MARTEN TRANSPORT, LTD.
2018 Annual Report
Who We Are
Marten Transport, Ltd., with headquarters in Mondovi,
Wisconsin, strives to be the premier supplier of time and tem-
perature-sensitive and dry transportation and distribution services
to customers in the United States, Canada and Mexico. We have
strategically transitioned from a long-haul carrier to a multifaceted
business offering a network of truck-based transportation capabil-
ities across our five distinct business platforms—Truckload,
Dedicated, Intermodal, Brokerage and MRTN de México. We
will accomplish our mission by exceeding the expectations of our
customers, employees, stockholders and society. We serve cus-
tomers 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 1,600
dry vans operating as of December 31, 2018.
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, 2018, we
employed 3,589 people, including drivers, office personnel and
mechanics.
Five-Year Financial Summary
(Dollars in thousands, except per share amounts)
2018
2017
Years ended December 31,
2016
2015
FOR THE YEAR
Operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 787,594
70,348
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
55,027
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income – excluding 2017 deferred income taxes benefit(1) .
55,027
Operating ratio(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
91.1%
$ 698,120
56,862
90,284
33,819
$ 671,144
58,303
33,464
33,464
$ 664,994
61,063
35,745
35,745
91.9%
91.3%
90.8%
92.4%
2014
$ 672,929
51,006
29,834
29,834
PER-SHARE DATA(3)
Basic earnings per common share . . . . . . . . . . . . . . . . . . . . . . $
Basic earnings per common share – excluding 2017 deferred
income taxes benefit(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per common share . . . . . . . . . . . . . . . . . . . .
Diluted earnings per common share – excluding 2017
deferred income taxes benefit(1). . . . . . . . . . . . . . . . . . . . . . .
Dividends declared per common share . . . . . . . . . . . . . . . . . .
Book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.01
$
1.66
$
0.62
$
0.64
$
0.54
1.01
1.00
1.00
0.10
10.57
0.62
1.65
0.62
0.08
9.64
0.62
0.61
0.61
0.06
8.04
0.64
0.64
0.64
0.06
7.50
0.54
0.53
0.53
0.06
6.96
AT YEAR END
Total assets(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 753,904
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
–
575,954
Stockholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 690,403
–
525,500
$ 653,748
7,886
437,338
$ 631,528
37,867
409,421
$ 576,461
24,373
387,926
(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 on our federal net deferred tax liability 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, 2014 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 amount for December 31, 2014 has 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.
Note: We account for our revenue in accordance with FASB ASC 606, which we adopted on January 1, 2018 using the modified retrospective method.
Prior years have not been restated and continue to be reported under the accounting standards in effect for those periods.
To Our Stockholders and Employees
By actively reshaping itself to fit a constantly changing and
expanding marketplace, Marten Transport has evolved from a
long-haul refrigerated carrier into a growing network of truck-
based transportation capabilities. The impact of this continuing
transition is reflected clearly in our 2018 results:
improved to 91.1 percent for 2018 from 91.9 percent for 2017.
Our operating ratio, net of fuel surcharges, improved to 89.7
percent for 2018 from 91.0 percent for 2017.
A summary of our operating results in 2018 compared with
2017 follows.
• Marten’s operating revenue and operating income were the
highest for any year in the company’s history, up by 12.8
percent and 23.7 percent, respectively, from 2017.
• The three reporting segments that have led the diversifi-
cation and expansion of Marten’s capabilities—Dedicated,
Intermodal and Brokerage—generated more than 50 per-
cent of the company’s operating income in 2018, up from
slightly less than 25 percent five years ago.
• Marten’s operating ratio, net of fuel surcharges, was the
best in 13 years.
In a performance analysis entitled “Marten Transport Delivers
the Goods,” the TCA Truckload Indexes newsletter recently
offered this commentary on Marten’s standing within the group
of mostly larger publicly-traded trucking companies that the
publication follows closely: “Quarter-over-quarter, year-over-
year, Marten Transport (NASDAQ: MRTN) has delivered
consistent, top quartile results. Key word is consistent. When
compared to many of the others, you don’t see very many
blips in operating expenses or legal exposures that may cause
multi-period hangovers for others…Their earnings releases
and SEC filings point to a very disciplined operating team…
Marten has hung with, and bettered the performance of many
of the big dogs.”
Consistent. Disciplined. Those are words we’re pleased to see in
a respected independent assessment, because they are what we
strive for at Marten—consistent profitable growth, regardless of
the economic environment; disciplined execution of our mul-
tifaceted business model across Marten’s entire organization.
2018 Financial Results
For 2018, net income was $55.0 million, or $1.00 per diluted
share. For 2017, which included a deferred income taxes ben-
efit of $56.5 million related to the Tax Cuts and Jobs Act of
2017, net income was $90.3 million, or $1.65 per diluted share.
Excluding the deferred income taxes benefit from the compar-
ison, net income for 2018 improved 62.7 percent from $33.8
million, or 62 cents per diluted share, for 2017.
Operating revenue improved 12.8 percent to a record $787.6
million for 2018 from $698.1 million for 2017. Excluding fuel
surcharges, 2018 operating revenue improved 8.0 percent to
$681.4 million from $631.0 million for 2017. Fuel surcharge
revenue increased to $106.2 million from $67.1 million for
2017.
Operating income improved 23.7 percent to a record $70.3
million for 2018 from $56.9 million for 2017. Our operating
ratio (operating expenses as a percentage of operating revenue)
(Dollars in thousands,
except share information)
Operating revenue
Operating income
Net income (excluding 2017
deferred income taxes benefit)
Diluted earnings per common
share (excluding 2017 deferred
income taxes benefit)
Year Ended Dec. 31,
2017
2018
Percentage
Change
Year Ended
Dec. 31,
2018 vs. 2017
$787,594 $698,120
12.8%
$ 70,348 $ 56,862
23.7%
$ 55,027 $ 33,819
62.7%
$ 1.00 $ 0.62
61.8%
A Growing Network
Marten’s strategic vision has produced a growing transportation
network designed to provide the best, most-efficient service for
our customers across five distinct business platforms.
Truckload—regional and over-the-road fleets operating from 15
regional service centers, including dry van operations out of Kansas
City, Atlanta and Phoenix facilities. While Truckload revenue
was down 1.3 percent for 2018, operating income increased
by 33.2 percent to $35.1 million from $26.3 million for 2017.
Average revenue, net of fuel surcharges, per tractor per week—a
main measure of Truckload asset productivity—improved by
9.1 percent from 2017. Truckload revenue was $375.3 million
for 2018, compared with $380.2 million for 2017. Excluding
fuel surcharges, Truckload revenue was $322.3 million, com-
pared with $336.6 million for 2017. The 2018 Truckload oper-
ating ratio was 90.7 percent, and the operating ratio, net of fuel
surcharges, was 89.1 percent.
Dedicated—customized solutions tailored to individual customers’
requirements utilizing refrigerated trailers, dry vans and other
specialized equipment. Dedicated revenue has more than tripled
over the past four years. It increased 34.1 percent to $223.9
million for 2018 from $166.9 million for 2017. Excluding fuel
surcharges, Dedicated revenue improved 21.8 percent to $187.1
million from $153.7 million for 2017. Operating income was
$18.6 million, up 8.9 percent from $17.1 million for 2017.
The 2018 Dedicated operating ratio was 91.7 percent, and the
operating ratio, net of fuel surcharges, was 90.1 percent. The
average number of tractors in service grew to 1,088 from 847
tractors in 2017.
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. Intermodal revenue improved 26.5 percent to $102.0
MARTEN TRANSPORT 2018 ANNUAL REPORT
million for 2018 from $80.6 million for 2017. Excluding fuel
surcharges, Intermodal revenue improved 21.8 percent to
$85.6 million from $70.3 million for 2017. Operating income
increased 34.3 percent to $11.2 million from $8.3 million for
2017. The 2018 Intermodal operating ratio was 89.1 percent,
and the operating ratio, net of fuel surcharges, was 87.0 percent.
Brokerage—surge flexibility to supplement Marten’s capabilities
through temperature-controlled and dry van services provided by
smaller third-party carriers. Brokerage revenue improved 22.7
percent to $86.4 million for 2018 from $70.4 million for 2017.
Brokerage operating income increased 7.4 percent to $5.5 mil-
lion from $5.2 million for 2017. The Brokerage operating ratio
was 93.6 percent for 2018.
Operating within our Truckload and Brokerage segments,
another 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 2018 revenue was $69.2
million—reported as part of our Truckload and Brokerage
results.
Transformation
In the words of John P. Kotter, the Harvard professor emeritus
widely recognized for his ground-breaking work on business
leadership and change, “Transformation is a process, not an
event.” That’s exactly the case at Marten. We are continuing to
build and transform Marten for new markets, new customers
and a changing driver population in the Electronic Logging
Device (ELD) era.
The industry-wide driver shortage continues to be a critical
problem, still reflected in tight shipping capacity nationally.
While no trucking company is immune, Marten continues to
enjoy a distinct competitive edge in recruiting and retaining top
drivers—exclusively experienced drivers. It is an advantage that
helped give us the driver resources to capitalize on the strength-
ened freight environment and improved shipping rates driven
by tighter capacity throughout much of 2018.
Marten has focused on making itself the best carrier in the
industry for drivers to work for—the best jobs for the best driv-
ers. That’s meant leading the way on driver pay, route options,
health coverage, safety and technology. We were one of the
first companies to fully implement electronic logging – and the
very first to introduce meaningful ways to compensate drivers
for down time that electronic logging does not allow to be
later recovered. That includes waits at customer docks, weather
problems and road service delays. Our safety and driver-health
measures are unquestionably setting the pace for the indus-
try. Examples: We compensate our drivers for pulling off in
inclement weather. We provide a fully-paid sleep apnea testing
and equipment program and a fully-paid annual physical begin-
ning at age 60, including a stress test and EKG. The equipment
we provide is the safest available, with automatic transmissions,
grill guards, radar-based collision avoidance systems and lane
departure systems.
MARTEN TRANSPORT 2018 ANNUAL REPORT
Difference Makers
The building of a multifaceted business brings together mul-
tiple ingredients. Among those that have made the difference
at Marten:
• Our regional platform—15 regional operating centers
across the nation, addressing customer trends toward
regional distribution and enabling supportive interaction
across our five individual business platforms.
• A freight diversity and density focus that is measurably
increasing productivity and resulting in more attractive
driver jobs.
• Customer collaboration for win-win productive and
cost-efficient industry leading service.
• Our in-house, industry leading and continuously changing
technology system—a proprietary competitive advantage
that provides the real-time visible information needed to
quickly make data-driven decisions for improved supply
chain productivity.
Finally, and most importantly, we are building and diversifying
our business with the talent and teamwork of Marten’s disci-
plined workforce—dedicated and experienced people consis-
tently managing and improving our processes. The emphasis on
continuous improvement is part of our culture. Marten people
focus daily on cost and productivity improvement—on doing
their best to exceed the expectations of our customers.
Marten’s people have built a strong, growing and increasingly
profitable business platform for now and the future based on
our five distinct business platforms. Capacity is still tight with
a driver shortage that will continue to be a challenge and yet
an opportunity for Marten in 2019 and beyond with the new
generation of drivers and the ELD era. We expect to produce
continued organic growth across all five of our operating plat-
forms 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.
Sincerely,
Randolph L. Marten
Chairman of the Board
and Chief Executive Officer
February 18, 2019
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 2018 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 7, 2019, at 3:00 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 2018 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 Retired 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 2018 Annual Report is printed on recycled paper.
MARTEN TRANSPORT 2018 ANNUAL REPORT
MARTEN TRANSPORT, LTD. 129 MARTEN STREET MONDOVI, WISCONSIN 54755 TELEPHONE: (715) 926-4216 FAX: (715) 926-4530 www.marten.com