of just give us a little bit about who you are, what you do, because at the end of the day, you're a whole lot more than a one-way truckload company. You guys have a lot of, you know, there's a huge offering here. Shelley, I'm going to go ahead and turn it over to you, and then we'll just jump into a Q&A. Will that work?
Sounds great.
Okay.
Yep. Thank you, Tyler, and thanks for having us. Excited to be here. We'll see if we've got slides that we can make work and maybe not. 11:40 A.M. Awesome. Thanks so much. I thought I'd just give you a five-minute overview, and then we can dig into any questions that you have from there. For us, we wanna create the most efficient transportation network, and one of the ways that we do that's really in our company foundations. This is where we invest and where our brand really comes to life. For us, we really think about our people and the differentiation our people have within the organization, and they really are the team that creates that change for our customers' mindset and how they can think about buying across multiple services.
We then connect to our technology and where we've invested in technology through our J.B. Hunt 360 platform that really helps empower our people, but it also helps connect what's happening from a capacity perspective, and certainly we're known as one of the largest capacity providers in North America. Our mission is to drive long-term value for our people, our customers, and shareholders, and we do that through our five core values: integrity, respect, innovation, safety, and always focused around excellence. We'll be celebrating our 65th year this August. Excited to do that. We're located all through North America with 400 different locations. You'll see about 31,000 of our people that are performing that work on behalf of our customers every day.
About two-thirds of those are our professional drivers, about 2,000 in our maintenance team, and the remainder will be in our office team helping support on about $12 billion in revenue. We are a growth company, and we're really excited about the opportunity that presents itself in front of us because although we are large in our space, it is a $600 billion addressable market, and all five of our business units have a great opportunity for growth on behalf of our customers. If you think about what our segments really look like in total, for intermodal, you know, we are the largest inside that segment with about 31% market share. However, the market overall, we do about 2 billion shipments. We estimate 7 million-11 million shipments are on the nation's highways that can be converted into intermodal.
In Dedicated Contract Services, that part of our business also is in the number one leading position in the market. However, that's a very large addressable market at about $90 billion that we've really identified. Our trucking-based solutions, really in both truckload and brokerage, that business really leverages our technology that we've invested into and helps procure capacity on behalf of our customers in either a pure brokerage model or brokered power with company assets. Finally, in the supply chain, we have our Final Mile Services, and that's going to do business inside our home. We think about that through our tenure management team with over 350 years of experience. Average tenure at J.B. Hunt at 27 years. That's very common inside our organization. Our VPs and senior VPs have 20 and 21 years. Our directors at 14.
Our managers, senior managers at nine years. We are a growth company, but also people tend to come in the company and stay a really long time. We think that's a differentiator for the organization as well. When we think about our priorities this year, we do think about them in kind of three key areas. If we take care of number one, it really helps solidify our number two and number three priority. We're focused on disciplined growth this year through operational excellence, making sure that we perform at the highest expectation of our customer. We want to be best in class across all five of our business segments, and then we want to have that rigor and discipline that we've executed on over this last year around our cost and make sure that our growth is accretive for both our customers, our people, and our shareholders.
you know, finally, on lowering our cost to serve, how we think about the company really positioning the organization in any environment. It's been a long, long four years of a freight recession, but really set the company to think about how do we reposition the company to take out $100 billion in structural costs that doesn't limit our potential upside really in a much improved market overall. Very pleased in the Q4 , we reached greater than $25 million, reaching our $100 million target that we'd set out in midyear. We've not announced any further targets past that, but we have talked a lot about the transformation work that we're doing, particularly around technology and how we're going to use that to transform our work and how we serve our customers.
Finally, we're not just disciplined in how we grow, we're also disciplined in our capital allocation. Our number one area that we always wanna deploy capital is growth on behalf of our customers. We have pre-funded a lot of our growth, not as much as needed in our capital planning for this year. Last year, we part of our strategy is to be opportunistic in stock buyback and dividend, and we did a nice job in 2025 buying a record $923 million of our stock, retiring 6% of our stock. Overall, good use of cash in total for us. With that, Tyler, I think I'll turn it back over to you.
Perfect. That was very, very helpful. Okay. Actually it segues pretty well. Maybe I'll even do it. Maybe we can start with culture. I actually had the opportunity. I live in Northwest Arkansas, so I know a lot about J.B. Hunt. I've met a lot of J.B. Hunt people over the years. Can we start with culture? Because I think this is something that time to time gets missed. I think it's super important for you, and maybe just talk a little bit more about your culture, how it sets you apart, and quite frankly, your willingness to invest despite the fact that the market's been very, very tough over the last few years.
Yeah. I think it started with our founders, Mr. and Mrs. Hunt, 64 years ago. Mr. Hunt was a driver, founded the organization. Mrs. Hunt was kind of the backbone of making sure that we execute flawlessly and at that operational excellence that we expect today. The one big foundation they had was taking great care of people. So much that Mrs. Hunt used to have drivers and technicians over to her home for Thanksgiving meals. It was just thinking about our people from a family-oriented perspective. Nick and I have both been with the company for a long time. I've been with the company 31 years. Nick, you're at 42 now.
42.
42 years. You know, we've seen the company over the last 15 years or so really double down on our commitment to our people. The greatest time that you see that, you hear a lot of people talk about our people are everything, our people are our culture. We think our people do create the culture that our customers know us for, which is our say do culture, making sure that we uphold the values and integrity of the organization. During this downturn, Tyler, this is really important. You know, we did it in 2009, we did it during COVID, but in this case we said we're not gonna have any mass layoffs. We still have to have a fiduciary responsibility to our shareholders to really focus on cost.
We're very proud of the fact that we didn't do any mass layoffs during this 4-year downturn. Our people became creative and thought in different ways, and especially when we did the $100 million cost takeout, that was without doing mass layoffs again. We believe our people, they really are what bring it to the forefront on behalf of our customers. I think that's why our tenure is so long, why our turnover has been so good. You have to think about that people have choice, and even in this downturn, our turnover has been really great across the organization. I don't think it just shows up with our people, I think it shows up in our financial results as well.
I think that's why our performance here at the back half of last year, being able to execute on that, I think a large result of that is our people.
We're all non-union. I'd just add to that and say that we have a great relationship with our drivers. We've got million-mile drivers. We've got five-million-mile drivers. Takes 35 years, 36 years, 37 years to get to that without accidents. Our culture, you see that in our safety results. It's just permeated throughout our technicians. For us to take care of our customers, it's real easy. Our people wanna take care of our customers, and when we do that, we take care of our people, they take care of our customers. That's just been a culture. Been there since 84, that's the culture from day one, and it continues to be there, and our customers really lean into us a lot and trust us a lot.
Perfect. A very idiosyncratic story at J.B. Hunt. There's a lot going on. We're gonna get into some of that, but we've gotta start with the market.
Mm.
There's, quite frankly, a lot going on in the market. Non-domiciled CDLs, we've got trucking school crackdowns, ELD crackdown. Can you just talk a little bit about what you're seeing in the market? There's a lot of talk about tightness in the market. Just what you're seeing day to day and talk a little bit about some of those supply constraints and if they're really having a real impact on supply.
Tyler, let me kick it off, then I want to turn it to Nick to talk more about what we're seeing from a capacity perspective. After our Q4 earnings call, I talked about the market feels fragile, specifically from what's happening from a supply side perspective. I would tell you from a demand side, it's been, you know, slightly better than what we expected from a customer perspective. I don't think any customers are expecting a real boom in business, we're not expecting a big pickup from a demand side. We're very focused on just making sure that we take market share and what we can control from a growth perspective overall. A lot of things are changing from a supply side of what we've talked about. Nick, I'll let you...
I would just say you've read about this, a lot of this, but there's real capacity exiting now. We've really not had a supply market shrinkage since probably 17 or 18 with ELDs. There's just numerous factors that's going into that, probably the most talked about is non-dom. That's legit. We've had some non-domiciled drivers. We're working through some issues, very small amount, but we know that that's real serious and being enforced. 200,000 drivers out of over-the-road market, so that's pretty significant. It's a matter of how much time that will be, whether it's law or just enforcement. That's happening. We're also seeing driver schools shut down, but also we're seeing a lot of enforcement around chameleon carriers and multiple operating authorities and moving around, a lot of enforcement on that.
We're also seeing, I think one of the bigger things is cabotage. There's no real good way to measure that. Where we're seeing that is in the Texas market before it started being enforced, there was lots of trucks there. Now that it's been enforced, we saw our rates intra Mexico drop dramatically 'cause a lot of the carriers went back to Mexico to run that's not up here running legally. Same thing in Canada. We saw it in the Rust Belt. We're seeing cabotage be a really legit source of capacity leaving. We're seeing a lot of things.
We're also seeing on our bids, I would just say in our bids coming back, we're seeing that when some carriers get award from their bid that they priced six weeks ago, some carriers are saying those rates are no longer good, so we're getting an opportunity to reprice on some of that. That activity's moving up. Many bids where routing guides are falling down, carriers falling out. We're seeing more mini bids. We're seeing all the different signs that capacity is really tightening up in many different areas. Not just one or two things. It's really six or seven different areas that's all kinda coming in at the same time.
Interesting. If we go back a week ago, it was the State of the Union address. I think Did you go? I did go. I thought I saw that on LinkedIn. I did. That's interesting. Unfortunately, there was the story about Dalilah Coleman.
Yeah.
There was a very tragic event. The president effectively implored Congress to move on what's being called the Dalilah's Law, and this is gonna have a lot more, it seems like, teeth around who can ultimately receive a CDL. Can you talk a little bit about that? Because I believe last week it was also introduced by a senator from Indiana, if I'm not mistaken. Just talk about what's different between what you just talked about, which is driven a lot by, you know, call it FMCSA or DOT guidance, whereas this would actually be a piece of legislation.
Yeah. I think it's gonna happen. They're gonna enforce it through regulation or through legislation. To me, it's just a timing of how fast that rest of that capacity comes out. I think a good chunk of non-dom, which this is talking about, has come out, but it might speed it up if this legislation passes. It will just speed it up instead of being two years or three years to when their EAD, their visa, and their CDL expires. That would pull it all forward and say, "You're not legal today," whatever day that is of that law. That's our speculation on the law. We gotta see what actually comes through when they pass the law. To me, it's just a timing is all that's talking about. It's still the same amount of drivers.
It's just is it over a few weeks or a couple of years?
Okay. That's a million-dollar question, number of drivers. You guys actually have a really interesting white paper, highly recommend you take a look-
Yeah
on the J.B. Hunt website. I think there's a lot of talk about the 200,000 non-domiciled. I think Noel Perry, you guys is a consultant in the industry. There was as much talk about as much as 600,000. Do you think that this pushes that number up, or how should we think about that?
I think there's a number of things that could push that number up. That's English language proficiency would be there. It's also cabotage of drivers. It's visa violations of just operating in the border as opposed to coming on up further in the States. There's numerous things that can get up to potentially 600,000. That's really talking about a lot of those different things coming in. It's also talking about more strict enforcement of new entrants entering truck driving schools and certifications. It's also talking about certifying ELDs because today, in the United States, there's 300 and something different suppliers of ELDs. They're all self-certified, so that means you can manipulate them, run extra hours. In Canada, there's like 30 something or 40 something that's certified by the government.
That's getting ready to change here in a few months so that it'll be government certified. There's just all these different initiatives that's all kinda coming in to really, taking some capacity out.
Yeah. To put it in perspective, 'cause I think perspective's key here. There's probably, what, 3.5 million-4 million drivers across the space-
That's-
... let's say. I mean, we could be-
That's also good.
... talking about a material amount of capacity that could be exiting. Would that be a fair to say?
Potentially, yes.
Yeah.
Yeah.
This is where it gets interesting to J.B. Hunt. Maybe the industry gets into a bit of a capacity crunch. You have multiple solutions. You know, one of the things, and, Shelley, you talked about it, you've pre-funded some of that growth. You guys invested during the downturn. Could J.B. Hunt be an outsized winner if that market got really tight? You have some other solutions that maybe, just maybe, you might be a winner in.
Well, I mean, we certainly think so. It's the reason we really thought about when we started the downturn, we said, "How do we use the strength of our balance sheet to really push forward during this downturn so on the other end we could come out a much bigger winner and really reap the benefit of all of that?" Tyler, we didn't realize it'd be four years. but that was definitely our strategy. If you think about the difficulty our customers had during COVID to get capacity, that was so difficult, really wanted to come out of this with a position of strength.
I think if you think about the whole organization in total, we now we didn't do mass layoffs, so we don't have to teach any new people our culture, how we take great care of our customers, how to take care of each other. We're ready to go from a people perspective. Our technology is on a modern platform. We're really leaning in, thinking about transforming our work, and can also be an accelerator for us in the upturn. Technology could really push us forward there, and then certainly in the amount of capacity that we have is significant. I think one thing that we've done that's been really important that we should just share more of is our focus on operational excellence. We've really called for that over the last three years. Nick really helped lead this.
The most resilient part of our business is our Dedicated Contract Services business. If you look at that business, it's within about 130 basis points of its margin target. Really throughout this recession, it's been very resilient, not just for the company, but I would say even in this industry overall. We've taken that concept through the organization, and if you look across all five of our business units, it is the strongest position from a brand perspective with our customers we've ever had. I could say that internally, we've been measuring it internally, but there's an external data source. We issued a press release on it. The Journal of Commerce does an external survey about intermodal service.
Inside that intermodal service, they ask for who's the best intermodal provider, and they rate you on technology and pickup and delivery.
Asset
... and customer service and capacity. For the sixth time, we rated first, but I think what's more important was our Net Promoter Score was a 58. That's comparable to like a Chick-fil-A or Google.
Wow.
Our next closest asset-based providers were both negative on their Net Promoter Score, and that's the differentiation we've really tried to focus on during this downturn, is making sure our customers. That's reflective. We get that external source that tells us that. I would tell you, if we were to do that across the company, if we could get an outside source to do that for us, I think you would see our scores across the board be reflective very much as to how the Journal of Commerce really how that came through from our customers.
Just going back to intermodal, I think you showed a slide of 125,000-ish containers.
That's right.
The goal had been to get to around 150.
Right.
Maybe there's some that are just kinda not in the count.
True
... could you give us a sense of how much slack capacity you have in that? You do 2 million loads, you know, again, squiggle, 2 million loads a year. I mean, could you have as much as 30, maybe even 50% you know, slack capacity in them, in that segment?
Yeah, I would say a couple of things. First, what our box turns do, which will be very important. If you look at our box turns right now, we're historically low. That really shares, you know, how much can we have? If we're at 1.4 turns a month today, can we get back to 1.8? Can we stretch it more than that? That would be slack in capacity. On top of that, we do have some containers that we've purchased. In 2023, we entered into a long-term agreement to purchase 100% of Walmart's private intermodal fleet. That long-term agreement and those boxes, not all of those are actually counted in our capacity yet because we still need to retrofit all of those.
Certainly, we think there's plenty of room for growth inside our intermodal business that's very exciting for us. As we think about this upturn in our business, we think great opportunity for us to seize.
Right. Forget the rates, which potentially have upside potential. When we think about incremental margins at the EBIT line, it'll be good. Andrew, maybe this is for you, but at the free cash flow line, if you think about it like an incremental return on free cash, that should be, I would think, very incremental because a lot of this investment has frankly already been made. You guys have already, you know, invested in that through the downturn.
Yeah. No, I think that's a fair way to characterize it. Yeah, we have pre-funded that growth. You know, we don't need to go out and secure additional capacity. We are paying some expense to store some of that capacity today. To the extent those boxes get in-serviced, that is cost that we're able to take out, plus you're able to generate revenue on those boxes, which would lead to higher incrementals and, you know, more free cash flows.
Right. Okay. I do wanna talk a little bit 'cause, Shelley, you brought it up about technology. Again, you guys have been very technology forward. There's no doubt. You know, if you look at J.B. Hunt 360.
Mm-hmm
... et cetera, et cetera. Can you talk about how I mean, there's a lot of talk about AI and how it's gonna impact the transportation markets. Good, bad, and the ugly, I suppose. Could you talk about your strategy there and just talk about, you know, how you see AI playing out for you at least over the next few years?
You want me to take that?
You're the new tech guy.
I'm the new tech guy. All right. The old operator's the new tech guy. We have a very modern platform that really makes it easy for us to really attach things. We've done a lot. If you think about our process, we're really engineer-oriented. We've done a lot of design for efficiency. That's how we did 360 platform. That's really set us up now as we kinda come in and think about automations. We've been doing bots and automations and all that for a few years, and now you kinda layer in AI, the new buzzword. We're excited about that. We're using a lot of AI in a lot of areas around our customer experience area and also on our payment side.
Just to kind of put an emphasis in it, we've really made a public announcement that we've partnered with UP.Partners and UP.Labs to really invest in AI. We've launched two new companies that's just getting started, and the first is on, really tracking and tracing and automation, also appointment setting, and so really doing some neat things. This is across our entire organization, not just brokerage, but it's across all sides of the company. On the back end, we have another company called Ground Truth that is AI-based that will help us on our billing and receivables and really gonna help us drive efficiency through that process. As we grow, we may not have to grow people at the same amount.
That's just a couple areas, but outside of that, there's a lot of other areas that we're looking at on some automation with some outside AI companies that's helping us maybe negotiate brokerage rates and with carriers and certain things. We're looking at all those areas, and we got a list of things we're doing. We're just being very methodical about that and really gonna put a lot of emphasis on that. The one thing I wanna say is we're fully supportive technology. We did the digital platform early, AI, fully supporting of that. The key is we still have to maintain contact with our customers and our carriers and our drivers, and it's how efficiently we do that, and then how do we drive efficiency in other places. We still have to maintain those relationships.
People buy from people, it's how efficient you do that. That's kind of our philosophy of how we kinda drive that. We're all about efficiency, really leaning into it, and think we're in a really good spot.
Tyler, I might add, too, if you think about the organization, we're taking the biggest opportunities and really leading that from a corporate view, kinda coming across the organization. We also have efficiency that we're working on at a individual view. Really trying to fuel the organization, giving them tools around AI that allows them to think about, "How can I use AI in my day-to-day?" I really believe when you have a culture that people know that we're gonna take great care of them, and we haven't done mass layoffs when we financially could have really talked through that, it's starting to bring the best ideas forward from our people. That's one of the things we went through during budget season this year. We had people come in with two things.
One, how do you create more value for customers? Two, how we use technology to transform your business. We saw some of the coolest ideas from that coming directly out of our frontline people saying, "Here's how we're going to do that," because they know we're going to re-skill and redeploy them into a new role and not necessarily be worried about the role that they have today.
Tyler, that business transformation, I don't know the story. That business transformation we talked about, remember when we announced the $100 million cost plan?
Right.
We at the same time ran a separate cost track focused on transformation. We have a value that we think we can achieve through that. Our engineers went into the business, looked at the way we execute a load, the different steps required to go from point A to point B, and thought about how can we use technology to automate some of this, make our people more efficient, remove those mundane tasks. That work will require some investment on our part. We're at the point right now where we're scoping those costs and making sure that we know how much it's gonna cost. Is it something we can develop internally? Do we need to partner with someone like UP.Labs to achieve it, or is it an off-the-shelf product we can buy?
That will be kind of the next phase of our, you know, cost work is. That'll probably be, you know, later this year into next year, kind of, we execute on some of that.
Perfect. It's interesting. I actually had the exact same thing. One of my garbage companies actually said similar.
Mm.
Some of the best ideas come out of the field.
Yeah
on the AI implementation. That's interesting. Let's talk about the cost program. Just got a couple minutes here. I think you announced the $100 million, no mass layoffs, what is it? What are a couple of the things-
Yeah
that we're talking about there? Is it really about network efficiency?
Mm-hmm.
Maybe just talk a little bit about that. I know you've kind of alluded to it, but does it feel like maybe there's some more, and maybe AI is part of that story?
Great question. One of the things that Darren did in intermodal was really implement a new technology. As we started thinking about what do our customers need from an operational excellence perspective, what's their expectation, we really went from having a mass program around service to being very dynamic by customer, by type of work. That technology implemented for us in the Q3 , really allowing us to take costs out of our system over the long term. A great example would be if a customer has business, and let's say the pickup is 200 miles away from the origin ramp, but we know that business doesn't actually have to go in that moment. We actually can hold that, not deadhead for it, and actually tour the driver from that perspective, removing hundreds of dollars of cost from that perspective.
That was a really great win overall. We've also looked at things from a maintenance perspective. How do we think about efficiency in total? How should we be doing things differently? It took the executive team to really engage because we'd already worked on all the cost side. It really was thinking about, it's okay if we've done it for 20 years this way. What's a new way that we can do that? That's just one of the big examples that we had, and I think we had really great success as a result.
Perfect. Okay, we've got 30 seconds.
Yeah.
We've got to talk about capital allocation.
Yeah
... because at the end of the day, you guys should be a very cash-generative business.
Yeah.
It's a very good place to be. The leverage on the balance sheet is very manageable. How should we think about capital allocation over the next couple of years in just a few comments?
I think our first priority is always to invest in the business.
Yeah.
You know, as Shelley alluded to, we've pre-funded a lot of our growth on the intermodal side. Dedicated as our most capital-intensive business. Those are five-year contracts we'll sign with a customer, ECI, CPI-linked price escalators, fixed and variable components, all underwritten to margin and return targets. We feel very good about deploying capital for that business for growth. We'll maintain our leverage around one times, and then outside of that, we'll be opportunistic with how we think about share repurchases and taking advantage where we see value.
Okay. Perfect. Thank you. Right at time. Thank you so much.
Thank you, Tyler.
Thank you.