MARTEN TRANSPORT, LTD.
2017 Annual Report
Who We Are
Marten Transport, Ltd., with headquarters in Mondovi,
Wisconsin, strives to be the premier supplier of time and tempera-
ture-sensitive transportation and distribution services to customers
in the United States, Canada and Mexico. We will accomplish this
by exceeding the expectations of our customers, employees, stock-
holders and society. We serve customers with demanding delivery
deadlines, as well as those who ship products requiring modern
temperature-controlled trailers to protect goods. Our dry freight
services are expanding, with 966 dry trailers operating as of
December 31, 2017.
Founded in 1946, we have been a public company since 1986. Our
common stock trades on the NASDAQ Global Select Market
under the symbol MRTN. At December 31, 2017, we employed
3,492 people, including drivers, office personnel and mechanics.
Five-Year Financial Summary
Years ended December 31,
(Dollars in thousands, except per share amounts) 2017 2016 2015 2014 2013
FOR THE YEAR
Operating revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 698,120 $ 671,144 $ 664,994 $ 672,929 $ 659,214
Operating income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,862 58,303 61,063 51,006 51,995
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,284 33,464 35,745 29,834 30,147
Net income – excluding 2017 deferred income taxes benefit(1) . . 33,819 33,464 35,745 29,834 30,147
Operating ratio(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91.9% 91.3% 90.8% 92.4% 92.1%
PER-SHARE DATA(3)
Basic earnings per common share . . . . . . . . . . . . . . . . . . . . . . $ 1.66 $ 0.62 $ 0.64 $ 0.54 $ 0.54
Basic earnings per common share – excluding 2017 deferred
income taxes benefit(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.62 0.62 0.64 0.54 0.54
Diluted earnings per common share . . . . . . . . . . . . . . . . . . . . 1.65 0.61 0.64 0.53 0.54
Diluted earnings per common share – excluding 2017
deferred income taxes benefit(1). . . . . . . . . . . . . . . . . . . . . . . 0.62 0.61 0.64 0.53 0.54
Dividends declared per common share . . . . . . . . . . . . . . . . . . 0.08 0.06 0.06 0.06 0.05
Book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.64 8.04 7.50 6.96 6.47
AT YEAR END
Total assets(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 690,403 $ 653,748 $ 631,528 $ 576,461 $ 522,387
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 7,886 37,867 24,373 –
Stockholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525,500 437,338 409,421 387,926 359,137
(1) Net income and basic and diluted earnings per common share for 2017 are presented for comparative purposes excluding the $56.5 million deferred
income taxes benefit recorded to recognize the impact of the reduction of the federal corporate statutory income tax rate from 35% to 21% related to
the Tax Cuts and Jobs Act of 2017.
(2) Represents operating expenses as a percentage of operating revenue.
(3) The amounts for December 31, 2013 through 2016 have been restated to reflect the five-for-three stock split effected in the form of a 662⁄3% stock
dividend on July 7, 2017.
(4) The amounts for December 31, 2013 and 2014 have been restated to reflect the reclassification of current deferred income tax assets to be consistent
with the current presentation upon adoption of FASB ASU No. 2015-17, “Income Taxes” effective December 31, 2015.
To Our Stockholders and Employees
For the trucking industry, the second half of 2017 brought esca-
lating freight demand and tightening capacity as an improving
economy ran smack into a worsening driver shortage. For the
year, the rising rates were more than offset by rising costs in an
operating environment that squeezed profit growth out of reach
for most of the trucking industry for the second year in a row.
But not for Marten Transport.
The disciplined execution of our multifaceted business model
across Marten’s entire organization produced 2017 net income of
$33.8 million, excluding a deferred income taxes benefit—our
third consecutive improvement in annual earnings, excluding a
gain on the disposition of facilities in 2015.
Marten people again made the difference with their smart, hard
work within our culture of continuous improvement of systems
and processes. Marten uses a proprietary information technolo-
gy system that provides the real-time visible information needed
to efficiently make data-driven decisions for improved supply
chain productivity.
Achieving an improvement in Marten’s 2017 earnings meant
overcoming a significantly smaller gain on disposition of our rev-
enue equipment—a reflection of a depressed used-truck market.
2017 Financial Results
For 2017, net income improved to $90.3 million, or $1.65 per
diluted share, including a deferred income taxes benefit of $56.5
million related to the Tax Cuts and Jobs Act of 2017. Excluding
that benefit, net income improved 1.1 percent to $33.8 million,
or 62 cents per diluted share, from $33.5 million, or 61 cents per
diluted share, for 2016.
Operating revenue improved 4.0 percent to a record $698.1 million for
2017 from $671.1 million for 2016. Fuel surcharge revenue increased to
$67.1 million for 2017 from $53.2 million for 2016. Excluding fuel sur-
charges, 2017 operating revenue improved 2.1 percent to $631.0 million
from $617.9 million for 2016.
Our operating ratio (operating expenses as a percentage of oper-
ating revenue), was 91.9 percent for 2017 and 91.3 percent for
2016. The operating ratio, net of fuel surcharges, was 91.0 percent
for 2017 and 90.6 percent for 2016.
In terms of freight environment, 2017 came in like a lamb and
went out like a lion. From an exceptionally weak level at the start
of the year, freight demand surged in the second quarter and grew
to a situation in the fourth quarter where it substantially exceeded
the declining supply of seated trucks available nationally. We
expect the pressure to meet freight demand to intensify in 2018,
with expansion of capacity further constrained by two major fac-
tors:
• The most critical driver shortage in history,
• The beginning of the new Electronic Logging Device (ELD)
era.
Marten has focused on being out in front on both issues.
Operating Revenue Growth
Excluding Fuel Surcharges
Dollars in Millions
Dedicated Revenue Growth
Excluding Fuel Surcharges
Dollars in Millions
2.1%
4.3%
8.2%
3.1%
650
625
600
575
550
525
500
2014
2015
2016
2017
Driver Shortage and ELDs
4.5%
37.1%
89.5%
68.9%
160
120
80
40
0
2014
2015
2016
2017
The chronic national driver shortage has become acute.
Retirements are cutting into the nation’s core of veteran drivers,
and the industry as a whole is not attracting enough younger
workers to provide replacements, let alone meet the underlying
demand for more capacity. And those who are attracted to the
challenge of driving in the big leagues of over-the-road trans-
portation today are a different breed, generally far less enamored
with life on the road than their predecessors were.
Marten has built a distinct competitive edge in recruiting and
retention of top drivers, offering industry-leading compensation,
first-class equipment and a network of transportation capabilities
dominated by an attractive range of dedicated, regional and inter-
modal runs that make it possible for drivers to stay closer to home.
The ELD mandate, which went into effect in December 2017,
requires electronic logging of drivers’ hours, eliminating reliance on
traditional paper log books. Because electronic logging precisely
captures waiting time and other delays in transit, the mandate is
expected to cut into the regulated time available for drivers to be
on the road—further tightening truckload capacity. We also expect
ELDs to level the competitive playing field for all truckload carri-
ers and, most important, to have a positive impact on safety.
Marten is positioned like no other carrier for the ELD era with
our unique driver pay package and unique business model. We
were one of the first carriers to fully implement electronic logging
in early 2011—more than six years before it was mandated. To
compensate our drivers for lost driving hours in the transition from
paper logs to ELDs, we introduced a series of mileage and non-
driving time pay increases. We pay our drivers industry leading per
hour compensation for waits at customer docks, inclement weath-
er downtime and road service delays. In short, we compensate our
drivers for their non-driving time like no other carrier in the new
electronic era.
In addition to leading the industry in compensation improve-
ments, we have focused on the creation of better jobs for our driv-
ers—the best jobs in the industry for the best drivers in the
industry. A major factor in the creation of better jobs has been
Marten’s strategic transition from long-haul carrier to a multifac-
MARTEN TRANSPORT 2017 ANNUAL REPORT
eted business platform offering a network of truck-based trans-
portation capabilities. The regional build out of our network
across 15 operating centers nationally has not only addressed cus-
tomer trends toward regional distribution, it has helped fulfill the
desire of many of our drivers for more time at home.
with smaller third-party carriers. Brokerage revenue was $70.4
million for 2017, up 6.0 percent from $66.4 million for 2016.
Brokerage operating income increased 23.3 percent to $5.2 mil-
lion from $4.2 million for 2016. The Brokerage operating ratio
was 92.7 percent for 2017.
Our regional centers have provided the foundation for the
development of our diversified customer solutions, enabling
supportive interaction across our four distinct business plat-
forms—Truckload, Dedicated, Intermodal and Brokerage.
Truckload—regional and over-the-road fleets operating from 15
regional service centers. While cost inflation undercut the improv-
ing freight environment in 2017, key measures of Truckload pro-
ductivity were positive. Revenue, net of fuel surcharges, per
tractor per week—a main measure of asset productivity—
increased by 2.5 percent from 2016. Miles per tractor improved
slightly. Truckload revenue was $380.2 million for 2017, com-
pared with $375.9 million for 2016. Excluding fuel surcharges,
Truckload revenue was $336.6 million for 2017, compared with
$340.0 million for 2016. Operating income was $26.3 million
versus $27.4 million for 2016. The 2017 Truckload operating
ratio was 93.1 percent, and the operating ratio, net of fuel sur-
charges, was 92.2 percent.
Dedicated—customized solutions tailored to individual customers’
requirements utilizing refrigerated trailers, dry vans and other spe-
cialized equipment. Over the past four years, Dedicated revenue,
excluding fuel surcharges, has more than quadrupled. Dedicated
revenue increased to $166.9 million for 2017 from $157.4 million
for 2016. Excluding fuel surcharges, Dedicated revenue
improved 4.5 percent to $153.7 million for 2017 from $147.0
million for 2016. Operating income was $17.1 million, compared
with $19.6 million for 2016. Revenue, net of fuel surcharges, per
tractor per week increased by 1.4 percent from 2016. The 2017
Dedicated operating ratio was 89.8 percent, and the operating
ratio, net of fuel surcharges, was 88.9 percent. In response to con-
tinuing awards of new business, the total number of Dedicated
tractors is projected to grow to more than 1,150 by June 2018.
Intermodal—refrigerated TOFC (trailer on flatcar) services, pro-
viding the economies and energy efficiencies of long-haul rail trans-
portation with extended door-to-door support from Marten’s truck
network. Marten is the largest truckload temperature-controlled
carrier with BNSF Railway Company. Intermodal revenue
increased to $80.6 million for 2017 from $71.5 million for 2016.
Excluding fuel surcharges, Intermodal revenue improved 9.0 per-
cent to $70.3 million for 2017 from $64.5 million for 2016.
Operating income increased 16.4 percent to $8.3 million from
$7.1 million for 2016. The 2017 Intermodal operating ratio was
89.7 percent, and the operating ratio, net of fuel surcharges, was
88.2 percent. In May, Marten’s Intermodal operation was recog-
nized as one of the 2016 Carriers of the Year serving Armada
Supply Chain Solutions LLC, a major provider of supply chain
management services in the food industry.
Brokerage—surge flexibility to supplement Marten’s capabilities
through temperature-controlled and dry van service within the
United States and into and out of Mexico through arrangements
MARTEN TRANSPORT 2017 ANNUAL REPORT
Operating within our Truckload and Brokerage segments, anoth-
er component of Marten’s vision and plan is MRTN de México,
which provides door-to-door Mexican business service with our
Mexican partner carriers. Its 2017 revenue was $64.6 million—
reported as part of our Truckload and Brokerage results.
We summarize the story of Marten’s multifaceted strategic devel-
opment in three words—stability, growth and evolution.
• Stability in financial strength, reliably superior customer serv-
ice and the talent and teamwork of the people who are Marten.
• Growth in financial performance, customer diversity and geo-
graphical reach.
• Evolution from long-haul carrier to an expanding network of
transportation capabilities aimed at providing the best, most
efficient services for Marten customers.
In recognition of Marten’s continuing financial stability, the
Board of Directors declared a five-for-three stock split of the
company’s common stock in the form of a 662⁄3 percent stock div-
idend in the second quarter of 2017. Holders of the stock received
an additional two-thirds share for each outstanding share of com-
mon stock held. Marten improved its balance sheet position with
$15.8 million in cash at the end of 2017 from $7.9 million in debt
at the beginning of the year.
We expect to further capitalize on profitable growth opportuni-
ties with our diversified platform, cost control emphasis, mod-
ern fleet, strong balance sheet and the continuing smart, hard
work of our people. More than anything else, our financial per-
formance in 2017 was the product of the talent and teamwork
of the people of Marten. As Apple co-founder Steve Jobs once
observed, “Great things in business are never done by one per-
son. They’re done by a team of people.” That describes Marten
Transport.
Sincerely,
Randolph L. Marten
Chairman of the Board
and Chief Executive Officer
February 27, 2018
This Annual Report, including the Stockholders and Employees Letter above,
contains forward-looking statements. Written words such as “may,” “expect,”
“believe,” “anticipate,” “plan,” “goal,” or “estimate,” or other variations of these or
similar words, identify such statements. Our actual results may differ materially
from those expressed in such forward-looking statements because of important
factors known to us that could cause such material differences including those noted
in the attached Form 10-K under the heading “Risk Factors.”
Corporate Information
Corporate Headquarters
129 Marten Street
Mondovi, Wisconsin 54755
Telephone: (715) 926-4216
Fax: (715) 926-4530
www.marten.com
Stockholder Information
Additional copies of our 2017 Annual Report on Form 10-K
as filed with the Securities and Exchange Commission are
available by writing to James J. Hinnendael, executive vice
president and chief financial officer, at our corporate
headquarters.
Annual Meeting
Stockholders, employees and friends may attend our annual
meeting on Tuesday, May 8, 2018, at 2:00 p.m. at the Roger
Marten Community Center, 120 South Franklin Street,
Mondovi, Wisconsin.
Stock Listing
NASDAQ Global Select Market symbol: MRTN
Legal Counsel
Fox Rothschild LLP
Campbell Mithun Tower – Suite 2000
222 South Ninth Street
Minneapolis, Minnesota 55402
Independent Registered Public Accounting Firm
Grant Thornton LLP
200 South Sixth Street, Suite 1400
Minneapolis, Minnesota 55402
Transfer Agent and Registrar
Computershare Shareowner Services
Stockholder correspondence mailing address:
P.O. Box 505000
Louisville, Kentucky 40233
Overnight correspondence address:
462 South 4th Street, Suite 1600
Louisville, Kentucky 40202
Telephone: (866) 637-5412
TDD: (800) 231-5469
Foreign: (201) 680-6578
www.computershare.com/investor
Stockholder online inquiries:
www-us.computershare.com/investor/contact
Direct communications about stock certificates or a change
of address to Computershare Shareowner Services.
MARTEN TRANSPORT 2017 ANNUAL REPORT
Executive Officers and Directors
Randolph L. Marten
Chairman of the Board,
Chief Executive Officer and Director
Timothy M. Kohl
President
Timothy P. Nash
Executive Vice President of Sales and Marketing
James J. Hinnendael
Executive Vice President and Chief Financial Officer
John H. Turner
Senior Vice President of Sales
Thomas A. Letscher
Secretary
Partner, Fox Rothschild LLP
Minneapolis, Minnesota
Larry B. Hagness
Director
Chief Executive Officer, Durand Builders Service, Inc.
Durand, Wisconsin
Thomas J. Winkel
Director
Management Consultant
Pewaukee, Wisconsin
Jerry M. Bauer
Director
Chairman of the Board and Chief Executive Officer,
Bauer Built, Inc.
Durand, Wisconsin
Robert L. Demorest
Director
Business Consultant and former President, Chief Executive
Officer and Chairman of the Board,
MOCON, Inc.
Minneapolis, Minnesota
G. Larry Owens
Director
Retired Chairman of the Board, Chief Executive Officer,
President and Secretary,
Smithway Motor Xpress Corp.
Milford, Iowa
Ronald R. Booth
Director
Retired Partner
KPMG LLP
Dellwood, Minnesota
The 2017 Annual Report is printed on recycled paper.
MARTEN TRANSPORT 2017 ANNUAL REPORT
MARTEN TRANSPORT, LTD. 129 MARTEN STREET MONDOVI, WISCONSIN 54755 TELEPHONE: (715) 926-4216 FAX: (715) 926-4530 www.marten.com