Marten Transport’s revenue increased significantly in the fourth quarter of 2022 compared to the previous year, but its net income increased significantly less.
Operating revenue at Marten (NASDAQ: MRTN) increased 15.8% excluding fuel, while total operating revenue increased 20.9% to $322.6 million from $266.9 million in the fourth quarter of 2021. Operating income increased to $32.78 million from $30.67 million, and after taxes and other charges of about $500,000 in the previous quarter, net income was $25.5 million compared to $24.73 million in the fourth quarter of 2021, a 3.2% increase.
That small increase in net income stood out in a table Marten provided on its financial performance during the pandemic.
Operating revenue has increased year on year since the first three months of 2020, with even the crazy second quarter of 2020 posting a 0.1% increase. In 2022, the sequential year-on-year gains were 28.8%, 41.8%, 29.1%, and 20.9%.
However, the 3.2% increase in fourth-quarter net income was easily the lowest in the series since the pandemic began. Only once since then has net income growth in percentage terms failed to reach double digits.
Salaries, wages, and benefits increased 18.2% to $104.7 million from $88.6 million the previous year. According to a statement provided by Executive Chairman Randall Marten, part of that is likely due to the company’s fleet of drivers increasing by 425. Marten does not host an earnings conference call with analysts.
Purchased transportation increased 11% to $60.6 million from $54.6 million, despite the fact that freight rates, as measured by the National Transportation Index in SONAR, fell over the year, from about $3.30 to $3.50 per mile to $2.60 to $2.80.
Net of fuel, Marten’s overall operating ratio fell 100 basis points to 87.8% from 86.8%. The comparison suffered because Marten’s truckload segment saw its OR net of fuel drop to 87.6% from 83.9%, while operating income in truckload fell 9.1% to $13.41 million from $14.75 million. Truckload revenue increased by $16.7 million, or 18.2%, to $108.5 million net of fuel.
The company’s intermodal segment suffered a 78.1% drop in operating income in the quarter, falling to $728,000 from $3.32 million in the fourth quarter of 2021. As a result, the group’s OR was 97.6%. Intermodal revenue, net of fuel, fell slightly to $22.8 million from $23.3 million.
The dedicated net fuel operating ratio increased from 88.7% to 85.4%. Brokerage improved similarly, rising to 88.5% from 90.2%.
Marten’s operating ratios did not change significantly between 2021 and 2022. Truckload fell slightly to 85.6% from 85.3%. Dedicated increased from 86.9% to 85%. Intermodal was slightly worse, with 89.4% versus 89.2%. Brokerage increased from 89.8% to 88.9%, resulting in a consolidated OR of 86.4%, up 400 basis points from 87% in 2021.
Marten ended the year with $80.6 million in cash on its balance sheet, up from just under $57 million at the end of 2021.
The results at Marten, according to Todd Fowler, chief transportation analyst at KeyBanc, show that “consistent execution is increasingly a hallmark of results, and in our view, a culmination of efforts to diversify freight offerings (dedicated, brokerage, intermodal) and a disciplined approach to rates.”
Fowler also stated that the discussion on a follow-up call with Marten executives “highlighted seasonal trends January-to-date (we interpret as soft), and as usual, the quarter will be determined by March trends,” Fowler wrote. “Despite lower volumes, commentary indicates that initial contract renewals are more likely to be flat than significantly lower, with driver pay expected to stabilize at recent levels.”
Marten’s earnings have been well received by investors. When the earnings were released late Tuesday, the stock jumped from about $20.60 to $22.22 before falling back to $21.72 at about 12:50 p.m. Thursday.
Marten’s net income was in line with consensus estimates, and revenue was slightly higher than expected, according to Seeking Alpha.
