J.B. Hunt keeps its 11-year-old debt rating from Moody’s

That ratio of debt to earnings before interest, taxes, depreciation and amortization is one of the key metrics that ratings agencies use in determining a company’s rating. The ratio, after some adjustments made by Moody’s, is expected to be 1X – or essentially equal – by the end of this year, Moody’s said.

That’s a strong ratio. By contrast, when S&P Global Ratings weighed in last September on the RXO acquisition of Coyote, it said the 3PL had a ratio of about 3X. The agency saw a possibility for it to move to 2X.

Another key metric for the ratings agencies is free cash flow, as debt payments can be more of a burden in a company generating limited cash.

Moody’s said it expects positive free cash flow at J.B. Hunt in 2025 “as the company has dialed back capital spending due to a higher than normal investment period in 2023 to replenish its fleet in anticipation of a growing economy.” J.B Hunt produced positive free cash flow of approximately $6 per share in 2024, according to calculations from CFRA, but it was slightly negative a year earlier.

Any hopes for a significantly better trucking market this year do not appear to have been a significant factor in the ratings affirmation; Moody’s doesn’t appear to have those expectations. “We expect volumes to increase modestly in 2025 due to reduced truck capacity in the industry and continued growth in the economy,” the agency said.

“J.B. Hunt, along with the transportation sector, has been challenged by soft freight volumes following significant capacity growth in the industry during the pandemic,” Moody’s said. “The company has also experienced pricing pressure in the transportation spot markets. Higher wages, higher carrier insurance and equipment costs are also negatively impacting margins.”

Ratings agencies also focus on liquidity, which Moody’s said was “solid” at J.B. Hunt. The company has a $1 billion revolving credit facility, and $720 million of that is available. Its cash stockpile at the end of last year was $47 million, Moody’s said.

Capital expenditures this year are expected to be about $800 million. That is right in the middle of the $700 million to $900 million that CFO John Kuhlow discussed on the company’s first-quarter earnings call as the likely spending in 2025.

Moody’s has debt maturities that come due in March 2026. It expects that J.B Hunt will refinance that debt later this year.

An email sent to J.B. Hunt about Moody’s action had not been responded to by publication time.

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