JBHT Hunt J B Transport Services Inc - 10-K

ITEM 1A.   RISK FACTORS

In addition to the factors outlined previously in this Form 10-K regarding forward-looking statements and other comments regarding risks and uncertainties, the following risk factors should be carefully considered when evaluating our business. Our business, financial condition or financial results could be materially and adversely affected by any of these risks.

Risks Related to Our Industry

Our business can be significantly impacted by economic conditions, customer business cycles, government policies, and seasonal factors.

Our business is dependent on the freight shipping needs of our customers, which can be heavily impacted by economic conditions and other factors affecting their businesses. Recessionary economic cycles and downturns in customers’ business cycles, particularly in market segments and industries where we have a significant concentration of customers, may substantially reduce freight volumes for which our customers need transportation services and lead to excess capacity in the industry and resulting pressure on the rates we are able to obtain for our services. Adverse economic conditions may also require us to increase our reserve for bad debt losses. Rapid changes in government or political policies, including border or trade policies and tariffs, can also impact our customers operations and reduce their need for freight shipping, or may have an impact on the cost or availability of our equipment. In addition, our results of operations may be affected by seasonal factors. Customers tend to reduce shipments after the winter holiday season, and our operating expenses tend to be higher in the winter months, primarily due to colder weather, which causes higher fuel consumption from increased idle time and higher maintenance costs. Any of these factors could have a significant adverse effect on our financial condition and results of operations.

Extreme or unusual weather conditions can disrupt our operations, impact freight volumes, and increase our costs, all of which could have a material adverse effect on our business results.

Certain weather conditions such as ice and snow can disrupt our operations. Increases in the cost of our operations, such as towing and other maintenance activities, frequently occur during the winter months. Natural disasters such as hurricanes and flooding can also impact freight volumes and increase our costs.

Our operations are subject to various environmental laws and regulations, including legislative and regulatory responses to climate change. Compliance with environmental requirements could result in significant expenditures and the violation of these regulations could result in substantial fines or penalties.

We are subject to various environmental laws and regulations dealing with the handling of hazardous materials, underground fuel storage tanks, and discharge and retention of storm water. We operate in industrial areas, where truck terminals and other industrial activities are located and where groundwater or other forms of environmental contamination have occurred. Our operations involve the risks of fuel spillage or seepage, environmental damage, and hazardous waste disposal, among others. We also maintain bulk fuel storage and fuel islands at several of our facilities. If a spill or other accident involving hazardous substances occurs, or if we are found to be in violation of applicable laws or regulations, it could have a material adverse effect on our business and operating results. If we should fail to comply with applicable environmental regulations, we could be subject to substantial fines or penalties and to civil and criminal liability.

We are also subject to existing and potential future laws and regulations with regards to public policy on climate change. If current regulatory requirements become more stringent or new environmental laws and regulations regarding climate change are introduced, we could be required to make significant expenditures or abandon certain activities, which could have a material adverse effect on our business and operating results.

We depend on third parties in the operation of our business, particularly rail service providers, transportation equipment manufacturers, third party carriers and independent contractors.

Our JBI business segment utilizes railroads in the performance of its transportation services. The majority of these services are provided pursuant to contractual relationships with the railroads. While we have agreements with a number of Class I railroads, the majority of our business travels on the BNSF and the Norfolk Southern railways. The transportation services provided by these railroads have been in recent years and may from time to time in the future be impacted by contractual disagreements, labor disruptions or shortages, and other rail network inefficiencies. A material change in the relationship with, the ability to utilize or the overall service levels provided by one or more of these railroads could have a material adverse effect on our business and operating results. In addition, a portion of the freight we deliver is imported to the United States through ports of call that are subject to labor union contracts. Work stoppages or other disruptions at any of these ports could have a material adverse effect on our business.

We regularly purchase new revenue equipment, including trucks, chassis and trailing equipment, in each of our operating segments to expand our fleets and replace aging equipment. Any significant delays in the availability of new revenue equipment or increases in the cost of such equipment could have a material adverse affect on our business and profitability by reducing productivity, increasing maintenance expenses and capital expenditures, and limiting our ability to expand our business.

We also utilize independent contractors and third-party carriers to complete our services. These third parties are subject to similar regulation requirements, which may have a more significant impact on their operations, causing them to exit the transportation industry. Aside from when these third parties may use our trailing equipment to fulfill loads, we do not own the revenue equipment or control the drivers delivering these loads. The inability to obtain reliable third-party carriers and independent contractors could have a material adverse effect on our operating results and business growth.

Rapid changes in fuel costs could impact our periodic financial results.

Fuel costs can be very volatile. We have a fuel surcharge revenue program in place with the majority of our customers, which has historically enabled us to recover the majority of higher fuel costs. Most of these programs automatically adjust weekly depending on the cost of fuel. However, there can be timing differences between a change in our fuel cost and the timing of the fuel surcharges billed to our customers. In addition, we incur additional costs when fuel price increases cannot be fully recovered due to our engines being idled during cold or warm weather and empty or out-of-route miles that cannot be billed to customers. Rapid increases in fuel costs or shortages of fuel could have a material adverse effect on our operations or future profitability. As of December 31, 2025, we had no derivative financial instruments to reduce our exposure to fuel-price fluctuations.

Insurance and claims expenses could significantly reduce our earnings.

Our future insurance and claims expenses might exceed historical levels, which could reduce our earnings. We have experienced substantial increases in the cost of auto liability claims and in recent periods these increases have exceeded our insurance coverage layers, which has adversely impacted our operating results. If the number of claims for which we are self-insured increases or the cost of such claims continues to increase, our operating results could be further adversely affected. We have policies in place for 2026 with substantially the same terms as our 2025 policies for personal injury, property damage, workers’ compensation, and cargo loss or damage. We purchase insurance coverage for the amounts above which we are self-insured. As a result of the increased cost of auto liability claims across the transportation industry, insurance premiums for auto liability coverage have increased substantially in recent years. If these expenses increase further and we are unable to offset the increase with higher freight rates, our earnings could be materially and adversely affected.

We operate in a regulated industry, and increased direct and indirect costs of compliance with, or liability for violation of, existing or future regulations could have a material adverse effect on our business.

The DOT, FMCSA, and various state agencies exercise broad powers over our business, generally governing matters including authorization to engage in motor carrier service, equipment operation, safety, and financial reporting. We are audited periodically by the DOT to ensure that we are in compliance with various safety, hours-of-service, and other rules and regulations. If we were found to be out of compliance, the DOT could restrict or otherwise impact our operations. Our failure to comply with any applicable laws, rules or regulations to which we are subject, whether actual or alleged, could expose us to fines, penalties or potential litigation liabilities, including costs, settlements and judgments. Further, these agencies could institute new laws, rules or regulations or issue interpretation changes to existing regulations at any time. Compliance with new laws, rules or regulations could substantially impair labor and equipment productivity, increase our costs or impact our ability to offer certain services.

Difficulty in attracting and retaining drivers and delivery personnel could affect our profitability and ability to grow.

If we are unable to attract and retain the necessary quality and number of employees, we could be required to significantly increase our employee compensation package, let revenue equipment sit idle, dispose of the equipment altogether, or rely more on higher-cost third-party carriers, which could adversely affect our growth and profitability. In addition, our growth could be limited by an inability to attract third-party carriers upon whom we rely to provide transportation services.

We operate in a competitive and highly fragmented industry. Numerous factors could impair our ability to maintain our current profitability and to compete with other carriers and private fleets.

We compete with many other transportation service providers of varying sizes and, to a lesser extent, with LTL carriers and railroads, some of which have more equipment and greater capital resources than we do. Additionally, some of our competitors periodically reduce their freight rates to gain business, especially during times of reduced growth rates in the economy, which may limit our ability to maintain or increase freight rates or to maintain our profit margins.

In an effort to reduce the number of carriers it uses, a customer often selects so-called “core carriers” as approved transportation service providers, and in some instances, we may not be selected. Many customers periodically accept bids from multiple carriers for their shipping needs, and this process may depress freight rates or result in the loss of some business to competitors. Also, certain customers that operate private fleets to transport their own freight could decide to expand their operations, thereby reducing their need for our services.

Our business can be significantly impacted by the effects of national or international health pandemics on general economic conditions and the operations of our customers and third-party suppliers and service providers.

Our operations can be heavily impacted by the effects of a widespread outbreak of contagious disease. The effects of a pandemic may disrupt or restrict the freight shipping activities of some of our customers, on which our business is dependent. In addition, adverse economic conditions caused by a pandemic may also require us to increase our reserve for bad debt losses. Furthermore, pandemic related social and economic disruptions may lead to other events which could negatively impact our operations including service limitations of our third-party purchased transportation providers, reduced availability of drivers and other key employees, disruptions in the procurement of revenue equipment, restrictions at U.S. ports of call, excess capacity or rate reductions within the intermodal or trucking industries, inability of suppliers to continue activities, or volatile financial credit markets. The extent to which a pandemic will impact general economic and business conditions is highly uncertain and unpredictable; however, any of these factors could have a significant adverse effect on our financial condition and results of operations.

Risks Related to Our Business

We derive a significant portion of our revenue from a few major customers, the loss of one or more of which could have a material adverse effect on our business.

For the calendar year ended December 31, 2025, our top 10 customers, based on revenue, accounted for approximately 33% of our revenue. Our JBI, ICS, and JBT segments typically do not have long-term contracts with their customers. While our DCS and FMS segments may involve long-term written contracts, those contracts may contain cancellation clauses, and there is no assurance that our current customers will continue to utilize our services or continue at the same levels. A reduction in or termination of our services by one or more of our major customers could have a material adverse effect on our business and operating results.

A determination that independent contractors are employees could expose us to various liabilities and additional costs.

Federal and state legislation as well as tax and other regulatory authorities have sought to assert that independent contractors in the transportation service industry are employees rather than independent contractors. The laws of several states, including California, apply stricter tests for determining whether an independent contractor should be classified as an employee. We believe we are in compliance with all applicable independent contractor classification requirements. However, it is possible that other federal or state legislation or regulations could be enacted or that various authorities could assert a position that re-classifies independent contractors as employees. If our independent contractors are determined to be properly classified as employees, that determination could materially increase our exposure under a variety of federal and state tax, workers’ compensation, unemployment benefits, labor, employment and tort laws, as well as our potential liability for employee benefits. In addition, such changes may be applied retroactively, and if so, we may be required to pay additional amounts to compensate individuals for prior time periods. Any of the above increased costs would adversely affect our business and operating results.

We may be subject to litigation claims that could result in significant expenditures.

We by the nature of our operations are exposed to the potential for a variety of litigation, including personal injury claims, vehicular collisions and accidents, alleged violations of federal and state labor and employment laws, such as class-action lawsuits alleging wage and hour violations and improper pay, commercial and contract disputes, cargo loss and property damage claims. While we purchase insurance coverage at levels we deem adequate, future litigation may exceed our insurance coverage or may not be covered by insurance. We accrue a provision for a litigation matter according to applicable accounting standards based on the ongoing assessment of the strengths and weaknesses of the litigation, its likelihood of success, and an evaluation of the possible range of loss. Our inability to defend ourselves against one or more significant litigation claims could have a material adverse effect on our financial results.

We rely significantly on our information technology systems, a disruption, failure or security breach of which could have a material adverse effect on our business.

We rely on information technology throughout all areas of our business to initiate, track, and complete customer orders; process financial and nonfinancial data; compile results of operations for internal and external reporting; and achieve operating efficiencies and growth. We have also invested significantly in the development of our Marketplace for J.B. Hunt 360 online freight matching platform. Each of our information technology systems may be susceptible to various interruptions, including equipment or network failures, failed upgrades or replacement of software, user error, power outages, natural disasters, cyber-attacks, theft or misuse of data, terrorist attacks, computer viruses, hackers, or other security breaches. Increasingly sophisticated cyber-attacks such as ransomware and AI-powered phishing scams could compromise the confidentiality, integrity, or availability of these systems, disrupt network and terminal operations, delay freight movements, or result in data loss or exfiltration. We have in the past experienced security breaches and other interruptions of our information technology systems and may in the future experience such breaches or interruptions despite our best efforts to prevent them. We have mitigated our exposure to these risks through the establishment and maintenance of technology security programs and disaster recovery plans, but these mitigating activities may not anticipate or prevent every attack or failure, particularly as threat actors and technologies evolve, nor may they fully prevent or mitigate all adverse impacts. A significant disruption, failure or security breach in our information technology systems could have a material adverse effect on our business, which could include operational disruptions, loss of confidential information, external reporting delays or errors, legal claims, or damage to our business reputation.

An inability to develop, adopt, and integrate new or enhanced technologies, including rapidly evolving artificial intelligence, could have a material adverse effect on our business.

We operate in a rapidly evolving, technology-driven environment, and if we do not timely identify, prioritize, develop, and successfully integrate new or enhanced technologies into our operations, our service quality, efficiency, and competitiveness could suffer. Technology initiatives can be complex and costly, with risks of delays, defects, and training hurdles. Anticipated benefits from these initiatives may not be realized on the expected timeline or at all. In addition, competitors may introduce and scale new technologies more quickly or effectively than we do, which could diminish our competitive position, compress margins, and result in lost business opportunities. The rapid evolution and adoption of artificial intelligence(AI) and any efforts we may make to incorporate it into our business may amplify cyber, legal, and operational risks. AI adoption may introduce or amplify risks, including inaccurate or biased outputs that are difficult to detect, governance and model-risk challenges, privacy and intellectual property concerns, and evolving legal disclosure obligations. AI can also increase cybersecurity exposure as threat actors leverage AI to enhance social-engineering and intrusion techniques. Implementing and maintaining AI capabilities can be complex and costly, anticipated benefits may not be realized and expected timelines or at all, and failures could harm our operations, reputation, results of operations, and financial condition.

Acquisitions or business combinations   may disrupt or have a material adverse effect on our operations or earnings.

Future growth strategies for our operating segments may involve the acquisition of one or more businesses. We could have difficulty integrating acquired companies’ assets, personnel and operations with our own.  Regardless of whether we are successful in making an acquisition or completing a business combination, the negotiations could disrupt our ongoing business, distract our management and employees, and increase our operating costs.  Acquisitions and business combinations are accompanied by a number of inherent risks, including, without limitation, the difficulty of integrating acquired companies and operations; potential disruption of our ongoing businesses and distraction of our management or the management of acquired companies; difficulties in maintaining controls, procedures and policies; potential impairment of relationships with employees and partners as a result of any integration of new management personnel; potential inability to manage an increased number of locations and employees; failure to realize expected efficiencies, synergies and cost savings; or the effect of any government regulations which relate to the businesses acquired.

Our business could be materially impacted if and to the extent that we are unable to succeed in addressing any of these risks or other problems encountered in connection with an acquisition or business combination, many of which cannot be presently identified.

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our results of operations and financial condition should be read in conjunction with our financial statements and related notes in Item 8. This discussion contains forward-looking statements. Please see “ Forward-looking Statements ” and “ Risk Factors ” for a discussion of items, uncertainties, assumptions and risks associated with these statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our financial statements in accordance with U.S. generally accepted accounting principles requires us to make estimates and assumptions that impact the amounts reported in our Consolidated Financial Statements and accompanying notes. Therefore, the reported amounts of assets, liabilities, revenues, expenses and associated disclosures of contingent liabilities are affected by these estimates. We evaluate these estimates on an ongoing basis, utilizing historical experience, consultation with third parties and other methods considered reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recognized in the accounting period in which the facts that give rise to the revision become known. We consider our critical accounting policies and estimates to be those that require us to make more significant judgments and estimates when we prepare our financial statements and include the following:

Workers’ Compensation and Accident Costs

We purchase insurance coverage for a portion of expenses related to employee injuries, vehicular collisions, accidents, and cargo damage. Certain insurance arrangements include a level of self-insurance (deductible) coverage applicable to each claim. We have umbrella policies to limit our exposure to catastrophic claim costs which may include certain coverage-layer-specific, aggregated reimbursement limits of covered excess claims. We are substantially self-insured for loss of and damage to our owned and leased revenue equipment.

The amounts of self-insurance may change from time to time based on measurement dates, policy expiration dates, and claim type. For 2024 and 2025, we were self-insured for $500,000 per occurrence as well as subject to coverage-layer-specific, aggregated reimbursement limits of covered excess claims for personal injury and property damage. We were fully insured for workers’ compensation claims for nearly all states. We have policies in place for 2026 with substantially the same terms as our 2025 policies for personal injury, property damage, workers’ compensation, and cargo loss or damage.

Our claims accrual policy for all self-insured claims is to recognize a liability at the time of the incident based on our analysis of the nature and severity of the claims and analyses provided by third-party claims administrators, as well as legal, economic, and regulatory factors. Our safety and claims personnel work directly with representatives from the insurance companies to continually update the estimated cost of each claim. The ultimate cost of a claim develops over time as additional information regarding the nature, timing, and extent of damages claimed becomes available. Accordingly, we use an actuarial method to develop current claim information to derive an estimate of our ultimate personal injury and property damage claim liability. This process involves the use of expected loss rates, loss-development factors based on our historical claims experience, claim frequencies and severity, and contractual premium adjustment factors, if applicable. In doing so, the recorded liability considers future claims growth and provides a reserve for incurred-but-not-reported claims. We do not discount our estimated losses. At December 31, 2025, we had current accruals of approximately $283 million and long-term accruals of approximately $444 million for estimated claims. A significant increase in the volume of claims or amount of settlements exceeding our coverage-layer specific, aggregated reimbursement limits could result in a significant increase in our estimated liability for claims in future periods. In addition, we record receivables for amounts expected to be reimbursed for payments made in excess of self-insurance levels on covered claims.  At December 31, 2025, we had recorded current assets of $255 million and long-term assets of $235 million of expected reimbursement for covered excess claims, other insurance deposits, and prepaid insurance premiums.

Revenue Equipment

We operate a significant number of tractors, trucks, containers, chassis, and trailers in connection with our business. This equipment may be purchased or acquired under lease agreements. In addition, we may rent revenue equipment from various third parties under short-term rental arrangements. Purchased revenue equipment is depreciated on the straight-line method over the estimated useful life to an estimated salvage or trade-in value. We periodically review the useful lives and salvage values of our revenue equipment and evaluate our long-lived assets for impairment. We have not identified any impairment to these assets at December 31, 2025.

We have agreements with our primary tractor suppliers for residual or trade-in values for certain new equipment. We have utilized these trade-in values, as well as other operational information such as anticipated annual miles, in accounting for depreciation expense.

Revenue Recognition

We record revenues on the gross basis at amounts charged to our customers because we control and are primarily responsible for the fulfillment of promised services. Accordingly, we serve as a principal in the transaction. We invoice our customers, and we maintain discretion over pricing. Additionally, we are responsible for selection of third-party transportation providers to the extent used to satisfy customer freight requirements.

We recognize revenue from customer contracts based on relative transit time in each reporting period and as other performance obligations are provided, with related expenses recognized as incurred. Accordingly, a portion of the total revenue that will be billed to the customer is recognized in each reporting period based on the percentage of the freight pickup and delivery performance obligation that has been completed at the end of the reporting period.

Our trade accounts receivable includes accounts receivable reduced by an allowance for uncollectible accounts. Receivables are recorded at amounts billed to customers when loads are delivered or services are performed. The allowance for uncollectible accounts is calculated over the life of the underlying receivable and is based on historical experience; any known trends or uncertainties related to customer billing and account collectability; current economic conditions; and reasonable and supportable economic forecasts, each applied to segregated risk pools based on the business segment that generated the receivable. The adequacy of our allowance is reviewed quarterly.

Income Taxes

We account for income taxes under the liability method. Our deferred tax assets and liabilities represent items that will result in a tax deduction or taxable income in future years for which we have already recorded the related tax expense or benefit in our statement of earnings. Deferred tax accounts arise as a result of timing differences between when items are recognized in our Consolidated Financial Statements and when they are recognized in our tax returns. We assess the likelihood that deferred tax assets will be recovered from future taxable income or the reversal of temporary timing differences. To the extent we believe recovery does not meet the more likely than not threshold, a valuation allowance is established. To the extent we establish a valuation allowance, we include an expense as part of our income tax provision.

Significant judgment is required in determining and assessing the impact of complex tax laws and certain tax-related contingencies on our provision for income taxes. As part of our calculation of the provision for income taxes, we assess whether the benefits of our tax positions are at least more likely than not to be sustained upon audit based on the technical merits of the tax position. For tax positions that are not more likely than not to be sustained upon audit, we accrue the largest amount of the benefit that is not more likely than not to be sustained in our Consolidated Financial Statements. Such accruals require us to make estimates and judgments, whereby actual results could vary materially from these estimates. Further, a number of years may elapse before a particular matter for which we have established an accrual is audited and resolved. See Note 6, Income Taxes, in our Consolidated Financial Statements for a discussion of our current tax contingencies.

RESULTS OF OPERATIONS

The following table sets forth items in our Consolidated Statements of Earnings as a percentage of operating revenues and the percentage increase or decrease of those items compared with the prior year.

Percentage of

Operating Revenues

Percentage

Change

Between

Years

Operating revenues

Operating expenses:

Rents and purchased transportation

Salaries, wages and employee benefits

Depreciation and amortization

Fuel and fuel taxes

Operating supplies and expenses

Insurance and claims

General and administrative expenses, including asset dispositions

Operating taxes and licenses

Communication and utilities

Total operating expenses

Operating income

Net interest expense

Earnings before income taxes

Income taxes

Net earnings

2025 Compared With 2024

Consolidated Operating Revenues

Our total consolidated operating revenues decreased 0.7% to $12.00 billion in 2025, compared to $12.09 billion in 2024. This decrease was primarily due to decreased revenue per load within JBI and JBT, lower volume within ICS, reduced truck count in DCS, and decreased revenue and stop counts in FMS, partially offset by higher volume in JBI and JBT, higher revenue per load in ICS, and increased productivity in DCS. Fuel surcharge revenues decreased 3.5% to $1.48 billion in 2025, compared to $1.53 billion in 2024. Revenues, excluding fuel surcharge revenues, decreased 0.3% from 2024.

Consolidated Operating Expenses

Our 2025 consolidated operating expenses decreased 1.1% from 2024, while year-over-year revenue decreased 0.7%, resulting in a 2025 operating ratio of 92.8% compared to 93.1% in 2024.

Rents and purchased transportation costs decreased 1.3% in 2025, primarily due to a decrease in ICS load volumes, which reduced the use of third-party truck carriers, and changes in the mix of third-party rail carriers within JBI, partially offset by increased JBI and JBT load volumes, compared to 2024. Salaries, wages and employee benefit costs increased 0.1% in 2025 from 2024. This increase was primarily related to higher incentive compensation and an increase in group medical benefit expenses, partially offset by lower employee headcounts.

Depreciation and amortization expense decreased 6.1% in 2025, primarily due to an increase in the expected useful lives of our chassis and trailer fleets, the absence in 2025 of depreciation and amortization expense related to the 2023 business acquisition of BNSF Logistics, LLC (BNSFL), and the reduction in DCS truck counts, partially offset by higher intermodal container counts.

Fuel and fuel taxes expense decreased 2.9% in 2025 compared with 2024, due primarily to a decrease in the price of fuel during 2025 and decreased road miles. We have fuel surcharge programs in place with the majority of our customers. These programs typically involve a specified computation based on the change in national, regional, or local fuel prices. While these programs may address fuel cost changes as frequently as weekly, most also reflect a specified miles-per-gallon factor and require a certain minimum change in fuel costs to trigger a change in fuel surcharge revenue. As a result, some of these programs have a time lag between when fuel costs change and when this change is reflected in revenues. Due to these programs, this lag negatively impacts operating income in times of rapidly increasing fuel costs and positively impacts operating income when fuel costs decrease rapidly. It is not meaningful to compare the amount of fuel surcharge revenue or the change in fuel surcharge revenue between reporting periods to fuel and fuel taxes expense, or the change of fuel expense between periods, as a significant portion of fuel cost is included in our payments to railroads, dray carriers and other third parties. These payments are classified as purchased transportation expense.

Operating supplies and expenses increased 3.3% in 2025 compared with 2024, driven primarily by higher equipment maintenance costs, increased tire expense, and higher tolls expense, partially offset by lower travel and entertainment expenses and towing costs, compared to 2024. Insurance and claims expense increased 6.7% in 2025, primarily due to an increase in cost per claim, higher insurance policy premium expense, and the absence of a $4.2 million net benefit from claim settlements recorded in 2024, partially offset by lower cargo claims expense in 2025. General and administrative expenses decreased 8.1% from 2024, primarily due to a decrease in building and yard rental expense, lower professional services expense, decreased technology costs, and lower bad debt expense. Net loss from sale or disposal of assets was $13.7 million in 2025, compared to a net loss from sale or disposal of assets of $14.6 million in 2024.

Net interest expense for 2025 decreased by 1.1% compared with 2024, due primarily to a decrease in effective interest rates on our debt, partially offset by an increase in our average debt balance. Income tax expense increased 3.8% in 2025, due primarily to increased taxable earnings in 2025. Our effective income tax rate was 24.7% in 2025 and 24.8% in 2024.

Segments

We operated five business segments during 2025. The operation of each of these businesses is described in our Notes to Consolidated Financial Statements. The following tables summarize financial and operating data by segment:

Operating Revenue by Segment

Years Ended December 31, (in millions)

JBI

DCS

ICS

FMS

JBT

Total segment revenues

Intersegment eliminations

Total

Operating Income by Segment

Years Ended December 31, (in millions)

JBI

DCS

ICS

FMS

JBT

Total

Operating Data by Segment

Years Ended December 31,

JBI

Loads

Average length of haul (miles)

Revenue per load

Average tractors during the period (1)

Tractors (end of period)

Trailing equipment (end of period)

Average effective trailing equipment usage

DCS

Loads

Average length of haul (miles)

Revenue per truck per week (2)

Average trucks during the period (3)

Trucks (end of period)

Trailing equipment (end of period)

Average effective trailing equipment usage

ICS

Loads

Revenue per load

Gross profit margin

Employee count (end of period)

Approximate number of third-party carriers (end of period)

Marketplace for J.B. Hunt 360 revenue (millions)

FMS

Stops

Average trucks during the period (3)

JBT

Loads

Revenue per load

Average length of haul

Tractors (end of period)

Company-owned

Independent contractor

Total tractors

Trailers (end of period)

Average effective trailing equipment usage

Includes company-owned and independent contractor tractors

Using weighted workdays

Includes company-owned, independent contractor, and customer-owned trucks

JBI Segment

JBI segment revenue was $5.98 billion in 2025, relatively flat when compared to $5.96 billion in 2024, primarily due to a 2% increase in load volume, partially offset by a 2% decrease in revenue per load, which is the combination of changes in freight mix, customer rate changes, and fuel surcharge revenue. Eastern network load volumes increased 10% and transcontinental loads decreased 2% compared to 2024. Revenue per load excluding fuel surcharges decreased 1% compared to 2024.

Operating income of the JBI segment increased to $450 million in 2025, from $430 million in 2024. The increase is primarily due to improved network balance and increased efficiency throughout our drayage fleet, lower third-party rail purchased transportation expense due to mix, and improvements associated with our overall cost management initiatives. These benefits were partially offset by higher driver and non-driver wages, increased equipment maintenance costs, higher insurance claims and premiums expense, and higher group medical benefit expenses.

DCS Segment

DCS segment revenue decreased 1% to $3.38 billion in 2025, from $3.40 billion in 2024. Productivity, defined as revenue per truck per week, increased 2% compared to 2024. Productivity, excluding fuel surcharge revenue, increased 3%, primarily due to contractual index-based rate increases, increased asset utilization, and reduced idle equipment. However, these productivity improvements in 2025 were more than offset by a 3% decline in average trucks, when compared to 2024. Customer retention rates were approximately 94%.

Operating income of our DCS segment increased to $377 million in 2025, from $376 million in 2024. The increase is primarily due to the maturing of new business onboarded over the past year, lower bad debt expense, and overall cost management initiatives, partially offset by lower revenue, increased equipment maintenance costs and higher group medical benefit expenses.

ICS Segment

ICS segment revenue decreased 3% to $1.11 billion in 2025, from $1.14 billion in 2024. Overall volumes decreased 9%, while revenue per load increased 7%, primarily due to higher contractual and spot rates and changes in customer freight mix when compared to 2024. Contractual business was 64% of both total load volume and total revenue in 2025, compared to 61% for both in 2024.

Our ICS segment had an operating loss of $10 million in 2025 compared to an operating loss of $56 million in 2024. The decrease in operating loss is primarily due to lower personnel salary and wages expense, lower cargo claims expense, reduced technology costs, and overall cost management initiatives. In addition, 2024 included integration and transition costs related to the 2023 purchase of the brokerage assets of BNSFL which included the impairment or accelerated amortization of certain acquired intangible, information system, and lease assets totaling $26 million. Gross profit margin decreased to 14.5% in the current year versus 16.1% in 2024, primarily from lower gross profit margin on contractual business and less project business compared to 2024. ICS’s carrier base increased 15% when compared to 2024, following a decline in 2024 due to changes in carrier qualification requirements.

FMS Segment

FMS segment revenue decreased 10% to $824 million in 2025 from $910 million in 2024, primarily due to general weakness in customer demand, loss of business due to internal efforts to improve revenue quality across certain accounts, and customer mix.

Operating income of our FMS segment decreased to $27 million in 2025, from $60 million in 2024. This decrease was primarily due to lower revenue, higher insurance premium and claims expense, and the absence of a $4.2 million net benefit from claim settlements recorded in 2024. These items were partially offset by lower personnel-related costs and facility rental expenses.

JBT Segment

JBT segment revenue increased 5% to $734 million in 2025, from $702 million in 2024. Revenue, excluding fuel surcharge revenue, for 2025 increased 6% compared to 2024, primarily due to an 11% increase in load volume, partially offset by a 5% decrease in revenue per load, excluding fuel surcharge revenue. Total average effective trailer count in 2025 was 12,152 compared to 12,552 in 2024, while trailer turns in 2025 were up 15% from 2024, primarily due to continued focus on improving trailer utilization and maintaining network balance. At the end of 2025, JBT operated 2,003 tractors compared to 1,919 at the end of 2024.

Operating income of our JBT segment was $21 million for both 2025 and 2024 as higher third-party purchased transportation costs, increased insurance premium and claims expense, and higher maintenance related costs were offset by increased revenue, lower personnel-related expenses and a continued focus on cost management initiatives and productivity. J.B. Hunt’s 360box volume increased 9% in 2025, when compared to 2024, as JBT continues to leverage the J.B. Hunt 360 platform to grow capacity and capabilities for this service offering.

This management's discussion and analysis provides comparisons of material changes in the consolidated financial statements for the years ended December 31, 2025 and 2024. For a comparison of the years ended December 31, 2024 and 2023, refer to Management's Discussion and Analysis of Financial Condition and Results of Operations included in our annual report on Form 10-K for the year ended December 31, 2024.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities totaled $1.68 billion in 2025, compared to $1.48 billion in 2024. The increase was primarily due to increased earnings and the timing of general working capital activities.

Net cash used in investing activities totaled $575 million in 2025, compared with $664 million in 2024. The decrease resulted primarily from a decrease in equipment purchases, net of proceeds from the sale of equipment.

Net cash used in financing activities was $1.1 billion in 2025, compared with $826 million in 2024. This increase resulted primarily from an increase in current year treasury stock purchases.

Our dividend policy is subject to review and revision by the Board of Directors, and payments are dependent upon our financial condition, liquidity, earnings, capital requirements, and other factors the Board of Directors may deem relevant. We paid a $0.42 per share quarterly dividend in 2023, a $0.43 per share quarterly dividend in 2024, and a $0.44 per share quarterly dividend in 2025. On January 22, 2026, we announced an increase in our quarterly cash dividend from $0.44 to $0.45 per share, which was paid February 20, 2026, to shareholders of record on February 6, 2026. We currently intend to continue paying cash dividends on a quarterly basis. However, no assurance can be given that future dividends will be paid.

Liquidity

Our need for capital has typically resulted from the acquisition of containers and chassis, trucks, tractors, and trailers required to support our growth and the replacement of older equipment as well as periodic business acquisitions and real estate transactions. We are frequently able to accelerate or postpone a portion of equipment replacements or other capital expenditures depending on market and overall economic conditions. In recent years, we have obtained capital through cash generated from operations, revolving lines of credit and long-term debt issuances. We have also periodically utilized operating leases to acquire revenue equipment. For our senior notes maturing in 2026, it is our intent to pay the entire outstanding balances in full, on or before the maturity dates, using our existing cash balance, revolving line of credit or other sources of long-term financing.

We believe our liquid assets, cash generated from operations, and revolving line of credit will provide sufficient funds for our operating and capital requirements for the foreseeable future. At December 31, 2025, we were authorized to borrow up to $1.7 billion through a revolving line of credit and committed term loans, pursuant to a credit agreement with a group of banks. The revolving line of credit authorizes us to borrow up to $1.0 billion under a five-year term expiring November 2030, and allows us to request an increase in the revolving line of credit total commitment by up to $400 million and to request two one-year extensions of the maturity date. The committed term loans authorize us to borrow up to an additional $700 million during the six-month period beginning November 25, 2025, and if funded, will mature in November 2028. The applicable interest rates under this agreement are based on either the Secured Overnight Financing Rate (SOFR), or a Base Rate, depending upon the specific type of borrowing, plus an applicable margin and other fees. At December 31, 2025, we had a cash balance of $17 million. Under our senior credit facility, we had a $26.8 million outstanding balance on the revolving line of credit, at an average interest rate of 4.62%.

We continue to evaluate the possible effects of current economic conditions and reasonable and supportable economic forecasts on operational cash flows, including the risks of declines in the overall freight market and our customers' liquidity and ability to pay. We regularly monitor working capital and maintain frequent communication with our customers, suppliers and service providers. A large portion of our cost structure is variable. Purchased transportation expense represents more than half of our total costs and is heavily tied to load volumes. Our second largest cost item is salaries and wages, the largest portion of which is driver pay, which includes a large variable component.

Our senior notes consist of two separate issuances. The first is $700 million of 3.875% senior notes due March 2026, issued in March 2019. Interest payments under these notes are due semiannually in March and September of each year, beginning September 2019. The second is $750 million of 4.90% senior notes due March 2030, issued in March 2025. Interest payments under these notes are due semiannually in March and September of each year beginning September 2025. Both senior notes were issued by J.B. Hunt Transport Services, Inc., a parent-level holding company with no significant tangible assets or operations. The notes are guaranteed on a full and unconditional basis by our wholly-owned operating subsidiary. All other subsidiaries of the parent are minor. We registered these offerings and the sale of the notes under the Securities Act of 1933, pursuant to shelf registration statements filed in January 2019 and February 2023, respectively. Both notes are unsecured obligations and rank equally with our existing and future senior unsecured debt. We may redeem for cash some or all of the notes based on a redemption price set forth in the note indenture.

Our financing arrangements require us to maintain certain covenants and financial ratios. At December 31, 2025, we were in compliance with all covenants and financial ratios.

We are currently committed to spend approximately $107.3 million, net of proceeds from sales or trade-ins, during the year 2026. These expenditures will relate primarily to the acquisition of tractors, containers, chassis, and other trailing equipment. We had no other off-balance sheet arrangements as of December 31, 2025.