JBHT 10-K & 10-Q changes, risk factors and insider trading

Our future insurance and claims expenses might exceed historical levels, which could reduce our earnings. We have experienced substantial increases in the severitycost of auto liability claims whichand in recent periods these increases have exceeded our insurance coverage layers, which has adversely impacted our operating results in recent periods.results. If the number of claims for which we are self-insured increases or the severitycost of such claims continues to increase, our operating results could be further adversely affected. We have policies in place for 20252026 with substantially the same terms as our 20242025 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.

For the calendar year ended December 31, 2024,2025, our top 10 customers, based on revenue, accounted for approximately 35%33% of our revenue. One customer accounted for approximately 11% of our total revenue for the year ended December 31, 2024. 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.

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. Recently issued rulemaking by the U.S. Department of Labor, which took effect on March 11, 2024, and theThe 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 rely significantly on our information technology systems, a disruption, failure or security breach of which or an inability to keep pace with technological advances 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 beanticipate sufficient.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. We also could experience an inability to keep pace with technological advances, resulting in our information technology platforms becoming obsolete or our competitors developing related or similar service offerings more effective than ours.

The amounts of self-insurance may change from time to time based on measurement dates, policy expiration dates, and claim type. For 20232024 and 2024,2025, 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 20252026 with substantially the same terms as our 20242025 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, 2024,2025, we had current accruals of approximately $232$283 million and long-term accruals of approximately $369$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, 2024,2025, we havehad recorded current assets of $237$255 million and long-term assets of $192$235 million of expected reimbursement for covered excess claims, other insurance deposits, and prepaid insurance premiums.

Our total consolidated operating revenues decreased 5.8%0.7% to $12.00 billion in 2025, compared to $12.09 billion in 2024, compared to $12.83 billion in 2023.2024. This decrease was primarily due to lower volume within DCS, ICS and JBT, 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.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 17.4%3.5% to $1.48 billion in 2025, compared to $1.53 billion in 2024, compared to $1.85 billion in 2023.2024. Revenues, excluding fuel surcharge revenues, decreased 3.8%0.3% from 2023.2024.

Rents and purchased transportation costs decreased 8.4%1.3% in 2024,2025, primarily due to a decrease in railICS load volumes, which reduced the use of third-party truck carriers, and truckchanges carrierin purchasedthe transportationmix ratesof third-party rail carriers within JBI, ICSpartially andoffset JBTby segmentsincreased and decreased ICSJBI and JBT load volume,volumes, whichcompared decreasedto services provided by third-party rail and truck carriers during the current year.2024. Salaries, wages and employee benefit costs decreasedincreased 0.8%0.1% in 20242025 from 2023.2024. This decreaseincrease was primarily related to ahigher decreaseincentive incompensation employee headcounts, partially offset byand an increase in group medical benefit expensesexpenses, andpartially wageoffset increases.by lower employee headcounts.

Depreciation and amortization expense increaseddecreased 3.1%6.1% in 2024,2025, primarily due to an increase in the additionexpected useful lives of tractorsour chassis and trailingtrailer equipmentfleets, withinthe JBIabsence andin additional2025 of depreciation and amortization expense resultingrelated fromto the recent2023 business acquisition of BNSF Logistics, LLC (BNSFL), and the reduction in DCS truck counts, partially offset by thehigher impact of the change in expected useful lives of ourintermodal container fleet and equipment reductions within DCS.counts.

Operating supplies and expenses decreasedincreased 2.7%3.3% in 20242025 compared with 2023,2024, driven primarily by lowerhigher equipment maintenance costs, decreasedincreased towingtire expenses,expense, lowerand higher tolls expense, partially offset by lower travel and decreasedentertainment otherexpenses operatingand supplytowing costscosts, compared to 2023.2024. Insurance and claims expense decreasedincreased 0.6%6.7% in 2024, primarily due to lower reserve expense for claims subject to insurance coverage-layer-specific aggregated limits and lower claim volume, partially offset by increased cost per claim and higher insurance policy premium expense. General and administrative expenses increased 11.6% from 2023,2025, 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, higherlower agentprofessional services expense, increaseddecreased technology costs, and higherlower bad debt expense, partially offset by lower advertising costs and lower net losses from sale or disposal of assets.expense. Net loss from sale or disposal of assets was $14.6$13.7 million in 2024,2025, compared to a net loss from sale or disposal of assets of $27.8$14.6 million in 2023.2024.

Net interest expense for 20242025 increaseddecreased by 23.0%1.1% compared with 2023,2024, due primarily to ana increasedecrease in effective interest rates on our debtdebt, andpartially offset by an increase in our average debt balance. Income tax expense decreasedincreased 8.7%3.8% in 2024,2025, due primarily to decreasedincreased taxable earnings in 2024, partially offset by a higher effective income tax rate.2025. Our effective income tax rate was 24.7% in 2025 and 24.8% in 2024 and 22.1% in 2023. The increase in rate was primarily due to discrete tax items recorded in 2023 that were not incurred in 2024.

JBI segment revenue decreasedwas 4%$5.98 billion in 2025, relatively flat when compared to $5.96 billion in 2024, fromprimarily $6.21due billionto a 2% increase in 2023.load Thisvolume, decreasepartially inoffset revenue was primarilyby a result of a 6%2% decrease in revenue per load, which is the combination of changes in freight mix, customer rate changes, and fuel surcharge revenue, partially offset by a 2% increase in load volume.revenue. Eastern network load volumes decreasedincreased 1%10% and transcontinental loads increaseddecreased 5%2% compared to 2023.2024. Revenue per load excluding fuel surcharges decreased 4%1% compared to 2023.2024.

DCS segment revenue decreased 4%1% to $3.38 billion in 2025, from $3.40 billion in 2024, from $3.54 billion in 2023.2024. Productivity, defined as revenue per truck per week, decreasedincreased 2% compared to 2023.2024. Productivity, excluding fuel surcharge revenue, remainedincreased flat,3%, primarily due to decreased asset utilization and increased idle equipment, offset by contractual index-based rate increases.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 90%.94%.

ICS segment revenue decreased 18%3% to $1.11 billion in 2025, from $1.14 billion in 2024, from $1.39 billion in 2023.2024. Overall volumes decreased 20%,9%, while revenue per load increased 3%,7%, primarily due to higher contractual and spot rates and changes in customer freight mix when compared to 2023. The decrease in revenue was partially offset by additional revenue from the acquisition of the brokerage assets of BNSFL in the third quarter 2023.2024. Contractual business was 61%64% of theboth total load volume and 61% of the total revenue in 2024,2025, compared to 64%61% offor the total load volume and 63% of the total revenueboth in 2023.2024.

Our ICS segment had an operating loss of $56$10 million in 20242025 compared to an operating loss of $44$56 million in 2023,2024. The decrease in operating loss is primarily due to decreasedlower revenuepersonnel 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 acquisition, which included the impairment or accelerated amortization of certain acquired intangible, information system, and lease assets totaling $26 million. These items were partially offset by lower personnel expenses and reduced equipment rental expense during 2024. Gross profit margin increaseddecreased to 16.1%14.5% in the current year versus 13.4%16.1% in 2023.2024, Approximatelyprimarily $396from millionlower ofgross ICSprofit revenuemargin foron 2024contractual wasbusiness executedand throughless theproject Marketplace for J.B. Hunt 360business compared to $766 million in 2023.2024. ICS’s carrier base decreasedincreased 10%15% when compared to 2023,2024, primarilyfollowing a decline in 2024 due to changes in carrier qualification requirements. In addition, ICS incurred $10 million in expense for the segment’s portion of an additional casualty claims reserve in 2023.

FMS segment revenue decreased 1%10% to $824 million in 2025 from $910 million in 2024 from $918 million in 2023,2024, primarily due to general weakness in customer demand anddemand, loss of business due to internal efforts to improve revenue quality across certain accounts, partially offset by improved revenue quality at underperforming accounts and the addition of multiple new customer contracts implemented over the past year.mix.

Operating income of our FMS segment increaseddecreased to $27 million in 2025, from $60 million in 2024,2024. fromThis $47 million in 2023. The increase in operating incomedecrease was primarily due to improvements in revenue quality, lower personnelrevenue, expenses,higher insurance premium and claims expense, and the absence of a $4.2 million net benefit from offsetting claim settlements,settlements andrecorded overallin cost2024. management,These items were partially offset by higherlower purchasedpersonnel-related transportationcosts expense.and Infacility addition,rental FMS incurred $3 million in expense for the segment’s portion of an additional casualty claims reserve in 2023.expenses.

JBT segment revenue decreasedincreased 11%5% to $734 million in 2025, from $702 million in 2024,2024. fromRevenue, $789 million in 2023. Excludingexcluding fuel surcharges,surcharge revenuerevenue, for 20242025 decreasedincreased 9%6% compared to 2023,2024, primarily due to an 11% increase in load volume, partially offset by a 5% decrease in revenue per load, excluding fuel surcharge revenue per load and a 5% decrease in load volume compared to 2023.revenue. Total average effective trailer count in 20242025 was 12,55212,152 compared to 13,00012,552 in 2023.2024, 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 2024,2025, JBT operated 1,9192,003 tractors, predominantly independent contractors,tractors compared to 1,9581,919 at the end of 2023.2024.

Net cash provided by operating activities totaled $1.68 billion in 2025, compared to $1.48 billion in 2024, compared to $1.74 billion in 2023.2024. The decreaseincrease was primarily due to decreasedincreased earnings of approximately $157 million 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, compared with $1.69 billion in 2023.2024. 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, compared with $58 million in 2023.2024. This increase resulted primarily from an increase in current year treasury stock purchases, retirement of long-term debt, and lower net borrowings from revolving lines of credit in 2024.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 and2023, a $0.43 per share quarterly dividend in 2024.2024, and a $0.44 per share quarterly dividend in 2025. On January 23,22, 2025,2026, we announced an increase in our quarterly cash dividend from $0.43$0.44 to $0.44$0.45 per share, which was paid February 21,20, 2025,2026, to shareholders of record on February 7,6, 2025.2026. We currently intend to continue paying cash dividends on a quarterly basis. However, no assurance can be given that future dividends will be paid.

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 credit facility term loansnotes maturing in 2025,2026, 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, 2024,2025, we were authorized to borrow up to $1.5$1.7 billion through a revolving line of credit and committed term loans, whichpursuant is supported byto 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 SeptemberNovember 2027,2030, and allows us to request an increase in the revolving line of credit total commitment by up to $300$400 million and to request two one-year extensions of the maturity date. The committed term loans authorizedauthorize us to borrow up to an additional $500$700 million during the nine-monthsix-month period beginning SeptemberNovember 27, 2022, due September25, 2025, whichand weif exercisedfunded, will mature in JuneNovember 2023.2028. 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, 2024,2025, we had a cash balance of $47$17 million. Under our senior credit facility, we had a $280.0$26.8 million outstanding balance on the revolving line of credit and a $500.0 million outstanding balance of term loanscredit, at an average interest rate of 5.48%.4.62%.

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. TheseThe 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 a shelf registration statementstatements filed in January 2019.2019 Theseand 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 $250 million of 3.85% senior notes matured in March 2024. The entire outstanding balance was paid in full at maturity.

We are currently committed to spend approximately $677$107.3 million, net of proceeds from sales or trade-ins, during the yearsyear 2025 and 2026, as well as an additional $89 million thereafter.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, 2024.2025.

We are one of the largest surface transportation, delivery, and logistics companies in North America. We operate five distinct, but complementary, business segments and provide a wide range of reliable transportation, brokerage, and delivery services to a diverse group of customers and consumers throughout the continental United States, Canada, and Mexico. Our service offerings include transportation of full-truckload containerized freight, which we directly transport utilizing our company-controlled revenue equipment and company drivers, independent contractors, or third-party carriers. We have arrangements with most of the major North American rail carriers to transport freight in containers or trailers, while we perform the majority of the pickup and delivery services. We also provide customized freight movement, revenue equipment, labor, systems, and delivery services that are tailored to meet individual customers’ requirements and typically involve long-term contracts. These arrangements are generally referred to as dedicated services and may include multiple pickups and drops, freight handling, specialized equipment, and freight network design. In addition, we provide or arrange for local and home delivery services, generally referred to as last-mile delivery services, to customers through a network of cross-dock and other delivery system locations throughout the continental United States. Utilizing thousands of reliable third-party carriers, we also provide comprehensive freight transportation brokerage and logistics services. In addition to dry-van, full-load operations, we also arrange for these unrelated outside carriers to provide flatbed, refrigerated, less-than-truckload (LTL), and other specialized equipment, drivers, and services. Also, we utilize contracted power units to provide traditional over-the-road full truckloadfull-truckload delivery services. Our customers, who include many Fortune 500 companies, have extremely diverse businesses. Many of them are served by J.B. Hunt 360°®, an online platform that offers shippers and carriers greater access, visibility and transparency of the supply chain. We account for our business on a calendar year basis, with our full year ending on December 31 and our quarterly reporting periods ending on March 31, June 30, and September 30. The operation of each of our five business segments is described in Note 9, Business Segments, in our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q and in Note 13, Segment Information, of our Annual Report (Form 10-K) for the year ended December 31, 2025.

Comparison of Three Months Ended MarchJune 31,30, 2026 to Three Months Ended MarchJune 31,30, 2025

Total consolidated operating revenues were $3.06$3.50 billion for the firstsecond quarter 2026, a 5%19% increase from $2.92$2.93 billion in the firstsecond quarter 2025. ThisSecond increasequarter was2026 operating revenues benefited primarily the result offrom higher load volumes in JBI, JBT,ICS and ICS,JBT, increased DCS productivity, and increased revenue per load in ICSJBI, ICS, and JBT, and improved productivity in DCS,JBT when compared to the firstsecond quarter 2025. These increases were partially offset by a decrease in FMS stops. Total consolidated operating revenuerevenue, excluding fuel surcharge revenuerevenue, increased 3%11%, when compared to the firstsecond quarter 2025.

JBI segment revenue increased 2%22% to $1.50$1.75 billion during the firstsecond quarter 2026, compared with $1.47$1.44 billion in 2025. Load volumes during the firstsecond quarter 2026 increased 3%10% compared toover the same period 2025,2025 withand gross revenue per load remainingincreased relatively11%, flat,compared whichto isa determinedyear byago. Transcontinental loads increased 5% during the combinationsecond ofquarter customer2026, rates, fuel surcharges and freight mix.while Eastern network loads increased 7% reflecting increased customer demand to convert over-the-road shipments to intermodal in that region, while transcontinental load volume remainedincreased flat16% compared to the firstsecond quarter 2025.2025 reflecting increased demand for our intermodal service during the quarter driven by the strong value proposition it presents for customers facing higher fuel prices and constrained driver and capacity availability in other transportation modes. Revenue per loadload, excluding fuel surcharge revenuerevenue, decreasedincreased 2%1% compared to the firstsecond quarter 2025. JBI segment operating income increased 21%,58% to $114.5$150.9 million in the firstsecond quarter 2026,2026 from $94.4$95.7 million in 2025. The increase is primarily due to strong volume growth, increased network efficiency, higher productivity in ourthe drayagedray operations,network, lower proportion of empty container moves, lower container storage costs, and improvementscontinued associatedexecution withon initiatives to lower our overall cost managementto initiatives,serve. These improvements were partially offset by disruptions from severe winter weather and higherincreased insurance premium and claims expense and higher professional driver expense, when compared to the firstsame quarterperiod 2025. The current quarter ended with approximately 124,000124,200 units of trailing capacity and 6,200 power units assigned to the dray fleet.

DCS segment revenue increased 2%9% to $841$921 million in the firstsecond quarter 2026 from $822$847 million in 2025. The average number of revenue producing trucks was consistent with the first quarter 2025, while productivity,Productivity, defined as revenue per truck per week, increased 2%9%, while average truck count was flat when compared to the priorsecond yearquarter period.2025. ProductivityProductivity, excluding fuel surchargessurcharge revenue, increased 1%,2%, primarily due to contractual index-based rate increases. On a net basis, revenue-producing trucks in the fleet at the end of the second quarter 2026 increased by five trucks compared to the prior-year period. Customer retention rates are approximately 96%. DCS segment operating income increased 9% to $87.4$102.5 million in the firstsecond quarter 2026, from $80.3$93.7 million in 2025. The increase is primarily due to increased revenue, lower equipment-relatedgroup costs,medical benefit expenses, and continued executionprogress on the initiative to lower our cost to serve, and the maturing of new business onboarded over the past year, partially offset by increased personnel-relatedinsurance premium and equipment-related costs and higherincreased insurancenew premiumbusiness expenseonboarding whencosts compared toover the firstpast quarter 2025.year.

ICS segment revenue increased 20%49% to $323$388 million in the firstsecond quarter 2026, from $268$260 million in 2025. Overall volumes increased 10%19% compared to the firstsecond quarter 2025.2025, Revenuewhile revenue per load increased 9%,26%, primarily due to higher rates across both contractual and spot customer rates compared to first quarter 2025.volume. Contractual business represented approximately 67%65% of total load volume and 66%63% of total revenue in the firstsecond quarter 2026, compared to 65%62% and 63%, respectively, in 2025. The ICS segment had operating lossincome wasof $4.7$1.7 million in the firstsecond quarter 2026, compared to an operating loss of $2.7$3.6 million in 2025. The declineincrease in operating performanceresults is primarily due to a 6%21% decreaseincrease in gross profit, driven by increasedhigher purchasedrevenue transportationper costsload comparedand to the prior year period.volume. Gross profit margin decreased to 12.0%12.5% in the firstsecond quarter 2026, compared to 15.3%15.5% in the2025 firstdue quarterto 2025. Excludingincreased purchased transportation expense, ICS operating expense decreasedas 1%third comparedparty tocapacity has tightened across the first quarter 2025.industry.

FMS segment revenue decreased 6% to $188$198 million in the firstsecond quarter 2026 from $201$211 million in 2025, primarily due to the impact of lost business anddue to the effects of demand stabilization, marginally offset by the addition of multiple new customer contracts implemented over the past year andongoing internal efforts to improve revenue quality and profitability across certain accounts.accounts, partially offset by demand stabilization across many of the end markets served and the implementation of new customer contracts awarded over the past year. FMS segment operating income increaseddecreased 53%30% to $7.2$5.6 million in the firstsecond quarter of 2026 compared to $4.7$8.0 million in 2025. This increasedecrease was primarily due to improvedlower revenue quality, decreased personnel-related costs, and decreasedincreased insurancepurchased claimtransportation expense compared to the firstsecond quarter of2025. 2025.The decrease in operating income was partially offset by lower claims and facility rental expenses, as well as continued progress on the initiative to lower our cost to serve.

JBT segment revenue totaledincreased $20535% to $240 million forin the firstsecond quarter 2026, an increase of 23% from $167$177 million in first quarter 2025. RevenueRevenue, excluding fuel surcharge revenuerevenue, increased 23%28% primarily due to a 19%14% increase in load volume and a 3%13% increase in revenue per loadload, excluding fuel surcharge revenuerevenue, compared to firstsecond quarter 2025. JBT average effective trailer count increased to 12,190 in the second quarter 2026, compared to 12,144 in 2025. At the end of the second quarter 2026, the JBT power fleet consisted of 1,880 tractors, compared to 2,041 tractors at June 30, 2025. Trailer turns in the firstsecond quarter of 2026 increased 15%13% compared to firstsecond quarter 20252025, due to increased asset utilization and improvements in network balance and velocity.balance. JBT averagesegment effectivehad traileran countoperating increasedloss toof 12,515$1.3 million in the firstsecond quarter 2026, compared to 12,096 in 2025. At the end of the first quarter 2026, the JBT power fleet consisted of 1,881 tractors, compared to 1,852 tractors in 2025. JBT segmentwith operating income increasedof 33% to $2.7 million in 2026, compared with $2.0$3.4 million during firstsecond quarter 2025. ThisThe increasedecrease wasis primarily due to increased purchased transportation costs as third party capacity has tightened across the industry, which led to a 12% decrease in gross profit. The decrease was partially offset by continued focus on cost management and productivity,improved reduced personnel-related expenses, and lower equipment-related expenses as a percentage of gross revenue, partially offset by an increase in purchased transportation costs.productivity.

Total operating expenses increased 3.9%,18.5%, while operating revenues increased 4.6%19.4% during the firstsecond quarter 2026,2026 from the comparable period 2025. Operating income increased to $207.0$259.5 million during the firstsecond quarter 2026 from $178.7$197.3 million in 2025.

Rents and purchased transportation costs increased 8.6%32.4% in the firstsecond quarter 2026. This increase was primarily the result of increasedan increase in rail and truck carrier purchased transportation rates and an increase in load volumes within JBI, ICSICS, and JBT load volume,segments, which increased services provided by third-party rail and truck carriers as well as higher carrier purchased transportation rates within ICS and JBT, partially offset by the mix of third-party rail carriers and reduced empty repositioning within JBI during the firstsecond quarter 2026 compared to 2025.

Salaries, wageswages, and employee benefits costs decreasedincreased 1.8%0.4% during the firstsecond quarter 2026, compared with 2025. This decreaseincrease was primarily due to ahigher decreasedriver wages and an increase in employeeincentive-based headcounts,pay, partially offset by ana increasedecrease in group medical benefit expenses and wagelower increases.office employee headcounts.

Operating supplies and expenses increased 1.5%,8.3%, driven primarily by higher equipment maintenance costs, increased tire expense, and higher toll costs, partially offset by lower travel and entertainmentincreased expenses.tire expense. Insurance and claims expenseexpenses increased 3.2%4.7% in 2026 compared with 2025, primarily due to higher costclaim per claimseverity and increased insurance policy premiums expense, partially offset by lower claim volume. General and administrative expenses decreased 15.2%12.2% for the current quarter from the comparable period in 2025, primarily due to decreased building and yard rental expense,expense and lower technologybad costs,debt expense, partially offset by increased driver advertising costs and aan decreaseincrease in net loss from sale or disposal of assets. Net loss from sale or disposal of assets was $0.3$3.4 million in 2026, compared to $6.5a net loss from sale or disposal of assets of $2.9 million in 2025.

Net interest expense decreased 3.8%21.2% in 2026 due to a lowerdecrease in our average debt balancebalance, andpartially loweroffset averageby an increase in effective interest raterates compared to firstsecond quarter 2025. Income tax expense increased 12.4%30.2% in 2026, compared with 2025, primarily due to higher taxable earnings, partially offset by a lower effective income tax rate. Our effective income tax rate decreasedwas to 25.2%25.4% for the firstsecond quarter of 2026, compared with 26.5% for the first quarter 2025, due to discrete26.9% taxin items.2025. Our annual tax rate for 2026 is expected to be between 24.0% and 25.0%.24.5%. In determining our quarterly provision for income taxes, we use an estimated annual effective tax rate, adjusted for discrete items. This rate is based on our expected annual income, statutory tax rates, best estimate of nontaxable and nondeductible items of income and expense, and the ultimate outcome of tax audits.

Net cash provided by operating activities totaled $353.0$723.3 million during the first quartersix months of 2026, compared with $404.2$806.2 million for the same period 2025. Operating cash flows decreased primarily due to the timing of general working capital activities, partially offset by increased earnings. Net cash used in investing activities totaled $70.7$144.9 million in 2026, compared with $225.1$399.1 million in 2025. The decrease resulted primarily from a decrease in equipment purchases, net of proceeds from the sale of equipment, compared to the firstsecond quarter 2025. Net cash used in financing activities was $295.0$591.4 million in 2026, compared with $182.7$403.2 million in 2025. This increase resulted primarily from the retirement in March 2026 of our $700 million in senior notes partially offset by net proceeds from our senior credit facility and a decrease in treasury stock purchases.

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 MarchJune 31,30, 2026, we were authorized to borrow through a revolving line of credit, which is supported by 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. In addition, the credit agreement authorizesauthorized us to borrow up to an additional $700 million through committed term loans during the six-month period beginning November 25, 2025, due November 2028, of which we partially exercised $475 million in February 2026. 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 MarchJune 31,30, 2026, we had a combined $562.1$54 million outstanding balanceon underthe ourrevolving seniorline of credit facility,and a $350 million balance of term loans, at an average interest rate of 4.66%4.61% and a cash balance of $4.6$4.2 million.

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.pay, as well as regulatory and other developments that may impact our capital allocation. 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 financing arrangements require us to maintain certain covenants and financial ratios. At MarchJune 31,30, 2026, we were compliant with all covenants and financial ratios.

Our net capital expenditures were approximately $70.7$144.9 million during the first threesix months of 2026, compared with $225.1$399.1 million for the same period 2025. Our net capital expenditures include net additions to revenue equipment and non-revenue producing assets that are necessary to contribute to and support the future growth of our various business segments. Capital expenditures in the first quarterhalf of 2026 were primarily for tractors, trailing equipment and related enhancements, and real estate. We expect to spend in the range of $600 million to $800 million for net capital expenditures during the full calendar year 2026. We are currently committed to spend approximately $616.8$611.5 million, net of proceeds from sales or trade-ins, during the years 2026 and 2027. At MarchJune 31,30, 2026, our aggregate future minimum lease payments under operating lease obligations related primarily to the rental of maintenance and support facilities, cross-dock and delivery system facilities, office space, parking yards, and equipment totaled $265.1$258.0 million.

We had no off-balance sheet arrangements, other than our net purchase commitments of $616.8$611.5 million, as of MarchJune 31,30, 2026.