MRTN Marten Transport Ltd

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
			ThreeMonths				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.