Analyst Note| Matthew Young, CFA |
Narrow-moat intermodal specialist J.B. Hunt’s top line increased 10% year over year, excluding fuel, in the first quarter, slightly ahead of our forecast, as COVID-19 disruption didn’t really creep in until the end of March. Relative to the same period last year, the increase stems from previous business wins, along with a spike in truckload shipping demand midquarter--food and beverage and household goods restocking surged as consumers stocked up on essentials amid nationwide lockdowns. That said, intermodal volume began to deteriorate by the end of March as the impact of government containment measures began to weigh on retail and industrial end markets. While the firm has been able to reposition dedicated-truckload equipment to customers that need capacity, we think Hunt’s full-truckload and truck brokerage (ICS) operations are seeing roughly the same demand deterioration of late. The impact of COVID-19 disruption will be much more evident in the second quarter for J.B. Hunt and its intermodal, brokerage, and truckload peers.