The first presentation of the last day. For those that don't know me, I'm Tyler Brown. I'm the senior analyst here at RayJay. I cover transportation, environmental services. I do heavy construction materials as well. This morning. Well first off, I'm just excited that everybody made it out so early, I appreciate that so very much. A great crowd. This morning, I'm just really excited to have J.B. Hunt with us. For those of you who may not know J.B. Hunt, obviously, this is one of the largest transportation providers in the U.S. A multimodal solution, have a really flagship intermodal product, which is great because we have Darren Field with us this morning, just nestled in beautiful Northwest Arkansas. Today, presenting, John Roberts, the company CEO. We've got Darren Field, the EVP, Head of Intermodal, and the Senior Vice President of Finance, and who also heads up the IR effort, Brad Delco. I think we're gonna go through a few slides, maybe give a little bit of a lay of the land, talk about the business just a little bit for those that may not be familiar. We'll jump into a Q&A and a fireside after that. If you have questions, please feel free to interrupt me for sure. I don't know about John, but me for sure. We can take those questions as we kinda go through the morning. John. Thank you, Tyler. It's tough to get a laugh at 7:30 in the morning, so we'll work on our delivery. Thank you all for making it out this morning. Great to have a nice full room here. This is a conference that we always kinda kick off our year. Don't assume - i s that me? Don't assume that you know everything. We'll just have a brief kinda fly over. Then Darren's gonna take us a little deeper into intermodal. We'll close with a couple of thoughts on how we allocate capital and our balance sheet. Then that'll lead us into, hopefully, some good questions. Of course, forward-looking statements covered. We reset our mission about two years ago. Took a step back and looked at the organization and the different services we provide and landed in a very broad statement of creating the most efficient transportation network in North America. It's a real shift for a company like ours to sort of not position the assets we have necessarily at the forefront of our purpose. This helps our folks really think about mode neutrality, which is something we'll talk about. We just believe in every business we have as a standalone with a real complementary nature. You think about the supply chain management that we have to face in North America. You really have a point of manufacturing or a point of import all the way through key steps of consolidation, distribution, point of purchase, point of consumption. Okay? We provide industry-leading services in every one of those key aspects of the supply chain. When we step back, which we did recently, we said, "This is really a goal," which is to say, what will drive our decisions if we're trying to achieve this lead status? That might mean we don't have certain services tomorrow that we had yesterday. That's really been a big change for us and a very important guiding light for the organization. We really concentrate on very focused customer value. Long ago, in the late 80s, our founder, Mr. Hunt met with a railroad CEO, Mike Haverty, and agreed to shake hands and move all of our longer haul freight in the western region of the country from the highway to the railway. That's so important to the culture of the company because by having a customer value focus, we can let ourselves evolve into a different state of mind. At that time, we were the largest truckload carrier in North America, and that was the best part of our business. That was the best internal return for us because you had a pickup and a delivery, thousands of miles, just generating revenue, one truck, one trailer, one driver. When Mr. Hunt saw the economics and efficiencies of the railroad, he said, "That's got to be better for the customer." As you know today, we are by far the leading domestic intermodal provider in North America and it's a very efficient way for us to provide those services in key lanes all across the nation today. Darren will talk a little bit more about our plans there. The other piece that really stands out here is the idea of long-term compounding returns. This gets to a financial discipline that is very evident if you look at the history of the company over the last probably 25 or 30 years. Not to say we haven't had our ups and downs, over time, we've made thoughtful, careful, disciplined decisions about where we invest to serve those customers. One of the questions that we ask ourselves is, first, excuse me, does the customer need it? Second, how big can it be? Third, can we make an adequate return on investment so that we can reinvest in the business? These are principles that we don't waver from, we won't waver from, and have served us very well. Lastly, just to comment on technology. In 2017, we really put our best foot forward there, hired a new CIO and committed ourselves to investing in the future. In transportation, it's very difficult to differentiate your company through technology, especially if you're an asset-based company. Part of that mission statement is calling out the idea of using technology to harvest the most efficient decision for any transportation need. For instance, I mentioned we were the largest truckload carrier in the country in the late 1980s when we decided to convert the company to intermodal in key lanes, evolving. Today, our truckload business is essentially without any tractors at all. We have a - we have a what we call 360box program that I think number of trailers is? $14,000. 14,000. I didn't wanna say so much, shouldn't have. Yes, if I would take Brad along, make sure he keeps us in check here. We learned through time what's best for the customer is not to own those assets, but to go and find the right asset. We have over 1 million trucks signed up under this technology platform, and it allows us to take in that demand and then run it through the algorithms and make assignments that are far more efficient for us. I think the key point I want you to take from this introduction is J.B. Hunt is an evolving company. J.B. Hunt is a growth company. J.B. Hunt is a customer-focused company, and that has got us to this point that we're at today. There we are. There's a, there's a good team here that has 342 years of management experience at J.B. Hunt, not in the business. Most of us grew up here. We were talking last night at dinner. I think you said you came into Intermodal in. When it became a business unit. 2,000, what was your job? I was a Director of Field Operations. Field operations out there. I was a sales guy. These folks all grew up here, we work together in a way that I think is unique. We actually highlight this part of the company because we see it as a real differentiator, a real advantage for us. The folks that are here that are fairly new, Stuart Scott, 7 years. He's the CIO I mentioned, everybody else you can see is in their high teens and 20s and some of us 30s. I like to say back in the 1900s, we were in the field. If you look at our revenue distribution, you'll see what is essentially a fairly consistent distribution of positioning. We just let the pie get bigger, right? This Intermodal business is very unique and has a number of unique qualities that we can talk about. It really affords us to be way in the lead here. If you look at our current position on investment, we are leaning forward in what we think is a renaissance in the Intermodal business. There was a time, if you know the industry, there, that we were going through a motion called PSR, Precision Scheduled Railroading, which was essentially constraining the railroad with the intent to create a better velocity, better more reliable service, higher profitability to reinvest. I get the idea. Through that time, we really saw a lot of constriction, and I felt like we were maybe facing a little bit of maturity. Well, we don't think that anymore. If you just appreciate the distribution here, you see DCS is really about the same size. Our ICS business, as you can see, has grown, and the truckload business has actually kind of constrained a little bit. We really manage those two parts of the company very consistently and in sort of a harmony. We refer to that category as the highway services. FMS up here is final mile services. Distribution of operating income didn't have final mile back in 2012. You can see a still fairly consistent distribution. Important to note that there's more assets here in the, in the green and the blue for sure, and that will continue to develop so that operating income production is very much linked to the capital requirements of each business. We also consider the resiliency of the businesses when we invest. For example, Dedicated has a 98% retention rate of its client base. We know that even though that's a very heavy lift from a capital point of view, it's a very good investment for us once we can capture that business and get it under contract. This is what we've looked like for, I guess, 10 years. Pandemic really was an uncertain time. I ran the company from a little room over my garage, as I'm sure many managers did. What happened, which we weren't sure of, is that we were very essential to the economy, even in the pandemic. We left on a Friday, called the play, everybody's going remote, and guess who can't work remote? Drivers, mechanics. We really had to rally around that over the weekend. That Monday, I remember this vividly. That Monday, we, our driver force showed up. We had an advantage that we work outside, and we work independently, and we trusted that and really leaned into two priorities during the pandemic: the safety and well-being of our people and honoring the commitments we've made to our customers. That was our sort of war cry. It was just no substitute, no compromise. That led to customers really leaning towards us because we were able to say, yes, we have a large fleet. We reallocated those fleets in Dedicated. There's over 13,000 tractors in Dedicated today. There were essential shippers and non-essential shippers. The non-essential were hurting. We were able to pull their trucks away and allocate those to the food shippers that we had, the staples, and everybody won through that. It just created a real kind of momentum for us. You can see the result. We really have been able to capitalize on being in position, being customer value-oriented, being people-focused, having the technology to get the job done. Let me stop there and turn it over to Darren for some Intermodal comments. Good morning, everyone. Thought I'd give you a quick little stat rundown. We own just over 115,000 containers at the end of last year. Over 6,600 trucks that do nothing but support Intermodal pickups and deliveries. You know, one of the things we're proudest of is the way we communicate our capacity commitments to our customers, the way we surge with those customers, the way that Intermodal can at a lower cost, produce surge capacity. Moving an empty container on a train costs far less than driving a trailer over the highway in order to create capacity. All of our containers are equipped with satellite tracking, and certainly, the long-standing agreements with railroads has separated us. That 1989 moment where Mr. Hunt and Mr. Haverty shook hands somewhere in I think Iowa or Western Illinois on the back of a train to say, "Yeah, we're gonna do this together." Here we are, 30-plus years later. We are BNSF's largest enterprise customer, and we're also Norfolk Southern's largest enterprise customer. Over 10 years ago, we entered temp-controlled intermodal. It was rocky in the early stages, but over the last 5 years, I would say we're continuing to invest and grow that, and we see that as a nice runway moving forward. Why am I not- Point it this way. Oh. I had the same. When I look back at the last 10 years, there's kind of a flattish part there, 2013 even through 2018. Revenue was growing. Our volumes were tricky for us, and our operating income was kind of stuck. A lot was happening during that window of time, and John touched on it. PSR, while the railroads really highlighted it as an opportunity for them to earn more, expand their margin, it was painful to us as a shipper. It was difficult for us to replace volume lost when they would close down a lane with more volume in other lanes. Part of PSR, to us, meant railroads really dictating the conditions and the way the customers acted. Customers have choices, and that's the role we play with the railroads, is to really help educate and communicate what are our customers really want. They need some level of flexibility, PSR didn't always translate to flexibility. What's different and what's happening today that makes us excited about the future, I think that our rail providers are significantly more aligned with us today about the long-term future of growth, the opportunity for their business to grow, and intermodal being the biggest driver of growth in the rail industry. Coal is not growing, and other industrial products don't have the compounding growth elements that intermodal certainly can. Just last March, we announced jointly with BNSF our effort to achieve 150,000 containers over a 3-to-5-year window. We're gonna do that. That's gonna be part of where we're headed. That handshake between John Roberts and Katie Farmer also happened. We're committed to each other and we're excited about the future. I think that many of you may know, Schneider has been a long competitor of ours on BNSF. About 1 year ago, they announced they were leaving and going to Union Pacific, and we are largely the last intermodal channel to access BNSF's network, and BNSF's network is the largest intermodal network in North America. Our opportunity to grow, the way we're communicating with each other, some hurdles that used to exist in front of us went away. Today, when we put our operating teams together to work on solutions for our customers, that working together with BNSF is just very different, and we're excited about the future. I think the pandemic also taught the railroads a significant lesson around international supply chain, and international steamship containers that come into the ports and ride trains into the interior, everything about that process slowed down tremendously. Then the opportunity to speed it up with dray trucks and chassis ownership, just, it was difficult. As the railroads looked at the domestic market versus the international market, frankly, domestic players are operating faster, and it's one phone call to J.B. Hunt to execute thousands and thousands of dray moves rather than trying to reach out to thousands of draymen to go operate the international business. As we move forward with BNSF, what we're most excited about is their announcement around Barstow and their future, where they're gonna transload a lot of business, and we're gonna be their provider and partner in that effort. There's a massive investment in infrastructure in Barstow, California, going on today, which certainly gives us a lot of energy and excitement for the future. Intermodal's a cold spring right now. We have the drivers, we have the people, we have the containers, and our customers want back in. Service is improving dramatically already this year, and so we're excited about the future. Coiled spring. I'll be real quick here, Tyler. I know we're coming up on time. This chart kind of speaks for itself, but I do think a little explanation. As you can see, the gray line is sort of operating cash flow. What do we do with our cash? John Roberts said it best. We consistently reinvest in our business. We are a growth company. We think about opportunity, first priority of our capital. Second priority, obviously supporting our dividend. I think we've grown our dividend consistently for 17-ish years. That's certainly a priority. Opportunistically repurchasing shares. What you've seen, which has been fairly rare in our history, we have done a couple small tuck-in acquisitions in support of expanding into some new channels and new verticals, specifically in our final mile business. We essentially last March said we're gonna grow this to 150,000 in the next 3-5 years. Call it roughly 40% growth in those 3-5 years. That's a fairly significant undertaking. Intermodal is, I would consider, to be more of an asset light business. We have the 115,000 containers. We have around 6,500 dray trucks to support the movement of those containers once they land at origin or we get assigned contracts, we go out and procure the equipment. When you see, I would say there may be a perception of a cyclical industrial company spending capital. I just sort of want to clarify, a lot of the capital we spend is success based. Beautiful chart, like the trend. This is sort of the long-term history. What's gonna support our ability to reinvest? If John Kuhlow, our CFO, was here, he would say, this is the most beautiful slide. Darren, a little bit about the intermodal renaissance. I love it. Barstow, intermodal capacity investments. The investments are certainly being made. Maybe help everybody understand why. Why would a customer shift to intermodal? Maybe some of the benefits of intermodal f rom both a quantitative and a qualitative perspective. Well, the first and easiest answer is it's cheaper than buying a truck to move over the road. That's really how it got started. You know, there are significant environmental benefits. Every shipment that occurs on a rail is gonna burn less carbon emissions into the atmosphere, and that's certainly a good thing and something our customers care more and more about every day. Then I talked about that ability to scale and manage surge capacity. I think that's widely misunderstood that intermodal provides kind of a unique benefit. As we hear from our customers what they need to prepare for peak season, we're building out a plan to execute for them and to create extra capacity in markets when our customers need it. That's, that's a big part of it. The other element I would maybe call out is that equipment, these are 20-year assets we're buying. We're very returns focused, as I think we highlighted. The container fleet, it can sit quietly and doesn't have to cost you very much money if we get into a bumpy patch. Our investment in those assets and our ability to provide a return on those assets is very strong. Ultimately for the customers, consistency and capacity, and it saves them money, which those two things are what they want most. It's a bit greener as well. It is a bit greener. A bit greener. What is it, 60% carbon? 60%, about. Yeah. That's a good number. At least something for the shippers to think about. John I wanna turn over real quickly to Dedicated. There's a lot of talk about Intermodal, and rightfully so, it is a big piece. That DCS piece is a very large piece of the overall EBIT mix as well. It's an incredibly sticky business. I know you said you're a sales guy. I think you're a sales guy in Dedicated, if I'm not mistaken. Can you talk a little bit about DCS, what that is? What's different? How is that different than just plain vanilla trucking, the depth of that relationship? Then when we think about it from a Return on Capital perspective, why is that such an attractive business? I think Brad can echo this, coming to us from an outside point of view focused on our industry, but it's the most misunderstood part of the company. It looks and feels and kind of resembles a trucking business, which is - it's nothing like that. It's a contract business. Think of a private fleet. In fact that's our target addressable market, is a private fleet. This is where a customer has made a decision, and they have done this $billions of times. We think the addressable market here is about $80 billion. There's a part of that supply chain I mentioned that can't be served by a common carrier pool. It's not reliable enough. This is where the customer generally makes their money. It's the point of purchase, point of consumption. Think of replenishment into your store or a key element of a material to manufacture. It just can't miss. Over time, there's been an accumulation of purchase and lease. you know, a company will go out and hire their own drivers, take on the regulatory risks, the insurance risks, the maintenance problems, fueling, et cetera. What we figured out in the, probably, I don't know, early mid-90s, early 90s, was that we knew how to do all those things. The contract structure is really the secret ingredient here. When we go sit down, I think, did you mention 18 months? I know we talked about that last night, but it's a very long sales cycle. Part of that sales cycle is engineering the right answer for the fleet. At the end of the sale process, we have a contract that supports a very specific design of utilization to do that routine that customer needs for us. It is a fixed and variable model. Every week there's a fixed charge for the depreciation of the assets, the management costs, the fixed costs associated with drivers' benefits, et cetera. Based on whatever activity occurs, miles, stops, unloading, whatever else we might have built in. We'll issue charges directly against that activity. You don't have any guesswork in how much empty miles are we gonna see? What's the utilization on a load gonna be? That's trucking. This is an engineered contract position that, as I mentioned, has a stickiness, right? It's a resilient business. Found that if we lost business, it was such a long sales cycle that you couldn't grow the business. We figured out, we gotta sell stuff that'll stay, and then once we get it, we gotta know how to take care of it so that the customer doesn't feel compelled to go and see if there's a better answer. In doing so, we've become, by far the largest provider of our kind. I think our closest competition here is about half our size. The person next to that person is about half their size, and then it goes really downhill from there. The process is we move in with the customer. All of our sites, I think we have almost 800 locations today. In almost every case, 99+% we live in the building with the customer. We become a part of their culture and their discussion. They lean into us to ask us for help. Last thing I'll say is, one of the differentiating qualities that we introduced early was not assigning the equipment to an onerous lease position. We are able to be more fluid and flexible with our customers and ebb and flow with their business. I mentioned the pandemic. We had Nick was telling a story yesterday about an auto parts company that we had a fleet with that had to close their stores. There was no activity. Over here, we had a grocery distribution company that was double the demand. We pulled from that auto parts company and assigned that equipment. Drivers, management, didn't have to charge the auto parts company. We're able to surge up with the grocery company. What Nick told us yesterday was that auto parts company just gave us three new sites. The moral of the story is if you can really find us if we were the customer. Let's have some flexibility. In a downturn, I've had periods where I will take trucks out of a fleet and just work with that customer, maybe take a little bit of a hit. What I found over time was every single time that customer's business came back, they called us for those trucks back, and probably a little bit more. Very close relationship, really solid structure. Super focused on return. The build of these designs has a Return on Invested Capital requirement. The margin is a product of making sure we achieve that. There's a lot of people that would say, "Hey, 12's great or 10's great or 8's great or whatever." If you've got a 10-to-1 trailer-to-tractor ratio because this particular customer need warrants a heavy load, you probably need a 20% margin to make that business return for you. We're very, very focused on that. Yes, ma'am. What growth rate in that business versus your others? Growth rate is. We have about 13,000 trucks in that business right now. What we've said publicly is we target to sell gross about 1,000-1,200 trucks per year. That's, you know, call it high single digits. Then most of 80% of these contracts have annual built-in price escalators that are linked to ECI or CPI, which is higher today than maybe it was three or four years ago. You can think of those sort of components to being top-line growth. I would say one of the fantastic data points over the course of the pandemic, I think we added. Well, we sold just over 2,000 trucks last year. Goal, again, 1,000-1,200. The year prior, I believe we sold 2,500 trucks. We've seen a lot of customers lean in, during the last couple years, in that private fleet outsourcing that John spoke about. It's a great question and one that we're putting some new pressure on, just because part of the governing factor is having the talent. It's a very people-focused business. The capital's there, if we can get the trucks built, and we're getting a lot better at that. By growing as much as Brad just mentioned, we have a larger labor pool to work with. I mentioned that we live on-site. We need those managers to be really, really broadly experienced and not just assigning a truck and a driver. You got to manage that fleet. You've got to think about safety. You've got to think about maintenance. You got to do billing. You got to work with customer. A lot of pretty heavy lifting there. That's been a governor on us. That 1,000-1,200 is a good number. When we were 6,000, 7,000 trucks, that was a good number. Now that we're 13, I'm starting to kind of get a little itch and think if it's an $80 billion addressable market and we've just added all this talent, in a couple of years, those folks are gonna be more seasoned. The other point that Brad makes, which is incredibly important, is building in that ECI, CPI rate component means we don't have to sit down every year and renegotiate. When you get inflation, you don't have to have these wars with your customer because we all kind of saw it coming. Perfect. We got to take this downstairs. We do have a breakout. Thank you guys so much for coming. Thank you all for being here this morning so early. Thanks. Great room.