Bad news at Marten: Profits miss expectations, truckload OR plummets

Its corporate OR weakened to 94.3% from 88.6% in the first quarter of 2023. A major contributor to that decline was Marten’s truckload segment, which saw OR fall 930 basis points to 99.5%. 

Truckload is the largest segment by revenue at Marten. Including fuel revenue, which was not significantly different from a year earlier, total Truckload revenue at Marten was $111.6 million, down 7.5% from the year-ago period.

Even though OR at Truckload declined more than that of any other Marten sector, the 7.5% drop in revenue was less than Dedicated, which suffered an 18.8% decline including fuel revenue; intermodal, which dropped 44.1%; and brokerage, down 15.7%. 

The size of the decline in truckload operating income was a whopping 95.1%, down to $489,000 from $10 million a year earlier. By contrast, Dedicated fell 32.3% to a quarterly operating income of $9.3 million, down from $13.7 million. Intermodal posted a small operating loss on a 48.1% drop in revenue to $16 million, while the company’s brokerage unit saw its operating income fall 40% to $2.7 million on a 15.7% drop in revenue to $35.7 million.

Marten does not hold a conference call with analysts. In the prepared statement accompanying the earnings release, Executive Chairman Randolph Marten weighed in on how competitive it wants to be in the pricing wars, which is a major source of discussion in markets today.

The Marten stance? Hold the line. 

“We remain focused on minimizing the freight market’s impact on our operations while investing in and positioning our operations to capitalize on profitable organic growth opportunities, with fair compensation for our premium services, across each of our business operations for what comes next in the freight cycle as the market necessarily recovers from its current recessionary late stages,” Marten said. “To that end, we have not agreed to rate reductions since last August.”

That stance on rates may have contributed to a particularly notable drop in miles driven by its Dedicated segment. It was down to 29 million from 34 million a year ago, while Truckload segment miles driven rose slightly to 39.7 million miles from 38.2 million.

Marten’s stock hit a 52-week low Thursday at $15.87 before the earnings were released. It is down 11.8% in a month, 19.1% in three months and 21.1% in 52 weeks.

Other highlights from the report:

• Marten’s cash position rose dramatically during the quarter. It closed the quarter with $73.3 million in cash, up from $53.2 million at the end of 2023.
• Revenue for the company as a whole  dropped 16.2%, to $249.7 million from $298 million a year earlier.
• Costs fell significantly, though not as much as revenue. They dropped 11.7%, to $237.4 million, a decline of $31.6 million. Of that, approximately $7 million was a decline in fuel expenses. Salaries and wages were down slightly less than $10 million, and purchased transportation dropped $12.3 million. Operating income fell to $12.25 million from $29 million a year earlier.

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