MARTEN TRANSPORT, LTD.
2019 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 1,650
dry vans operating as of December 31, 2019.
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, 2019, we
employed 4,087 people, including drivers, office personnel and
mechanics.
Five-Year Financial Summary
(Dollars in thousands, except per share amounts)
2019
2018
Years ended December 31,
2017
2016
FOR THE YEAR
Operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 843,271
76,498
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61,071
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income – excluding 2017 deferred income taxes benefit(1) .
61,071
Operating ratio(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90.9%
$ 787,594
70,348
55,027
55,027
$ 698,120
56,862
90,284
33,819
$ 671,144
58,303
33,464
33,464
91.1%
91.9%
91.3%
90.8%
2015
$ 664,994
61,063
35,745
35,745
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.12
$
1.01
$
1.66
$
0.62
$
0.64
1.12
1.11
1.11
0.77
10.92
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
AT YEAR END
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 796,586
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
–
597,589
Stockholders’ equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 753,904
–
575,954
$ 690,403
–
525,500
$ 653,748
7,886
437,338
$ 631,528
37,867
409,421
(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 2015 and 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.
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
In a year in which nearly all other major carriers experienced
substantial earnings deterioration, Marten Transport produced
the highest operating revenue and operating income for any
year in our history. These record performances in 2019’s
weak pricing environment significantly surpassed the previous
record levels achieved in 2018’s exceptionally favorable market.
Our operating revenue improved 7.1% in 2019 on top of the
12.8% increase in 2018. Our operating income improved 8.7%
in 2019 on top of the 23.7% increase in 2018. Success breeds
success.
Marten’s 11.0% increase in net income for 2019 was our fifth
consecutive improvement in annual earnings, excluding a
deferred income taxes benefit in 2017 and a gain on the dis-
position of facilities in 2015. Our operating ratio, net of fuel
surcharges, was our best over the last 14 years.
Unique Model, Unique Consistency
The consistency of Marten’s earnings growth is unique among
major trucking companies—as is the business model that has
made this consistency possible. Marten has developed a model
quite different from the rest of the industry, reshaping our
operations in response to a constantly changing and expand-
ing marketplace. In the process—which continues—we have
evolved from a long-haul refrigerated carrier into a growing
network of truck-based transportation capabilities. This mul-
tifaceted approach has given us five distinct but complemen-
tary business platforms: Truckload, Dedicated, Intermodal,
Brokerage and MRTN de México. Together they offer an
expanding combination of transportation capabilities designed
to provide the best, most efficient service for a diverse and
growing range of customers.
Of course, no matter how well conceived, a business model is
only as good as the people who execute it. And that is the other
major factor in the consistency of Marten’s operating perfor-
mance—the talent and smart, hard work of our experienced
and dedicated workforce. Within a culture that recognizes that
transformation is a process, not an event, our people focus daily
on cost and productivity improvement—on doing their best to
exceed the expectations of our customers. They are equipped
with our in-house, industry leading information technology
system—a proprietary competitive advantage that provides the
real-time visible information needed to quickly make data-driv-
en decisions for improved supply chain productivity.
Our results for 2019 once again offer a measure of the edge
our model gives us. The entire industry was caught in a painful
squeeze between inflationary cost pressures and a persistent
oversupply of truckload capacity. Marten is not immune to
these pressures. But, our diversified model gives us the opera-
tional flexibility and resilience to produce consistent profitable
growth, and the ability to overcome difficult economic envi-
ronments.
Operating Results Comparison
Operating revenue
Operating income
Net income
Percentage Change
Year Ended
December 31,
2019 vs. 2018
Percentage Change
Year Ended
December 31,
2018 vs. 2017
7.1%
8.7%
11.0%
12.8%
23.7%
62.7%
Net income used to calculate the percentage increase from 2017 to 2018
excludes a $56.5 million deferred income tax benefit in the fourth quarter of
2017.
2019 Financial Results
For 2019, net income was $61.1 million, or $1.11 per diluted
share, up 11.0% from $55.0 million, or $1.00 per diluted share,
for 2018.
Operating revenue improved 7.1% to a record $843.3 million
for 2019 from $787.6 million for 2018. Excluding fuel surcharg-
es, 2019 operating revenue improved 8.6% to $739.9 million
from $681.4 million for 2018. Fuel surcharge revenue decreased
to $103.4 million from $106.2 million for 2018.
Operating income improved 8.7% to a record $76.5 million for
2019 from $70.3 million for 2018. Our operating ratio (operat-
ing expenses as a percentage of operating revenue) improved to
90.9% for 2019 from 91.1% for 2018. Our operating ratio, net
of fuel surcharges, was 89.7% for each year.
Regional Foundation
Our network of regional operating centers across the nation
provides the foundation for development of our diverse cus-
tomer solutions, enabling us to address customer trends toward
regional distribution and facilitating supportive interaction
across our five individual business platforms.
Truckload—regional and over-the-road fleets operating from
Marten’s 15 regional service centers, including dry van operations
out of our Kansas City, Atlanta and Phoenix facilities. Truckload
revenue was $378.0 million for 2019 versus $375.3 million
for 2018. Excluding fuel surcharges, Truckload revenue was
$329.3 million, up 2.2% from $322.3 million in 2018. Average
revenue, net of fuel surcharges, per tractor per week—a main
measure of Truckload asset productivity—was down less than
1%, despite the pressure on industry rates in 2019’s softer freight
environment. Operating income was $29.7 million, down from
$35.1 million for 2018. The 2019 Truckload operating ratio
was 92.2%, and the operating ratio, net of fuel surcharges, was
91.0%.
Dedicated—customized solutions tailored to individual customers’
requirements utilizing refrigerated trailers, dry vans and other
specialized equipment. Dedicated revenue has grown by 278%
over the past five years, reflecting this platform’s mutually sup-
MARTEN TRANSPORT 2019 ANNUAL REPORT
portive interaction with our regional Truckload and Brokerage
resources. For 2019, Dedicated revenue increased 18.8% to
$266.0 million from $223.9 million for 2018. Excluding fuel
surcharges, Dedicated revenue improved 19.7% to $223.9 mil-
lion for 2019 from $187.1 million for 2018. Operating income
was $31.2 million, up 68.1% from $18.6 million for 2018. The
2019 Dedicated operating ratio was 88.3%, and the operating
ratio, net of fuel surcharges, was 86.0%. Our average number
of tractors in service grew 16.9% to 1,272 from 1,088 in 2018.
Intermodal—refrigerated TOFC (trailer on flatcar) and refriger-
ated COFC (container on flatcar) services, providing the economies
and energy efficiencies of long-haul rail transportation with extend-
ed door-to-door support from Marten’s truck network. Marten is
the largest truckload temperature-controlled carrier with the
BNSF Railway Company. During the second half of 2019, we
began phasing in refrigerated COFC to our Intermodal plat-
form, ordering 500 stackable refrigerated containers in August.
They are being put in service immediately upon delivery, with
all expected to be operating in early 2020, putting Marten
ahead of the industry’s expected transition to this space-sav-
ing equipment. COFC offers both economic and operational
advantages over TOFC. Reflecting competition with unsus-
tainably low over-the-road truckload rates, Intermodal reve-
nue declined to $90.4 million for 2019 from $102.0 million
for 2018. Excluding fuel surcharges, Intermodal revenue was
$77.8 million, compared with $85.6 million in 2018. Operating
income was $6.6 million, down from $11.2 million for 2018.
The 2019 Intermodal operating ratio was 92.7%, and the oper-
ating ratio, net of fuel surcharges, was 91.5%.
Brokerage—surge flexibility to supplement Marten’s capabilities
through temperature-controlled and dry van services provided by
smaller third-party carriers. Marten’s Brokerage resources are an
integral part of our growing transportation network, supporting
our Dedicated platform by ensuring reliable shipping conti-
nuity for our customers during surges in demand. Marten’s
Brokerage revenue improved 26.1% to $108.9 million for 2019
from $86.4 million for 2018. Brokerage operating income
increased 61.9% to $9.0 million from $5.5 million for 2018.
The Brokerage operating ratio was 91.8% for 2019.
Operating within our Truckload and Brokerage segments,
another profitable component of Marten’s vision and plan is
MRTN de México, which provides door-to-door business ser-
vice between the United States and Mexico with our Mexican
partner carriers. Its 2019 revenue was $63.3 million—reported
as part of our Truckload and Brokerage results.
Investing in Safety
As part of Marten’s drive for continuous improvement, we
have focused on the creation of better jobs for our drivers, safer
jobs—the best jobs for the industry’s best drivers. Unlike the
other major carriers, we only hire experienced drivers. Our ded-
icated, regional and intermodal infrastructure offers our drivers
more attractive route options. We’ve led the way in compen-
sation improvements, health coverage, safety and technology.
MARTEN TRANSPORT 2019 ANNUAL REPORT
The equipment we provide is the safest available, featuring
automatic transmissions, radar-based collision avoidance sys-
tems and lane departure systems.
Our approach has given us the finest driving team in the
industry—well worth the industry-leading pay increases we’ve
introduced. The return on that investment in terms of safety
and driver performance is another ingredient in Marten’s prof-
itable growth. Carriers that are forced to hire inexperienced,
unproven drivers are more susceptible to safety and regulatory
problems. Thanks to Marten’s elite driver base and unrelenting
emphasis on safety, the liability insurance inflation driven by
“nuclear” jury awards has not impacted us to the same degree
as the industry in general. While Marten has established a clear
competitive edge in hiring top drivers, the overall shortage of
drivers remains a critical problem for the industry.
Escalating driver pay and insurance and equipment costs are
leading the challenging inflationary cost increases that will con-
tinue through 2020. But, we expect an improvement in the rate
environment with a tightening of industry capacity in 2020.
Unlike carriers that found themselves saddled with idle tractors
and empty trailers during the worsening freight environment
in 2019, Marten added 329 Dedicated and 101 Truckload
tractors. That was a 16.1% increase in our fleet size since the
beginning of the year—another measure of the edge that our
multifaceted model gives us, another illustration of the talent
and teamwork of the people of Marten. We expect to continue
to expand our capacity in 2020 and we’re off to a strong start
with recent awards of new dedicated business with several cus-
tomers for over 185 additional tractors starting in 2019’s fourth
and 2020’s first quarters.
Marten’s people continued to work together as a smart, dis-
ciplined team in 2019 to build on our model and produce
profitable growth in a challenging freight and driver market. In
the process we have laid the groundwork for another profitable
growth year in 2020. Success breeds success.
Sincerely,
Randolph L. Marten
Chairman of the Board
and Chief Executive Officer
February 17, 2020
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 2019 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 5, 2020, 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 2019 ANNUAL REPORT
Executive Officers and Directors
Randolph L. Marten
Chairman of the Board,
Chief Executive Officer and Director
Timothy M. Kohl
President
James J. Hinnendael
Executive Vice President and Chief Financial Officer
John H. Turner
Executive Vice President of Sales and Marketing
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
Ronald R. Booth
Director
Retired Partner,
KPMG LLP
Dellwood, Minnesota
Kathleen P. Iverson
Director
Retired President, Chief Executive Officer and
Chairman of the Board,
CyberOptics Corporation
Chanhassen, Minnesota
The 2019 Annual Report is printed on recycled paper.
MARTEN TRANSPORT 2019 ANNUAL REPORT
MARTEN TRANSPORT, LTD. 129 MARTEN STREET MONDOVI, WISCONSIN 54755 TELEPHONE: (715) 926-4216 FAX: (715) 926-4530 www.marten.com