Marten Transport Announces Fourth Quarter and Year End Results

Bay Street

6 years ago

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.