Marten Transport(MRTN) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited consolidated financial statements for Q1 2025, detailing a significant decrease in net income and changes in assets and liabilities Consolidated Condensed Balance Sheets Total assets increased to $983.3 million as of March 31, 2025, driven by cash, while total liabilities also grew Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $162,500 | $138,511 | | Net property and equipment | $819,057 | $828,613 | | Total assets | $983,332 | $968,757 | | Total current liabilities | $109,623 | $93,519 | | Total liabilities | $215,832 | $200,835 | | Total stockholders' equity | $767,500 | $767,922 | | Total liabilities and stockholders' equity | $983,332 | $968,757 | Consolidated Condensed Statements of Operations Operating revenue decreased by 10.6% and net income declined by 55.1% in Q1 2025, leading to lower diluted earnings per share Q1 2025 vs Q1 2024 Performance (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating revenue | $223,152 | $249,672 | | Total operating expenses | $217,293 | $237,422 | | Operating income | $5,859 | $12,250 | | Net income | $4,335 | $9,646 | | Diluted earnings per common share | $0.05 | $0.12 | | Dividends declared per common share | $0.06 | $0.06 | Consolidated Condensed Statements of Cash Flows Net cash from operating activities decreased to $36.2 million in Q1 2025, with a net increase in cash and cash equivalents to $39.9 million Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $36,215 | $45,722 | | Net cash used for investing activities | ($8,413) | ($20,249) | | Net cash used for financing activities | ($5,164) | ($4,956) | | Net change in cash and cash equivalents | $22,638 | $20,517 | | Cash and cash equivalents, end of period | $39,905 | $73,730 | Notes to Consolidated Condensed Financial Statements Details accounting policies, segment performance, debt facilities, and significant commitments, noting declines across all business segments - The company has a $30.0 million unsecured credit facility maturing in August 2027, with no outstanding principal balance as of March 31, 2025. Remaining borrowing availability was $7.6 million[16] - The company has commitments for new revenue equipment purchases of $124.3 million for the remainder of 2025[24] Segment Operating Income/(Loss) (in thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Truckload | $(300) | $489 | | Dedicated | $4,854 | $9,258 | | Intermodal | $(855) | $(194) | | Brokerage | $2,160 | $2,697 | | Total operating income | $5,859 | $12,250 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management attributes Q1 2025 revenue and operating income declines to a softened freight market, impacting all segments and worsening the operating ratio, while maintaining strong liquidity - Operating revenue decreased 10.6% and net income declined 55.1% in Q1 2025 compared to Q1 2024, primarily due to a softened freight market[54][56] - The consolidated operating ratio worsened to 97.4% in Q1 2025 from 95.1% in Q1 2024. Net of fuel surcharges, the ratio increased to 97.0% from 94.3%[56] - The company plans capital expenditures, net of dispositions, of approximately $107 million for the remainder of 2025[57][86] Results of Operations Detailed analysis reveals broad-based weakness in Q1 2025, with revenue declines across all segments and increased insurance and claims expenses Segment Revenue Changes (Q1 2025 vs Q1 2024, in thousands) | Segment Revenue (Net of Fuel Surcharge) | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Truckload | $90,106 | $95,022 | $(4,916) | (5.2)% | | Dedicated | $62,405 | $71,738 | $(9,333) | (13.0)% | | Intermodal | $10,268 | $13,281 | $(3,013) | (22.7)% | | Brokerage | $33,019 | $35,689 | $(2,670) | (7.5)% | - The Truckload segment's operating ratio increased to 100.3% from 99.6% due to higher insurance, depreciation, and maintenance costs[65] - Insurance and claims expense increased by $1.7 million (14.8%) in Q1 2025, primarily due to higher self-insured auto liability claim costs and insurance premiums[76] - The effective income tax rate rose to 30.2% from 26.1% in the prior-year period, mainly due to increases in non-deductible expenses as a percentage of lower projected earnings[80] Liquidity and Capital Resources The company maintains strong liquidity through cash from operations and an undrawn credit facility, with available funds for share repurchases and planned capital expenditures - Net cash from operating activities was $36.2 million in Q1 2025, down from $45.7 million in Q1 2024[83][85] - As of March 31, 2025, the company had no outstanding long-term debt and $7.6 million in borrowing availability under its credit facility[88] - The company has a share repurchase program with authorization for up to $33.2 million remaining as of March 31, 2025. No shares were repurchased in Q1 2025[84] Item 3. Quantitative and Qualitative Disclosures about Market Risk The primary market risk is diesel fuel price volatility, partially mitigated by surcharges, with a hypothetical 5% increase impacting Q1 2025 fuel expense by $1.6 million - The primary market risk is the price and availability of diesel fuel[93] - A 5% increase in the average cost of diesel fuel would have increased fuel expense by $1.6 million in Q1 2025[93] - The company uses fuel surcharge programs to pass through a significant portion of fuel cost increases to customers, but these programs are not fully effective in mitigating all fuel-related price increases[94] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[96] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[96] PART II. OTHER INFORMATION Item 1A. Risk Factors No material changes to risk factors from the 2024 Annual Report, with an updated emphasis on general economic conditions, trucking capacity, trade policies, and geopolitical events - An updated risk factor highlights dependence on general economic and business factors beyond the company's control[98] - Specific risks mentioned include excess capacity in the trucking industry, the impact of trade tariffs on shipping volumes and equipment costs, and unpredictable effects of geopolitical conflicts[99][100] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement in Q1 2025[101] Item 6. Exhibits Lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial data in iXBRL format - Filed exhibits include certifications from the CEO (31.1) and CFO (31.2) pursuant to Section 302 of the Sarbanes-Oxley Act[103] - The report includes financial statements and notes formatted in iXBRL (Exhibit 101)[103]