Marten Transport (NASDAQ: MRTN) kicked off the truckload earnings season with a report that showed modest gains in revenue compared to the first quarter of last year, but a significant increase in operating and net income.
In a phone interview with FreightWaves, Tim Kohl, president, and Jim Hinnendael, executive vice president and chief financial officer, said the company had been hit hard by the snow and ice of the Texas/southeast U.S. storm of mid-February.
“We got hit more than anybody else by the snow,” Kohl said. In particular, three key Walmart distribution centers serviced by Marten were shut or restricted for days, resulting in the company seeing an impact on miles driven in a freight market that is otherwise roaring along.
The company’s dedicated division, which would be the first line of transportation servicing those distribution centers, saw its total miles edge up slightly, to just under 32 million miles from 31.5 million miles. But Kohl and Hinnendael said the truckload division would also service those Walmart accounts, and in that sector, total miles driven dropped to 38.2 million from 41 million miles.
Despite the weather-related woes, Marten managed to maintain an operating ratio that was sub-90%, a benchmark number that few pure-play truckload carriers manage to crack.
Given the problems of February, Marten said in its earnings report that much of its bottom-line performance came in March. Marten recorded earnings per share of 22 cents for the quarter, but chairman and CEO Randolph Marten said in the statement that 10 cents of that came in the final month of the quarter.
With the slowdown created by the poor weather, operating revenue for Marten rose just 2%, to $223 million, from $218.6 million in the first quarter of 2020. Much of that fell straight to the bottom line, as operating income rose to just under $24 million from just over $18 million in the corresponding quarter last year, an increase that closely mirrored the rise in revenue.
Income tax payments rose to $6 million from $4.4 million, so that net income climbed to $18 million from $13.7 million, less than the rise in operating revenue.
Meanwhile, total operating expenses declined to just over $199 million from $200.6 million last year.
One of the more striking figures in the quarterly report is that even with driver wages significantly higher in the first quarter of 2021 throughout the industry compared to the corresponding period of 2020, compensation costs were largely flat. Salaries, wages and benefits were about $200,000 higher, at just under $73 million, and purchased transportation was up about $300,000 to $40.7 million.
The compensation figures include payouts made by Marten to drivers who couldn’t move freight due to the weather. In the prepared statement, CEO Marten said the company paid its driver $876,000 in February for “available hours not driven due to the persistent unsafe weather conditions.” That was up from $46,000 a year earlier.
In the phone interview, Kohl also pointed to the company’s insurance costs as a reason for the better bottom-line performance, which declined to $11.4 million from $12.2 million. Supplies and maintenance improved also, down to $11 million from $12.2 million.
The overall operating ratio at Marten strengthened by almost 500 basis points from the first quarter of 2020, improving to 89.2% for the company overall from 91.8%. The improvement in the truckload sector was greater, coming in at 88% from 92.9% last year. Dedicated was flat at 88.6%, while intermodal moved to 93.4% from 94.5%.
Marten’s OR was slightly weaker than in the fourth quarter of 2020, which was described by the company at that time as record-breaking. The full-company OR for 4Q 2020 was 88.8%, but the truckload sector’s OR in the fourth quarter of last year was 88.3%, slightly weaker than in the first quarter of 2021.
The impact of stronger freight rates through the industry can be seen in the average revenue per tractor per week in the truckload segment, which increased to $4,057 from $3,814. Dedicated’s revenue, which would be affected by lower contract rates and by the winter storms that Kohl referred to, dropped to $3,214 from $3,304.
Where the storms’ impact is particularly visible is in total miles driven. In the truckload segment, miles driven fell to 38.2 million from 41 million miles. Dedicated was up slightly to just under 32 million miles from 31.5 million miles.
Intermodal volume took a significant hit, dropping to 7,982 from 9,737 loads. But its total revenue declined far less, slipping to $22 million from $23.6 million.
One other significant number in the earnings report: the balance sheet. Marten exited the quarter with $88.5 million in cash, up significantly from the $66.1 million at the end of 2020.