Attached files

file filename
EX-31.2 - EXHIBIT 31.2 - MARTEN TRANSPORT LTDex31-2.htm
EX-31.1 - EXHIBIT 31.1 - MARTEN TRANSPORT LTDex31-1.htm
EX-32.1 - EXHIBIT 32.1 - MARTEN TRANSPORT LTDex32-1.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

Form 10-Q

 

Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the Quarter ended September 30, 2015

 

Commission File Number 0-15010

 

MARTEN TRANSPORT, LTD.

(Exact name of registrant as specified in its charter)

  

Delaware

 

39-1140809

(State of incorporation)

 

(I.R.S. employer identification no.)

  

129 Marten Street, Mondovi, Wisconsin 54755

(Address of principal executive offices)

 

715-926-4216

(Registrant’s telephone number)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒   No

 

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ☒   No

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐   Accelerated filer ☒   Smaller reporting company ☐   Non-accelerated filer ☐ (Do not check if a smaller reporting company)

 

Indicate by check mark whether the Registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐   No

 

The number of shares outstanding of the Registrant’s Common Stock, par value $.01 per share, was 33,623,995 as of October 26, 2015.

 

 

 
 

 

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

MARTEN TRANSPORT, LTD.

CONSOLIDATED CONDENSED BALANCE SHEETS 

(Unaudited)

 

   

September 30,

   

December 31,

 

(In thousands, except share information)

 

2015

   

2014

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 145     $ 123  

Receivables:

               

Trade, net

    70,829       72,263  

Other

    4,045       17,740  

Prepaid expenses and other

    15,803       16,860  

Deferred income taxes

    3,037       3,199  

Total current assets

    93,859       110,185  

Property and equipment:

               

Revenue equipment, buildings and land, office equipment and other

    724,712       645,972  

Accumulated depreciation

    (192,144 )     (180,223 )

Net property and equipment

    532,568       465,749  

Other assets

    3,572       3,726  

Total assets

  $ 629,999     $ 579,660  
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Checks issued in excess of cash balances

  $ 687     $ 745  

Accounts payable and accrued liabilities

    49,536       29,775  

Insurance and claims accruals

    14,832       13,998  

Total current liabilities

    65,055       44,518  

Long-term debt

    26,280       24,373  

Deferred income taxes

    122,298       122,843  

Total liabilities

    213,633       191,734  

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; 96,000,000 shares authorized; 33,623,395 shares at September 30, 2015, and 33,418,829 shares at December 31, 2014, issued and outstanding

    336       334  

Additional paid-in capital

    91,371       87,370  

Retained earnings

    324,659       300,222  

Total stockholders’ equity

    416,366       387,926  

Total liabilities and stockholders’ equity

  $ 629,999     $ 579,660  

 

The accompanying notes are an integral part of these consolidated condensed financial statements.

 

 

 
1

 

 

MARTEN TRANSPORT, LTD.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

(In thousands, except per share information)

 

Three Months

Ended September 30,

   

Nine Months

Ended September 30,

 
   

2015

   

2014

   

2015

   

2014

 

Operating revenue

  $ 171,346     $ 171,550     $ 496,221     $ 499,382  
                                 

Operating expenses (income):

                               

Salaries, wages and benefits

    55,129       46,435       154,901       134,834  

Purchased transportation

    30,756       32,914       88,343       91,783  

Fuel and fuel taxes

    26,556       39,398       81,313       119,718  

Supplies and maintenance

    11,351       10,273       32,735       31,059  

Depreciation

    19,331       17,253       55,469       50,489  

Operating taxes and licenses

    2,295       1,837       6,185       5,278  

Insurance and claims

    7,105       6,205       21,973       18,993  

Communications and utilities

    1,431       1,507       4,347       4,251  

Gain on disposition of revenue equipment

    (1,895 )     (1,419 )     (4,843 )     (3,360 )

Gain on disposition of facility

    -       -       (3,712 )     -  

Other

    4,933       4,105       13,684       11,723  
                                 

Total operating expenses

    156,992       158,508       450,395       464,768  
                                 

Operating income

    14,354       13,042       45,826       34,614  
                                 

Other

    126       (226 )     147       (936 )
                                 

Income before income taxes

    14,228       13,268       45,679       35,550  
                                 

Provision for income taxes

    5,818       5,616       18,724       14,685  
                                 

Net income

  $ 8,410     $ 7,652     $ 26,955     $ 20,865  
                                 

Basic earnings per common share

  $ 0.25     $ 0.23     $ 0.80     $ 0.63  
                                 

Diluted earnings per common share

  $ 0.25     $ 0.23     $ 0.80     $ 0.62  
                                 

Dividends declared per common share

  $ 0.025     $ 0.025     $ 0.075     $ 0.075  

 

The accompanying notes are an integral part of these consolidated condensed financial statements.

 

 

 
2

 

  

MARTEN TRANSPORT, LTD.

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

   

Common Stock

   

Additional

Paid-In

   

Retained

   

Total Stock-

holders’

 
(In thousands)   Shares     Amount     Capital     Earnings     Equity  
                                         

Balance at December 31, 2013

    33,301     $ 333     $ 85,077     $ 273,727     $ 359,137  

Net income

    -       -       -       20,865       20,865  

Issuance of common stock from share-based payment arrangement exercises and vesting of performance unit awards

    105       1       1,054       -       1,055  

Tax benefits from share-based payment arrangement exercises

    -       -       141       -       141  

Share-based payment arrangement compensation expense

    -       -       720       -       720  

Dividends on common stock

    -       -       -       (2,504 )     (2,504 )

Balance at September 30, 2014

    33,406       334       86,992       292,088       379,414  

Net income

    -       -       -       8,969       8,969  

Issuance of common stock from share-based payment arrangement exercises and vesting of performance unit awards

    13       -       159       -       159  

Tax benefits from share-based payment arrangement exercises

    -       -       18       -       18  

Share-based payment arrangement compensation expense

    -       -       201       -       201  

Dividends on common stock

    -       -       -       (835 )     (835 )

Balance at December 31, 2014

    33,419       334       87,370       300,222       387,926  

Net income

    -       -       -       26,955       26,955  

Issuance of common stock from share-based payment arrangement exercises and vesting of performance unit awards

    204       2       2,361       -       2,363  

Tax benefits from share-based payment arrangement exercises

    -       -       451       -       451  

Share-based payment arrangement compensation expense

    -       -       1,189       -       1,189  

Dividends on common stock

    -       -       -       (2,518 )     (2,518 )

Balance at September 30, 2015

    33,623     $ 336     $ 91,371     $ 324,659     $ 416,366  

 

The accompanying notes are an integral part of these consolidated condensed financial statements.

 

 

 
3

 

 

MARTEN TRANSPORT, LTD.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Nine Months

Ended September 30,

 
(In thousands)  

2015

    2014  
Cash flows provided by operating activities:                
Operations:                

Net income

  $ 26,955     $ 20,865  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation

    55,469       50,489  

Gain on disposition of revenue equipment

    (4,843 )     (3,360 )

Gain on disposition of facility

    (3,712 )     -  

Deferred income taxes

    (383 )     (3,795 )

Tax benefits from share-based payment arrangement exercises

    451       141  

Excess tax benefits from share-based payment arrangement exercises

    (432 )     (97 )

Share-based payment arrangement compensation expense

    1,189       720  

Equity in earnings from affiliate

    184       (453 )

Changes in other current operating items:

               

Receivables

    15,300       (3,825 )

Prepaid expenses and other

    1,057       1,793  

Accounts payable and accrued liabilities

    9,353       (3,450 )

Insurance and claims accruals

    834       (645 )

Net cash provided by operating activities

    101,422       58,383  
                 
Cash flows used for investing activities:                

    Revenue equipment additions

    (139,788 )     (102,752 )

Proceeds from revenue equipment dispositions

    43,451       35,429  

Buildings and land, office equipment and other additions

    (11,784 )     (27,870 )

Proceeds from buildings and land, office equipment and other dispositions

    4,625       17  

Other

    (30 )     (27 )

Net cash used for investing activities

    (103,526 )     (95,203 )

Cash flows provided by financing activities:

               

Borrowings under credit facility and long-term debt

    94,437       102,912  

Repayment of borrowings under credit facility and long-term debt

    (92,530 )     (78,231 )

Dividends on common stock

    (2,518 )     (2,504 )

Issuance of common stock from share-based payment arrangement exercises

    2,363       1,055  

Excess tax benefits from share-based payment arrangement exercises

    432       97  

Change in checks issued in excess of cash balances

    (58 )     28  

Net cash provided by financing activities

    2,126       23,357  

Net change in cash and cash equivalents

    22       (13,463 )

Cash and cash equivalents:

               

Beginning of period

    123       13,650  

End of period

  $ 145     $ 187  
                 

Supplemental non-cash disclosure:

               

Change in property and equipment not yet paid

  $ 10,237     $ 4,264  
                 

Supplemental disclosure of cash flow information:

               

Cash (received) paid for:

               

Income taxes

  $ (4,451 )   $ 20,001  

Interest

  $ 136     $ 114  

 

The accompanying notes are an integral part of these consolidated condensed financial statements.

 

 

 
4

 

 

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2015

(Unaudited)

 

(1) Consolidated Financial Statements

 

The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements, and therefore do not include all information and disclosures required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, such statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present our consolidated financial condition, results of operations and cash flows for the interim periods presented. The results of operations for any interim period do not necessarily indicate the results for the full year. The unaudited interim consolidated condensed financial statements should be read with reference to the consolidated financial statements and notes to consolidated financial statements in our 2014 Annual Report on Form 10-K.

 

(2) Earnings per Common Share

 

Basic and diluted earnings per common share were computed as follows: 

     

   

Three Months

Ended September 30,

   

Nine Months

Ended September 30,

 

(In thousands, except per share amounts)

 

2015

    2014    

2015

    2014  

Numerator:

                               

Net income

  $ 8,410     $ 7,652     $ 26,955     $ 20,865  

Denominator:

                               

Basic earnings per common share - weighted-average shares

    33,622       33,403       33,555       33,371  

Effect of dilutive stock options

    224       289       261       301  

Diluted earnings per common share - weighted-average shares and assumed conversions

    33,846       33,692       33,816       33,672  
                                 

Basic earnings per common share

  $ 0.25     $ 0.23     $ 0.80     $ 0.63  

Diluted earnings per common share

  $ 0.25     $ 0.23     $ 0.80     $ 0.62  

 

Options totaling 324,600 and 311,200 equivalent shares for the three-month and nine-month periods ended September 30, 2015, respectively, and 171,500 equivalent shares for each of the three-month and nine-month periods ended September 30, 2014, were outstanding but were not included in the calculation of diluted earnings per share because including the options in the denominator would be antidilutive, or decrease the number of weighted-average shares, due to their exercise prices exceeding the average market price of the common shares, or because inclusion of average unrecognized compensation expense in the calculation would cause the options to be antidilutive.

 

Unvested performance unit awards totaling 67,595 equivalent shares for each of the three-month and nine-month periods ended September 30, 2015, and 39,885 equivalent shares for each of the three-month and nine-month periods ended September 30, 2014, were considered outstanding but were not included in the calculation of diluted earnings per share because inclusion of average unrecognized compensation expense in the calculation would cause the performance units to be antidilutive.

  

 

 
5

 

   

(3) Long-Term Debt

 

We maintain a credit agreement that provides for an unsecured committed credit facility which matures in December 2019. The aggregate principal amount of the credit facility of $50.0 million may be increased at our option, subject to completion of signed amendments with the lender, up to a maximum aggregate principal amount of $75.0 million. At September 30, 2015, there was an outstanding principal balance of $26.3 million on the credit facility. As of that date, we had outstanding standby letters of credit of $10.4 million and remaining borrowing availability of $13.3 million. This facility bears interest at a variable rate based on the London Interbank Offered Rate or the lender’s Prime Rate, in each case plus/minus applicable margins. The weighted average interest rate for the facility was 0.90% at September 30, 2015.

 

(4) Related Party Transactions

 

We purchase fuel and obtain tires and related services from Bauer Built, Inc., or BBI. Jerry M. Bauer, one of our directors, is the chairman of the board and chief executive officer and the principal stockholder of BBI. We paid BBI $274,000 in the first nine months of 2015 and $413,000 in the first nine months of 2014 for fuel and tire services. In addition, we paid $1.1 million in each of the first nine months of 2015 and 2014 to tire manufacturers for tires that were provided by BBI. BBI received commissions from the tire manufacturers related to these purchases.

 

We provide transportation services to MW Logistics, LLC (MWL) as described in Note 9.

 

(5) Amendment to Amended and Restated Certificate of Incorporation

 

In May 2015, our stockholders approved an amendment to our Amended and Restated Certificate of Incorporation increasing the authorized number of shares of common stock, $.01 par value per share, from 48,000,000 shares to 96,000,000 shares.

 

(6) Dividends

 

In 2010, we announced that our Board of Directors approved a regular cash dividend program to our stockholders, subject to approval each quarter. Quarterly cash dividends of $0.025 per share of common stock were declared in each of the first three quarters of 2015 and 2014.

 

(7) 2015 Equity Incentive Plan

 

In May 2015, our stockholders approved our 2015 Equity Incentive Plan (the “2015 Plan”). Our Board of Directors adopted the 2015 Plan in March 2015. Under the 2015 Plan, all of our employees and any subsidiary employees, as well as all of our non-employee directors, may be granted stock-based awards, including non-statutory stock options and performance unit awards, of which 211,500 shares have been awarded as of September 30, 2015. The maximum number of shares of common stock available for issuance under the 2015 Plan is 800,000 shares. The 2015 Plan replaces our 2005 Stock Incentive Plan (the “2005 Plan”), which expired by its terms in May 2015. Any awards issued under the 2005 Plan that remain outstanding will continue according to their terms.

 

(8) Accounting for Share-based Payment Arrangement Compensation

 

We account for share-based payment arrangements in accordance with Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, 718, Compensation – Stock Compensation. During the first nine months of 2015, there were no significant changes to the structure of our stock-based award plans. Pre-tax compensation expense related to stock options and performance unit awards recorded in the first nine months of 2015 and 2014 was $1.2 million and $720,000, respectively. See Note 11 to our consolidated financial statements in our 2014 Annual Report on Form 10-K for a detailed description of stock-based awards.

  

 

 
6

 

   

(9) Equity Investment

 

We own a 45% equity interest in MWL, a third-party provider of logistics services to the transportation industry. A non-related party owns the other 55% equity interest in MWL. We received $4.5 million and $5.7 million of our revenue for loads transported by our tractors and arranged by MWL in the nine-month periods ended September 30, 2015 and September 30, 2014, respectively. As of September 30, 2015, we also had a trade receivable in the amount of $113,000 from MWL and an accrued liability of $3.9 million to MWL for the excess of payments by MWL’s customers into our lockbox account over the amounts drawn on the account by MWL.

 

(10) Fair Value of Financial Instruments

 

The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturity of these instruments. The carrying amount of our long-term debt approximates fair value as its interest rate is based upon prevailing market rates.

 

(11) Commitments and Contingencies

 

We are committed to purchase $28.2 million of new revenue equipment in the remainder of 2015; building construction expenditures of $692,000 in the remainder of 2015; and operating lease obligation expenditures totaling $549,000 through 2018.

 

We self-insure, in part, for losses relating to workers’ compensation, auto liability, general liability, cargo and property damage claims, along with employees’ health insurance with varying risk retention levels. We maintain insurance coverage for per-incident and total losses in excess of these risk retention levels in amounts we consider adequate based upon historical experience and our ongoing review, and reserve currently for the estimated cost of the uninsured portion of pending claims.

 

We are also involved in other legal actions that arise in the ordinary course of business. In the opinion of management, based upon present knowledge of the facts, it is remote that the ultimate outcome of any such legal actions will have a material adverse effect upon our long-term financial position or results of operations.

 

(12) Business Segments

 

We have six current operating segments that have been aggregated into four reporting segments (Truckload, Dedicated, Intermodal and Brokerage) for financial reporting purposes. Information for the first nine months of 2014, which was previously aggregated into two reporting segments, has been shown in the same four segments for comparison purposes. We believe reporting our results in this manner will provide better visibility and understanding into our business and reflect our operational structure.

 

The primary source of our operating revenue is provided by our Truckload segment through a combination of regional short-haul and medium-to-long-haul full-load transportation services. We transport food and other consumer packaged goods that require a temperature-controlled or insulated environment across the United States and into and out of Mexico and Canada.

 

Our Dedicated segment provides customized transportation solutions tailored to meet individual customers’ requirements, utilizing temperature-controlled trailers, dry vans and other specialized equipment within the United States. Our customer contracts range from three to five years and are subject to annual rate reviews.

 

Our Intermodal segment transports our customers’ freight within the United States primarily utilizing our temperature-controlled trailers and also, through March 2015, our dry containers on railroad flatcars for portions of trips, with the balance of the trips using our tractors or, to a lesser extent, contracted carriers.

 

Our Brokerage segment arranges for smaller third-party carriers to transport freight for our customers in temperature-controlled trailers and dry vans within the United States and into and out of Mexico while we retain the billing, collection and customer management responsibilities.

 

 

 
7

 

   

The following table sets forth for the periods indicated our operating revenue and operating income by segment. We do not prepare separate balance sheets by segment and, as a result, assets are not separately identifiable by segment.

 

   

Three Months

   

Nine Months

 
   

Ended September 30,

   

Ended September 30,

 

(Dollars in thousands)

 

2015

   

2014

   

2015

   

2014

 

Operating revenue:

                               

Truckload revenue, net of fuel surcharge revenue

  $ 86,594     $ 89,515     $ 262,227     $ 266,633  

Truckload fuel surcharge revenue

    11,777       21,821       40,296       69,232  

Total Truckload revenue

    98,371       111,336       302,523       335,865  
                                 

Dedicated revenue, net of fuel surcharge revenue

    31,477       15,756       73,941       38,329  

Dedicated fuel surcharge revenue

    2,937       3,995       8,331       10,062  

Total Dedicated revenue

    34,414       19,751       82,272       48,391  
                                 

Intermodal revenue, net of fuel surcharge revenue

    17,158       19,229       50,278       57,989  

Intermodal fuel surcharge revenue

    2,673       5,793       8,991       16,929  

Total Intermodal revenue

    19,831       25,022       59,269       74,918  
                                 

Brokerage revenue

    18,730       15,441       52,157       40,208  
                                 

Total operating revenue

  $ 171,346     $ 171,550     $ 496,221     $ 499,382  
                                 

Operating income:

                               

Truckload

  $ 8,204     $ 10,455     $ 27,614     $ 27,043  

Dedicated

    3,929       2,046       8,496       4,801  

Intermodal

    1,152       (151 )     3,372       815  

Brokerage

    1,069       692       2,632       1,955  

Total operating income before gain on disposition of facility

    14,354       13,042       42,114       34,614  

Gain on disposition of facility

    -       -       3,712       -  

Total operating income

  $ 14,354     $ 13,042     $ 45,826     $ 34,614  

 

Truckload segment depreciation expense was $13.3 million and $13.2 million, Dedicated segment depreciation expense was $4.3 million and $2.3 million, Intermodal segment depreciation expense was $1.4 million and $1.6 million, and Brokerage segment depreciation expense was $295,000 and $247,000, in the three-month periods ended September 30, 2015 and September 30, 2014, respectively. Truckload segment depreciation expense was $40.0 million and $39.7 million, Dedicated segment depreciation expense was $10.4 million and $5.6 million, Intermodal segment depreciation expense was $4.3 million and $4.5 million, and Brokerage segment depreciation expense was $854,000 and $711,000, in the nine-month periods ended September 30, 2015 and September 30, 2014, respectively.

 

(13) Use of Estimates

 

We must make estimates and assumptions to prepare the consolidated condensed financial statements in conformity with U.S. generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities in the consolidated condensed financial statements and the reported amount of revenue and expenses during the reporting period. These estimates are primarily related to insurance and claims accruals and depreciation. Ultimate results could differ from these estimates.

  

 

 
8

 

     

(14) Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard, which is effective for the first quarter of 2018, will replace most existing revenue recognition guidance required by U.S. generally accepted accounting principles. The adoption of this standard is not expected to have a significant impact on our consolidated condensed balance sheets, statements of operations or statements of cash flows.

 

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following discussion and analysis of our financial condition and results of operations should be read together with the selected consolidated financial data and our consolidated condensed financial statements and the related notes appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those included in our Form 10-K, Part 1, Item 1A for the year ended December 31, 2014. We do not assume, and specifically disclaim, any obligation to update any forward-looking statement contained in this report.

 

Overview

 

The primary source of our operating revenue is provided by our Truckload segment through a combination of regional short-haul and medium-to-long-haul full-load transportation services. We transport food and other consumer packaged goods that require a temperature-controlled or insulated environment across the United States and into and out of Mexico and Canada.

 

Our Dedicated segment provides customized transportation solutions tailored to meet individual customers’ requirements, utilizing temperature-controlled trailers, dry vans and other specialized equipment within the United States. Our customer contracts range from three to five years and are subject to annual rate reviews.

 

Generally, we are paid by the mile for our Truckload and Dedicated services. We also derive Truckload and Dedicated revenue from fuel surcharges, loading and unloading activities, equipment detention and other ancillary services. The main factors that affect our Truckload and Dedicated revenue are the rate per mile we receive from our customers, the percentage of miles for which we are compensated, the number of miles we generate with our equipment and changes in fuel prices. We monitor our revenue production primarily through average Truckload and Dedicated revenue, net of fuel surcharges, per tractor per week. We also analyze our average Truckload and Dedicated revenue, net of fuel surcharges, per total mile, non-revenue miles percentage, the miles per tractor we generate, our fuel surcharge revenue, our accessorial revenue and our other sources of operating revenue.

 

Our Intermodal segment transports our customers’ freight within the United States primarily utilizing our temperature-controlled trailers and also, through March 2015, our dry containers on railroad flatcars for portions of trips, with the balance of the trips using our tractors or, to a lesser extent, contracted carriers. The main factors that affect our Intermodal revenue are the rate per mile and other charges we receive from our customers.

 

Our Brokerage segment arranges for smaller third-party carriers to transport freight for our customers in temperature-controlled trailers and dry vans within the United States and into and out of Mexico while we retain the billing, collection and customer management responsibilities. The main factors that affect our Brokerage revenue are the rate per mile and other charges we receive from our customers.

 

In addition to the factors discussed above, our operating revenue is also affected by, among other things, the United States economy, inventory levels, the level of truck and rail capacity in the transportation market, a contracting driver market, severe weather conditions and specific customer demand.

  

 

 
9

 

  

Our operating revenue decreased $3.2 million, or 0.6%, in the first nine months of 2015. Our operating revenue, net of fuel surcharges, increased $35.4 million, or 8.8%, compared with the first nine months of 2014. Truckload segment revenue, net of fuel surcharges, decreased 1.7% from the 2014 period. Dedicated segment revenue, net of fuel surcharges, increased 92.9% primarily due to an increase in our average fleet size of 85.2% from the 2014 period. Intermodal segment revenue, net of fuel surcharges, decreased 13.3% due to the disposal in March 2015 of the overhead-intensive containers that were used in our intermodal operations, partially offset by increased volume with our temperature-controlled intermodal trailer service. Brokerage revenue increased 29.7% in the first nine months of 2015 due to an increase in volume. Fuel surcharge revenue decreased to $57.6 million in the first nine months of 2015 from $96.2 million in the first nine months of 2014, which was due to lower fuel prices.

 

Our profitability is impacted by the variable costs of transporting freight for our customers, fixed costs, and expenses containing both fixed and variable components. The variable costs include fuel expense, driver-related expenses, such as wages, benefits, training, and recruitment, and independent contractor costs, which are recorded under purchased transportation. Expenses that have both fixed and variable components include maintenance and tire expense and our cost of insurance and claims. These expenses generally vary with the miles we travel, but also have a controllable component based on safety, fleet age, efficiency and other factors. Our main fixed costs relate to the acquisition and subsequent depreciation of long-term assets, such as revenue equipment and operating terminals. We expect our annual cost of tractor and trailer ownership will increase in future periods as a result of higher prices of new equipment, along with any increases in fleet size. Although certain factors affecting our expenses are beyond our control, we monitor them closely and attempt to anticipate changes in these factors in managing our business. For example, fuel prices have significantly fluctuated over the past several years. We manage our exposure to changes in fuel prices primarily through fuel surcharge programs with our customers, as well as through volume fuel purchasing arrangements with national fuel centers and bulk purchases of fuel at our terminals. To help further reduce fuel expense, we have installed and tightly manage the use of auxiliary power units in our tractors to provide climate control and electrical power for our drivers without idling the tractor engine, and also have improved the fuel usage in the temperature-control units on our trailers. For our Intermodal and Brokerage segments, our profitability is impacted by the percentage of revenue we pay to providers for the transportation services we arrange, which is included within purchased transportation in our consolidated condensed statements of operations.

  

Our operating expenses as a percentage of operating revenue, or “operating ratio,” improved to 90.8% in the first nine months of 2015 from 93.1% in the first nine months of 2014. Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 89.6% in the first nine months of 2015 from 91.4% in the first nine months of 2014. Our operating ratio for the first nine months of 2015, net of a gain on the disposition of a facility of $3.7 million, improved to 91.5% and, net of both fuel surcharges and the facility disposition gain, improved to 90.4%. Our net income increased by 29.2% to $27.0 million, or $0.80 per diluted share, in the first nine months of 2015 from $20.9 million, or $0.62 per diluted share, in the first nine months of 2014. The increase in profitability in the first nine months of 2015 was primarily driven by the $0.06 per diluted share impact of the facility disposition gain, the disposal in March 2015 of the overhead-intensive containers that were used in a portion of our intermodal operations, an improvement in net fuel expense with the lower fuel prices, the impact that the severe weather conditions had on the first quarter of 2014 on both freight volumes and operating costs, and costs associated with rail service interruption and delay issues in 2014 that constrained our intermodal operations, partially offset by a soft freight market in the second and third quarters of 2015 and an increase in insurance and claims in 2015.

 

Our business requires substantial, ongoing capital investments, particularly for new tractors and trailers. At September 30, 2015, we had $542,000 of checks issued in excess of cash balances net of cash and cash equivalents, $26.3 million of long-term debt outstanding and $416.4 million in stockholders’ equity. In the first nine months of 2015, net cash flows provided by operating activities of $101.4 million and borrowings under our credit facility of $1.9 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $96.3 million, to partially construct regional operating facilities in the amount of $7.7 million and to pay cash dividends of $2.5 million. We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $26 million for the remainder of 2015. We believe our sources of liquidity are adequate to meet our current and anticipated needs for at least the next twelve months. Based upon anticipated cash flows, existing cash and cash equivalents balances, current borrowing availability and other sources of financing we expect to be available to us, we do not anticipate any significant liquidity constraints in the foreseeable future.

  

 

 
10

 

    

Our business strategy encompasses a multifaceted set of transportation service solutions, primarily regional Truckload temperature-controlled operations along with Dedicated, Intermodal and Brokerage services, with a diverse customer base that gains value from and expands each of these operating segments. We believe that we are well-positioned regardless of the economic environment with the services we provide combined with our competitive position, cost control emphasis, modern fleet and strong balance sheet.

  

This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes discussions of operating revenue, net of fuel surcharge revenue; Truckload, Dedicated and Intermodal revenue, net of fuel surcharge revenue; operating expenses as a percentage of operating revenue, each net of fuel surcharge revenue, the facility disposition gain, and the sum of both amounts; and net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads). We provide these additional disclosures because management believes these measures provide a more consistent basis for comparing results of operations from period to period. These financial measures in this report have not been determined in accordance with U.S. generally accepted accounting principles (GAAP). Pursuant to Item 10(e) of Regulation S-K, we have included the amounts necessary to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures of operating revenue, operating expenses divided by operating revenue, and fuel and fuel taxes.

   

Results of Operations

 

The following table sets forth for the periods indicated certain operating statistics regarding our revenue and operations:

 

   

Three Months

   

Nine Months

 
   

Ended September 30,

   

Ended September 30,

 
   

2015

   

2014

   

2015

   

2014

 

Truckload Segment:

                               

Revenue (in thousands)

  $ 98,371     $ 111,336     $ 302,523     $ 335,865  

Average revenue, net of fuel surcharges, per tractor per week(1)

  $ 3,492     $ 3,611     $ 3,573     $ 3,591  

Average tractors(1)

    1,887       1,886       1,882       1,904  

Average miles per trip

    643       674       675       678  

Total miles (in thousands)

    45,811       49,067       141,170       149,159  
                                 

Dedicated Segment:

                               

Revenue (in thousands)

  $ 34,414     $ 19,751     $ 82,272     $ 48,391  

Average revenue, net of fuel surcharges, per tractor per week(1)

  $ 3,416     $ 3,267     $ 3,446     $ 3,305  

Average tractors(1)

    701       367       550       297  

Average miles per trip

    341       327       358       332  

Total miles (in thousands)

    16,533       8,786       39,882       21,310  
                                 

Intermodal Segment:

                               

Revenue (in thousands)

  $ 19,831     $ 25,022     $ 59,269     $ 74,918  

Loads

    9,531       11,677       27,765       34,232  

Average tractors

    86       116       91       112  
                                 

Brokerage Segment:

                               

Revenue (in thousands)

  $ 18,730     $ 15,441     $ 52,157     $ 40,208  

Loads

    13,208       9,679       34,832       25,998  

 

(1)

Includes tractors driven by both company-employed drivers and independent contractors. Independent contractors provided 64 and 57 tractors as of September 30, 2015 and 2014, respectively.

 

 

 
11

 

 

Comparison of Three Months Ended September 30, 2015 to Three Months Ended September 30, 2014

 

The following table sets forth for the periods indicated our operating revenue, operating income and operating ratio by segment, along with the change for each component:

 

                   

Dollar

   

Percentage

 
                   

Change

   

Change

 
   

Three Months

Ended

   

Three Months

Ended

   

Three Months

Ended

 
   

September 30,

   

September 30,

   

September 30,

 

(Dollars in thousands)

 

2015

   

2014

   

2015 vs. 2014

   

2015 vs. 2014

 

Operating revenue:

                               

Truckload revenue, net of fuel surcharge revenue

  $ 86,594     $ 89,515     $ (2,921 )     (3.3 )%

Truckload fuel surcharge revenue

    11,777       21,821       (10,044 )     (46.0 )

Total Truckload revenue

    98,371       111,336       (12,965 )     (11.6 )
                                 

Dedicated revenue, net of fuel surcharge revenue

    31,477       15,756       15,721       99.8  

Dedicated fuel surcharge revenue

    2,937       3,995       (1,058 )     (26.5 )

Total Dedicated revenue

    34,414       19,751       14,663       74.2  
                                 

Intermodal revenue, net of fuel surcharge revenue

    17,158       19,229       (2,071 )     (10.8 )

Intermodal fuel surcharge revenue

    2,673       5,793       (3,120 )     (53.9 )

Total Intermodal revenue

    19,831       25,022       (5,191 )     (20.7 )
                                 

Brokerage revenue

    18,730       15,441       3,289       21.3  
                                 

Total operating revenue

  $ 171,346     $ 171,550     $ (204 )     (0.1 )%
                                 

Operating income:

                               

Truckload

  $ 8,204     $ 10,455     $ (2,251 )     (21.5 )%

Dedicated

    3,929       2,046       1,883       92.0  

Intermodal

    1,152       (151 )     1,303    

N/A

 

Brokerage

    1,069       692       377       54.5  

Total operating income

  $ 14,354     $ 13,042     $ 1,312       10.1 %
                                 

Operating ratio(1):

                               

Truckload

    91.7 %     90.6 %                

Dedicated

    88.6       89.6                  

Intermodal

    94.2       100.6                  

Brokerage

    94.3       95.5                  

Consolidated operating ratio

    91.6 %     92.4 %                

 

(1)

Represents operating expenses as a percentage of operating revenue.

 

Our operating revenue decreased $204,000, or 0.1%, to $171.3 million in the 2015 period from $171.6 million in the 2014 period. Our operating revenue, net of fuel surcharges, increased $14.0 million, or 10.0%, to $154.0 million in the 2015 period from $139.9 million in the 2014 period. This increase was primarily due to a $15.7 million increase in Dedicated revenue, net of fuel surcharges, and a $3.3 million increase in Brokerage revenue, partially offset by a $2.9 million decrease in Truckload revenue, net of fuel surcharges, and a $2.1 million decrease in Intermodal revenue, net of fuel surcharges. Fuel surcharge revenue decreased to $17.4 million in the 2015 period from $31.6 million in the 2014 period, which was due to lower fuel prices.

 

 

 
12

 

 

Truckload segment revenue decreased $13.0 million, or 11.6%, to $98.4 million in the 2015 period from $111.3 million in the 2014 period. Truckload segment revenue, net of fuel surcharges, decreased to $86.6 million in the 2015 period from $89.5 million in the 2014 period. The increase in the operating ratio in the 2015 period was primarily due to a decrease in our average revenue per tractor within a soft freight market and an increase in insurance and claims, partially offset by an improvement in our net fuel expense with the lower fuel prices.

 

Dedicated segment revenue increased $14.7 million, or 74.2%, to $34.4 million in the 2015 period from $19.8 million in the 2014 period. Dedicated segment revenue, net of fuel surcharges, increased 99.8% primarily due to an increase in our average fleet size of 91.0% driven by a significant increase in our number of Dedicated contracts with customers. The improvement in the operating ratio in the 2015 period was primarily due to an increase in our average revenue per tractor.

 

Intermodal segment revenue decreased $5.2 million, or 20.7%, to $19.8 million in the 2015 period from $25.0 million in the 2014 period. Intermodal segment revenue, net of fuel surcharges, decreased 10.8% due to the disposal in March 2015 of the dry containers that were used in a portion of our intermodal operations, partially offset by increased volume with our temperature-controlled intermodal trailer service. The improvement in the operating ratio in the 2015 period was primarily due to costs associated with rail service interruption and delay issues in the 2014 period that constrained our intermodal operations, the disposal of our dry container service, which produced a higher operating ratio than our temperature-controlled trailer service, and rate increases beginning in the fourth quarter of 2014.

 

Brokerage segment revenue increased $3.3 million, or 21.3%, to $18.7 million in the 2015 period from $15.4 million in the 2014 period, primarily due to an increase in volume. The improvement in the operating ratio in the 2015 period was primarily due to a decrease in the payments to carriers for transportation services which we arranged as a percentage of our Brokerage revenue.

 

 
13

 

 

The following table sets forth for the periods indicated the dollar and percentage increase or decrease of the items in our unaudited consolidated condensed statements of operations, and those items as a percentage of operating revenue:

 

   

Dollar

Change

   

Percentage

Change

   

Percentage of

Operating Revenue

 
   

Three Months

Ended

September 30,

   

Three Months

Ended

September 30,

   

Three Months

Ended

September 30,

 

(Dollars in thousands)

 

2015 vs. 2014

   

2015 vs. 2014

   

2015

   

2014

 
                                 

Operating revenue

  $ (204

)

    (0.1

)%

    100.0

%

    100.0

%

Operating expenses (income):

                               

Salaries, wages and benefits

    8,694       18.7       32.2       27.1  

Purchased transportation

    (2,158

)

    (6.6

)

    17.9       19.2  

Fuel and fuel taxes

    (12,842

)

    (32.6

)

    15.5       23.0  

Supplies and maintenance

    1,078       10.5       6.6       6.0  

Depreciation

    2,078       12.0       11.3       10.1  

Operating taxes and licenses

    458       24.9       1.3       1.1  

Insurance and claims

    900       14.5       4.1       3.6  

Communications and utilities

    (76

)

    (5.0

)

    0.8       0.9  

Gain on disposition of revenue equipment

    (476

)

    (33.5

)

    (1.1

)

    (0.8

)

Other

    828       20.2       2.9       2.4  

Total operating expenses

    (1,516

)

    (1.0

)

    91.6       92.4  

Operating income

    1,312       10.1       8.4       7.6  

Other

    352       155.8       0.1       (0.1

)

Income before income taxes

    960       7.2       8.3       7.7  

Provision for income taxes

    202       3.6       3.4       3.3  

Net income

  $ 758       9.9

%

    4.9

%

    4.5

%

   

Salaries, wages and benefits consist of compensation for our employees, including both driver and non-driver employees, employees’ health insurance, 401(k) plan contributions and other fringe benefits. These expenses vary depending upon the size of our Truckload, Dedicated and Intermodal tractor fleets, the ratio of company drivers to independent contractors, our efficiency, our experience with employees’ health insurance claims, changes in health care premiums and other factors. The increase in salaries, wages and benefits from the 2014 period resulted primarily from increases to several components of the amount paid to company drivers and an increase in employees’ health insurance due to an increase in our self-insured medical claims.

 

Purchased transportation consists of payments to railroads and carriers for transportation services we arrange in connection with Brokerage and Intermodal operations and to independent contractor providers of revenue equipment. This category will vary depending upon the amount and rates, including fuel surcharges, we pay to third-party railroad and motor carriers, the ratio of company drivers versus independent contractors and the amount of fuel surcharges passed through to independent contractors. Purchased transportation expense decreased $2.2 million in total, or 6.6%, in the 2015 period from the 2014 period. Payments to carriers for transportation services we arranged in our Brokerage segment increased $2.4 million to $15.8 million in the 2015 period from $13.4 million in the 2014 period, primarily due to an increase in volume. Payments to railroads and drayage carriers for transportation services within our Intermodal segment decreased $4.4 million to $12.8 million in the 2015 period from $17.2 million in the 2014 period. This decrease was due to the disposal in March 2015 of the dry containers that were used in a portion of our intermodal operations, partially offset by increased volume with our temperature-controlled intermodal trailer service. The portion of purchased transportation expense related to our independent contractors within our Truckload and Dedicated segments, including fuel surcharges, decreased $144,000 in the 2015 period. We expect that purchased transportation expense will increase as we grow our Intermodal and Brokerage segments.

 

 

 
14

 

 

Fuel and fuel taxes decreased by $12.8 million in the 2015 period from the 2014 period. Net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads) decreased $1.1 million, or 9.0%, to $11.4 million in the 2015 period from $12.5 million in the 2014 period. Fuel surcharges passed through to independent contractors, outside drayage carriers and railroads were $2.2 million in the 2015 period and $4.7 million in the 2014 period. We have worked diligently to control fuel usage and costs by improving our volume purchasing arrangements and optimizing our drivers’ fuel purchases with national fuel centers, focusing on shorter lengths of haul, installing and tightly managing the use of auxiliary power units in our tractors to minimize engine idling and improving fuel usage in the temperature-control units on our trailers. Auxiliary power units, which we have installed in our company-owned tractors, provide climate control and electrical power for our drivers without idling the tractor engine. The decrease in net fuel expense was primarily due to a decrease in the DOE national average cost of fuel to $2.63 per gallon in the 2015 period from $3.83 per gallon in the 2014 period and continued progress with the cost control measures stated above. Net fuel expense represented 8.4% of Truckload, Dedicated and Intermodal segment revenue, net of fuel surcharges, in the 2015 period, compared with 10.1% in the 2014 period.

 

Supplies and maintenance consist of repairs, maintenance, tires, parts, oil, and engine fluids, along with load-specific expenses including loading/unloading, tolls, pallets and trailer hostling. Our supplies and maintenance expense increased $1.1 million, or 10.5%, from the 2014 period primarily due to increased repair costs at external facilities.

   

Depreciation relates to owned tractors, trailers, auxiliary power units, communication units, terminal facilities and other assets. The increase in depreciation was primarily due to a continued increase in the cost of revenue equipment and growth of our fleet. We expect our annual cost of tractor and trailer ownership will increase in future periods as a result of higher prices of new equipment, which will result in greater depreciation over the useful life.

 

Insurance and claims consist of the costs of insurance premiums and accruals we make for claims within our self-insured retention amounts, primarily for personal injury, property damage, physical damage to our equipment, cargo claims and workers’ compensation claims. These expenses will vary primarily based upon the frequency and severity of our accident experience, our self-insured retention levels and the market for insurance. The $900,000 increase in insurance and claims in the 2015 period was primarily due to an increase in the cost of physical damage claims related to our tractors and trailers. Our significant self-insured retention exposes us to the possibility of significant fluctuations in claims expense between periods which could materially impact our financial results depending on the frequency, severity and timing of claims.

 

As a result of the foregoing factors, our operating expenses as a percentage of operating revenue, or “operating ratio,” improved to 91.6% in the 2015 period from 92.4% in the 2014 period. The operating ratio for our Truckload segment was 91.7% in the 2015 period and 90.6% in the 2014 period, for our Dedicated segment was 88.6% in the 2015 period and 89.6% in the 2014 period, for our Intermodal segment was 94.2% in the 2015 period and 100.6% in the 2014 period, and for our Brokerage segment was 94.3% in the 2015 period and 95.5% in the 2014 period. Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, was 90.7% in both the 2015 and 2014 periods.

 

The decrease in other non-operating income was primarily due to decreased earnings in the 2015 period by MWL, a 45% owned affiliate.

 

Our effective income tax rate decreased to 40.9% in the 2015 period from 42.3% in the 2014 period.

 

As a result of the factors described above, net income increased by 9.9% to $8.4 million in the 2015 period from $7.7 million in the 2014 period. Net earnings per diluted share increased to $0.25 in the 2015 period from $0.23 in the 2014 period.

 

 

 
15

 

 

Comparison of Nine Months Ended September 30, 2015 to Nine Months Ended September 30, 2014

 

The following table sets forth for the periods indicated our operating revenue, operating income and operating ratio by segment, along with the change for each component:

 

                   

Dollar

   

Percentage

 
                   

Change

   

Change

 
   

Nine Months

Ended

   

Nine Months

Ended

   

Nine Months

Ended

 
   

September 30,

   

September 30,

   

September 30,

 

(Dollars in thousands)

 

2015

   

2014

   

2015 vs. 2014

   

2015 vs. 2014

 

Operating revenue:

                               

Truckload revenue, net of fuel surcharge revenue

  $ 262,227     $ 266,633     $ (4,406 )     (1.7 )%

Truckload fuel surcharge revenue

    40,296       69,232       (28,936 )     (41.8 )

Total Truckload revenue

    302,523       335,865       (33,342 )     (9.9 )
                                 

Dedicated revenue, net of fuel surcharge revenue

    73,941       38,329       35,612       92.9  

Dedicated fuel surcharge revenue

    8,331       10,062       (1,731 )     (17.2 )

Total Dedicated revenue

    82,272       48,391       33,881       70.0  
                                 

Intermodal revenue, net of fuel surcharge revenue

    50,278       57,989       (7,711 )     (13.3 )

Intermodal fuel surcharge revenue

    8,991       16,929       (7,938 )     (46.9 )

Total Intermodal revenue

    59,269       74,918       (15,649 )     (20.9 )
                                 

Brokerage revenue

    52,157       40,208       11,949       29.7  
                                 

Total operating revenue

  $ 496,221     $ 499,382     $ (3,161 )     (0.6 )%
                                 

Operating income:

                               

Truckload

  $ 27,614     $ 27,043     $ 571       2.1 %

Dedicated

    8,496       4,801       3,695       77.0  

Intermodal

    3,372       815       2,557       313.7  

Brokerage

    2,632       1,955       677       34.6  

Total operating income before gain on disposition of facility

    42,114       34,614       7,500       21.7  
                                 

Gain on disposition of facility

    3,712       -       3,712    

N/A

 

Total operating income

  $ 45,826     $ 34,614     $ 11,212       32.4 %
                                 

Operating ratio(1):

                               

Truckload

    90.9 %     91.9 %                

Dedicated

    89.7       90.1                  

Intermodal

    94.3       98.9                  

Brokerage

    95.0       95.1                  

Consolidated operating ratio before gain on disposition of facility

    91.5 %     93.1 %                
                                 

Consolidated operating ratio

    90.8 %     93.1 %                

 

(1)

Represents operating expenses as a percentage of operating revenue.

 

Our operating revenue decreased $3.2 million, or 0.6%, to $496.2 million in the 2015 period from $499.4 million in the 2014 period. Our operating revenue, net of fuel surcharges, increased $35.4 million, or 8.8%, to $438.6 million in the 2015 period from $403.2 million in the 2014 period. This increase was primarily due to a $35.6 million increase in Dedicated revenue, net of fuel surcharges, and an $11.9 million increase in Brokerage revenue, partially offset by a $7.7 million decrease in Intermodal revenue, net of fuel surcharges, and a $4.4 million decrease in Truckload revenue, net of fuel surcharges. Fuel surcharge revenue decreased to $57.6 million in the 2015 period from $96.2 million in the 2014 period, which was due to lower fuel prices.

 

 

 
16

 

 

Truckload segment revenue decreased $33.3 million, or 9.9%, to $302.5 million in the 2015 period from $335.9 million in the 2014 period. Truckload segment revenue, net of fuel surcharges, decreased by 1.7% to $262.2 million in the 2015 period from $266.6 million in the 2014 period. The improvement in the operating ratio in the 2015 period was primarily due to an improvement in our net fuel expense with the lower fuel prices and the impact of severe weather conditions in the first quarter of 2014 on both freight volumes and operating costs, partially offset by a soft freight market in the second and third quarters of 2015 and an increase in insurance and claims in the 2015 period.

 

Dedicated segment revenue increased $33.9 million, or 70.0%, to $82.3 million in the 2015 period from $48.4 million in the 2014 period. Dedicated segment revenue, net of fuel surcharges, increased 92.9% primarily due to an increase in our average fleet size of 85.2% driven by a significant increase in our number of Dedicated contracts with customers. The improvement in the operating ratio in the 2015 period was primarily due to an increase in our average revenue per tractor.

 

Intermodal segment revenue decreased $15.6 million, or 20.9%, to $59.3 million in the 2015 period from $74.9 million in the 2014 period. Intermodal segment revenue, net of fuel surcharges, decreased 13.3% due to the disposal in March 2015 of the dry containers that were used in a portion of our intermodal operations, partially offset by increased volume with our temperature-controlled intermodal trailer service. The improvement in the operating ratio in the 2015 period was primarily due to costs associated with rail service interruption and delay issues in the 2014 period that constrained our intermodal operations, the disposal of our dry container service, which produced a higher operating ratio than our temperature-controlled trailer service, rate increases beginning in the fourth quarter of 2014, and the impact of severe weather conditions in the first quarter of 2014 on both freight volumes and operating costs.

 

 

 
17

 

  

Brokerage segment revenue increased $11.9 million, or 29.7%, to $52.2 million in the 2015 period from $40.2 million in the 2014 period, primarily due to an increase in volume. The operating ratio for our Brokerage segment in the 2015 period was consistent with the 2014 period.  

 

The following table sets forth for the periods indicated the dollar and percentage increase or decrease of the items in our unaudited consolidated condensed statements of operations, and those items as a percentage of operating revenue:
 

   

Dollar

Change

   

Percentage

Change

   

Percentage of

Operating Revenue

 
   

Nine Months

Ended

September 30,

   

Nine Months

Ended

September 30,

   

Nine Months

Ended

September 30,

 

(Dollars in thousands)

 

2015 vs. 2014

   

2015 vs. 2014

   

2015

   

2014

 
                                 

Operating revenue

  $ (3,161

)

    (0.6

)%

    100.0

%

    100.0

%

Operating expenses (income):

                               

Salaries, wages and benefits

    20,067       14.9       31.2       27.0  

Purchased transportation

    (3,440

)

    (3.7

)

    17.8       18.4  

Fuel and fuel taxes

    (38,405

)

    (32.1

)

    16.4       24.0  

Supplies and maintenance

    1,676       5.4       6.6       6.2  

Depreciation

    4,980       9.9       11.2       10.1  

Operating taxes and licenses

    907       17.2       1.2       1.1  

Insurance and claims

    2,980       15.7       4.4       3.8  

Communications and utilities

    96       2.3       0.9       0.9  

Gain on disposition of revenue equipment

    (1,483

)

    (44.1

)

    (1.0

)

    (0.7

)

Gain on disposition of facility

    (3,712

)

 

N/A

      (0.7

)

    -  

Other

    1,961       16.7       2.8       2.3  

Total operating expenses

    (14,373

)

    (3.1

)

    90.8       93.1  

Operating income

    11,212       32.4       9.2       6.9  

Other

    1,083       115.7       -       (0.2

)

Income before income taxes

    10,129       28.5       9.2       7.1  

Provision for income taxes

    4,039       27.5       3.8       2.9  

Net income

  $ 6,090       29.2

%

    5.4

%

    4.2

%

   

The increase in salaries, wages and benefits from the 2014 period resulted primarily from increases to several components of the amount paid to company drivers, an increase in bonus compensation expense for our non-driver employees and an increase in employees’ health insurance due to an increase in our self-insured medical claims.

 

Purchased transportation expense decreased $3.4 million in total, or 3.7%, in the 2015 period from the 2014 period. Payments to carriers for transportation services we arranged in our Brokerage segment increased $10.0 million to $44.4 million in the 2015 period from $34.3 million in the 2014 period, primarily due to an increase in volume. Payments to railroads and drayage carriers for transportation services within our Intermodal segment decreased $14.1 million to $37.9 million in the 2015 period from $52.0 million in the 2014 period. This decrease was due to the disposal in March 2015 of the dry containers that were used in a portion of our intermodal operations, partially offset by increased volume with our temperature-controlled intermodal trailer service. The portion of purchased transportation expense related to our independent contractors within our Truckload and Dedicated segments, including fuel surcharges, increased $585,000 in the 2015 period.

  

 

 
18

 

    

Fuel and fuel taxes decreased by $38.4 million in the 2015 period from the 2014 period. Net fuel expense (fuel and fuel taxes net of fuel surcharge revenue and surcharges passed through to independent contractors, outside drayage carriers and railroads) decreased $6.9 million, or 18.3%, to $30.8 million in the 2015 period from $37.7 million in the 2014 period. Fuel surcharges passed through to independent contractors, outside drayage carriers and railroads were $7.1 million in the 2015 period and $14.2 million in the 2014 period. We have worked diligently to control fuel usage and costs by improving our volume purchasing arrangements and optimizing our drivers’ fuel purchases with national fuel centers, focusing on shorter lengths of haul, installing and tightly managing the use of auxiliary power units in our tractors to minimize engine idling and improving fuel usage in the temperature-control units on our trailers. Auxiliary power units, which we have installed in our company-owned tractors, provide climate control and electrical power for our drivers without idling the tractor engine. The decrease in net fuel expense was primarily due to a decrease in the DOE national average cost of fuel to $2.80 per gallon in the 2015 period from $3.91 per gallon in the 2014 period and continued progress with the cost control measures stated above. Net fuel expense represented 8.0% of Truckload, Dedicated and Intermodal segment revenue, net of fuel surcharges, in the 2015 period, compared with 10.4% in the 2014 period.

 

The increase in depreciation was primarily due to a continued increase in the cost of revenue equipment and growth of our fleet.

 

The $3.0 million increase in insurance and claims in the 2015 period was primarily due to increases in the cost of our self-insured auto liability claims and in the cost of physical damage claims related to our tractors and trailers.

 

Gain on disposition of revenue equipment increased to $4.8 million in the 2015 period from $3.4 million in the 2014 period primarily due to an increase in the market value for used revenue equipment and an increase in the number of trailers sold. Future gains or losses on dispositions of revenue equipment will be impacted by the market for used revenue equipment, which is beyond our control.

 

Gain on disposition of facility was $3.7 million in the 2015 period. The disposition of the facility, located in Ontario, CA, is part of our ongoing program to expand and update the footprint of our facilities throughout the United States, in which we have spent over $83 million since 2008. Any future gains or losses on disposition of facilities will be impacted by the market for real estate, which is beyond our control.

 

As a result of the foregoing factors, our operating expenses as a percentage of operating revenue, or “operating ratio,” improved to 90.8% in the 2015 period from 93.1% in the 2014 period. The operating ratio for our Truckload segment was 90.9% in the 2015 period and 91.9% in the 2014 period, for our Dedicated segment was 89.7% in the 2015 period and 90.1% in the 2014 period, for our Intermodal segment was 94.3% in the 2015 period and 98.9% in the 2014 period, and for our Brokerage segment was 95.0% in the 2015 period and 95.1% in the 2014 period. Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, improved to 89.6% in the 2015 period from 91.4% in the 2014 period. Our operating ratio for the 2015 period, net of the facility disposition gain, improved to 91.5% and, net of both fuel surcharges and the facility disposition gain, improved to 90.4%.

 

The decrease in other non-operating income was primarily due to decreased earnings in the 2015 period by MWL, a 45% owned affiliate.

 

Our effective income tax rate decreased to 41.0% in the 2015 period from 41.3% in the 2014 period.

 

As a result of the factors described above, net income increased by 29.2% to $27.0 million in the 2015 period from $20.9 million in the 2014 period. Net earnings per diluted share increased to $0.80 in the 2015 period from $0.62 in the 2014 period.

   

 

 
19

 

      

Liquidity and Capital Resources

 

Our business requires substantial, ongoing capital investments, particularly for new tractors and trailers. Our primary sources of liquidity are funds provided by operations and our revolving credit facility. A portion of our tractor fleet is provided by independent contractors who own and operate their own equipment. We have no capital expenditure requirements relating to those drivers who own their tractors or obtain financing through third parties.

 

The table below reflects our net cash flows provided by operating activities, net cash flows used for investing activities and net cash flows provided by financing activities for the periods indicated.

 

   

Nine Months

Ended September 30,

 

(In thousands)

 

2015

   

2014

 

 

               

Net cash flows provided by operating activities

  $ 101,422     $ 58,383  

Net cash flows used for investing activities

    (103,526 )     (95,203 )

Net cash flows provided by financing activities

    2,126       23,357  

 

In the first nine months of 2015, net cash flows provided by operating activities of $101.4 million and borrowings under our credit facility of $1.9 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $96.3 million, to partially construct regional operating facilities in the amount of $7.7 million and to pay cash dividends of $2.5 million. In the first nine months of 2014, net cash flows provided by operating activities of $58.4 million, borrowings under our credit facility of $24.7 million, and cash and cash equivalents of $13.5 million were primarily used to purchase new revenue equipment, net of proceeds from dispositions, in the amount of $67.3 million, to acquire and partially construct regional operating facilities in the amount of $24.6 million, and to pay cash dividends of $2.5 million.

 

We estimate that capital expenditures, net of proceeds from dispositions, will be approximately $26 million for the remainder of 2015. Quarterly cash dividends of $0.025 per share of common stock were declared in each of the first three quarters of 2015 and 2014 and totaled $2.5 million in each period. We currently expect to continue to pay quarterly cash dividends in the future. The payment of cash dividends in the future, and the amount of any such dividends, will depend upon our financial condition, results of operations, cash requirements, and certain corporate law requirements, as well as other factors deemed relevant by our Board of Directors. As current federal and state bonus depreciation provisions have expired, we expect an increase in our current income tax payments as a portion of our deferred tax liability for property and equipment reverses. We believe our sources of liquidity are adequate to meet our current and anticipated needs for at least the next twelve months. Based upon anticipated cash flows, existing cash and cash equivalents balances, current borrowing availability and other sources of financing we expect to be available to us, we do not anticipate any significant liquidity constraints in the foreseeable future.

 

We maintain a credit agreement that provides for an unsecured committed credit facility which matures in December 2019. The aggregate principal amount of the credit facility of $50.0 million may be increased at our option, subject to completion of signed amendments with the lender, up to a maximum aggregate principal amount of $75.0 million. At September 30, 2015, there was an outstanding principal balance of $26.3 million on the credit facility. As of that date, we had outstanding standby letters of credit of $10.4 million and remaining borrowing availability of $13.3 million. This facility bears interest at a variable rate based on the London Interbank Offered Rate or the lender’s Prime Rate, in each case plus/minus applicable margins.

 

Our credit facility prohibits us from paying, in any fiscal year, dividends in excess of 25% of our net income from the prior fiscal year. This facility also contains restrictive covenants which, among other matters, require us to maintain compliance with cash flow leverage and fixed charge coverage ratios. We were in compliance with all of these covenants at September 30, 2015.

  

 

 
20

 

  

The following is a summary of our contractual obligations as of September 30, 2015.

 

   

Payments Due by Period

 
   

Remainder

   

2016

   

2018

                 
   

of

   

And

   

And

                 

(In thousands)

 

2015

   

2017

   

2019

   

Thereafter

   

Total

 

Purchase obligations for revenue equipment

  $ 28,159     $     $     $     $ 28,159  

Long-term debt obligations

                26,280             26,280  

Building construction obligations

    692                         692  

Operating lease obligations

    94       447       8             549  

Total

  $ 28,945     $ 447     $ 26,288     $     $ 55,680  

 

Due to uncertainty with respect to the timing of future cash flows, the obligation under our nonqualified deferred compensation plan at September 30, 2015 of 70,781 shares of Company common stock with a value of $1.1 million has been excluded from the above table.

 

Related Parties

 

We purchase fuel and obtain tires and related services from Bauer Built, Inc., or BBI. Jerry M. Bauer, one of our directors, is the chairman of the board and chief executive officer and the principal stockholder of BBI. We paid BBI $274,000 in the first nine months of 2015 and $413,000 in the first nine months of 2014 for fuel and tire services. In addition, we paid $1.1 million in each of the first nine months of 2015 and 2014 to tire manufacturers for tires that were provided by BBI. BBI received commissions from the tire manufacturers related to these purchases. Other than any benefit received from his ownership interest, Mr. Bauer receives no compensation or other benefits from our business with BBI.

 

We own a 45% equity interest in MWL, a third-party provider of logistics services to the transportation industry. We received $4.5 million and $5.7 million of our revenue for loads transported by our tractors and arranged by MWL in the nine-month periods ended September 30, 2015 and September 30, 2014, respectively. As of September 30, 2015, we also had a trade receivable in the amount of $113,000 from MWL and an accrued liability of $3.9 million to MWL for the excess of payments by MWL’s customers into our lockbox account over the amounts drawn on the account by MWL.

 

We believe that the transactions with related parties noted above are on reasonable terms which, based upon market rates, are comparable to terms available from unaffiliated third parties.

 

Off-balance Sheet Arrangements

 

Other than standby letters of credit maintained in connection with our self-insurance programs in the amount of $10.4 million and operating leases summarized above in our summary of contractual obligations, we did not have any other material off-balance sheet arrangements at September 30, 2015.

 

Inflation and Fuel Costs

 

Most of our operating expenses are inflation-sensitive, with inflation generally producing increased costs of operations. During the last two years, the most significant effects of inflation have been on revenue equipment prices, accident claims, health insurance and employee compensation. We attempt to limit the effects of inflation through increases in freight rates and cost control efforts.

 

In addition to inflation, fluctuations in fuel prices can affect our profitability. We require substantial amounts of fuel to operate our tractors and power the temperature-control units on our trailers. Substantially all of our contracts with customers contain fuel surcharge provisions. Although we historically have been able to pass through a significant portion of long-term increases in fuel prices and related taxes to customers in the form of fuel surcharges and higher rates, such increases usually are not fully recovered. These fuel surcharge provisions are not effective in mitigating the fuel price increases related to non-revenue miles or fuel used while the tractor is idling.

 

 

 
21

 

 

Seasonality

 

Our tractor productivity generally decreases during the winter season because inclement weather impedes operations and some shippers reduce their shipments. At the same time, operating expenses generally increase, with harsh weather creating higher accident frequency, increased claims and more equipment repairs.

 

Critical Accounting Policies

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue and expenses in our consolidated condensed financial statements and related notes. We base our estimates, assumptions and judgments on historical experience, current trends and other factors believed to be relevant at the time our consolidated condensed financial statements are prepared. However, because future events and their effects cannot be determined with certainty, actual results could differ from our estimates and assumptions, and such differences could be material. We believe that the following critical accounting policies affect our more significant estimates, assumptions and judgments used in the preparation of our consolidated condensed financial statements.

 

Revenue Recognition. We recognize revenue, including fuel surcharges, at the time shipment of freight is completed. We account for revenue of our Intermodal and Brokerage segments and revenue on freight transported by independent contractors within our Truckload and Dedicated segments on a gross basis because we are the primary obligor in the arrangements, we have the ability to establish prices, we have the risk of loss in the event of cargo claims and we bear credit risk with customer payments. Accordingly, all such revenue billed to customers is classified as operating revenue and all corresponding payments to carriers for transportation services we arrange in connection with brokerage and intermodal activities and to independent contractor providers of revenue equipment are classified as purchased transportation expense.

 

Accounts Receivable. We are dependent upon a limited number of customers, and, as a result, our trade accounts receivable are highly concentrated. Trade accounts receivable are recorded at the invoiced amounts, net of an allowance for doubtful accounts. Our allowance for doubtful accounts was $410,000 as of September 30, 2015 and $475,000 as of December 31, 2014. A considerable amount of judgment is required in assessing the realization of these receivables including the current creditworthiness of each customer and related aging of the past-due balances, including any billing disputes. In order to assess the collectibility of these receivables, we perform ongoing credit evaluations of our customers’ financial condition. Through these evaluations, we may become aware of a situation where a customer may not be able to meet its financial obligations due to deterioration of its financial viability, credit ratings or bankruptcy. The allowance for doubtful accounts is based on the best information available to us and is reevaluated and adjusted as additional information is received. We evaluate the allowance based on historical write-off experience, the size of the individual customer balances, past-due amounts and the overall national economy. We review the adequacy of our allowance for doubtful accounts monthly.

 

Property and Equipment. The transportation industry requires significant capital investments. Our net property and equipment was $532.6 million as of September 30, 2015 and $465.7 million as of December 31, 2014. Our depreciation expense was $55.5 million for the first nine months of 2015 and $50.5 million for the first nine months of 2014. We compute depreciation of our property and equipment for financial reporting purposes based on the cost of each asset, reduced by its estimated salvage value, using the straight-line method over its estimated useful life. We determine and periodically evaluate our estimate of the projected salvage values and useful lives primarily by considering the market for used equipment, prior useful lives and changes in technology. We have not changed our policy regarding salvage values as a percentage of initial cost or useful lives of tractors and trailers within the last ten years. We believe that our policies and past estimates have been reasonable. Actual results could differ from these estimates. A 5% decrease in estimated salvage values would have decreased our net property and equipment as of September 30, 2015 by approximately $10.7 million, or 2.0%.

 

Impairment of Assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less the costs to sell.

 

 

 
22

 

 

Insurance and Claims. We self-insure, in part, for losses relating to workers’ compensation, auto liability, general liability, cargo and property damage claims, along with employees’ health insurance with varying risk retention levels. We maintain insurance coverage for per-incident and total losses in excess of these risk retention levels in amounts we consider adequate based upon historical experience and our ongoing review. However, we could suffer a series of losses within our self-insured retention limits or losses over our policy limits, which could negatively affect our financial condition and operating results. We are responsible for the first $1.0 million on each auto liability claim and for the first $750,000 on each workers’ compensation claim. We have $10.4 million in standby letters of credit to guarantee settlement of claims under agreements with our insurance carriers and regulatory authorities. The insurance and claims accruals in our consolidated condensed balance sheets were $14.8 million as of September 30, 2015 and $14.0 million as of December 31, 2014. We reserve currently for the estimated cost of the uninsured portion of pending claims. We periodically evaluate and adjust these reserves based on our evaluation of the nature and severity of outstanding individual claims and our estimate of future claims development based on historical claims development factors. We believe that our claims development factors have historically been reasonable, as indicated by the adequacy of our insurance and claims accruals compared to settled claims. Actual results could differ from these current estimates. In addition, to the extent that claims are litigated and not settled, jury awards are difficult to predict. If our claims settlement experience worsened causing our historical claims development factors to increase by 5%, our estimated insurance and claims accruals as of September 30, 2015 would have needed to increase by approximately $3.7 million.

 

Share-based Payment Arrangement Compensation. We have granted stock options to certain employees and non-employee directors. We recognize compensation expense for all stock options net of an estimated forfeiture rate and only record compensation expense for those shares expected to vest on a straight-line basis over the requisite service period (normally the vesting period). Determining the appropriate fair value model and calculating the fair value of stock options require the input of highly subjective assumptions, including the expected life of the stock options and stock price volatility. We use the Black-Scholes model to value our stock option awards. We believe that future volatility will not materially differ from our historical volatility. Thus, we use the historical volatility of our common stock over the expected life of the award. The assumptions used in calculating the fair value of stock options represent our best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change and we use different assumptions, stock option compensation expense could be materially different in the future.

 

We have also granted performance unit awards to certain employees which are subject to vesting requirements over a five-year period, primarily based on our earnings growth. The fair value of each performance unit is based on the closing market price on the date of grant. We recognize compensation expense for these awards based on the estimated number of units probable of achieving the vesting requirements of the awards, net of an estimated forfeiture rate.

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard, which is effective for the first quarter of 2018, will replace most existing revenue recognition guidance required by U.S. generally accepted accounting principles. The adoption of this standard is not expected to have a significant impact on our consolidated condensed balance sheets, statements of operations or statements of cash flows.

   

 

 
23

 

  

Item 3.   Quantitative and Qualitative Disclosures about Market Risk.

   

We are exposed to a variety of market risks, most importantly the effects of the price and availability of diesel fuel. We require substantial amounts of diesel fuel to operate our tractors and power the temperature-control units on our trailers. The price and availability of diesel fuel can vary, and are subject to political, economic and market factors that are beyond our control. Significant increases in diesel fuel costs could materially and adversely affect our results of operations and financial condition. Based upon our fuel consumption in the first nine months of 2015, a 5% increase in the average cost of diesel fuel would have increased our fuel expense by $4.0 million.

 

We have historically been able to pass through a significant portion of long-term increases in diesel fuel prices and related taxes to customers in the form of fuel surcharges. Fuel surcharge programs are widely accepted among our customers, though they can vary somewhat from customer-to-customer. These fuel surcharges, which adjust weekly with the cost of fuel, enable us to recover a substantial portion of the higher cost of fuel as prices increase. These fuel surcharge provisions are not effective in mitigating the fuel price increases related to non-revenue miles or fuel used while the tractor is idling. In addition, we have worked diligently to control fuel usage and costs by improving our volume purchasing arrangements and optimizing our drivers’ fuel purchases with national fuel centers, focusing on shorter lengths of haul, installing and tightly managing the use of auxiliary power units in our tractors to minimize engine idling and improving fuel usage in our trailers’ refrigeration units.

 

While we do not currently have any outstanding hedging instruments to mitigate this market risk, we may enter into derivatives or other financial instruments to hedge a portion of our fuel costs in the future.

   

Item 4.   Controls and Procedures.

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”), we have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and our Executive Vice President and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and our Executive Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2015. There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting. We intend to periodically evaluate our disclosure controls and procedures as required by the Exchange Act Rules.

 

 

 
24

 

 

PART II. OTHER INFORMATION

 

Item 1A. Risk Factors.

 

We do not believe there are any material changes from the risk factors previously disclosed in Item 1A to Part 1 of our Form 10-K for the year ended December 31, 2014.

 

Item 6.    Exhibits.

 

Item No.

Item

 

Method of Filing

31.1

Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Randolph L. Marten, the Registrant’s Chief Executive Officer (Principal Executive Officer)

 

Filed with this Report.

       

31.2

Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by James J. Hinnendael, the Registrant’s Executive Vice President and Chief Financial Officer (Principal Financial Officer)

 

Filed with this Report.

       

32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Filed with this Report.

       

101

The following financial information from Marten Transport, Ltd.’s Quarterly Report on Form 10-Q for the period ended September 30, 2015, filed with the SEC on November 6, 2015, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Condensed Balance Sheets as of September 30, 2015 and December 31, 2014, (ii) Consolidated Condensed Statements of Operations for the three and nine-month periods ended September 30, 2015 and September 30, 2014, (iii) Consolidated Condensed Statements of Stockholders’ Equity for the nine-month periods ended September 30, 2015 and September 30, 2014, and for the three-month period ended December 31, 2014, (iv)  Consolidated Condensed Statements of Cash Flows for the nine-month periods ended September 30, 2015 and September 30, 2014, and (v) Notes to Consolidated Condensed Financial Statements.

 

Filed with this Report.

 

 

 
25

 

  

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

MARTEN TRANSPORT, LTD.

     
     

Dated: November 6, 2015

By:

/s/ Randolph L. Marten

   

Randolph L. Marten

   

Chief Executive Officer

   

(Principal Executive Officer)

     
     

Dated: November 6, 2015

By:

/s/ James J. Hinnendael

   

James J. Hinnendael

   

Executive Vice President and Chief Financial Officer

   

(Principal Financial and Accounting Officer)

 

26