Marten Transport(MRTN) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents unaudited financial statements showing decreased revenue and net income amid a strong liquidity position Consolidated Condensed Balance Sheets Key Balance Sheet Items (in thousands) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | ASSETS | | | | Cash and cash equivalents | $35,052 | $17,267 | | Total current assets | $155,813 | $138,511 | | Net property and equipment | $834,268 | $828,613 | | Total assets | $991,816 | $968,757 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $116,685 | $93,519 | | Total liabilities | $221,100 | $200,835 | | Total stockholders' equity | $770,716 | $767,922 | | Total liabilities and stockholders' equity | $991,816 | $968,757 | - Cash and cash equivalents increased by $17.785 million from December 31, 2024, to June 30, 2025[7] - Total assets increased by $23.059 million, and total liabilities increased by $20.265 million from December 31, 2024, to June 30, 2025[7] Consolidated Condensed Statements of Operations Key Operating Results (in thousands, except per share data) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Operating revenue | $229,922 | $246,238 | $453,074 | $495,910 | | Operating income | $9,734 | $9,974 | $15,593 | $22,224 | | Net income | $7,186 | $7,889 | $11,521 | $17,535 | | Basic earnings per common share | $0.09 | $0.10 | $0.14 | $0.22 | | Diluted earnings per common share | $0.09 | $0.10 | $0.14 | $0.22 | | Dividends declared per common share | $0.06 | $0.06 | $0.12 | $0.12 | - Operating revenue decreased by 6.6% for the three months and 8.6% for the six months ended June 30, 2025, compared to the same periods in 2024[9] - Net income decreased by 8.9% for the three months and 34.3% for the six months ended June 30, 2025, compared to the same periods in 2024[9] Consolidated Condensed Statements of Stockholders' Equity Changes in Stockholders' Equity (in thousands) | Metric (in thousands) | Balance at Dec 31, 2024 | Balance at June 30, 2025 | | :--- | :--- | :--- | | Common Stock Shares | 81,464 | 81,520 | | Common Stock Amount | $815 | $815 | | Additional Paid-In Capital | $52,941 | $53,994 | | Retained Earnings | $714,166 | $715,907 | | Total Stockholders' Equity | $767,922 | $770,716 | - Total stockholders' equity increased by $2.794 million from December 31, 2024, to June 30, 2025, primarily due to net income partially offset by dividends[10] - Dividends on common stock of $0.06 per share were paid in each of the first two quarters of 2025 and 2024, totaling $4.891 million and $4.889 million respectively for the second quarter[10][12] Consolidated Condensed Statements of Cash Flows Summary of Cash Flows (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $69,368 | $81,543 | | Net cash used for investing activities | $(41,528) | $(48,025) | | Net cash used for financing activities | $(10,055) | $(9,532) | | Net change in cash and cash equivalents | $17,785 | $23,986 | | Cash and cash equivalents, End of period | $35,052 | $77,199 | - Net cash provided by operating activities decreased by $12.175 million (14.9%) in the first six months of 2025 compared to 2024[15] - Cash used for investing activities decreased by $6.497 million (13.5%) in the first six months of 2025, primarily due to lower revenue equipment additions[15] Notes to Consolidated Condensed Financial Statements (1) Consolidated Condensed Financial Statements - The unaudited consolidated condensed financial statements are prepared in accordance with U.S. GAAP for interim financial statements and include normal recurring adjustments[16] - Interim results do not necessarily indicate full-year results and should be read with reference to the 2024 Annual Report on Form 10-K[16] (2) Earnings per Common Share Earnings Per Share Calculation (in thousands, except per share) | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $7,186 | $7,889 | $11,521 | $17,535 | | Basic earnings per common share | $0.09 | $0.10 | $0.14 | $0.22 | | Diluted earnings per common share | $0.09 | $0.10 | $0.14 | $0.22 | | Basic weighted-average shares | 81,510 | 81,381 | 81,502 | 81,365 | | Diluted weighted-average shares | 81,517 | 81,446 | 81,512 | 81,442 | - Certain stock options and unvested performance unit awards were excluded from diluted EPS calculation as their inclusion would be antidilutive[17][18] (3) Long-Term Debt - The company has an unsecured committed credit facility of $30.0 million maturing in August 2027, with no outstanding principal balance at June 30, 2025, or December 31, 2024[19] - As of June 30, 2025, outstanding standby letters of credit totaled $22.4 million, with $7.6 million remaining borrowing availability[19] - The credit agreement includes restrictive covenants, such as a $150 million limit on stock redemptions and dividends per fiscal year, with which the company was in compliance[20] (4) Related Party Transactions - The company purchased $13,000 in tires and related services from Bauer Built, Inc (BBI) in the first six months of 2025, where a company director is chairman and CEO[21] - An additional $613,000 was paid to tire manufacturers for BBI-provided tires in the first six months of 2025, for which BBI received commissions[21] - No transactions occurred with Durand Builders Service, Inc in the first six months of 2025, compared to $7,000 paid in 2024, where another company director is CEO and principal stockholder[22] (5) Share Repurchase Program - The Board of Directors approved an increase in the share repurchase program to $50.0 million (approximately 3.1 million shares) on May 3, 2022[23] - No shares were repurchased in the first six months of 2025, 2024, 2023, or the third and fourth quarters of 2022[24] - As of June 30, 2025, $33.2 million (approximately 2.2 million shares) remained available for future repurchases[24] (6) Dividends - Quarterly cash dividends of $0.06 per share of common stock were paid in the first two quarters of 2025 and 2024, totaling $9.8 million in each period[25] (7) Accounting for Share-based Payment Arrangement Compensation - Pre-tax compensation expense for stock options and performance unit awards was $1.3 million in the first six months of 2025, down from $1.4 million in 2024[26] - No significant changes to the structure of stock-based award plans occurred in the first six months of 2025[26] (8) Fair Value of Financial Instruments - The carrying amounts of cash equivalents, accounts receivable, and accounts payable approximate fair value due to their short maturity[27] (9) Commitments and Contingencies - The company is committed to new revenue equipment purchases of $64.3 million for the remainder of 2025 and has operating lease obligations totaling $698,000 through 2028[28] - The company self-insures for various claims, with increased responsibility for auto liability claims: $3.0 million per claim for the policy year effective June 1, 2025, up from $2.0 million in 2024 and $1.0 million in 2023[30] - Management believes the resolution of open claims and pending litigation is not likely to have a materially adverse effect on financial statements, considering existing reserves[32] (10) Revenue and Business Segments - Marten Transport operates four reporting segments: Truckload, Dedicated, Intermodal, and Brokerage, offering temperature-sensitive and dry truck-based transportation[33][34] Segment Revenue (in thousands) | Segment (in thousands) | Three Months Ended June 30, 2025 Revenue | Three Months Ended June 30, 2024 Revenue | Six Months Ended June 30, 2025 Revenue | Six Months Ended June 30, 2024 Revenue | | :--- | :--- | :--- | :--- | :--- | | Total Truckload revenue | $106,486 | $112,523 | $210,877 | $224,074 | | Total Dedicated revenue | $71,874 | $81,266 | $145,499 | $167,726 | | Total Intermodal revenue | $11,703 | $15,064 | $23,820 | $31,036 | | Brokerage revenue | $39,859 | $37,385 | $72,878 | $73,074 | | Total operating revenue | $229,922 | $246,238 | $453,074 | $495,910 | Segment Operating Income/(Loss) (in thousands) | Segment (in thousands) | Three Months Ended June 30, 2025 Operating Income/(Loss) | Three Months Ended June 30, 2024 Operating Income/(Loss) | Six Months Ended June 30, 2025 Operating Income/(Loss) | Six Months Ended June 30, 2024 Operating Income/(Loss) | | :--- | :--- | :--- | :--- | :--- | | Truckload | $2,344 | $1,115 | $2,044 | $1,604 | | Dedicated | $5,429 | $6,650 | $10,283 | $15,908 | | Intermodal | $(735) | $(684) | $(1,590) | $(878) | | Brokerage | $2,696 | $2,893 | $4,856 | $5,590 | | Total operating income | $9,734 | $9,974 | $15,593 | $22,224 | (11) Use of Estimates - Preparation of financial statements requires estimates and assumptions, primarily related to insurance and claims accruals and depreciation, which may differ from ultimate results[51] (12) Sale of Intermodal Business Assets Subsequent Event - On July 22, 2025, Marten Transport announced an agreement to sell its Intermodal business assets, including over 1,200 refrigerated containers and associated customer contracts, to Hub Group, Inc for $51.8 million in cash[52] - The transaction is expected to close by the end of the third quarter of 2025 and is not anticipated to have a material impact on the company's results of operations[52] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This analysis highlights decreased revenue and income due to a soft freight market despite the company maintaining strong liquidity Overview - Marten Transport has transitioned from a refrigerated long-haul carrier to a multifaceted business offering time and temperature-sensitive and dry truck-based transportation across six platforms, reported in four segments: Truckload, Dedicated, Intermodal, and Brokerage[54] - Operating revenue decreased by $42.8 million (8.6%) in the first six months of 2025 compared to 2024, with Truckload, Dedicated, and Intermodal segments experiencing declines, while Brokerage revenue saw a slight decrease[62] - Operating income declined 29.8% to $15.6 million, and net income declined 34.3% to $11.5 million in the first six months of 2025, primarily due to a softened freight market[64] Results of Operations Comparison of Three Months Ended June 30, 2025 to Three Months Ended June 30, 2024 Q2 2025 vs Q2 2024 Performance (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Dollar Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Total operating revenue | $229,922 | $246,238 | $(16,316) | (6.6)% | | Total operating income | $9,734 | $9,974 | $(240) | (2.4)% | | Net income | $7,186 | $7,889 | $(703) | (8.9)% | | Consolidated operating ratio | 95.8% | 95.9% | | | | Consolidated operating ratio, net of fuel surcharges | 95.2% | 95.3% | | | - Truckload operating income increased by 110.2% to $2.344 million, while Dedicated operating income decreased by 18.4% to $5.429 million[70] - Salaries, wages and benefits decreased by $7.9 million (9.2%), primarily due to reductions in company driver compensation and lower self-insured medical claims[77] - Insurance and claims expense increased by $3.3 million (26.2%) due to higher self-insured auto liability claim costs and insurance premiums[83] Comparison of Six Months Ended June 30, 2025 to Six Months Ended June 30, 2024 H1 2025 vs H1 2024 Performance (in thousands) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Dollar Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | Total operating revenue | $453,074 | $495,910 | $(42,836) | (8.6)% | | Total operating income | $15,593 | $22,224 | $(6,631) | (29.8)% | | Net income | $11,521 | $17,535 | $(6,014) | (34.3)% | | Consolidated operating ratio | 96.6% | 95.5% | | | | Consolidated operating ratio, net of fuel surcharges | 96.1% | 94.8% | | | - Dedicated segment operating income decreased by 35.4% to $10.283 million, and Intermodal operating loss increased by 81.1% to $(1.590) million[88] - Salaries, wages and benefits decreased by $17.9 million (10.2%), driven by reductions in company driver and non-driver compensation, and lower self-insured medical claims[95] - Insurance and claims increased by $5.0 million (20.7%) due to higher self-insured auto liability claim costs and insurance premiums, partially offset by lower physical damage and workers' compensation claims[99] Liquidity and Capital Resources Cash Flow Summary (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash flows provided by operating activities | $69,368 | $81,543 | | Net cash flows used for investing activities | $(41,528) | $(48,025) | | Net cash flows used for financing activities | $(10,055) | $(9,532) | - In the first six months of 2025, operating cash flows of $69.4 million were primarily used for new revenue equipment purchases ($38.8 million net), cash dividends ($9.8 million), and other asset purchases ($2.7 million), resulting in a $17.8 million increase in cash[108] - The company estimates capital expenditures, net of dispositions, will be approximately $65 million for the remainder of 2025, including $64.3 million in new revenue equipment commitments[109] - Marten Transport believes its liquidity sources, including anticipated cash flows, existing cash, and borrowing availability, are adequate to meet needs for at least the next twelve months, with no significant liquidity constraints foreseen[109] Seasonality - Tractor productivity generally decreases during winter due to inclement weather and reduced shipper volumes[114] - Operating expenses typically increase in harsh weather due to higher accident frequency, increased claims, lower fuel efficiency, and more equipment repairs[114] Critical Accounting Estimates - There have been no material changes in critical accounting estimates since the Annual Report on Form 10-K for the year ended December 31, 2024[115] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section details market risk exposure, primarily from diesel fuel price fluctuations, and mitigation strategies via fuel surcharges - The company's primary market risk is the price and availability of diesel fuel, which can significantly impact operating results[116] - A 5% increase in the average cost of diesel fuel would have increased fuel expense by $3.2 million in the first six months of 2025 (compared to $3.8 million in 2024)[116] - Fuel surcharge programs with customers help recover a substantial portion of higher fuel costs, though they are not fully effective for non-revenue miles or idling[117] - The company employs strategies like volume purchasing, optimizing driver fuel purchases, shorter lengths of haul, and auxiliary power units to control fuel usage and costs[117] Item 4. Controls and Procedures Management confirms the effectiveness of disclosure controls and procedures with no material changes to internal controls during the period - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[119] - No material changes in internal control over financial reporting occurred during the period covered by the report[119] PART II. OTHER INFORMATION Item 1A. Risk Factors This section updates risk factors, focusing on economic conditions, trade tariffs, and geopolitical instability - The business is subject to general economic and business factors beyond its control, such as excess capacity in the trucking industry, economic cycles, and fluctuations in interest rates and fuel prices[121] - New and increased tariff rates on imported goods, and potential retaliatory trade policies, may decrease shipping volumes, increase equipment costs, and impact the ability to recover fuel price increases, adversely affecting revenue and operations[122] - Actual or threatened armed conflicts, terrorist attacks, and related events could have unpredictable adverse effects on the economy, consumer confidence, and future operating results[123] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[124] Item 6. Exhibits This section lists filed exhibits, including incentive plans, executive compensation details, and Sarbanes-Oxley certifications - Exhibits include the Marten Transport, Ltd 2025 Equity Incentive Plan and related agreements, as well as Named Executive Officer Compensation[126] - Certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 by the CEO and CFO are filed with the report[126] - Financial information for the period ended June 30, 2025, is filed in iXBRL format[126] SIGNATURES The report is duly authorized by the CEO and CFO on behalf of Marten Transport, Ltd as of August 8, 2025 - The report was signed by Timothy M. Kohl, Chief Executive Officer, and James J. Hinnendael, Executive Vice President and Chief Financial Officer, on August 8, 2025[130]