MONDOVI, Wis., Jan. 25 /PRNewswire-FirstCall/ -- Marten Transport, Ltd. (Nasdaq: MRTN) announced today its financial and operating results for the quarter and year ended Dec. 31, 2006 .
For the fourth quarter of 2006, operating revenue increased 5.0% to $131.7 million from $125.4 million for the same quarter of 2005. For 2006, operating revenue increased 12.8% to $518.9 million from $460.2 million for 2005. Operating revenue included fuel surcharges of $17.8 million and $77.3 million for the quarter and year ended Dec. 31, 2006 , compared with $19.1 million and $57.2 million for the quarter and year ended Dec. 31, 2005 . Operating revenue also included non-freight revenue principally from Marten's logistics and intermodal operations. Non-freight revenue increased 143.4% to $12.4 million for the quarter and 132.9% to $39.3 million for the year ended Dec. 31, 2006 , compared with $5.1 million and $16.9 million for the quarter and year ended Dec. 31, 2005 , respectively.
For the fourth quarter, net income decreased 27.0% to $5.2 million , or 24 cents per diluted share, from $7.1 million , or 32 cents per diluted share, for the same quarter of 2005. For the year ended Dec. 31, 2006 , net income decreased 2.2% to $24.5 million , or $1.12 per diluted share, from $25.1 million , or $1.14 per diluted share, for 2005.
Chairman, President and Chief Executive Officer Randolph L. Marten said, 'We continued to grow with our customers during the fourth quarter, though a more challenging freight environment and an increase in driver-related expenses impacted our profitability for the period. Operating revenue increased 5.0% in the last quarter of 2006, despite a 7.0% decrease in fuel surcharges. Non-freight revenue, consisting of our intermodal, brokerage, and MW Logistics operations, increased 143.4% to $12.4 million over the fourth quarter of 2005. Combining these business units with our trucking operations shows revenue growth, before fuel surcharges, of $7.6 million , or 7.1%, over the fourth quarter of 2005.
'We believe the freight market in the fourth quarter was characterized by less robust shipping demand and greater truck capacity than in the fourth quarter of 2005, with the amount of 'surge' freight significantly lower than in the last two years. This freight is highly profitable and the lack of it made a difference.
'Average freight revenue per tractor per week is one of our main measures of asset productivity. For the 2006 quarter, average freight revenue per tractor per week was $3,037 compared with $3,006 in the fourth quarter of 2005. This increase was due to slight improvements in both average freight revenue per total mile and in average miles per tractor from the fourth quarter of 2005.
'The primary changes in our expenses related to the increase in company- owned equipment and the corresponding decrease in independent contractor equipment. Salaries, wages and benefits increased 1.3% as a percentage of operating revenue, net of fuel surcharge, in the fourth quarter of 2006, partially due to the approximately 3.2 million mile increase in the number of miles driven by company drivers and partially due to increased health insurance expense. Higher self-insured medical claims increased our employees' health insurance expense by $1.5 million in the 2006 fourth quarter over the prior year period. These increases were partially offset by a decrease of $784,000 in compensation expensed for our non-driver employees under our incentive compensation program from the fourth quarter of 2005.
'Fuel expense, net of surcharge collection, increased 1.2% as a percentage of operating revenue, net of fuel surcharge, over the last quarter of 2005, due to an increase in company truck miles as a percentage of total miles and lower fuel economy. Our average cost of fuel in the fourth quarter was $2.45 per gallon compared with $2.58 per gallon in the same quarter of 2005.
'Our insurance and claims expense increased $974,000 , primarily attributable to increased claims experience. During the quarter, we experienced an uncharacteristic increase in accident severity. Our large self-insured retention resulted in an increase in claims expense, partially offset by a decrease in premium expense.
'Our operating ratio (operating expenses as a percentage of operating revenue) was 93.4% for the fourth quarter and 92.1% for the year of 2006 compared with 90.4% for the fourth quarter and 90.7% for the year of 2005. Netting fuel surcharges against fuel expense, as many of our peers do, would have produced an operating ratio of 92.4% for the fourth quarter of 2006 compared with 88.7% for the fourth quarter of 2005 and 90.7% for the year of 2006 compared with 89.4% for the year of 2005.
'Net income for the fourth quarter of 2006 included an income tax benefit of approximately $425,000 due to a decrease to our deferred income tax liability. The decrease was primarily due to a change in our income apportionment for several states. We expect our effective income tax rate to be in the range of 37% to 39% in 2007.
'We continue to experience below industry-average turnover with our drivers. In the fourth quarters of 2005 and 2006, our annualized driver turnover was less than 75%. This compares favorably with an annualized driver turnover rate estimated at approximately 120% by the American Trucking Associations.
'At Dec. 31 , our balance sheet reflected approximately $221.0 million in stockholders' equity and $58.7 million of borrowed debt, which results in a debt-to-total capitalization ratio of approximately 21.0%. Our net capital expenditures of $88.5 million in 2005 and $97.3 million in 2006 have represented a major investment to avoid the higher cost and less-efficient tractors that are mandated by federal emissions regulations beginning in 2007 and to build our trailer-to-tractor ratio for intermodal service. We expect capital expenditures in 2007 to decrease to approximately $45 million , net of proceeds of dispositions. Assuming net capital expenditures in that range and operating margins similar to the margins this year, we expect to generate cash flows to retire a substantial amount of our debt in 2007 or provide flexibility for other purposes.
'I'm also happy to announce that
Looking forward,
Marten Transport, with headquarters in Mondovi, Wis., is one of the leading temperature-sensitive truckload carriers in the United States . Marten specializes in transporting food and other consumer packaged goods that require a temperature-sensitive or insulated environment. Marten offers nationwide service, concentrating on expedited movements for high-volume customers. Marten's common stock is traded on the Nasdaq Global Select Market under the symbol MRTN.
This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may be identified by their use of terms or phrases such as 'expects,' 'estimates,' 'projects,' 'believes,' 'anticipates,' 'plans,' 'intends,' and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. In this release, forward looking statements involve, among other things, expectations regarding revenue and earnings growth, operating ratio, capital expenditures, and free cash flow. The following factors, among others, could cause actual results to differ materially from those in forward-looking statements: excess tractor or trailer capacity in the trucking industry; decreased demand for our services or loss of one or more of our major customers; surplus inventories; recessionary economic cycles and downturns in customers' business cycles; strikes, work slow downs, or work stoppages at the company, customers, ports, or other shipping related facilities; increases or rapid fluctuations in fuel prices as well as fluctuations in surcharge collection; the volume and terms of diesel purchase commitments; interest rates, fuel taxes, tolls, and license and registration fees; increases in the prices paid for new revenue equipment and changes in the resale value of our used equipment; increased indebtedness, and associated interest expense, arising from maintaining a new fleet of equipment; shortages in supply of new equipment from manufacturers; increases in compensation for and difficulty in attracting and retaining qualified drivers and independent contractors; elevated experience in the frequency and severity of claims relating to accident, cargo, workers' compensation, health, and other claims; changes in management's estimates of liability based upon such experience and development factors; increases in insurance premiums and deductible amounts; seasonal factors such as harsh weather conditions that increase operating costs; competition from trucking, rail, and intermodal competitors; and regulatory requirements that increase costs or decrease efficiency, including new emissions standards for engines. Readers should review and consider these factors along with the various disclosures by the company in its press releases, stockholder reports, and filings with the Securities and Exchange Commission.
CONTACTS:
MARTEN TRANSPORT, LTD.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except share information)
December 31 December 31,
2006 2005
ASSETS (Unaudited)
Current assets:
Cash $2,988 $1,080
Marketable securities 300 494
Receivables:
Trade, less allowances of $861 and
$928, respectively 48,005 47,383
Other 6,458 6,975
Prepaid expenses and other 14,227 13,264
Deferred income taxes 4,532 3,873
Total current assets 76,510 73,069
Property and equipment:
Revenue equipment 406,449 339,606
Buildings and land 10,945 10,877
Office equipment and other 11,335 11,797
Less accumulated depreciation (98,841) (92,342)
Net property and equipment 329,888 269,938
Other assets 4,424 6,726
TOTAL ASSETS $410,822 $349,733
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Checks issued in excess of cash balances $804 $1,446
Accounts payable 12,690 7,646
Insurance and claims accruals 16,073 13,126
Accrued liabilities 24,855 18,557
Current maturities of long-term debt 5,000 5,000
Total current liabilities 59,422 45,775
Long-term debt, less current maturities 53,659 43,300
Deferred income taxes 75,835 66,310
Total liabilities 188,916 155,385
Commitments and contingencies
Minority interest 913 431
Stockholders' equity:
Preferred stock, $.01 par value per share;
2,000,000 shares authorized; no shares
issued and outstanding - -
Common stock, $.01 par value per share;
48,000,000 shares authorized; 21,764,773
shares at December 31, 2006, and
21,573,220 shares at December 31, 2005,
issued and outstanding 218 216
Additional paid-in capital 73,601 71,045
Retained earnings 147,174 122,656
Total stockholders' equity 220,993 193,917
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $410,822 $349,733
MARTEN TRANSPORT, LTD.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months Year
Ended December 31, Ended December 31,
(In thousands, except 2006 2005 2006 2005
per share (unaudited) (unaudited) (unaudited)
information)
OPERATING REVENUE $131,661 $125,415 $518,890 $460,202
OPERATING EXPENSES
(INCOME):
Salaries, wages and
benefits 37,918 33,971 144,373 126,577
Purchased
transportation 21,478 19,881 84,409 81,897
Fuel and fuel taxes 32,401 31,458 135,079 107,722
Supplies and
maintenance 8,763 7,396 33,155 28,192
Depreciation 11,537 10,447 44,360 38,229
Operating taxes
and licenses 1,979 1,769 7,514 7,051
Insurance and claims 6,581 5,607 21,183 18,914
Communications and
utilities 935 910 3,635 3,398
Gain on disposition
of revenue equipment (1,267) (651) (6,990) (3,943)
Other 2,681 2,638 11,003 9,298
Total operating
expenses 123,006 113,426 477,721 417,335
OPERATING INCOME 8,655 11,989 41,169 42,867
OTHER EXPENSES
(INCOME):
Interest expense 881 671 3,564 2,361
Interest income
and other (245) (506) (1,106) (1,722)
Minority interest 157 150 768 741
793 315 3,226 1,380
INCOME BEFORE INCOME
TAXES 7,862 11,674 37,943 41,487
PROVISION FOR INCOME
TAXES 2,673 4,565 13,425 16,426
NET INCOME $5,189 $7,109 $24,518 $25,061
BASIC EARNINGS PER
COMMON SHARE $0.24 $0.33 $1.13 $1.16
DILUTED EARNINGS PER
COMMON SHARE $0.24 $0.32 $1.12 $1.14
MARTEN TRANSPORT, LTD.
OPERATING REVENUE COMPONENTS
(In thousands)
Dollar Percentage
Change Change
Three Months Three Months Three Months
Ended Ended Ended
December 31, December 31, December 31,
2006 2005 2006 vs. 2005 2006 vs. 2005
Freight revenue $101,491 $101,197 $294 0.3%
Fuel surcharge revenue 17,808 19,139 (1,331) (7.0)
Non-freight revenue 12,362 5,079 7,283 143.4
Operating revenue $131,661 $125,415 $6,246 5.0%
Dollar Percentage
Change Change
Year Year Year
Ended Ended Ended
December 31, December 31, December 31,
2006 2005 2006 vs. 2005 2006 vs. 2005
Freight revenue $402,327 $386,131 $16,196 4.2%
Fuel surcharge revenue 77,265 57,198 20,067 35.1
Non-freight revenue 39,298 16,873 22,425 132.9
Operating revenue $518,890 $460,202 $58,688 12.8%
MARTEN TRANSPORT, LTD.
OPERATING STATISTICS
(Unaudited)
Three Months Year
Ended December 31, Ended December 31,
2006 2005 2006 2005
For period: (1)
Average operating
revenue per total
mile $1.940 $1.849 $1.905 $1.689
Average freight
revenue per total
mile (2) $1.496 $1.492 $1.477 $1.417
Average miles per
tractor(3) 26,683 26,473 108,781 111,823
Average operating
revenue per tractor
per week(3) $3,940 $3,725 $3,974 $3,622
Average freight
revenue per tractor
per week(2) (3) $3,037 $3,006 $3,081 $3,039
Average miles per
trip 942 944 937 947
Non-revenue miles
percentage(4) 7.5% 7.0% 7.5% 7.2%
Total miles -
company-employed
drivers
(in thousands) 56,816 53,607 222,579 206,205
Total miles -
independent
contractors
(in thousands) 11,039 14,213 49,810 66,293
At December 31, 2006,
and December 31, 2005:
Total tractors(3) 2,602 2,618
Average age of
company tractors
(in years) 1.5 1.2
Total trailers 3,774 3,438
Average age of
company trailers
(in years) 2.2 2.9
Ratio of trailers
to tractors(3) 1.5 1.3
Ratio of tractors to
non-driver personnel(3) 5.6 5.7
Three Months Year
Ended December 31, Ended December 31,
(In thousands) 2006 2005 2006 2005
Net cash provided by
operating activities $40,229 $26,933 $85,046 $72,472
Net cash used for
investing activities 39,344 40,146 94,824 88,557
Weighted average shares
outstanding:
Basic 21,761 21,566 21,735 21,518
Diluted 21,953 21,994 21,955 21,962
(1) The statistics for the periods presented exclude tractors and miles
associated with non-freight revenue.
(2) Excludes revenue from fuel surcharges and non-freight revenue.
(3) Includes tractors driven by both company-employed drivers and
independent contractors. Independent contractors provided 365 and 423
tractors as of December 31, 2006, and 2005, respectively.
(4) Represents the percentage of miles for which the company is not
compensated.
SOURCE Marten Transport, Ltd.
