Let's go ahead and get started with the next presentation. So for those of you that do not know me, I'm Tyler Brown. I'm the senior analyst here at Ray J. I cover transportation, garbage industry. I do some heavy construction materials. I do quite a few things, but I'm very excited. It's still morning, still morning to have J.B. Hunt with us. So actually you guys are my first transports. So I'm kind of excited to kind of get going on transports. But presenting today, the company's CEO, Shelly Simpson, COO, President of also Highway and Final Mile, Nick Hobbs, Senior Director of Finance, Mr. Andrew Hall. So I think, Shelly, this is a generalist conference. So I think that you've got a couple of. All good. I think you've got a couple of slides. I think we've got a couple of slides. But 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 there's a huge offering here so um shelly 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
yep thank you tyler thanks for having us excited to be here uh we'll see if we've got slides that we can make work and um thanks so much uh so i thought i'd just give you a five minute overview and then we can uh dig into any questions that you have from there for us we want to create the most efficient transportation network and one of the ways that we do that it'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 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 JV at 360 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 and 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 two thousands in our maintenance team and the remainder will be in our office team helping support on about twelve billion dollars 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 six $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 million shipments. We estimate 7 to 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. And then 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. and 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 jb 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 so 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 and when we think about our priorities this year we do think about them in kind of three key areas but if we take care of number one it really helps solidify our number two and number three priority so we're focused on discipline 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 and then 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 a hundred billion dollars in structural costs that doesn't limit our potential upside really in a much improved market overall very pleased in the fourth quarter we reached greater than 25 million reaching our hundred million dollar target that we'd set out in mid-year 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 and then finally we're not just disciplined and how we grow we're also disciplined in our capital allocation. Our number one area that we always want to deploy capital is growth on behalf of our customers. We have pre-funded a lot of our growth, so not as much as needed in our capital planning for this year. Last year, 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 so with that Tyler I think I'll turn it
back over to you yeah perfect that was very very helpful uh okay I think it segues pretty but maybe we can start with culture so I actually have the opportunity I live in northwest Arkansas so I know a lot about J.B. Hunt I met a lot of J.B. Hunt people over the years so 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 mr hunt mrs help is kind of the backbone of making sure that we execute flawlessly and at that operational excellence that we expect today. But the one big foundation they have is taking great care of people. So much that Mrs. Hunt used to have drivers and technicians over to her home for Thanksgiving meals. And so it was just thinking about our people from a family-oriented perspective. And Nick and I have both been with the company for a long time, we've been with the company 31 years. Nick, you're at 42 now. 42 years. and you know we've seen the company over the last 15 years or so really double down on our commitment to our people and 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 and so 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 going to have any mass layoffs but we still have to have we have a fiduciary responsibility to our shareholders to really focus on cost and so we're very proud of the fact that we didn't do any mass layoffs during this four-year downturn but our people became creative and thought of different ways and especially when we did the hundred million dollar cost takeout that was without doing mass layoffs again and so 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 but I don't think it just shows up with our people I think it shows up in our financial results as well and 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. Yeah, we're all non-union. I'll just add to that and say that we have a great relationship with our our drivers. We've got million mile drivers. We've got four or five, five million mile drivers. Takes 35, 36, 37 years to get to that without accidents. So our culture, you see that in our safety results. It's just permeated throughout our technicians. And so for us to take care of our customers it's really easy our people want to 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 uh to be there and our customers really lean into us a lot trust us a lot perfect so a very idiosyncratic story
at jb there's a lot going on we're going to get into some of that but we've got to start with the market because there's quite frankly a lot going on in the market non-domiciled CDLs we've got driver truck trucking trucking school crackdowns ELD crackdown so 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 so tell it 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 but after a fourth quarter 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 and so we're not expecting a big pickup from a demand side but we're very focused on just making sure that we take market share and what we can control from a growth perspective overall but 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 and so there's just numerous factors that's going in to 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 a couple hundred thousand 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 and there's no real good way to measure that but we're seeing that is in the Texas market before it started being enforced there was lots of trucks there now that it's being enforced we saw our rates intra-mexico dropped dramatically because 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 so we're seeing cabotage be a really legit source of capacity leaving so 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 so that activity is moving up many bids for routing guides are falling down a carrier's falling out we're seeing more mini bids so 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 kind of coming
in at the same time interesting so if we go back a week ago it was the state of the union address i think you maybe did you go i think i saw that on linkedin i did so that's interesting so unfortunately there was the story about delilah coleman there was a very tragic event uh but the president effectively implored congress to move on what's being called the delilah law and this is to have a lot more it seems like teeth around who can who can ultimately receive a cdl so 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 and 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 yes i think it's i think it's going to happen they're going to enforce it through regulation or through legislation and so 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 got to see what actually comes through when they pass the law but 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 so that's a million dollar question number of
drivers so you guys actually have a really interesting white paper highly recommend you take a look on the jb hunt website i think there's there was a lot of talk about the 200 000 non-nomiciled but then i think noel perry you guys did a he's a consultant in in the industry there was as much talk about as much as 600 000. so do you think that this pushes that number up
or how should we think about that well i think there's a number of things that could push that number up um and 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 so there's numerous things that can get up to potentially 600,000 so that's really talking about a lot of those different things coming in and they're and 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 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 so there's just all these different initiatives it's all kind of coming in to really
taking some capacity yeah so to put it in perspective because i think perspective is key here there's probably what three and a half four million drivers across the space let's say so i mean we could be talking about a material amount of capacity that could be exiting would that be a fair fair to say potentially yes yeah so this is where it gets interesting to jv hunt so maybe the industry gets into a bit of a capacity crunch you have multiple solutions and you You know, one of the things, and Shelly, you talked about it, you've pre-funded some of that growth. So you guys invested during the downturn. So 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 and really reap the benefit of all of that and so Taylor we didn't realize it'd be four years but that that was definitely our strategy and so if you think about the difficulty our customers had during COVID to get capacity that was so difficult really when they 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 good care of our customers, how to take care of each other. So 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. But 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 and so we've 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 and 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 so 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. And 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. Journal of Commerce does an external survey about intermodal service. And inside that intermodal service, they ask for who's the best intermodal provider. And they rate you on technology and pick up and delivery and um and customer service and capacity and 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 the chick-fil-a or google 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 so that's reflective we get that external source that tells us that but I would tell you if we were to do that across the company 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. So just going back to intermodal I think you showed a slide of 125,000 ish containers But the goal had been to get to around 150 right. Maybe there's some that are just kind of not in the count. But could you could you give us a sense of how much slack capacity you have in that you do 2 million loads you know again squiggle squiggle 2 million loads a year. I mean could you have as much as 30 maybe even 50 percent capacity you know slack capacity in that 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 the store
low and so that really shares you know how much can we have so for a 1.4 turns a month today can we get back to 1.8 can we stretch it more than that so that would be slacking capacity and 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 and so 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 so certainly we think there's plenty of room for growth inside our intermodal business that that's very exciting for us as we think about this upturn in our business we think great
opportunity for us to seize right so forget the rates which potentially have upside potential and when we think about incremental margins at the ebit line it'll be good but Andrew maybe this for you but at the free cash flow line so 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 i think that's a fair way to characterize it um yeah we have we have pre-funded like growth you know we don't need to go out and secure additional capacity um we are paying some So to the extent those boxes get in service, 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 more free cash for us.
Okay, I do want to talk a little bit because, Shelley, you brought it up about technology. So again, you guys have been very technology forward. There's no doubt. You know, if you look at J.B. Hunt 360, et cetera, et cetera. So can you talk about how, I mean, there's a lot of talk about AI and how it's going to impact the transportation markets. Good, bad, and the ugly, I suppose. But 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. The old operator is the new tech guy. Well, we have a very modern platform, and so that really makes it easy for us to really attach things. And so 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. So that's really set us up now as we kind of come in and think about automations. We've been doing bots and automations and all that for a few years, and now you kind of layer in AI, the new buzzword. we're excited about that we're using a lot of AI and a lot of areas around our customer experience area and also on our payment side and just to kind of put an emphasis in it we've really we've made a public announcement that we've partnered with up partners and up labs to really invest in AI and so 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 and this is across our entire organization not just brokerage but it's across all sides of the company and then 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 going to help us drive efficiency through that process as we grow we may not have to grow people at the same amount so 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 and so we're looking at all those areas and we got a list of things we're doing and we're just being very methodical about that and really gonna put a lot of emphasis on that but the one thing I want to say is we're fully supportive technology we did the digital platform early AI fully supporting of that but 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 but we still have to maintain those relationships people buy from people but it's how efficient you do that so that's kind of our philosophy of how we kind of drive that so we're all about efficiency really leaning into it and think we're in a really good spot and and 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 kind of coming across the organization but we also have efficiency that we're working on at an individual view so 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 and I I really believe when you have a culture that people know that we're going to take great care of them and we haven't done mass layoffs when we we financially could have really talked through that it's starting to bring the best ideas forward from our people and so that's one of the 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 and 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 reskill and redeploy them into a new role and not necessarily be worried about the role that they have today. And Tyler, that business
transformation, that business transformation we talked about, remember we announced the $100 million cost plan. 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 so our engineers went into the business looked at the way we execute a load the different steps take 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 and so we're at the point right now where we're scoping those costs and making sure that we know how much it's going to cost is it something we can develop internally do we need a partner with someone like up labs to achieve it or is it an off-the-shelf product we can buy um so that that will be kind of the next phase of our you know cost work is and that'll probably be you know later this year into next year kind of uh 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 some of the best ideas come out of the field on the ai implementations that's interesting um so let's talk about the cost program it's got a couple minutes here so I think you announced 100 million no mass layer so what is it what are a couple of the things that we're talking about there is it really about network efficiency maybe just talk a little bit about that and 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 yeah great question so one of the things that Darren did in Intermodal was really implement a new technology as we started thinking about what 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 and so that technology implemented for us in the third quarter really allowing us to take costs out of our system over the long term and so 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 so 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 so 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 and 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 we've got to talk about capital allocation because at the end of the day you guys should be a very cash generative business it's a very good place to be the leverage on the balance sheet is very manageable so what how should we think about capital allocation over the next couple of years and just a few few comments oh yeah um I think
our first priority is always to invest in the business um you know as Shelly alluded to we've pre-funded a lot of our growth on the intermodal side um dedicated as our most capital intensive business those are five-year contracts we'll sign with a customer um ECI CPI linked price escalators fixed and variable components all underwritten to margin and return targets so we feel very good about deploying capital for that business for growth um we'll maintain our leverage around one times and then outside of that we'll be opportunistic with how we think about sharing purchases and taking advantage where we see value okay perfect thank you right at time
thank you so much thank you