Good afternoon, and welcome to the J.B. Hunt Transport first quarter 2026 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Andrew Hall, Senior Director of Finance. Please go ahead, sir. Good afternoon. Before I introduce the speakers, I would like to provide some disclosures regarding forward-looking statements. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, estimates, or similar expressions are intended to identify these forward-looking statements. These statements are based on J.B. Hunt's current plans and expectations and involve risks and uncertainties that could cause future activities and results to be materially different from those set forth in the forward-looking statements. For more information regarding risk factors, please refer to J.B. Hunt's annual report on Form 10-K and other reports and filings with the Securities and Exchange Commission. Now, I would like to introduce the speakers on today's call. This afternoon, I am joined by our President and CEO, Shelley Simpson, our CFO, Brad Delco, Spencer Frazier, EVP of Sales and Marketing, our COO and President of Highway Services and Final Mile, Nick Hobbs, Brad Hicks, President of Dedicated Contract Services, and Darren Field, President of Intermodal. I'd now like to turn the call over to our CEO, Ms. Shelley Simpson, for some opening comments. Shelley? Thank you, Andrew, and good afternoon. I want to begin by thanking our teams for the work they continue to do every day for our customers. The year-over-year improvement we delivered, both financially and operationally, is a direct result of the focus, discipline, and commitment across this organization. We delivered strong results relative to the market in a still challenging environment, reflecting disciplined execution against the strategy we laid out. We are taking share driven by the strength of our execution and consistent service for our customers. As we moved through the first quarter, the freight environment felt meaningfully different than what we've operated in over the past several years. When we spoke last quarter, I described the truckload market as fragile and that we are testing the elasticity of supply, and that assessment proved accurate. Continued regulatory enforcement to improve safety in our industry has removed non-compliant capacity, and when combined with early signs of improved demand, resulted in a tighter truckload market throughout the quarter. While predicting inflection points is never precise, we believe we are on a path of recovery. We feel confident about how we are positioned. The operational discipline we've established over the past several years is showing up in year-over-year financial improvements and enhanced customer responses, enabling us to shift from a defensive posture to playing offense from a position of strength. This confidence is grounded in results. We have delivered exceptional performance in safety and service, surpassed expectations on lowering our cost to serve, and maintained very high customer retention. Our strong execution has earned the company multiple Carrier of the Year awards as customers increasingly choose J.B. Hunt. This opens doors to growth opportunities, and we are approaching them with intentionality and discipline. Let me close by outlining our key priorities for the year and how they position us for success in this dynamic environment. First, we are focused on disciplined growth driven by operational excellence. Customer conversations during this season have become more constructive. Though there is still work to do to fully restore pricing and margins to expected levels. We are pushing where appropriate and remain confident in the value we deliver. We are seeing increased traction in ICS and JBT consistent with early cycle market shifts, and there remains opportunity in intermodal, which Darren will discuss. Second, we will continue to leverage our investments in people, technology, and capacity to drive sustainable competitive advantages in our business. We consistently invest in our people who represent J.B. Hunt to our customers and are central to our operational excellence. Our technology connects and empowers our people and helps us optimally utilize our capacity, and we are building on our innovative foundation to drive greater automation and productivity. We have pre-funded our capacity needs, particularly in intermodal, at the bottom of the cycle. These remain the core foundations in our business, and we expect to see future benefit from these investments. Third, we remain focused on repairing margins and driving long-term shareholder value. We are a disciplined growth company and equally disciplined in how we deploy capital. We have momentum in the business and will continue to build on our strong start to the year. With that, I'd like to turn the call over to Brad. Thanks, Shelley, and good afternoon. Let me start with the first quarter results. On a GAAP basis, total revenue was up 5%, while operating income improved 16% and diluted earnings per share improved 27% versus the prior year period. We experienced strong demand for our service offerings as a predominantly supply-driven freight recovery continued to gain steam, coupled with some modest improvements in demand. In the quarter, we executed well across our service, safety, and cost to serve initiatives, which continue to gain momentum. As we discussed during the first quarter conference circuit, this momentum was partially offset by the impact of weather, which negatively impacted incremental margins in the quarter. We also saw volatile fuel prices. Our business and our industry has fuel surcharge programs that protect our operations from fluctuations in fuel markets. Admittedly, intermodal is a very fuel efficient solution for our customers, so higher fuel prices enhance the value proposition of our leading intermodal franchise. It's worth reminding our investors, fuel is generally a pass-through expense and typically has a small impact on profit dollars quarter to quarter. However, it is dilutive to overall margins. Let me turn to our lowering cost to serve initiative. We have given an update each quarter since we announced our $100 million target to remove structural costs from our business. In the first quarter, we continued to make additional progress, eliminating over $30 million during the quarter. Again, our intent is to make sure these cost initiatives are visible in our results, and despite further investments in our people, higher insurance premiums, medical costs, and fuel prices, and worse weather, we were able to expand margins 70 basis points year-over-year in the quarter, with pricing that still did not cover core inflation. Going forward, we will continue to challenge ourselves on our structural cost without sacrificing our ability to capitalize on market opportunities to compound our growth ahead. The discipline across our company also extends to our capital deployment. We continue to prioritize reinvestment in the business and will reiterate our guidance of a $600 million-$800 million net CapEx plan for the year. Success-based growth opportunities in dedicated will continue to be the main catalyst to influence this range. We retired $700 million of notes that matured on March 1st and ended the quarter with 0.8 turns of debt, below our stated target of one turn. We repurchased 380,000 shares of stock in the quarter for approximately $80 million. Finally, back in January, the board authorized a 2% increase in our dividend, which is also the 22nd consecutive year of increasing our quarterly dividend. Let me close with this. First, we are executing extremely well across the organization on operational excellence in service, safety, and lowering our cost to serve. Second, without any meaningful tailwinds from price driven by this recent market inflection, we have already put ourselves on a path to restoring our margins, which we think is a differentiator in the market. Third, we have pre-funded a lot of our growth while maintaining a significant amount of flexibility to deploy capital to drive long-term value for our shareholders. We are operating from a position of strength. That concludes my comments, and I'll turn it over to Spencer. Thank you, Brad, and good afternoon. I want to start with what we're seeing from customers and across our network. Throughout the first quarter, there has been an evolving narrative from customers that tightening in the truckload market would be temporary in nature. Today, most customers understand there has been, and continues to be, a shift in industry capacity that is impacting the truckload market, and this is a structural change. Customers haven't seen a capacity-led cycle change, with the exception of when the industry implemented ELDs or experienced a constrained market, since 2022. What we're seeing is a freight market that has fundamentally less slack than it did in prior cycles. Capacity has been steadily exiting for an extended period, driven by regulatory enforcement, rising costs, and financial performance that does not support capital reinvestment. Even as spot rates increase, capacity continues to leave the industry. You can look at most industry KPIs, and they are either at their highest or lowest levels since 2022. Truckload rates, tender rejections, the ISM PMI, and several others are all at their highest levels since 2022. Trucking employment is at the lowest levels since 2022. All proof points of structural change. At the same time, customers' supply chains are leaner, agile, and more synchronized than they've ever been, while their demand is solid and increasing. This combination matters. It means the system is far more sensitive to even modest changes in volume or disruption. We saw that dynamic clearly late last year. As volumes increased around peak, conditions tightened quickly, service became more valuable, and customers leaned into partners they trust to execute, partners who can honor commitments when it matters. This dynamic continued into the first quarter. For J.B. Hunt, that environment plays directly to our strengths. We are seeing strong customer retention, continued share gains across all our services, an expanding pipeline, and much more disciplined pricing conversations. We're not chasing volume, but we are taking market share. We're focused on freight that fits our networks, creates value for our customers, and at the right rate to generate durable returns. What's also different this time is how customers are behaving. We're seeing far less price-led decision making and far more focus on execution quality. They're adjusting to capacity challenges with frequent mini bids. They're consolidating freight with fewer, more reliable providers, and they're prioritizing scale, visibility, and execution. While we remain mindful about the macro and recognize today's risks, we're confident in our positioning. We built this company for environments like this, where operational excellence, reliability, and network depth matter. Our focus remains the same, execute at a high level, honor commitments when the market tightens, and use our platform to help customers manage volatility. That approach has driven share gains in the past, and we believe it will continue to do so well into the future. I'll now hand it over to Nick. Thanks, Spencer, and good afternoon. I'm going to start with safety. We are coming off of three consecutive years of record safety performance as measured by DOT preventable accidents per million miles. I'm proud to say that we continue to lead the industry and set new records for ourselves, besting last year's first quarter result by 14% despite a materially more challenging weather impacted quarter versus prior year. This performance directly reflects the commitment of our drivers and broader teams to operating safe and secure every day. As we continue to grow with customers and take market share, we will bring on drivers and operations-focused employees to maintain our operational excellence our customers expect. In fact, our current driver need is the highest it has been since June of 2022. As the driver market has tightened, we have begun to execute various strategies that allow us to recruit to meet our needs and support our growth. As these new drivers are onboarded, our emphasis on safety starts day one with our more tenured drivers, reinforcing our culture through training and the sharing of best practices. Moving to the business, I'll start with the Final Mile. End market demand has shown signs of stabilization across furniture and exercise equipment. With appliance replacement demand remaining solid, we continue to see strength in our fulfillment business, driven primarily by off-price retail channels. Going forward, our focus hasn't changed. We are committed to providing high service levels for customers and being safe and secure while continuing to lead the industry in background verification standards. Last quarter, we spoke to an expected $90 million revenue headwind this year from some lost business. Since then, we've secured new wins and see a strong and developing pipeline as we work to offset as much of that headwind as possible without sacrificing returns for the unique value we provide. Moving on to our highway businesses. Overall demand was better than normal seasonality, with more spot opportunities as tender rejections remained high and routing guides were breaking down. On capacity, the truckload market remained unseasonably tight as market factors continued to pressure capacity. We believe the market tightness was driven primarily by a shortage of supply, but with some positive elements of demand, which is a slight positive development from Q4, which seemed to be mostly supply driven. In JBT, we reported our fourth consecutive quarter of double-digit volume growth as our focus on operational excellence is leading to additional opportunities for growth and market share gains. Execution remains strong as we continue to grow revenue while effectively managing controllable cost. However, the tight truckload market and rapid rise in fuel prices late in the quarter created challenges for independent contractors, leading us to source more third-party capacity to cover loads in the first quarter. To put this in context, our revenue increased 23% on 19% load growth, but our gross profit declined 5%, primarily due to the higher purchased transportation rates. Going forward, our focus remains on disciplined growth of our trailing network while continuing to improve the utilization of our assets through improved box turns. I'll close with ICS. We have positive momentum in this business that hasn't yet translated to improved financial performance due to continued gross margin pressure from higher purchased transportation costs. This margin pressure is normal at this point in the cycle as we balance honoring customer commitments and working with customers to reprice freight as needed. So far in bid season, we are winning more volume and securing rate increases. While spot market opportunities have increased, they were not enough to offset the margin pressure on our contractual business. Going forward, we are encouraged by the momentum we have and remain focused on leveraging our cost as we scale the business. With that, I'd like to turn the call over to Brad. Thanks, Nick, and good afternoon, everybody. I'll provide an update on our dedicated business. Starting with the quarter, at a high level, our first quarter results continue to highlight the resiliency of our dedicated business. Weather did negatively impact our operations during the quarter, particularly in January and February. As a result, we have not seen much of spring surge with our lawn and garden customers across much of the northern half of the country, which could be delayed from the lingering winter weather. Regardless of this, the team did a great job managing our costs and continuing to lower our cost to serve while maintaining high service levels and delivering value for customers. The combination of these factors, plus a record safety performance in the first quarter, allowed us to grow operating income 9% compared to the prior year on only modestly higher revenue. During the first quarter, we sold approximately 295 trucks and remain confident in our ability to achieve our full year target for net truck sales of 800-1,000 new trucks this year. Our sales pipeline is strong and strengthening while also broad with a lot of diverse fleets from both a customer size and industry perspective. As the truckload market has tightened over the past several months, we have seen an uptick in interest from customers for a dedicated solution. I commented last quarter that we added a record 40 new customer names to the portfolio in 2025. Historically, once we have been able to get in the door with customers and prove out the value of our differentiated service, this has led to additional opportunities for growth at new locations for these customers. This has been a large part of what has driven our success. Operational excellence on execution and service. We get the customer in the door, get our people involved in running and managing the business, get the equipment and drivers in position, and stand up our processes and service standards, and a majority of the time, customers realize our service truly is differentiated and new growth opportunities present themselves. I spoke last quarter about expecting only modest operating income growth in our dedicated business in 2026, and I still believe that is the right framework for this year. I also spoke about needing to see a wave of truck growth for about six months before we see material increases in profit performance, given the nature of starting up new accounts and incurring expenses there. We are now on two consecutive quarters of strong truck sales and our pipeline has strengthened recently. I am confident this wave of new business is coming, just the timing was pushed out a little later than we anticipated. To wrap up, I want to hit on a couple things that could impact our results for the rest of the year. First, as I mentioned earlier, we are seeing increased interest from customers for a dedicated solution. Actually, during the first quarter, we had our second highest month in the last five years of new deals priced. This is encouraging for potential truck growth, but keep in mind, the more successful we are at selling new trucks, the more startup expense we incur. Next, we have seen a significant increase in fuel prices over the past several weeks. While fuel is predominantly a pass-through in our business, it is dilutive to operating ratio or margin percent, but not dilutive to margin dollars. Finally, with the capacity rationalization that has taken place in the market, we are experiencing increased challenges in driver hiring that we haven't seen in years. We are well positioned to handle these challenges, but it is a notably different environment. With that, I'd like to turn it over to Darren. Thank you, Brad, and thank you everyone for joining us this afternoon. Our intermodal business executed extremely well on our strategy during the first quarter with high service levels to meet elevated customer demand, despite some really harsh weather conditions in parts of the country. Our focus on operational excellence is resonating with customers and is leading to market share gains and continued road to rail conversion. I am proud of the team and encouraged by our strong start to the year. During the first quarter, demand for our intermodal service outperformed normal seasonality, and we set a record for first quarter volume. We also set a weekly volume record in March with over 46,000 loads delivered, an unusual occurrence in that first quarter when fall peak season is typically when we break volume records. The strength in demand was broad-based among customers and across the network. For the quarter, volumes were up 3% year-over-year, and by month, were down 1% in January, up 1% in February, and up 8% in March. Despite facing difficult year-over-year comparisons in our Eastern network, we grew Eastern loads 7% against a 13% comp, while transcon volume was flat. We are seeing road to rail conversion continue in the East. Also, with elevated truckload spot rates and rising fuel prices, the value proposition of our intermodal offering becomes increasingly more attractive for customers. We continue to see strong rail service from all of our rail providers, a trend we have seen for several years now. During a winter in which we saw several impactful storms across the country, the rail networks were able to quickly recover their service, a testament to the investments that have been made in their networks and service over the past few years. We and our rail providers know the true test of network resiliency will come once demand strengthens. As we enter this prove it time for rail networks, we in the railroads are confident service levels can be maintained even in a period of sustained volume growth. I'll close with some comments on pricing. As we have said previously, but it bears repeating, given the nature of our bid cycle, we are living with the results of last year's bid season in the first half of 2026. Turning to the current bid season, we are in the final stretch, and as is our normal practice, we aren't going to provide any updates on overall results or expectations until we wrap up this bid season. That said, I will give a few high-level thoughts and observations. Early in bid season, we saw westbound backhaul freight repriced down year-over-year as the market for this freight was competitive as it is every year. In the rest of our network, the emphasis on operational excellence has positioned us well to have conversations with customers in the bid season, leaning into the value we create with our differentiated service. In the eastern network, where we compete more directly with truck, our ability to push price and the reception from customers to price increases is different than the transcon market. So far in the transcon network, we have seen a more competitive bid season, particularly outbound off the West Coast, than we had expected. Our strategy is to remain disciplined in our growth and our pricing, expecting the value we create for customers when we leverage our network to be realized in the returns we generate. My confidence in the strength of our intermodal franchise and the opportunities for growth that are ahead of us remains high. We have pre-funded our capacity needs and are ready to meet our customer growth demand with our unmatched scale and density. Our focus on operational excellence and industry leading service are competitive advantages that further differentiate us for customers. As we have stated before, we have long-term intermodal solutions for our customers in any operating environment and provide seamless coast-to-coast intermodal service today as we have for years. With that, I'd like to turn it back over to the operator to open the call for questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Please limit yourself to one question only. At this time, we will pause momentarily to assemble the roster. The first question will come from Jonathan Chappell with Evercore ISI. Please go ahead. Hey, John. Thank you. Good afternoon. This question is for Spencer, but anyone can answer it. One of the big takeaways, I think, from the January call was the reluctance to call the inflection so much, and the one quote that really stood out was you're hesitant to suggest there's some big pricing opportunity this year. Sounds like a lot has changed in the last three months up to and including customers' willingness to kind of acknowledge the durability of this. Darren kind of talked on intermodal bid season. I know you're not going to get in any more detail there, but just broadly speaking for the business, does it feel today that there is a better pricing opportunity, whether it be for second half of 2026 or 2027, than you maybe anticipated back in January? Yeah. Hey, John. Thanks for the question. I do think it feels quite a bit different today than it did in January. As you mentioned, when we talked in January, we started to see some tightening both in demand and then also really tightening of capacity that took place really around Thanksgiving and through the end of Q4. That just continued through this quarter. Capacity, I'll just say this, has inverted, and it's changed rapidly as regulatory enforcement continues to be implemented, and we believe that enforcement is going to continue to accelerate. Also, there's multiple shipper and other surveys out there done by several of you that indicate that their perspective of capacity is going down and pricing is going up with solid demand. One other thing I just want to mention, and I mentioned it early in my comments today, really talking about how this cycle is a little bit different than in the past, but a little bit similar to the prior two cycles, the prior two upcycles, specifically the capacity led one in 2017 and 2018 with the ELDs, and then also the demand cycle and shock associated with 2020 through 2022. Here's the things that really kind of are illustrated in our results but also match the patterns of those two cycles. One, spot price always is your real-time indicator of change, and it changed rapidly in both of those upcycles first. Well, what's happening today? Spot pricing has changed first. You typically see, say, a 3-6-month window of contract pricing changing on the highway, and then maybe even a 6-12-month window of contract pricing changing in intermodal. Well, look at our revenue per load that we just shared. ICS up 9%, JBT up 3%, and our intermodal changing just a little bit slower. I can tell you things are structurally different. Capacity is continuing to exit the industry. Customer demand is solid, and therefore, I think we're in this structural change and the first part of an upcycle. John, this is Nick. I'd just add from the Highway segment. We've clearly seen a big shift from the first half to the second half of bid season, and customers more willing and coming back, with different opportunities, with a lot of mini bids and rate increases. It's moving quicker on the brokerage side, but it's also following quickly just on the pure truckload side as well. Yeah. This is Darren. I'll chime in on intermodal. Just want to highlight that it's behaving a lot like we've seen in the past, in that where we compete most directly with highway, we're going to see new opportunities for road to rail conversion. That is happening in a 7% growth on top of 13% growth in our eastern network a year ago is proof that those opportunities are presenting themselves. Again, as the season goes on, we'll continue to look for additional pricing improvement opportunities as the market certainly makes that available. Look, customers are under a lot of pressure, and our customers are fighting the push up, and that's not new. We've dealt with that for decades. We'll continue to compete, and we'll continue to be disciplined with our approach on how we bring on volume. The next question will come from Brandon Oglenski with Barclays. Please go ahead. Hi. Hey, Brandon. Hey, Brad. Maybe I'll direct this one at you, because I think you made a prepared comment about being on track to restore margins, even though you haven't really seen any material tailwinds from price yet. I guess it fits in with the conversation on the last question, but can you talk about your cost to serve programs here, and maybe the confidence you're seeing on the cost side as well? Yeah, sure. Thanks, Brandon. The announcement for this quarter was we're sort of running at a pace north of $30 million a quarter. We targeted $100 million. I think we're closer to running somewhere close to or just north of $130. I think we're outperforming. That was also included in Shelley's comments. I think the important point that I really want to make sure is when you look at the year-over-year change in margin performance, and I know you guys like looking at incremental margins in our business. We still have some pretty meaningful year-over-year headwinds and inflationary costs. I think I called out insurance premiums, medical costs. We continuously invest in our people. I think we've called out weather being more material in this first quarter, than the prior first quarter. Despite all of those, what I'd say sort of above trend inflationary cost pressures, combined with the fact that I don't think if you aggregated our pricing performance over the last 12 months, it would even exceed what I would consider core inflation. It sort of speaks to, okay, you've executed really well on your lowering our cost to serve, but we've also executed extremely well on all the productivity we've seen in ICS and JBT and DCS, in FMS and in intermodal. Particularly, the callouts to me, and I'll just point out, we did add a little bit of incremental financial color on JBT and introduced the concept of gross profit dollars. Think of revenue and then purchased transportation cost. With that sort of revenue growth, both in ICS and JBT, our gross profit dollars were actually lower year over year. You saw our operating expenses in each of those business units lower also year-over-year, despite meaningfully more volume. I think that's been the story across really all of our segments other than maybe final mile, who is dealing with the customer loss that we disclosed last quarter. Without maybe giving a new number on cost to serve, I think it's probably really good for you and everyone else to think about how much productivity we've driven in our business, combined with the structural cost removal, to really put up what I think is a meaningful improvements year-over-year, with really without much tailwind yet from what we're seeing play out thus far in the market. The next question will come from Chris Wetherbee with Wells Fargo. Please go ahead. Yeah. Thanks for asking, guys. Hey. We've talked a lot about capacity, but maybe I wanted to ask a little bit about demand. It does seem like you guys are getting more constructive about the demand environment that we're in right now. I think intermodal sounds like it accelerated a bit as you went through the quarter. I was wondering, as you think about the March improvement, how much is that related to the increase that we saw in fuel? I guess, how do you think about broadly the demand environment? Then maybe as a second piece, how we should think about the knock on effect of fuel driving volume to intermodal as we look forward? Yeah, Chris, I'll take that. Just a couple things. I think even associated with some of the comments around the consumer in your earnings release and several other banks. I think the consumer remains resilient, and that's been proven time and time again. I think that there's strength there. Then again, our customers continue to compete and drive value for their customers in unique ways. As we meet with them at conferences throughout the first quarter and have multiple conversations with our customer and sales teams on a daily basis, they're confident in their demand outlook, and I would just call it as solid. To your point on fuel, I think fuel definitely is potentially a watch out there. That's what we talked about. There's some risks that we're aware of, but also definitely a big opportunity for customers when they look at optimization of their networks, which they consistently do. They're trying to optimize orders, shipments, modes, and fleets, and that really plays into the strength of our opportunity for mode conversion as well as fleet expansion. I think one other thing, Brad, you mentioned this in your dedicated remarks, talking about really a strengthening pipeline inside DCS. I would also say that's across the board in all of our services. Our pipelines are strong and growing. That really goes to the value proposition that we put out there related to some fuel nuances, but also mostly related to operational excellence and the value we create for our customers. I just want to comment real quick. This is Darren on intermodal. I think that while the fuel certainly is a major headline and has been for a few weeks now, largely in the first quarter, that wasn't present yet. A lot of success we were having in our Eastern network growth, I would not characterize our results in the first quarter as being very driven from fuel. It has certainly elevated the opportunity for discussions with our customers, and we've got some anecdotal examples where maybe a customer split a lane between intermodal and highway, and they ran a little bit more intermodal or will continue to do that as the year goes on. I know that our operational excellence, as proven by 13% growth in the Eastern network a year ago in the first quarter without any fuel tailwinds, is driving the majority of our opportunity to continue to grow in the East. Chris, this is Shelley. I would just add also that if you think about what's happened here in the first quarter, really January and February plagued with weather, and then fuel prices here in March, our customers' routing guides and their budgets have not really gone as they had planned. Anytime that that happens, for whatever reason, our customers become more interested in our ideas around creating a more efficient way of transportation. I think our pipelines are up as they're thinking about who can I go to? Who do I trust? I think we're one of those names that come to the forefront of their mind when things like that are happening. As Spencer talked about, the structural change happening on the supply side, we continue to see customers leaning more into us to say, "Okay, let me think about you more from a conversion perspective. Let me get help building a dedicated fleet. Let's think about technology in the platform with 360, with [Nick's area], and certainly final mile. Let me differentiate the way we're going into home." I think that those conversations are happening more today than they were at the first part of the year, and it's because of all of the things I've just mentioned. The next question will come from Scott Group with Wolfe Research. Please go ahead. Scott. Hey, thanks. Afternoon, guys. Darren, we've always seen intermodal price lag truckload price. That's very normal. I just want to get a little perspective about some of your comments, like when intermodal pricing does start to turn, do you typically see it first in the East and transcon lags? What you're saying right now is very normal, or is this abnormal where East price is starting to turn positive, but transcon is lagging? I just don't know if this is normal or not. Maybe just if I can broaden it out just a little bit, Brad, your comment at the beginning of the call that price not covering inflation yet, do you ultimately have visibility that we get there over the next couple of quarters? Well, first of all, Scott, I'll say that, I think Eastern network pricing improving faster than transcon, I would consider very normal. That's just. It's more closely related to highway rates and the customer buying patterns, shorter length of haul, cost to serve in those markets are more impacted by, certainly, driver wages. That sort of thing can really push challenges in the East. Historically speaking, Eastern network would move faster than transcon. The transcon network is not competing head-to-head against the highway to the degree that you do in the East, and so historically speaking, it certainly would lag a little bit longer. Yeah. Maybe, Scott, just to make sure the context of my comment was taken correctly. I would actually say, yeah, based on what we're seeing, the change in price, I think, will exceed core inflation. When I say core inflation, I'm thinking ECI, CPI. I think the challenging part, if you want me to add a layer to that, would say, I don't know when the cost of purchased transportation might settle. As you know, in JBT and in ICS, even with what I think are some pretty meaningful increases in rates, a lot of those rates are being passed to carriers to cover loads, and so I think you've seen that with margin compression in those two areas. If we wanted to say, "Hey, is pricing going to exceed core inflation?" I would feel pretty confident the answer's going to be yes. The industry needs margin recovery. The industry needs better financial performance to support reinvestment, and so I think that's probably the direction the industry is going to be heading. I just don't know at what point securing third-party capacity may settle, because obviously the direction has been up and to the right. I don't know, Nick, if you wanted to add anything in terms of what you're seeing on. I would just say what we've seen so far is that, it was really, really tight early on, and March was very tight when I look at month-over-month, so it was kind of building. April was very typical, just kind of settled there, and that's what we're seeing, just typical, I would say, on rates and on the carrier side as well. Particularly when you get in flatbed and temp, it's still really, really tight there. I think, Nick, you were talking about double-digit rate increases. Yeah. In brokerage. In brokerage. Yeah, in brokerage, we were clearly seeing double digits, and that's on some contract stuff as well as spots, even higher than that, so it's driving higher. Yeah. I hope that helps, Scott. The next question will come from Jordan Alliger with Goldman Sachs. Please go ahead. Yeah. Hi, just wanted to come back a little bit to the brokerage side. It's good to hear on the pricing front, obviously still a squeeze, still an impact on overall profitability. Can you maybe talk a little bit to how you're thinking about that profit profile for brokerage as you think ahead, given the puts and takes with PT versus selling price and maybe getting back to the black? Thanks. Yeah. I would just say, I feel very good about where we're at. If we look at the volume, that we've had up 10% growth in ICS, very excited about that. The market was typically down, let's say 3%-5%, and our direct expense was down 1%. We think we're lining up very well from a cost and being able to leverage our platform, our technology, and our people. We've got a great retention rate going on there. Our customers love our brand, love our operational excellence, and we've got the capacity with the carriers. We're safe and secure, so it's lining up very well for us. We're excited about where we're going in the future. The next question will come from Brady Lierz with Stephens Inc. Please go ahead. Hey, Brady. Great. Hey, Brad. Great. Thanks. Brad, I wanted to ask about the dedicated and specifically the impact of the administration's regulatory actions. You mentioned in your remarks a tighter market, more difficulty hiring drivers. Do you think this supply-driven nature of the tighter market could translate to a faster dedicated sales timeline this cycle? Maybe on the other hand, do you expect any margin impact from the increased challenges hiring drivers and the subsequent potential increase to driver wages? Yeah. Thanks, Brady. Nick touched upon it in his prepared remarks, kind of what we're seeing on the driver front. I made a reference. We've definitely seen it tighten, certainly in some geographies more than others. We absolutely do believe that the regulatory changes are playing through with respect to driver availability. Not so much in terms of how we've been directly impacted, because our programs largely provisioned us to not have as much exposure, but we do see the overall market tightening. In particular, I might add, we've seen abnormalities in states like Texas, Ohio, Michigan, those that are close to the borders. We think that cabotage is a factor in those particular geographies. Obviously, the English language proficiency as well as non-dom is really more generally across the entire United States. We've seen our total needs climb for driver needs, but we feel and are very confident in the investments and the strategy that we have in our corporate driver personnel strategy. We believe that we're positioned better than anybody to overcome those market obstacles. To the second part of your question, yes, we've already seen the acceleration, and that was part of the reason why I wanted to highlight the comment on the volume of pricing that we've seen come through and really pricings after we do engineering work. We call that an engineered design request, and those were record volumes for us, in the month of March, in particular. We see our pipeline building. We feel great about how that looks, both from diversity, and it's really not getting propped up by big, big deals. Sometimes our pipeline, we could get some mega fleets that come through that'll kind of artificially prop up our pipelines. This is really with the volume of deals that are helping the overall health of our pipeline. All those things add up to a huge optimism from my perspective, for dedicated opportunities. Now, the trick for us is we've seen this play out before, and we want to make sure that we stay disciplined to not grow our dedicated business unit with what we would call capacity fleets, those that only want to have a guaranteed capacity at a guaranteed rate in these environments. We've got great businesses like ICS and JBT that can help provide customers solutions there. We do see the acceleration. We do think that the combination of inflation, the risks that Brad referenced earlier, when you think about healthcare and insurance premiums, those are what will drive private fleets towards us. Those private fleets have particularly a more difficult time sourcing drivers than the success that we have. We think that recipe lines up nicely for us to have a really healthy growth year. The next question will come from Richa Harnain with Deutsche Bank. Please go ahead. Hey, Richa. Hi. Maybe a more longer term-oriented one for Shelley. Shelley, you commented on how you still have work to do to fully restore pricing and margins, even on the back of the third consecutive quarter of margin expansion, despite what Brad keeps reminding us is limited help from price thus far, so pretty impressive. Just maybe talk to us about your line of sight on margins longer term. In the past, you've indicated 10%-12% as a potential for your intermodal business. Is that still what you're targeting or given the structural changes Spencer spoke about, coupled with the efficiencies you're uncovering with all your technology and such, could it be higher? And what do you think is a reasonable timeframe to achieve that? Yeah. Thank you for that question, Richa. I will tell you, we've talked a lot about our internal goals and the things that we want to get accomplished. We've not changed any of our margin targets externally. I'll tell you, I think we've got a few opportunities. One is really around the work we're doing in our transformation work that I've talked about now here for the last several quarters. I'm using our technology and our investments, and that being a core foundation for us, and really how we're using the disciplined ROIC-driven investment to lower cost to serve, how we think about AI, and that really being a force multiplier across our entire organization. We're early on in that. We do believe that there's good opportunity for us to think about that differently. Part of our ability to get margins back in our margin target, we're going to have to have more help from a demand perspective. There's a lot happening from a supply side. The recovery is happening from that perspective, but we just need a more normalized environment from demand overall. Certainly, we've all been here a really long time. We've seen recoveries happen very quickly. Those tend to not work as well for us over the long term. If we can recover over the next one to two years, that's going to be healthier for our business over the next 4-5 years. If it's a huge inflection with pricing changing significantly very quickly in Darren's business or really in any of our businesses, then when that settles back down, customers want to do something different there also. It also means there's probably more inflationary costs that stick over the long term. For us, we've been patient. We've grown impatient. We're really trying to help our customers understand where we're at, and I think that they're hearing us on that. I can't really speak to if our margins would change. I'll tell you, we want to get first inside the margin targets, but that's not a stopping point for us. We'll evaluate those as we get there. The next question will come from Ken Hoexter with Bank of America. Please go ahead. Hey. Hey. Good afternoon. Hey, Brad. You noted in the past about 30% excess capacity in intermodal. I don't know, maybe an update on where that stands now. Given that backdrop, how do you balance pulling out the capacity and your ability to get pricing? Does that maybe delay the ramp in pricing as you move here? Then given the contrasting rising driver pay, given the tighter market, I think you mentioned you're hiring drivers and ops teammates. Does that eat up the incremental margins? I guess that's a margin question going back to Shelley's last answer, but maybe just how you think about the pace of it in this recovery. Well, Ken, this is Darren. Let me just highlight. We haven't added any capacity in some time now, and certainly we have highlighted, we think our network can support up to 20% more volume, I think is what we've said in previous earnings calls. I don't know what I would call the industry excess capacity, but certainly most of the public competitors we fight with all talk about having similar excess capacity. I don't think we're necessarily talking about taking capacity out as much as we're talking about growing in to our pre-funded capacity investments that we've made. That's been our approach for some time now. I think the discipline that we apply to not just using a reduction in pricing to add volume at weaker margins is where we really would draw the line, and we've maintained that discipline, certainly over the last couple of years, have been very focused on improving our balance, looking at cost areas that we can attack in order to reduce our cost to serve, and in some ways, to allow us to be even more competitive on our price and get volume growth. I think that's our approach as we move on. I don't know, there's not a capacity exit in the intermodal space like there is in the highway space, given the intermodal capacity is largely containers. Certainly the drivers and the drayage community used to operate intermodal is impacted by higher driver wages, but certainly it's a lower percentage of the total cost. Everybody, as we look for ways to grow, that's our plan in J.B. Hunt, is grow into our excess capacity. The next question will come from Brian Ossenbeck with J.P. Morgan. Please go ahead. Hey, Brian. Hey. Afternoon, everybody. Two kind of follow-ups here. Just the first, Darren, coming back to your Comment on transcon competition was a little bit tougher than you expected, at least to start. I don't know if you have a sense as to why that is given, assuming everybody else is facing similar inflationary impacts, maybe more so than you all. Just maybe a quick update as we get into the spring and summer here. What's most impactful in your perspective from the regulatory perspective as it comes to maybe even increasingly squeezing out more of the truckload capacity? Are there any other step changes you're looking for? Or is it more of just increasing compliance and enforcement on a more gradual basis? Thank you. Yeah. Appreciate it, Brian. When we think about the transcon pricing, you highlighted what is the surprise to us is that certainly what appears to be depressed margins in the industry, but yet a competitive environment out there, or at least what our customers are telling us and what they're willing to do in terms of put capacity at risk for their business based on pricing discussion. I want to be cautious and not over-highlight that issue. It's just we have grown 0%. We're flat in our transcon business as we highlighted. We're being very disciplined with our price so that we can achieve appropriate margin levels on that business. In doing so this year, that's been harder than what we would have anticipated given the environment that we're in. I also want to highlight that, look, we're pricing backhaul business. It's very competitive. That book of business actually repriced negative. Every head-haul segment we operate in is positive. Again, I think that it's not covering our inflationary cost, but certainly we are getting price increases, but we're not getting to the level of price increases that would cover our inflation at this point in the cycle. As we continue to go through the summer, we'll be looking for opportunities to grow with customers at returns that justify reinvestment in our business. I'll hand the driver question off to Nick. Yeah, Brian, I would just say continued enforcement. You're seeing states like Indiana that just made an announcement, took 1,800 drivers out. You're seeing the same thing in California. You see a lot of states starting to enforce that. I just think there'll be continued enforcement. In May, you got Roadcheck. I think that'll be a big test there to see what supply looks like. They're going to really focus on ELDs and load securement. It'll be interesting to see what they do there. I just see this administration with chameleon carriers and authorization. They're going to continue to tighten the enforcement around that. They really want CDLs to mean something and have the right folks behind the wheels that are trained and certified. I think that's going to continue for some time. I would just add, too, Brian, this is Brad Hicks. The volume of truck driving schools that have been shut down, the ELD providers that have been shut off, all of those are going to create a more challenging pathway for us to have growing capacity or new entrants into the marketplace. We have an administration that's looking to put more, I guess, controls in place for carrier to even come into the industry. All those things, I think, are going to continue to add. It's hard to pinpoint which one's going to put more pressure on, but it's the collective that really is going to reveal itself. The last question will come from Tom Wadewitz with UBS. Please go ahead. Yeah. Good afternoon. Good evening. Hey, Tom. Thanks for the opportunity. Another question here. Hey. Yeah. Hey, Brad. Wanted to ask you, go back to intermodal. The monthly progression was pretty notably favorable. I'm guessing that January, February, some impact on the year-over-year volume, but update in March is pretty strong. How do you think about the way we should interpret that for the go-forward intermodal volume growth? Relative to 3% for the full quarter, is it reasonable to expect some nice acceleration given that aid, or was there something quirky about that? I guess another component on just how we think about intermodal volume growth, it's less driver-intensive, which is great for the environment, but have you seen environments in the past where the driver market's so tight that you get squeezed on drayage and that's a constraint on your intermodal volume growth? Thank you. Well, thanks for the question, Tom. I'm going to hit the driver question first. Look, driver wages in a tight driver market, it impacts every part of the transportation market that involves a truck driver in. Certainly higher wages is a challenge for intermodal. Do I think that drayage capacity has been a bottleneck for intermodal volumes in the past? Not to the extent that it shows up on the highway. I do think that one driver in a local environment in intermodal can certainly execute multiple loads in a day, and so that ends up being the ability to add capacity in the intermodal drayage market certainly offers an opportunity, and it's a career path for a lot of highway capacity as intermodal demand climbs and more of those jobs grow. We have a very attractive job to go recruit to, and so that certainly helps the industry. In terms of the volume outlook, you know us, Tom, I can't give you guidance on that. Certainly, March was very strong. We set a single week volume record during the month of March that I'm very proud of my team for their execution on, and we continue to see a strong pipeline and look forward to the remainder of the bid season. As we head forward, we think the value of our business unit and the way that we provide our service to customers really gives us strong opportunity to keep growing in the future. This concludes our question and answer session. I would like to turn the conference back over to Ms. Shelley Simpson for any closing remarks. Thanks again for the discussion today. It was a strong quarter for us, and our people delivered that through great operational excellence. We've been focused on that the last two years. I think you're seeing that really come forward and show in our results, and not being reliant on the environment. We've had reliable service, strong safety performance. Our customer retention is excellent, and we continue to make great share gains with our customers. We know there's more work to do, particularly as we want to continue to improve our returns and performance across the portfolio. Having said that, we like the progress that we're making, the investments that we've made in our people and our technology and capacity. I think that's clearly moving our business in the right direction. I am proud of the team and how they delivered this quarter. I am confident in our momentum, and we are focused on continuing to build long-term value. Thanks for your time. I look forward to our discussion next fall. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.