Okay, we're gonna go ahead and get started here with our next presentation. We have J.B. Hunt. With us today, we've got Brad Delco, CFO, Darren Field, President of Intermodal, and Greer Woodruff, who's EVP of Safety, Sustainability, and Maintenance. Got it. All right, thanks. Thanks, gentlemen, for joining us here today. Really appreciate it. Maybe we'll just start off a little bit with the short term here. I think, Darren, you made some comments earlier that demand was a little bit better than expected sort of before the winter storms hit. I don't know which storm we're talking about. There's been a few of them. What was positive about that, and is there potential for that to come back now when we get finally into what hopefully is the spring? Sure. Well, I mean, when we came into January, I think that in general, our customers were experiencing or we experienced slightly stronger volumes than what those same customers had communicated to us to expect in mid-December. Those were good signs. I don't know that I would call that anything other than they were doing some inventory moves. I don't think that has translated to customers saying, "Oh, man, my sales were so much better than what I expected." I do think we've had puts and takes with customers where some have actually increased their forecast for the year, and we've had some customers that have said, "No, I was dead on." The good news is I don't have a lot of customers that have taken their forecast down. I would highlight the storm that we referenced really at the end of January. It's I don't know what the name of the storm was, but really when you take out the southern tier of the U.S., Texas, all the way through Georgia, even into Florida, that and then drop 20 degrees on top of that for a week, you're gonna really break down the transportation supply chain a little bit. That was I would say it's the worst event I've experienced in the last decade. It was. Really? Really material in terms of the impact on our ability to move our equipment. So it was a significant event. Yes, we have winter every single year, so I don't want to act like winter is a new subject. That particular storm was really unusual. Yeah, usually we don't have Arkansas kids out of school longer than Connecticut. That's correct. That certainly happened in this case. We might have talked about that, Brian. With I think my kids didn't go to school for an entire week, so. Yeah, we had one day. Well, in that case though, I mean, how much of an impact are we talking about here, Brad or Darren? Can you put some numbers around? I imagine dray drivers disrupted, network out of balance. Like, what sort of magnitude are we talking about above, you know, what typically is a normally tougher time to operate? Yeah. Have we talked about that in this kinda setting? I just wanna be careful. No, we haven't. Follow the rules. Brian, we typically don't. I mean. Yeah We don't wanna make excuses. You know, we're focused on, you know, creating the most value for our customers, focusing on operational excellence, leveraging our investments, repairing our margins. Like, our entire management team is hyper-focused on doing all the things, executing on our cost to serve initiatives. Yes, we've had weather, and to the extent we feel like it's material and we wanna call it out in Q1, we will do it. But head's been down. How do we, you know, provide excellent service? How do we really get momentum going into this bid season where it does feel like the relationship between supply and demand feels a little bit different? Mm-hmm. What sort of additional opportunities does that create for us? I think that's been the focus versus, you know, everyone go make up a number and tell me what you think weather impacted your business by. We spend more time focusing on the former versus the latter. Understood. Well, how was rail service then in terms of getting through this dynamic? Yeah We might hear some numbers from those folks, but, like, what were you experiencing, you know, on the ground and on the street? Yeah. Rail service during my career has never been better really, across the board. Even through this period of time? Even through this- Hmm period of time. Look, the railroads are fighting. It's an outdoor sport we all play. They were caught up in some of the same challenges we were, and I would call their recovery, and this would be the entire industry, every railroad we do business with, was exceptional in their recovery from the winter events and feel really confident about both the commitment, the resource planning, the investment in their people and their teams. You can really see an industry that is very focused on sustaining resiliency through the current environment that they're in. We ask them every day, "Are you prepared for an uptick in demand? Are you resourced appropriately?" Naturally, they're all very confident in their plans. Look, we're experiencing, and again, best rail service I've experienced in 30-plus years, so. Okay. Well, it does seem like, I think, Brad, you alluded to that the market feels like it's changing, and it's not just like, well, we'll see how much and when. It's just like, no, it's getting more clear, you know, to shippers in particular that is starting to move in that direction. I think it was about three months ago. I forget who it was, but a company described the market as being fragile, and I think there were some chuckles and laughs at the use of that word. You know, in hindsight. We were seeing it, right? We felt like if there was any hiccup in one direction or the other, whether it be storm-driven, whether it be demand-driven, whether supply continues to sort of come out of the market, you know, it just didn't feel like there was a lot of elasticity. We've had a couple bumps or elements that have disrupted supply or the supply chain. We've seen, you know, obviously the market is tracking what's happening with spot rates, and that's a real-time indicator of the relationship between supply and demand. I will go back and reiterate that we continue to believe that the market is in a fragile state. After we define what fragile meant, we could move on from that. It certainly feels that way. In terms of the commercial strategy though, Darren, how do you position the business? 'Cause so much is getting done and figured out right now. It's always path dependent, so I don't wanna say it's any- Sure ... too much different now. It certainly feels like there's a bit of more uncertainty, but also our shippers trying to get ahead of that right now. Yeah, I think that our sales organization is doing a great job of highlighting a combination for our customers of, okay, what is your greatest challenge today? What are you most concerned about? Then often one of our fastest responses is, "Have you maximized your highway to rail conversion strategy? How can we convert business from the highway back to intermodal or to intermodal for the first time, hopefully save you a little money at the same time as a way to prepare your budget for maybe a year where truckload capacity and prices could get difficult for you? How can you hedge against the potential for a cost increase coming at your budget as a shipper by utilizing more intermodal and capitalizing on the service quality that I believe we have built as a brand. I think the industry is doing better than ever, but I think our brand is really strong, and we're very confident in the service quality. Really, the strategy is to highlight the ways that intermodal can solve for our customers and prepare them for, you know, give them a little extra capacity so that they can optimize the truckload capacity that they need in whatever way is best for them. Really a lot of focus on that. Now in an environment when fuel prices are increasing, it only enhances that conversation even more. You know, we're not reacting to the current fuel environment as if it's structural, but certainly, we're gonna talk about Intermodal's ability to save dollars against a rising fuel environment for sure. In that case, are customers really bringing that up in conversations in terms of fuel savings? Obviously, higher energy prices could have an impact on demand and a bunch of other things, but clearly it would be a net benefit for conversion. Then maybe you can just remind us on how the surcharges work from your perspective, more of a pass-through. Yeah. Didn't really see too much of an impact. Typically an intermodal fuel surcharge is roughly half of what a truckload fuel surcharge is. Every week on a Monday, the Department of Energy issues a national average cost of fuel, and that sets our fuel surcharges. This is very industry standard on anything published where you're gonna go a full week at a time. Really fuel tends to lag by, call it a week, but it's not. We feel confident that largely our fuel surcharge programs balance out our experience with cost. We're not. You can be hurt a little bit on the lag as fuel costs are climbing, and you can be barely helped a little bit on the downward move in fuel prices. Over a long period of time, the carriers aren't winning or necessarily losing on higher cost of fuel. I just think customers aren't yet in the current environment. What we're seeing with fuel over the last three weeks, it's a discussion topic, but it's not yet driving strategy discussions. Right. I think the overarching theory is that, nobody knows how long this will last, and so there's a lot of caution on that. We just will constantly highlight that intermodal can be a mitigating factor on rising fuel costs, so. What's sort of this, your sense on inventories, you know, heading into the spring? We've had the pull forward conversation for a while now. We've had a heap of tariffs got thrown out, but we've got new ones put on. It doesn't seem, at least in our conversations, that a lot of additional pull forward is happening. Are there any that you have examples of, or? I- Inventory's in pretty good shape right now? I think inventories are comfortable for shippers given the way that the supply chain has functioned and the high quality of service available. Our customers are largely more confident in running with maybe what would be historically slightly lower levels of inventory, but the ability for the supply chain to replenish those inventories has been very good. Customers seem to be trying to take advantage of that. Look, the interest rates are higher than what they were back when inventories might've been higher. I think our customers are more sophisticated in the way that they plan that than ever, and that the supply chain, they're still confident that they can recover. They're not at all afraid that they're gonna have a lost sale over inventory. It'll be interesting to see if a fragile supply-demand equation comes into play, and if demand ticks up, does the fragility of the supply create an environment where customers begin to experience a lost sale because they didn't have enough inventory where they needed it, when they need it? Mm-hmm. That's probably what we reference when we talk about fragile. It just feels like it wouldn't take a lot of new demand to create an environment where customer inventory wasn't quite where they wanted it, when they wanted it. Just on the topic of supply, Greer, wanted to ask you a couple of questions on just how quickly things are changing, and there's the intensity of the focus from the administration on new regulations and enforcement. Maybe you can give us some high-level thoughts in terms of, like, how quickly this can really be impactful. Are we in the early innings of this? Because it's still, I think only a couple months ago when we first started really talking about non-domiciled drivers and what that could have, and it's only grown from there. You got an interesting white paper in terms of the amount of capacity that could come out. Maybe you can walk us through what you're seeing and how quickly this could take shape. Yeah. I think this is this interesting time on the supply because what we're seeing with the administration is that they're really enforcing rules that already have existed that just have been poorly enforced in the past. We're not having to go through this, you know, 60 or 90 day kinda rule making process. They were able to come in very quickly and identify rules that they could enforce, you know, now. I think we've seen it be applied pretty quickly with English language proficiency first being brought up and enforced starting in April of last year. I think the administrator yesterday said about 17,000 drivers had been placed out of service so far, so that's in 10 or 11 months. It looks like that's probably about 20,000 a year is what we had estimated, and it looks like that's Mm-hmm Pretty well on track for that. Then if you look at the non-domiciled issue, which I believe started in about September, the estimate is, and I think a pretty safe estimate, is there's about 194,000 drivers with non-domiciled CDLs that will not be renewed. A lot of those have come out already, because their employment authorization documentation did not match the expiration of their CDL. Their CDL expiration date went beyond their authorization to work in the United States, and state DMVs have been requiring them to come in and produce that paperwork, and they've not been renewing. I think it's fair to say that about 214,000 is a good floor of what we could expect to go out over the next 2 to 3 years. That's about 5% of the CDL holders. Then if you take into consideration the cabotage enforcement and, perhaps others that have been operating maybe even without a CDL, I think you could see an upside of maybe 12% that could go. We've already seen, you know, the cabotage. We've seen a lot of the drivers south of the border that were operating in the United States hauling domestic freight. A lot of them have already returned back into Mexico, and we're seeing a loosened capacity in Mexico as a result of them returning. Mm-hmm. I would estimate we'll probably see 5%-12% of CDL holders exit from last April through, you know, about a 3-4 year cycle. Greer, what about the CDL mills? Yeah. That was mentioned as well as truck driving schools are self-certified right now, and there's been audits being done of those schools. So far, 7,000 of the 16,000 registered programs have been removed from the registry and can no longer provide entry-level driver training. I believe we'll probably see some new rules emerge related to what's required to be a training school and to have good quality training where we could find you know safe drivers, new entrants into the industry receiving a CDL. That's being tightened up now, and I think we'll probably see some more tightening of that. Hmm some higher standards expected. I would assume similar for ELDs and the enforcement self-certification on that. Yeah. I would say I don't know how much ELDs really affect capacity. There could be a short-term impact if a device no longer is certified and a carrier is operating with those devices, and they have to park their truck while they remove that device and install another one that does meet the requirements. There is an effect there, and they are now screening any new ELDs that want to be certified. They are establishing some screening processes for that, and then they're gonna have to determine how they're gonna handle those that are already in the registry that haven't been, you know, vetted as thoroughly as they would expect them to. Mm-hmm. I think we'll see kinda some of these things that have been the honor system, you know, self-certifications are gonna have more stringent vetting and oversight over those in the future. Have you seen a lot of support for the DRIVE-Safe Act? Is this talked about in the State of the Union? It seems like some of those things would be overlapping, but some would also be perhaps more. You know, onerous or a little more conservative if they were to be put in place. Is that sort of additive to what we're talking about here in terms of the regulations? I think there's a little bit of additive. A lot of that law would codify things that are currently happening. But there will be some things that will be added to that. I would expect that we may see that show up within the Surface Transportation Reauthorization Act. Mm-hmm which is under development now. More than likely, the transportation bill will be a continuing resolution as we get closer to midterms, and that's something that'll be taken up after the midterms later this year or early next year. I would expect that will probably show up in that bigger transportation bill. One more for you, Greer. I don't know how closely you're following the brokerage liability, but clearly a case before the Supreme Court in terms of how that could be extended into the brokerage arm. What do you see that impacting? If it's extended and brokers are found to be more liable like a carrier, how could that impact the industry and rates and just how you perceive risk, you know, in this market? Yeah, that's man, that's a big unknown really. I think it's obviously if C.H. Robinson doesn't prevail, that could really change the whole risk profile of the brokerage business. Brokers are gonna have to figure out how they're gonna ensure that the motor carrier, in many cases the driver, because such a large population is an independent driver with his own authority, how do we screen those drivers? The truth is, a lot of those drivers have not had an inspection in the last 24 months. If you look at carriers that have one to 11 trucks, which is a very large percent of the population, 63% of them had no roadside inspection in 2025. What data's available to look at to determine whether or not they're safe, which kinda pushes you into probably having to look at motor vehicle records and things like that of an individual. That complicates, I think, that brokerage risk profile, and somebody's gonna have to try to figure that out. Okay. Well, we'll see what happens in the middle of the year then, I guess. When that's supposed to be ruled upon. Brad, just another question on ICS, though. If, you know, spot rate's obviously elevated, margin squeeze kinda typical for this business, but there seems like there's some more spot volume that could be offsetting here in the first quarter. Should this be a similar sort of margin profile quarter to quarter? Maybe a little bit worse? Like, how are you thinking about ICS here in this environment? Yeah, you know, go back to fourth quarter, we were talking about kinda what we saw play out. You know, we did see the market tighten. It wasn't necessarily a function of demand exceeding what we were expecting. More a surprise as to how tight the market was, really supply-driven. However, that didn't really translate into a lot of spot opportunities, and I think we commented on the call, really till late in the fourth quarter. I believe in the first quarter we have seen more spot opportunities. Obviously, that helps to alleviate some of the pressure you're seeing on your contractual business. I would say I believe that contractual margins actually have compressed further in Q1, and so you're really sort of fighting with that spot to even overcome that additional pressure you're seeing on your contractual business. Still time to go here in March, but I don't know that we've necessarily seen the relationship between supply and demand get any looser, and so- Mm-hmm I think that team has done a really good job executing on, you know, diversifying our business, really getting into more difficult types of freight, things that are a little bit more specialized. Obviously, we're executing pretty well on our cost initiatives in that area. You can see our costs are really sort of back to where we were in 2018. I think we talked about that on our last call. Setting the business up, really, so when we do start seeing incremental gross margin dollars, how do we get as many of those. How much, how do we get as much of that dollar to really flow through and down to the EBIT line. I think that remains the focus of that team. Darren, in this sort of environment where things are changing quickly, but clearly the skew seems to be more favorable on the positive side for rates now, is this a type of market that intermodal contracts can go up as much as truckload? Are they gonna lag in magnitude? They usually lag in terms of timing, but maybe we can dissect the two lags here and what we should expect, in terms of when the market does turn, how that would be tracking relative to truck. Well, I think it's clear, all parties, the railroads, the intermodal providers, the draymen, all different entities that are engaged in the intermodal supply chain, everyone would like a stronger revenue quality. There's no lack of desire to accomplish that. I think that historically speaking, intermodal has lagged truckload and brokerage pricing. I don't know to what degree, but it typically lags. Now, in the current environment we're in, you kinda I don't know if it's related to sort of a different mindset about intermodal across the industry at the railroads, but the competitive environment so that I don't lose any share. It's look, it's pretty significant, and I think that this idea that in the environment we're in today, there's you know, a potential merger out there trying to go on. How do the players all react in this current set of conditions is a little unusual. We'll see what that means. I know this, there's not a single entity out there that has a margin that makes them happy. I'd like to believe that everybody is encouraged to try to recover revenue, that everybody needs to repair margins, and that there's no lack of desire for that. You are certainly seeing a competitive environment out there that's you know, everybody wants to grow, and everybody wants to repair margins at the same time. Is that because we were in sort of the, I guess, the backhaul environment for a little while for bids? Well- Now it's focused on head haul? You know, the early part of the bid cycle is largely backhaul driven. There's a lot of westbound business that bids in the early part of the cycle, so that's certainly a factor. None of us will repair our margins with pricing on the backhauls. Right. That's not where that work gets done. You have to do that work in the head hauls. Certainly, as the pricing cycle goes on, we're all gonna be anxious to watch what happens. We think the quality of our service has been proven out for our customers, and we know that the capacity we offer is valuable, and we're gonna really test our customers to help us identify ways to either take cost out or improve the quality of the revenue that we have coming in. One of the big Both parts are important. It when we enter into a discussion with a customer around pricing, if that customer can bring forward margin repair initiatives from cost takeout, we're engaged in that. I know the pricing often can be a scorecard metric because it's real visible, but there's lots, more than one way to repair margins. Maybe you can elaborate a little bit on that from a- Mm cost takeout perspective. If I'm a shipper, am I giving you better volume, different volume in different areas? Like, what are some of the dynamics at play? Yeah, I mean, you know, really it comes down to it can be better volume. It can be more. Certainly more volume helps. We are all about growth in what we do, and we have capacity to bring on growth. There's fixed costs that get covered with that. At the same time, customers can give us flexibility on the service front. That can be a pickup flexibility or a delivery flexibility, and what that means is, "Hey, if this load needs to deliver today by 5 P.M., and I don't have a pickup within five miles of that delivery this afternoon, but I do tomorrow, can I delay the delivery until tomorrow?" Where I can tour it, and I just create a much more efficient drayage answer on that particular shipment. This is happening thousands of times a day in our network, where we're evaluating, okay, what's the drayage system perspective on empty miles? What costs will I incur in order to meet this level of service? The customer can challenge themself around that same inventory question. Am I waiting on this product? Is it gonna get unloaded tonight? Will it go into use in my supply chain somewhere else tomorrow? Or can I just wait and receive it tomorrow? There's a lot of work in that area. I'm oversimplifying it for the context here. But that's a big part of the work that we did really last year, and I'm really encouraged by the way our customers have reacted to that conversation. I think that it was important to get out of this, a winner and a loser all the time on pricing, and how do we find a way to help each other eliminate cost for both of us? I think that that's been very successful for us, and we're encouraged by where we're at. Yeah, that is pretty interesting in terms of how it's been a zero-sum game for as long as I can remember. Oh, man. Are these productivity initiatives, efficiency, in the things that you guys are delivering on the $100 million, or is this separate? Yeah, no, it's all inside our lowering our cost to serve initiatives. Largely what became more visible in the third and fourth quarter last year is really that work. As we came out of the 2024 peak season cycle, it created a new environment for us to discuss this topic with customers, and I think the reaction really did change a year ago. We were able to implement technology last summer that gave our full team better visibility of how and when they had that flexibility option that they could use. It was really in the third quarter when it became far more visible because that work went on through the first half of last year and continues today. You know, the rail network service levels have really been faster in the past, but they've not been more consistent and more reliable in the ability to plan around the transit times. That's given our customers more confidence to give us some flexibility back. Mm Is how I would describe that. Okay. Well, the productivity gains have been substantial, say, at least, in the last couple quarters. Brad, maybe you can remind us, like, what were the major building blocks to get to the first $100 million? As this is a continual process, for the next $100 million, are they different? Are they more of the same? Like, how should we be thinking about that? First off, have we announced the next 100 yet? Or is that just a little add-in slip on your part? Well, maybe a little bit. I mean, Daryn described an example in his org, but you think about the same really intense focus on our costs on the corporate overhead side, but also direct overhead in each of the businesses, and really just the constant challenge of, "Hey, let's remain focused on our cost metrics. What is the right cost metric? How do we improve upon those? We know that we're gonna be facing inflationary costs each and every year. How do we combat that inflationary cost with some level of productivity so that when we do go to customers, when we are in an environment where, hey, we can at least, you know, get pricing in line with inflation, heck, it'd be nice to get inflation plus pricing, like some others in the industry, you know, how do we really drive a quicker repair of our margins?" I mean, that's one of our major priorities, right? We gotta repair our margins, make sure we're creating value for our shareholders. As we've talked about numerous times, there's over 100 different line items. You know, Andrew Hall, who leads our IR efforts and FP&A efforts, is really granular with teams in terms of how we're tracking that progress. We've committed to keep our investors updated each and every quarter. We'll have another update for you guys obviously after Q1. In terms of what we're seeing, and Darren, you can speak for your business, because I know each and every time we review our financials, you know, your team is talking about how much leverage they're seeing in corporate overheads. I know that area has really performed extremely well. There's been a tremendous amount of discipline, and so this is setting us up well, we think, obviously to compete in the market, to accelerate our growth. That was the whole purpose behind our cost to serve initiative. Regarding the next leg of the story, and I think what you were maybe alluding to, Brian, is this business transformation process. Go back last year at the same time, we had really rolled up our sleeves and dug into the different areas of our business in looking at removing structural costs. We had engineers in our business looking at our processes and asking the question: How can we accelerate, expedite, drive better efficiencies through some introduction of technology to speed the process or drive that productivity? You know, we're in the early innings of that now. What's different about that process is we are scoping these projects. There is a cost element to them. We're looking at what sort of return we would expect from these initiatives. We'll prioritize those projects. You know, that's something we're hoping to deliver on and see more tangible evidence of later this year and probably into next year. I would say, I mean, in terms of an update, I think our company has seen and has momentum, and I think there's a lot of really great work that's been going on. You know, our goal has been not to get up on stage and throw out a number and tell you guys what we've been doing on the cost side. It's we wanna make sure you see it in how we're reporting. Oh, by the way, we have really not been in a super positive pricing environment. Seeing the turn in our business in Q3 and Q4, where margins were expanding while, let's just say, pricing was basically flat, while also incurring a lot of inflationary cost pressures, and we've talked about insurance and wages and all the other line items, we have done way more on productivity, efficiency, cost takeout than probably what we've given ourselves credit for, so. Well, just to wrap up on the transformation, is that really focused on technology, the incubations, the up labs, like those sorts of things? Well, you know, when you think about our company foundations, right? It's people, technology, and capacity. We will always say our people come first. I mean, J.B. Hunt, 64 years, we have a very strong culture, you know, that really has survived, you know, from the founding of, you know, Mr. and Mrs. Hunt. Technology's in the center, so we think about technology as being enabler to allow our people and our capacity to be used more efficiently, and obviously, our capacity, our containers, our trailers, our trucks. Those are the foundations of our business. Certainly, yes, technology is gonna be an enabler in us, for us in order to better utilize, you know, the resources of both our people and our capacity. Okay. Well, we are out of time. Thanks very much, guys, for the update today. Really appreciate it. Thank you, Brian. Hey, great conference.