Marten Transport reported higher third-quarter earnings, but most came from an unlikely source: its brokerage section.
In a quarter when truckload carriers Heartland Express (NASDAQ: HTLD) and P.A.M. Transport (NASDAQ: PTSI) both reported operating ratios under 80%, Marten’s (NASDAQ: MRTN) truckload OR improved marginally to 88.3 percent from 88.7 percent in the third quarter of 2020. Its devoted division performed substantially worse, falling to 89.6% from 85.9% a year before.
In a historically bullish trucking market, truckload revenue net of fuel increased by only $1.8 million to $86.9 million, a 2.1 percent increase over the third quarter of last year. The dedicated yield of fuel revenue fell 0.3 percent to $68.8 million.
However, revenue in the brokerage area nearly doubled. It increased by $20.6 million to $42.7 million, a 93.7 percent increase over the previous year’s $22 million. The group’s OR rose from 93.1 percent to 87.2 percent.
With the dedicated unit’s operating income down $2.5 million, truckload up $1.1 million, and intermodal up $1.53 million, the brokerage group’s increase in net income of $3.93 million accounted for about 96 percent of Marten’s total operating income increase of just over $4 million.
Marten’s operational sales increased to just under $251.3 million in the third quarter of 2020, up from $216 million in the previous quarter. This represents a 16.3 percent increase. According to Seeking Alpha, operating revenue was $13.8 million higher than expected.
Marten’s intermodal division had a beneficial impact on total revenue as well. The company’s revenue, excluding gasoline, increased by 13.6 percent to $22.7 million, a gain of $2.72 million.
Operating expenses increased to $222.78 million in the quarter, up from $191.6 million the previous quarter. That’s a 16.2 percent increase, almost equal to the growth in operational revenue. However, Marten encountered several cost headwinds, resulting in a $4 million increase in overall operating income against a more than $35 million increase in sales – a figure that includes fuel surcharge revenue.o t
Salaries and wages increased by 8% to $81 million. Purchased transportation increased by nearly 42% to $52.86 million. Fuel expenses increased by over 40% to $33.9 million; however, fuel surcharge income more than compensated this in the company’s net profitability by roughly 90%.
Marten had a quarter on the road that did not appear to be that of a large truckload carrier in a busy freight market at first appearance. Truckload revenue increased by just 2.1 percent, to $86.88 million, a gain of $1.81 million, net of fuel surcharges. Revenue for the devoted group fell 0.3 percent to $68.82 million.
Marten’s freight volume figures were also decreasing, despite increasing revenue net fuel per tractor per week. This essential statistic increased by 11.5 percent to $4,411 from $3,955. However, the truckload segment’s average miles per trip fell to 502 from 546, and the segment’s total miles traveled fell to 35.9 million from 41.2 million, a 12.8 percent reduction.
The average tractor in the truckload class fell by 8.4% to 1,499 from 1,637. It fell to 1,523 from 1,593 in the devoted unit.
Even though dedicated’s financial performance was worse than a year ago, numerous measures increased. The average number of miles each trip increased to 328 from 304, and the average weekly revenue net of fuel per tractor increased to $3,438 from $3,295, while total miles decreased to 31.5 million from 33.8 million.
Marten’s overall numbers were substantial, aided by the brokerage division. The third-quarter operating revenue of $251.3 million was a new high, up 16.3 percent. However, that figure includes gasoline surcharges; without them, operating revenue increased by 12.8 percent.
The bottom line was also impressive. The third quarter’s net income of $21.27 million was up 17.9% over the previous year’s third quarter. According to Seeking Alpha, earnings per share of 26 cents were up 4 cents year over year and 1 cent more than consensus estimates.
However, the $3.27 million increase in net income does not match the nearly $4 million gain in operating income in the brokerage division, highlighting how significant brokerage was to Marten’s performance during the quarter.
Earlier in the quarter, the corporation paid a special 50-cents-per-share dividend. This would not have affected earnings, but it would have influenced its cash position for the quarter. These remained solid, with cash reaching $83.9 million at the end of the quarter, up from $66.1 million at the end of 2020. From $831.63 million at the end of last year, the whole balance sheet has increased to $903.38 million.
Marten doesn’t have a conference call with analysts. It made no mention of any unit’s specific performance, including brokerage, in its prepared statement. In a statement, Executive Chairman Randolph Marten remarked, “Marten’s skilled and devoted individuals continue to fuel our constant profitable growth.” “Over the last year and a half during the pandemic, we’ve delivered excellent operating income improvement in every quarter.”
The size of its workforce is one robust metric in the statement that isn’t included in the financial tables. According to Chairman Marten, the company began the fourth quarter with 181 more drivers than in the third quarter.
He also stated that the company’s refrigerated trailer fleet increased by 53 throughout the quarter. There are now 607 ships in the fleet.
