Bay Street News

Marten Transport Announces Fourth Quarter and Year End Results

Reports highest operating income and operating revenue for any quarter and year in Company history

MONDOVI, Wis., Jan. 24, 2019 (GLOBE NEWSWIRE) — Marten Transport, Ltd. (Nasdaq/GS:MRTN) today reported the highest operating income and operating revenue for any quarter and year in its history. For the fourth quarter ended December 31, 2018, net income was $15.7 million, or 29 cents per diluted share. Net income for the 2017 fourth quarter was $65.1 million, or $1.18 per diluted share – results that include a deferred income taxes benefit of $56.5 million related to the federal Tax Cuts and Jobs Act of 2017. Excluding that benefit, net income improved 82.8% from $8.6 million, or 16 cents per diluted share, for the 2017 fourth quarter. Net income was $55.0 million, or $1.00 per diluted share, for the year ended December 31, 2018 and was $90.3 million, or $1.65 per diluted share, for 2017. Excluding the deferred income taxes benefit, 2018 net income improved 62.7% from $33.8 million, or 62 cents per diluted share, for 2017. 

       
  Operating Results Comparison    
       
      Percentage     Percentage  
      Change     Change  
      Three Months     Year  
    Three Months Ended   Year Ended  
    Ended Dec. 31, Dec. 31,   Ended Dec. 31, Dec. 31,  
  (Dollars in thousands, except share information) 2018 2017 2018 vs. 2017   2018 2017 2018 vs. 2017  
                                       
  Operating revenue  $ 203,961   $ 182,771   11.6%      $ 787,594   $ 698,120    12.8%    
                                       
  Operating income  $ 19,538   $ 14,333     36.3%      $ 70,348   $ 56,862   23.7%    
                                       
  Net income (excluding 2017 deferred income taxes benefit) $ 15,737   $ 8,609   82.8%     $ 55,027   $ 33,819   62.7%    
                                       
  Diluted earnings per common share (excluding 2017 deferred income taxes benefit) $ 0.29   $ 0.16   82.7%     $ 1.00   $ 0.62   61.8%    
       

 
  Earnings Impact of Deferred Income Taxes Benefit in 2017  
     
      Three
Months
    Year    
      Ended     Ended    
   (Dollars in thousands, except share information)   Dec. 31,
2017
    Dec. 31,
2017
   
                     
  Net income:                  
  Excluding deferred income taxes benefit   $  8,609     $ 33,819    
  Deferred income taxes benefit     56,465       56,465    
  Net income   $ 65,074     $ 90,284    
  Diluted earnings per common share*:                  
  Excluding deferred income taxes benefit   $  0.16     $ 0.62    
  Deferred income taxes benefit     1.03       1.03    
  Diluted earnings per common share   $ 1.18     $ 1.65    
     
  *Differences in rounding exist for the diluted earnings per common share amounts for the three months ended Dec. 31, 2017.  
     

Operating revenue improved 11.6% to a record $204.0 million for the fourth quarter of 2018 from $182.8 million for the fourth quarter of 2017, and improved 12.8% to a record $787.6 million for 2018 from $698.1 million for 2017. Excluding fuel surcharges, operating revenue improved 8.0% to $176.5 million for the 2018 quarter from $163.4 million for the 2017 quarter, and improved 8.0% to $681.4 million for 2018 from $631.0 million for 2017. Fuel surcharge revenue increased to $27.4 million for the fourth quarter of 2018 from $19.3 million for the 2017 quarter, and increased to $106.2 million for 2018 from $67.1 million for 2017.

Operating income improved 36.3% to a record $19.5 million for the fourth quarter of 2018 from $14.3 million for the fourth quarter of 2017, and improved 23.7% to a record $70.3 million for 2018 from $56.9 million for 2017. 

Operating expenses as a percentage of operating revenue improved to 90.4% for the fourth quarter of 2018 from 92.2% for the fourth quarter of 2017. Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 88.9% for the fourth quarter of 2018 from 91.2% for the fourth quarter of 2017.

Operating expenses as a percentage of operating revenue improved to 91.1% for 2018 from 91.9% for 2017. Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 89.7% for 2018 from 91.0% for 2017.

Chairman and Chief Executive Officer Randolph L. Marten said, “We are pleased to report record operating income and operating revenue for the year, along with our best operating ratio, net of fuel surcharges, over the last 13 years – which we earned by consistently stepping up our profitability throughout the year. We also drove record operating revenue and operating income for the fourth quarter, along with our best operating ratio, net of fuel surcharges, over the last 15 quarters. Marten’s talented people delivered these strong top- and bottom-line results through the continued disciplined execution of our unique multifaceted business model while capitalizing on the strengthened freight environment. In addition, we enhanced our balance sheet position with $56.8 million in cash at December 31, 2018 compared with $15.8 million at the beginning of the year. We expect to produce continued organic growth across all of our operating platforms in 2019 with increasing compensation for our premium services, additional freight with existing and new customers, our emphasis on operating efficiencies and cost controls, and our modern fleet and strong balance sheet.”

“A number of our customer agreements included a shift beginning in this year’s first quarter from line haul to fuel surcharge revenue, which reduced our Dedicated and Truckload revenue, net of fuel surcharges, by $201 and $35 per tractor per week in the fourth quarter, and by $179 and $32 per tractor per week in the year. The change reduced our revenue excluding fuel surcharges by $3.6 million for the fourth quarter and by $12.9 million for the year, while increasing our fuel surcharge revenue by the same amounts.”

Marten Transport, with headquarters in Mondovi, Wis., is one of the leading temperature-sensitive truckload carriers in the United States, specializing in transporting and distributing food and other consumer packaged goods that require a temperature-controlled or insulated environment. Marten’s dry freight services are expanding, with 1,600 dry trailers operating as of December 31, 2018. Marten offers service in the United States, Canada and Mexico, concentrating on expedited movements for high-volume customers. Marten’s common stock is traded on the Nasdaq Global Select Market under the symbol MRTN.

This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include a discussion of the Company’s prospects for future growth and by their nature involve substantial risks and uncertainties, and actual results may differ materially from those expressed in such forward-looking statements. Important factors known to the Company that could cause actual results to differ materially from those discussed in the forward-looking statements are discussed in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The Company undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.

CONTACTS: Tim Kohl, President, and Jim Hinnendael, Executive Vice President and Chief Financial Officer, of Marten Transport, Ltd., 715-926-4216.

 
MARTEN TRANSPORT, LTD.
CONSOLIDATED CONDENSED BALANCE SHEETS
             
    December 31,     December 31,  
(In thousands, except share information)   2018     2017  
       (Unaudited)          
ASSETS                
Current assets:                
Cash and cash equivalents   $ 56,763     $ 15,791  
Receivables:                
Trade, net     83,033       74,886  
Other     3,808       6,131  
Prepaid expenses and other     19,924       19,810  
Total current assets     163,528       116,618  
                 
Property and equipment:                
Revenue equipment, buildings and land, office equipment and other     816,430       783,648  
Accumulated depreciation     (228,200 )     (211,728 )
Net property and equipment     588,230       571,920  
Other assets     2,146       1,865  
  Total assets   $ 753,904     $ 690,403  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable and accrued liabilities   $ 43,870     $ 38,100  
Insurance and claims accruals     28,103       26,177  
Total current liabilities     71,973       64,277  
Deferred income taxes     105,977       100,626  
Total liabilities     177,950       164,903  
                 
Stockholders’ equity:                
Preferred stock, $.01 par value per share; 2,000,000 shares authorized; no shares issued and outstanding            
Common stock, $.01 par value per share; 192,000,000 shares authorized; 54,466,691 shares at December 31, 2018, and 54,533,455 shares at December 31, 2017, issued and outstanding     545       545  
Additional paid-in capital     76,814       76,413  
Retained earnings     498,595       448,542  
Total stockholders’ equity     575,954       525,500  
Total liabilities and stockholders’ equity   $ 753,904     $ 690,403  
                 

 
MARTEN TRANSPORT, LTD.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
 
    Three Months     Year  
    Ended December 31,     Ended December 31,  
(In thousands, except per share information)     2018       2017       2018       2017  
                                 
Operating revenue   $ 203,961     $ 182,771     $ 787,594     $ 698,120  
                                 
Operating expenses (income):                                
Salaries, wages and benefits     65,924       59,382       252,047       226,091  
Purchased transportation     38,670       32,803       144,611       118,349  
Fuel and fuel taxes     29,189       28,284       121,633       105,390  
Supplies and maintenance     9,592       9,701       40,853       41,613  
Depreciation     22,305       21,245       88,585       85,120  
Operating taxes and licenses     2,418       2,180       9,473       8,993  
Insurance and claims     10,859       9,487       38,657       38,585  
Communications and utilities     1,641       1,516       6,634       6,047  
Gain on disposition of revenue equipment     (2,038 )     (617 )     (7,244 )     (5,499 )
Other     5,863       4,457       21,997       16,569  
                                 
Total operating expenses     184,423       168,438       717,246       641,258  
                                 
Operating income     19,538       14,333       70,348       56,862  
                                 
Other     (234 )     109       (681 )     389  
                                 
Income before income taxes     19,772       14,224       71,029       56,473  
                                 
Income taxes expense (benefit)     4,035       (50,850 )     16,002       (33,811 )
                                 
Net income   $ 15,737     $ 65,074     $ 55,027     $ 90,284  
                                 
Basic earnings per common share   $ 0.29     $ 1.19     $ 1.01     $ 1.66  
                                 
Diluted earnings per common share   $ 0.29     $ 1.18     $ 1.00     $ 1.65  
                                 
Dividends declared per common share   $ 0.025     $ 0.025     $ 0.10     $ 0.08  
                                 

 
MARTEN TRANSPORT, LTD.
SEGMENT INFORMATION
(Unaudited)
 
                    Dollar     Percentage  
                    Change     Change  
    Three Months     Three Months     Three Months  
    Ended     Ended     Ended  
    December 31,     December 31,     December 31,  
(Dollars in thousands)   2018     2017     2018 vs. 2017     2018 vs. 2017  
Operating revenue:                                
Truckload revenue, net of fuel surcharge revenue   $ 81,020     $ 85,469     $ (4,449 )     (5.2 )%
Truckload fuel surcharge revenue     12,979       12,161       818       6.7  
Total Truckload revenue     93,999       97,630       (3,631 )     (3.7 )
                                 
Dedicated revenue, net of fuel surcharge revenue     49,041       39,037       10,004       25.6  
Dedicated fuel surcharge revenue     10,216       3,916       6,300       160.9  
Total Dedicated revenue     59,257       42,953       16,304       38.0  
                                 
Intermodal revenue, net of fuel surcharge revenue     21,738       19,171       2,567       13.4  
Intermodal fuel surcharge revenue     4,226       3,254       972       29.9  
Total Intermodal revenue     25,964       22,425       3,539       15.8  
                                 
Brokerage revenue     24,741       19,763       4,978       25.2  
                                 
Total operating revenue   $ 203,961     $ 182,771     $ 21,190       11.6 %
                                 
Operating income:                                
Truckload   $ 9,537     $ 7,077     $ 2,460       34.8 %
Dedicated     5,268       2,999       2,269       75.7  
Intermodal     3,153       2,526       627       24.8  
Brokerage     1,580       1,731       (151 )     (8.7 )
Total operating income   $ 19,538     $ 14,333     $ 5,205       36.3 %
                                 
Operating ratio:                                
Truckload     89.9 %     92.8 %                
Dedicated     91.1       93.0                  
Intermodal     87.9       88.7                  
Brokerage     93.6       91.2                  
Consolidated operating ratio     90.4 %     92.2 %                
                                 

 
MARTEN TRANSPORT, LTD.
SEGMENT INFORMATION
(Unaudited)
 
                    Dollar     Percentage  
                    Change     Change  
    Year     Year     Year  
    Ended     Ended     Ended  
    December 31,     December 31,     December 31,  
(Dollars in thousands)   2018     2017     2018 vs. 2017     2018 vs. 2017  
Operating revenue:                                
Truckload revenue, net of fuel surcharge revenue   $ 322,324     $ 336,596     $ (14,272 )     (4.2 )%
Truckload fuel surcharge revenue     53,016       43,614       9,402       21.6  
Total Truckload revenue     375,340       380,210       (4,870     (1.3 )
                                 
Dedicated revenue, net of fuel surcharge revenue     187,137       153,691       33,446       21.8  
Dedicated fuel surcharge revenue     36,715       13,190       23,525       178.4  
Total Dedicated revenue     223,852       166,881       56,971       34.1  
                                 
Intermodal revenue, net of fuel surcharge revenue     85,572       70,282       15,290       21.8  
Intermodal fuel surcharge revenue     16,453       10,339       6,114       59.1  
Total Intermodal revenue     102,025       80,621       21,404       26.5  
                                 
Brokerage revenue     86,377       70,408       15,969       22.7  
                                 
Total operating revenue   $ 787,594     $ 698,120     $ 89,474       12.8 %
                                 
Operating income:                                
Truckload   $ 35,067     $ 26,326     $ 8,741       33.2 %
Dedicated     18,589       17,074       1,515       8.9  
Intermodal     11,150       8,303       2,847       34.3  
Brokerage     5,542       5,159       383       7.4  
Total operating income   $ 70,348     $ 56,862     $ 13,486       23.7 %
                                 
Operating ratio:                                
Truckload     90.7 %     93.1 %                
Dedicated     91.7       89.8                  
Intermodal     89.1       89.7                  
Brokerage     93.6       92.7                  
Consolidated operating ratio     91.1 %     91.9 %                
                                 

 
MARTEN TRANSPORT, LTD.
OPERATING STATISTICS
(Unaudited)
             
    Three Months     Year  
    Ended December 31,     Ended December 31,  
    2018     2017     2018     2017  
Truckload Segment:                                
Revenue (in thousands)   $ 93,999     $ 97,630     $ 375,340     $ 380,210  
Average revenue, net of fuel surcharges, per tractor per week(1)   $ 3,941     $ 3,700     $ 3,833     $ 3,514  
Average tractors(1)     1,564       1,758       1,613       1,837  
Average miles per trip     558       601       573       599  
Non-revenue miles percentage(2)     11.4 %     6.2 %     9.5 %     8.3 %
Total miles (in thousands)     36,171       43,624       153,514       178,760  
                                 
Dedicated Segment:                                
Revenue (in thousands)   $ 59,257     $ 42,953     $ 223,852     $ 166,881  
Average revenue, net of fuel surcharges, per tractor per week(1)   $ 3,360     $ 3,535     $ 3,300     $ 3,481  
Average tractors(1)     1,111       840       1,088       847  
Average miles per trip     321       296       309       297  
Non-revenue miles percentage(2)     0.5 %     1.1 %     0.7 %     0.8 %
Total miles (in thousands)     24,025       19,461       93,269       77,102  
                                 
Intermodal Segment:                                
Revenue (in thousands)   $ 25,964     $ 22,425     $ 102,025     $ 80,621  
Loads     10,493       10,554       42,425       40,196  
Average tractors     91       78       88       79  
                                 
Brokerage Segment:                                
Revenue (in thousands)   $ 24,741     $ 19,763     $ 86,377     $ 70,408  
Loads     14,314       11,667       51,104       48,271  
                                 
At December 31, 2018 and December 31, 2017:                                
Total tractors(1)     2,755       2,738                  
Average age of company tractors (in years)     1.7       1.5                  
Total trailers     5,347       4,909                  
Average age of company trailers (in years)     2.5       2.8                  
Ratio of trailers to tractors(1)     1.9       1.8                  
                                 

       

             
    Three Months     Year  
    Ended December 31,     Ended December 31,  
(In thousands)   2018     2017     2018     2017  
                                 
Net cash provided by operating activities   $ 38,526     $ 27,169     $ 150,623     $ 121,879  
Net cash (used for) investing activities     (12,428 )     (11,303 )     (101,270 )     (95,318 )
Net cash (used for) financing activities     (5,074     (1,234 )     (8,381 )     (11,258 )
                                 
Weighted average shares outstanding:                                
Basic     54,514       54,529       54,590       54,492  
Diluted     55,014       54,979       55,149       54,850  
                                 
(1) Includes tractors driven by both company-employed drivers and independent contractors. Independent contractors provided 46 and 60 tractors as of December 31, 2018 and 2017, respectively. 
 
(2) Represents the percentage of miles for which the company is not compensated.