J.B. Hunt Transport Services, Inc.

Good afternoon. My name is Krista and I'll be your conference operator today. At this time, I would like to welcome everyone to the JB Hunt fourth quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. We ask that you limit yourself to one question only with no follow-up. If you would like to ask an additional question, please re-queue. If you would like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Brad Delco, Senior Vice President of Finance. Brad, you may begin your conference.

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 risk 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'm joined by our CEO, John Roberts, our President, Shelly Simpson, our CFO, John Kulo, Nick Hobbs, our COO and President of Contract Services, Darren Field, President of Intermodal, and Brad Hicks, President of Highway Services and EVP of People. I'd now like to turn the call over to our CEO, Mr. John Roberts, for some opening comments. John?

Thank you, Brad, and good afternoon. I would like to hit on a couple of topics before I turn it over to our team to discuss our results and how we are investing in managing the business. We remain long-term focused and will continue to do so while being disciplined in our approach. I'm a believer in taking the bad with the good and the good with the bad, so let's start with the bad as well as the obvious. On the topic of insurance, we have been routinely covering with you the inflationary cost headwinds we faced as a company as well as an industry in the areas of professional driver and non-driver wages, healthcare benefits, and equipment costs. However, as an industry, we are also seeing unprecedented pressure in the area of claims, costs, or settlements. As you saw in our release, we incurred $53 million of additional costs in the quarter, largely related to higher claims costs and exceeding coverage limits in certain insurance layers. And this, despite 2023 being the company's best performance in history on safety, measured by having our lowest DOT preventable accidents per million miles. We remain one of the safest carriers in the industry. Yet our insurance rates continue to increase as the industry experiences higher verdicts and, as a result, higher litigation settlements. Jury verdicts in trucking cases where the verdicts exceed $1 million have seen an 867% increase in the average size of verdicts from 2010 to 2018. This is according to the U.S. Chamber of Commerce Institute for Legal Reform. Given that the majority of motor carriers in the industry carry only $1 million in coverage, just above the legal minimum of $750,000 in coverage, it's the larger carriers who bear the brunt or disproportionate share of the escalating insurance and claims cost, and ultimately these inflationary costs get passed on to customers and consumers. As you've heard from us repeatedly, we are continuously focused on our safety performance, and you've heard updates from Nick on our latest investments in this area. Our intense focus on safety and our investments in the latest safety technology and compliant equipment helps to protect our drivers, the motoring public, the environment, our customers, and your investments. We remain steadfast and committed to the safety of our people and the motoring public and will continue to invest in the latest technologies and training to support these efforts. On the freight environment, we have turned the page on 2023. Goodbye and good riddance. As you are aware, 2023 presented many challenges, but I am very proud of our team and their perseverance and how they responded to these challenges. The experience of our leaders and the investments made during this downturn, I am confident, will drive long-term value for the company. While a new year has begun and the calendar has flipped another page, not much has changed in regard to the freight environment. While we see opportunities across all of our businesses, good work is needed in the areas of revenue quality, controlling cost, and execution to earn an appropriate return while delivering value to our customers. We remain committed to our focus on return on invested capital and managing for the long term, but the freight environment remains in a challenged state. With all of that out of the way, I am truly encouraged by our team's collective efforts and the opportunities presented across all of our businesses and for our relative performance in this market through 2023. Intermodal is seeing some momentum on the volume side the last few quarters, and our work with BNSF and our other rail providers presents opportunities for growth in our future. Dedicated continues to be a steady performer, and along with Final Mile, both had record years in segment operating income performance. And while ITS and JVT have faced the brunt of the market challenges, we still see great opportunities to scale our investments in technology, to drive efficiency in our customer supply chain in both our brokerage and power-only offerings. Now I'd like to turn the call over to our president, Shelly Simpson. Shelly?