UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER~~JUNE 30, ~~2022~~2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-49983

Saia, Inc.

(Exact name of registrant as specified in its charter)


Delaware		48-1229851
(State of incorporation)		(I.R.S. Employer Identification No.)
11465 Johns Creek Parkway, Suite 400
Johns Creek, GA		30097
(Address of principal executive offices)		(Zip Code)

(770) 232-5067

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $.001 per share

SAIA

The Nasdaq Global Select Market

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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

There were ~~26,462,463~~26,535,382 shares of Common Stock outstanding at ~~October 27, 2022.~~July 26, 2023.

SAIA, INC. AND SUBSIDIARIES

INDEX


		PAGE

PART I. FINANCIAL INFORMATION

ITEM 1:	Financial Statements	3

	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022	3

	Condensed Consolidated Statements of Operations for the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022	4

	Condensed Consolidated Statements of Stockholders’ Equity for the quarters and ~~nine~~six months ended ~~September~~ June 30, ~~2022~~2023 and ~~2021~~2022	5

	Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022	76


	Notes to Condensed Consolidated Financial Statements	87

ITEM 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations	1211

ITEM 3:	Quantitative and Qualitative Disclosures About Market Risk	1918

ITEM 4:	Controls and Procedures	2019

PART II. OTHER INFORMATION

ITEM 1:	Legal Proceedings	2120

ITEM 1A:	Risk Factors	2120

ITEM 2:	Unregistered Sales of Equity Securities and Use of Proceeds	2220

~~ITEM 3:~~	~~Defaults Upon Senior Securities~~	22

~~ITEM 4:~~	~~Mine Safety Disclosures~~	22

~~ITEM 5:~~	~~Other Information~~	22

ITEM 6:	Exhibits	2321

Signature		2422

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Saia, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(unaudited)


	September 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
Assets	(in thousands, except share and per share data)						(in thousands, except share and per share data)
Current Assets:
Cash and cash equivalents	$	149,825		$	106,588		$	234,997		$	187,390
Accounts receivable, net		335,595			276,755			299,551			290,306
Prepaid expenses								36,515			22,525
Income tax receivable		11,859			—			1,442			23,438
Prepaid expenses and other		54,123			32,912
Other current assets								6,364			7,227
Total current assets		551,402			416,255			578,869			530,886
Property and Equipment, at cost		2,403,702			2,144,528			2,683,192			2,478,824
Less: accumulated depreciation		964,533			864,074			1,075,639			996,204
Net property and equipment		1,439,169			1,280,454			1,607,553			1,482,620
Operating Lease Right-of-Use Assets		107,456			107,781			110,428			120,455
Goodwill and Identifiable Intangibles, net		18,362			19,157			17,722			18,149
Other Noncurrent Assets		23,935			21,603			22,539			22,600
Total assets	$	2,140,324		$	1,845,250		$	2,337,111		$	2,174,710
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	114,697		$	114,010		$	98,249		$	99,792
Wages, vacation and employees’ benefits		79,193			73,109			63,153			66,684
Claims and insurance accruals		74,799			54,717			42,018			45,481
Other current liabilities		31,116			38,551			26,800			22,684
Current portion of long-term debt		15,914			19,396			11,681			14,519
Current portion of operating lease liability		22,750			21,565			25,393			24,925
Total current liabilities		338,469			321,348			267,294			274,085
Other Liabilities:
Long-term debt, less current portion		18,936			31,008			9,677			16,489
Operating lease liability, less current portion		87,388			88,409			88,506			98,581
Deferred income taxes		124,960			124,137			158,543			145,771
Claims, insurance and other		64,089			60,015			66,869			60,443
Total other liabilities		295,373			303,569			323,595			321,284
Stockholders’ Equity:
Preferred stock, $0.001 par value, 50,000 shares authorized, none issued and outstanding		—			—			-			-
Common stock, $0.001 par value, 100,000,000 shares authorized, 26,462,463 and 26,336,589 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		26			26
Common stock, $0.001 par value, 100,000,000 shares authorized, 26,535,382 and 26,464,197 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively								27			26
Additional paid-in-capital		275,358			274,633			277,208			277,366
Deferred compensation trust, 70,578 and 94,627 shares of common stock at cost at September 30, 2022 and December 31, 2021, respectively		(5,237	)		(4,101	)
Deferred compensation trust, 70,442 and 69,982 shares of common stock at cost at June 30, 2023 and December 31, 2022, respectively								(5,626	)		(5,248	)
Retained earnings		1,236,335			949,775			1,474,613			1,307,197
Total stockholders’ equity		1,506,482			1,220,333			1,746,222			1,579,341
Total liabilities and stockholders’ equity	$	2,140,324		$	1,845,250		$	2,337,111		$	2,174,710

See accompanying notes to condensed consolidated financial statements.

Saia, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

For the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(unaudited)


	Third Quarter					Nine Months					Second Quarter						Six Months
	2022		2021			2022		2021			2023			2022			2023			2022
	(in thousands, except per share data)										(in thousands, except per share data)
Operating Revenue	$	729,561	$	616,216		$	2,136,331	$	1,671,623		$	694,622		$	745,554		$	1,355,157		$	1,406,770
Operating Expenses:
Salaries, wages and employees' benefits		297,247		277,087			881,762		790,310			311,888			295,052			610,844			584,515
Purchased transportation		85,452		72,193			255,519		179,705			49,771			91,819			96,498			170,067
Fuel, operating expenses and supplies		145,461		98,834			413,762		274,399			133,490			145,530			275,115			268,301
Operating taxes and licenses		16,261		14,572			48,813		43,469			17,457			15,979			34,522			32,552
Claims and insurance		15,988		15,518			40,940		44,326			16,956			14,216			31,015			24,952
Depreciation and amortization		40,682		35,742			117,578		105,773			44,658			36,944			87,538			76,896
Loss (gain) from property disposals, net		115		(3,847	)		160		(4,115	)
Other operating, net												147			21			227			45
Total operating expenses		601,206		510,099			1,758,534		1,433,867			574,367			599,561			1,135,759			1,157,328
Operating Income		128,355		106,117			377,797		237,756			120,255			145,993			219,398			249,442
Nonoperating Expenses (Income):
Nonoperating (Income) Expenses:
Interest expense		581		777			1,941		2,463			458			668			1,146			1,360
Interest income												(487	)		(55	)		(627	)		(62	)
Other, net		68		14			1,072		(547	)		(990	)		824			(1,493	)		1,066
Nonoperating expenses, net		649		791			3,013		1,916
Nonoperating (income) expenses, net												(1,019	)		1,437			(974	)		2,364
Income Before Income Taxes		127,706		105,326			374,784		235,840			121,274			144,556			220,372			247,078
Income Tax Provision		29,815		25,617			88,224		56,366			29,955			35,311			52,956			58,409
Net Income	$	97,891	$	79,709		$	286,560	$	179,474		$	91,319		$	109,245		$	167,416		$	188,669

Weighted average common shares outstanding – basic		26,539		26,334			26,506		26,317			26,634			26,507			26,617			26,489
Weighted average common shares outstanding – diluted		26,676		26,713			26,663		26,699			26,736			26,665			26,722			26,662

Basic Earnings Per Share	$	3.69	$	3.03		$	10.81	$	6.82		$	3.43		$	4.12		$	6.29		$	7.12
Diluted Earnings Per Share	$	3.67	$	2.98		$	10.75	$	6.72		$	3.42		$	4.10		$	6.27		$	7.08

See accompanying notes to condensed consolidated financial statements.

Saia, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

For the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(unaudited)


	Common Shares		Common Stock		Additional Paid-in Capital			Deferred Compensation Trust			Retained Earnings		Total			Common Shares		Common Stock		Additional Paid-in Capital			Deferred Compensation Trust			Retained Earnings		Total
	(in thousands, except share data)															(in thousands)
Balance at December 31, 2021		26,336,589	$	26	$	274,633		$	(4,101	)	$	949,775	$	1,220,333
Balance at December 31, 2022																	26,464	$	26	$	277,366		$	(5,248	)	$	1,307,197	$	1,579,341
Stock compensation, including options and long-term incentives		—		—		2,056			—			—		2,056			—		—		2,225			—			—		2,225
Exercise of stock options, less shares withheld for taxes		10,992		—		907			—			—		907			21		—		2,204			—			—		2,204
Shares issued for long-term incentive awards, net of shares withheld for taxes		60,821		—		(11,230	)		—			—		(11,230	)		48		1		(8,928	)		—			—		(8,927	)
Purchase of shares by Deferred Compensation Trust		—		—		2,445			(2,445	)		—		—			—		—		474			(474	)		—		—
Sale of shares by Deferred Compensation Trust		—		—		(1,066	)		1,066			—		—			—		—		(67	)		67			—		—
Net income		—		—		—			—			79,424		79,424			—		—		—			—			76,097		76,097
Balance at March 31, 2022		26,408,402	$	26	$	267,745		$	(5,480	)	$	1,029,199	$	1,291,490
Balance at March 31, 2023																	26,533	$	27	$	273,274		$	(5,655	)	$	1,383,294	$	1,650,940

Stock compensation, including options and long-term incentives		—		—		1,756			—			—		1,756			—		—		2,500			—			—		2,500
Director deferred share activity		2,327		—		1,170			—			—		1,170			2		—		1,417			—			—		1,417
Exercise of stock options, less shares withheld for taxes		1,007		—		101			—			—		101			—		—		46			—			—		46
Shares issued for long-term incentive awards, net of shares withheld for taxes		—		—		—			—			—		—
Purchase of shares by Deferred Compensation Trust		—		—		631			(631	)		—		—
Sale of shares by Deferred Compensation Trust		—		—		(8	)		8			—		—			—		—		(29	)		29			—		—
Net income		—		—		—			—			109,245		109,245			—		—		—			—			91,319		91,319
Balance at June 30, 2022		26,411,736	$	26	$	271,395		$	(6,103	)	$	1,138,444	$	1,403,762
Balance at June 30, 2023																	26,535	$	27	$	277,208		$	(5,626	)	$	1,474,613	$	1,746,222

Stock compensation, including options and long-term incentives		—		—		1,894			—			—		1,894
Director deferred share activity		—		—		—			—			—		—
Exercise of stock options less shares withheld for taxes		48,329		—		3,408			—			—		3,408
Shares issued for long-term incentive awards, net of shares withheld for taxes		2,398		—		(473	)		—			—		(473	)
Purchase of shares by Deferred Compensation Trust		—		—		93			(93	)		—		—
Sale of shares by Deferred Compensation Trust		—		—		(959	)		959			—		—
Net income		—		—		—			—			97,891		97,891
Balance at September 30, 2022		26,462,463	$	26	$	275,358		$	(5,237	)	$	1,236,335	$	1,506,482


	Common Shares		Common Stock		Additional Paid-in Capital			Deferred Compensation Trust			Retained Earnings		Total
	(in thousands)
Balance at December 31, 2021		26,337	$	26	$	274,633		$	(4,101	)	$	949,775	$	1,220,333
Stock compensation, including options and long-term incentives		—		—		2,056			—			—		2,056
Exercise of stock options, less shares withheld for taxes		10		—		907			—			—		907
Shares issued for long-term incentive awards, net of shares withheld for taxes		61		—		(11,230	)		—			—		(11,230	)
Purchase of shares by Deferred Compensation Trust		—		—		2,445			(2,445	)		—		—
Sale of shares by Deferred Compensation Trust		—		—		(1,066	)		1,066			—		—
Net income		—		—		—			—			79,424		79,424
Balance at March 31, 2022		26,408	$	26	$	267,745		$	(5,480	)	$	1,029,199	$	1,291,490

Stock compensation, including options and long-term incentives		—		—		1,756			—			—		1,756
Director deferred share activity		3		—		1,170			—			—		1,170
Exercise of stock options, less shares withheld for taxes		1		—		101			—			—		101
Purchase of shares by Deferred Compensation Trust		—		—		631			(631	)		—		—
Sale of shares by Deferred Compensation Trust		—		—		(8	)		8			—		—
Net income		—		—		—			—			109,245		109,245
Balance at June 30, 2022		26,412	$	26	$	271,395		$	(6,103	)	$	1,138,444	$	1,403,762

Common Shares

Common Stock

Additional Paid-in Capital

Deferred Compensation Trust

Retained Earnings

Total

(in thousands, except share data)

Balance at December 31, 2020

26,236,570

$
26

$
267,666

$
(2,944
)

$
696,540

$
961,288

Stock compensation, including options and long-term incentives

—

—

1,711

—

—

1,711

Exercise of stock options, less shares withheld for taxes

46,741

—

3,678

—

—

3,678

Shares issued for long-term incentive awards, net of shares withheld for taxes

50,381

—

(6,350
)

—

—

(6,350
)
Purchase of shares by Deferred Compensation Trust

—

—

742

(742
)

—

—

Sale of shares by Deferred Compensation Trust

—

—

(17
)

17

—

—

Net income

—

—

—

—

37,291

37,291

Balance at March 31, 2021

26,333,692

$
26

$
267,430

$
(3,669
)

$
733,831

$
997,618

Stock compensation, including options and long-term incentives

—

—

1,810

—

—

1,810

Director deferred share activity

1,404

—

1,256

—

—

1,256

Exercise of stock options, less shares withheld for taxes

—

—

—

—

—

—

Shares issued for long-term incentive awards, net of shares withheld for taxes

—

—

—

—

—

—

Purchase of shares by Deferred Compensation Trust

—

—

112

(112
)

—

—

Sale of shares by Deferred Compensation Trust

—

—

—

—

—

—

Net income

—

—

—

—

62,474

62,474

Balance at June 30, 2021

26,335,096

$
26

$
270,608

$
(3,781
)

$
796,305

$
1,063,158

Stock compensation, including options and long-term incentives

—

—

1,878

—

—

1,878

Director deferred share activity

294

—

202

—

—

202

Exercise of stock options less shares withheld for taxes

—

—

—

—

—

—

Shares issued for long-term incentive awards, net of shares withheld for taxes

1,199

—

(221
)

—

—

(221
)
Purchase of shares by Deferred Compensation Trust

—

—

98

(98
)

—

—

Sale of shares by Deferred Compensation Trust

—

—

(20
)

20

—

—

Net income

—

—

—

—

79,709

79,709

Balance at September 30, 2021

26,336,589

$
26

$
272,545

$
(3,859
)

$
876,014

$
1,144,726

See accompanying notes to condensed consolidated financial statements.

Saia, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(unaudited)


	Nine Months						Six Months
	2022			2021			2023			2022
	(in thousands)						(in thousands)
Operating Activities:
Net income	$	286,560		$	179,474		$	167,416		$	188,669
Noncash items included in net income:
Depreciation and amortization		117,578			105,773			87,538			76,896
Deferred income taxes		824			5,086			12,772			(907	)
Other, net		268			4,290			7,894			3,862
Changes in operating assets and liabilities, net		(61,156	)		(26,937	)
Changes in operating assets and liabilities:
Accounts receivable								(10,771	)		(82,138	)
Accounts payable								10,893			35,231
Change in other assets and liabilities, net								15,663			(13,708	)
Net cash provided by operating activities		344,074			267,686			291,405			207,905
Investing Activities:
Acquisition of property and equipment		(279,057	)		(154,884	)		(227,022	)		(156,351	)
Proceeds from disposal of property and equipment		1,061			6,460			529			1,060
Other		—			(500	)
Net cash used in investing activities		(277,996	)		(148,924	)		(226,493	)		(155,291	)
Financing Activities:
Repayments of revolving credit agreement		(1,000	)		(36,410	)		—			(1,000	)
Borrowings of revolving credit agreement		1,000			36,410			—			1,000
Proceeds from stock option exercises		4,416			3,678			2,250			1,008
Shares withheld for taxes		(11,703	)		(6,571	)		(8,928	)		(11,230	)
Repayment of finance leases		(15,554	)		(15,805	)		(9,650	)		(11,109	)
Other financing activity								(977	)		—
Net cash used in financing activities		(22,841	)		(18,698	)		(17,305	)		(21,331	)
Net Increase in Cash, Cash Equivalents and Restricted Cash (1)		43,237			100,064
Cash, Cash Equivalents and Restricted Cash, beginning of period (1)		106,588			25,308
Cash, Cash Equivalents and Restricted Cash, end of period (1)	$	149,825		$	125,372
Net Increase in Cash and Cash Equivalents								47,607			31,283
Cash and Cash Equivalents, beginning of period								187,390			106,588
Cash and Cash Equivalents, end of period							$	234,997		$	137,871

~~(1) Cash, cash equivalents and restricted cash at the end of the period includes $3.7~~ ~~million of restricted cash included in accounts receivable, net on the Condensed Consolidated Balance Sheet ending September 30, 2021.~~

See accompanying notes to condensed consolidated financial statements.

Saia, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1) Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Saia, Inc. and its wholly-owned subsidiaries (together, the Company or Saia). All significant intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements.

The condensed consolidated financial statements have been prepared by the Company without audit by the independent registered public accounting firm. In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, stockholders’ equity and cash flows for the interim periods included herein have been made. These interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information, the instructions to Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted from these statements. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. Operating results for the quarter and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 are not necessarily indicative of the results of operations that may be expected for the year ended December 31, ~~2022.~~2023.

Business

The Company provides national less-than-truckload (LTL) services through a single integrated organization. While more than 9697 percent of its revenue has been derived from transporting LTL shipments across 45 states, the Company also offers customers a wide range of other value-added services, including non-asset truckload, expedited transportation and logistics services across North America. The Company’s customer base is diversified across numerous industries.

Revenue Recognition

The Company’s revenues are derived primarily from the transportation of freight as it satisfies performance obligations that arise from contracts with its customers. The Company’s performance obligations arise when it receives a bill of lading ~~(“BOL”)~~(BOL) to transport a customer's commodities at negotiated prices contained in either a transportation services agreement or a publicly disclosed tariff rate. Once a BOL is received and accepted, a legally-enforceable contract is formed whereby the parties are committed to perform and the rights of the parties, shipping terms and conditions, and payment terms have been identified. ~~A customer may submit many BOLs for transportation services at various times throughout a service agreement term but each~~Each shipment represents a distinct service that is a separately identified performance obligation.

The typical transit time to complete a shipment is from one to five days. Billing for transportation services normally occurs after completion of the service and payment is generally due within 30 days after the invoice date. The Company recognizes revenue related to the Company’s ~~LTL, non-asset truckload and expedited~~transportation services over the transit time of the shipment as it moves from origin to ~~destination. Revenue for services is recognized~~destination based on the transit status at the end of each reporting period.

Key estimates included in the recognition and measurement of revenue and related accounts receivable are as follows:

•

Revenue associated with shipments in transit is recognized ratably over transit time; and

•

Adjustments to revenue for billing adjustments and collectability.

The portion of the gross invoice related to interline transportation services that involve the services of another party, such as another LTL service provider, is not recorded in the Company’s revenues. Revenue from logistics services is recognized as the services are provided.

Remaining performance obligations represent the transaction price allocated to future periods for freight services started but not completed at the reporting date. These amounts include the unearned portion of billed and unbilled amounts for freight shipments in transit that the Company expects to recognize as revenue in the period subsequent to the reporting date, which is generally less than one week. The Company has elected to apply the optional exemption in accordance with the ~~Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers,~~ ~~as it relates to additional quantitative disclosures pertaining to remaining performance obligations.~~

Claims and Insurance Accruals

~~We are regularly subject to claims resulting from bodily injury, property damage, casualty and cargo losses, group healthcare costs, and workers' compensation.~~ The Company ~~has self-insured retention limits generally ranging from $250,000~~ ~~to $1.0~~ ~~million per occurrence~~maintains a significant amount of insurance coverage with third-party insurance carriers that provides various levels of protection for ~~group healthcare, workers'~~covered risk exposure, including in the areas of workers’ compensation, ~~casualty and cargo losses and certain property damage and from $2.0~~ ~~million to $10.0~~ ~~million for~~ bodily injury and property damage, casualty, cargo loss and damage and group health, with coverage limits, retention amounts and deductible amounts that vary based on policy periods and claim type. Claims and insurance accruals related to ~~auto liability. The Company’s automobile liability insurance policy for the four-year period ended March 1, 2023 provides coverage for a single~~workers’ compensation, bodily injury and property damage, casualty, cargo loss ~~of $8.0~~ ~~million, an aggregate loss limit of $24.0~~ ~~million for each policy year,~~ and ~~a $48.0~~ ~~million aggregate loss limit for the four-year period, subject to risk retention of $2.0~~ ~~million per occurrence. Under the policy, the Company is required to pay additional amounts of up to $11.5~~ ~~million if losses paid~~damage and group health are established by ~~the insurer are greater than $18.4~~ million over the four-year policy period. Based on claims occurring since March 1, 2019, no additional amount was accrued as of September 30, 2022. Commencing on August 30, 2023, the Company may elect to commute the policy with respect to the insurer’s entire liability under the policy in which case the Company would be entitled to a return of a portion of the premium paid, up to $~~18.4~~ ~~million,~~management based on ~~the amount~~estimates of claims paid and the insurer would be released from all liability under the policy for the four-year period ending March 1, 2023. As a result, if the Company elects to commute the policy as to the entire policy term, the Company would be self-insured for $~~10.0~~ ~~million per occurrence for the four years ended March 1, 2023. The Company is self-insured for auto liability for the first $10.0~~ ~~million per occurrence for the one-year period ended March 1, 2019.~~

~~The Company also maintains an insurance policy covering the~~ ~~three-year~~ ~~period ending March 1, 2025~~losses that ~~provides $5.0~~ ~~million of coverage per occurrence after an occurrence exceeds $10.0~~ ~~million, subject to an aggregate loss limit of $10.0~~ ~~million for each policy year, and a $20.0~~ ~~million aggregate loss limit for the three-year term. Additionally, the Company is required to pay additional amounts of up to $7.5~~ ~~million if losses paid by the insurer are greater than $1.4~~ ~~million over the three-year policy period ending March 1, 2025. Based on claims occurring since March 1, 2022,~~ no ~~additional amounts were accrued at September 30, 2022. Under the policy, the Company may elect to commute the policy for the three-year term if losses incurred are less than $1.4~~ million and the Company does not elect to renew the policy. In the event the Company elects to commute the policy for such period, it will be entitled to a return of a portion of the premium paid, up to $~~1.1~~ million, based on the amount of claims paid and the insurer will be released from all liability under the policy in connection with such period. As a result, if the Company elects to commute the policy as to such period, the Company will ~~be self-insured~~ultimately incur on reported claims and on claims that have been incurred but not yet reported. Accruals are calculated on reported claims based on an evaluation of the nature and severity of the claim, historical loss experience and on legal, economic and other factors. Actuarial analysis is also used in calculating the accruals for ~~the $10.0~~ ~~million to $15.0~~ ~~million loss layer per occurrence for the three years ended March 1, 2025. The election to commute the policy cannot be made before June 1, 2024~~workers’ compensation and ~~must be made prior to December 1, 2025, unless the insurer agrees to extend such date.~~bodily injury and property damage claims.

(2) Computation of Earnings Per Share

The calculation of basic earnings per common share and diluted earnings per common share was as follows (in thousands, except per share amounts):


	Third Quarter				Nine Months				Second Quarter				Six Months
	2022		2021		2022		2021		2023		2022		2023		2022
Numerator:
Net income	$	97,891	$	79,709	$	286,560	$	179,474	$	91,319	$	109,245	$	167,416	$	188,669
Denominator:
Denominator for basic earnings per share–weighted average common shares		26,539		26,334		26,506		26,317		26,634		26,507		26,617		26,489
Dilutive effect of share-based awards		137		379		157		382		102		158		105		173
Denominator for diluted earnings per share–adjusted weighted average common shares		26,676		26,713		26,663		26,699		26,736		26,665		26,722		26,662

Basic Earnings Per Share	$	3.69	$	3.03	$	10.81	$	6.82	$	3.43	$	4.12	$	6.29	$	7.12

Diluted Earnings Per Share	$	3.67	$	2.98	$	10.75	$	6.72	$	3.42	$	4.10	$	6.27	$	7.08

For both the quarter and six months ended June 30, 2023, options and restricted stock for 14,854 shares of common stock were excluded from the calculation of diluted earnings per share because their effect was anti-dilutive. For the quarter and ~~nine~~six months ended ~~September~~June 30, 2022, options and restricted stock for ~~43,602~~38,437 and ~~27,598~~22,493 shares of common stock, respectively, were excluded from the calculation of diluted earnings per share because their effect was anti-dilutive. ~~For both the quarter~~

~~and nine months ended September 30, 2021, options and restricted stock for~~ ~~19,250~~ ~~shares of common stock were excluded from the calculation of diluted earnings per share because their effect was anti-dilutive.~~

(3) Commitments and Contingencies

The Company pays its pro rata share of the cost of letters of credit outstanding for certain workers’ compensation claims incurred prior to March 1, 2000 that Saia’s former parent maintains for insurance programs. The Company’s pro rata share of these outstanding letters of credit was $~~1.8~~ ~~million at September 30, 2022.~~

The Company is subject to legal proceedings that arise in the ordinary course of its business. Management believes that adequate provisions for the resolution of all contingencies, claims and pending litigation have been made for probable and estimable losses and that the ultimate outcome of these actions will not have a material adverse effect on its financial condition but could have a material adverse effect on the results of operations in a given quarter or annual period.

(4) Fair Value of Financial Instruments

The carrying amounts of financial instruments including cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximated fair value as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, because of the relatively short maturity of these instruments. Based on the borrowing rates currently available to the Company for debt with similar terms and remaining maturities, the estimated fair value of total debt at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was $~~34.8~~21.5 million and $~~50.8~~31.2 million, respectively, based upon level two inputs in the fair value hierarchy. The carrying value of the debt was $~~34.9~~21.4 million and $~~50.4~~31.0 million at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

(5) Debt and Financing Arrangements

At ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, debt consisted of the following (in thousands):


	September 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
Credit Agreement with Banks, described below	$	—	$	—	$	—	$	—
Finance Leases, described below		34,850		50,404		21,358		31,008
Total debt		34,850		50,404		21,358		31,008
Less: current portion of long-term debt		15,914		19,396		11,681		14,519
Long-term debt, less current portion	$	18,936	$	31,008	$	9,677	$	16,489

The Company’s liquidity needs arise primarily from capital investment in new equipment, land and structures, information technology and letters of credit required under insurance programs, as well as funding working capital requirements.

~~The Company is party to a revolving credit agreement with a group of banks that is available to fund capital investments, letters of credit and working capital needs.~~

Credit Agreement

~~The~~Prior to February 3, 2023, the Company iswas a party to a Sixth Amended and Restated Credit Agreement with ~~its~~a banking group (the Amended Credit Agreement), ~~which provides~~that provided up to a $300 million revolving line of credit through February 2024. The Amended Credit Agreement also ~~has~~had an accordion feature that ~~allows~~allowed for an additional $100 million availability, subject to certain conditions and availability of lender commitments. ~~The Amended Credit Agreement provides for aLIBOR rate margin range from~~ ~~100~~ ~~basis points to~~ ~~200~~ ~~basis points, base rate margins from minus~~ 50 ~~basis points to plus~~ 50 ~~basis points, an unused portion fee from~~ ~~17.5~~ ~~basis points to~~ 30 ~~basis points and letter of credit fees from~~ ~~100~~ ~~basis points to~~ ~~200~~ ~~basis points, in each case based on the Company’s leverage ratio.~~ Under the Amended Credit Agreement, the Company ~~must~~was required to maintain a minimum debt service coverage ratio set at 1.25 to 1.00 and a maximum leverage ratio set at 3.25 to 1.00. The Amended Credit Agreement ~~provides~~provided for a pledge by the Company of certain land and structures, accounts receivable and other assets to secure indebtedness under this agreement. The Amended Credit Agreement contained certain customary representations and warranties, affirmative and negative covenants and provisions relating to events of default.

On February 3, 2023, the Company entered into a new unsecured credit agreement with a banking group (the 2023 Credit Agreement) and terminated the Amended Credit Agreement. The 2023 Credit Agreement maintains the amount of the previous line of credit of $300 million and extends the term until February 2028. The 2023 Credit Agreement contains an accordion feature that allows the Company to increase the size of the facility by up to $150 million, subject to certain conditions and availability of lender commitments, for a total borrowing capacity of up to $450 million. Under the 2023 Credit Agreement, the Company is subject to a maximum consolidated net lease adjusted leverage ratio of less than 3.50 to 1.00 with the potential to be temporarily increased in the event the Company makes an acquisition that meets certain criteria. The 2023 Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants and provisions relating to events of default. Under the ~~Amended~~2023 Credit Agreement, if an event of default occurs, the banks will be entitled to take various actions, including the acceleration of amounts due.

At ~~September~~June 30, 2023 and December 31, 2022, the Company had no outstanding borrowings and outstanding letters of credit of $33.1 million and $31.2 million, respectively, under ~~the Amended Credit Agreement. At December 31, 2021, the Company had~~ no ~~outstanding borrowings and outstanding letters of~~these credit ~~of $29.3~~ ~~million under the Amended Credit Agreement.~~agreements. The available portion of the ~~Amended~~2023 Credit Agreement may be used for general corporate purposes, including capital expenditures, working capital and letter of credit requirements, as needed.

Finance Leases

The Company is obligated under finance leases with seven-year original terms covering revenue equipment. Total liabilities recognized under finance leases were $~~34.9~~21.4 million and $~~50.4~~31.0 million as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Amortization of assets held under the finance leases is included in depreciation and amortization expense. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, approximately $~~64.8~~40.9 million and $~~85.1~~60.5 million of finance leased assets, net of depreciation, were included in Property and Equipment, respectively. The weighted average interest rates for the finance leases at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 were3.9 percent and 3.7 percent, ~~and~~ respectively.

~~3.6~~9

~~percent, respectively.~~

Principal Maturities of Long-Term Debt

The principal maturities of long-term debt, including interest on finance leases, for the next five years (in thousands) are as follows:


	Amount		Amount
2022	$	4,229
2023		15,409	$	5,251
2024		10,606		10,604
2025		5,453		5,453
2026		919		995
2027				—
Thereafter		—		—
Total		36,616		22,303
Less: Amounts Representing Interest on Finance Leases		1,766		945
Total	$	34,850	$	21,358

1110

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

This Management’s Discussion and Analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and our ~~2021~~2022 audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. Those consolidated financial statements include additional information about our significant accounting policies, practices and the transactions that underlie our financial results.

Cautionary Note Regarding Forward-Looking Statements

The Securities and Exchange Commission (the SEC) encourages companies to disclose forward-looking information so that investors can better understand the future prospects of a company and make informed investment decisions. This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations,” contains these types of statements, which are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “may,” “plan,” “predict,” “believe,” “should” and similar words or expressions are intended to identify forward-looking statements. Investors should not place undue reliance on forward-looking statements, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, except as otherwise required by applicable law. All forward-looking statements reflect the present expectation of future events of our management as of the date of this Quarterly Report on Form 10-Q and are subject to a number of important factors, risks, uncertainties and assumptions that could cause actual results to differ materially from those described in any forward-looking statements. These factors, risks, uncertainties and assumptions include, but are not limited to, the following:

•

general economic conditions including downturns or inflationary periods in the business cycle;

•

operation within a highly competitive industry and the adverse impact from downward pricing pressures, including in connection with fuel surcharges, and other factors;

•

industry-wide external factors largely out of our control;

•

cost and availability of qualified drivers, dock workers, mechanics and other employees, purchased transportation and fuel;

•

inflationary increases in operating expenses and corresponding reductions of profitability;

•

cost and availability of diesel fuel and fuel surcharges;

•

cost and availability of insurance coverage and claims expenses and other expense volatility, including for personal injury, cargo loss and damage, workers’ compensation, employment and group health plan claims;

•

cost and availability of insurance coverage, including the possibility the Company may be required to pay additional premiums, assume additional liability under its auto liability policies or be unable to obtain insurance coverage;

•

failure to successfully execute the strategy to expand our service geography;

•

costs and liabilities from the disruption in or failure of our technology or equipment essential to our operations, including as a result of cyber incidents, security breaches, malware or ransomware attacks;

•

failure to keep pace with technological developments;

•

labor relations, including the adverse impact should a portion of our workforce become unionized;

•

cost, availability and resale value of real property and revenue equipment;

•

supply chain disruption and delays on new equipment delivery;

•

capacity and highway infrastructure constraints;

•

risks arising from international business operations and relationships;

•

seasonal factors, harsh weather and disasters caused by climate change;

•

economic declines in the geographic regions or industries in which our customers operate;

•

the creditworthiness of our customers and their ability to pay for services;

•

our need for capital and uncertainty of the credit markets;

•

the possibility of defaults under our debt agreements, including violation of financial covenants;

•

inaccuracies and changes to estimates and assumptions used in preparing our financial statements;

•

failure to operate and grow acquired businesses in a manner that support the value allocated to acquired businesses;

•

dependence on key employees;

•

employee turnover from changes to compensation and benefits or market factors;

•

increased costs of healthcare benefits;

•

damage to our reputation from adverse publicity, including from the use of or impact from social media;

•

failure to make future acquisitions or to achieve acquisition synergies;

•

the effect of litigation and class action lawsuits arising from the operation of our business, including the possibility of claims or judgments in excess of our insurance coverages or that result in increases in the cost of insurance coverage or that preclude us from obtaining adequate insurance coverage in the future;

•

the potential of higher corporate taxes and new regulations, including with respect to climate change, employment and labor law, healthcare and securities regulation;

•

the effect of governmental regulations, including hours of service and licensing compliance for drivers, engine emissions, the Compliance, Safety, Accountability (CSA) initiative, regulations of the Food and Drug Administration and Homeland Security, and healthcare and environmental regulations;

•

unforeseen costs from new and existing data privacy laws;

•

changes in accounting and financial standards or practices;

•

widespread outbreak of an illness or any other communicable disease, including the COVID-19 ~~pandemic, or any other health crisis or business disruptions~~pandemic;

•

the conflict between Russia and higher costs that may arise from the COVID-19 pandemic in the future, including governmental regulations requiring that employees be vaccinated or be tested regularly for COVID-19 before reporting to work;Ukraine;

•

relations between China and Taiwan;

•

increasing investor and customer sensitivity to social and sustainability issues, including climate change;

•

provisions in our governing documents and Delaware law that may have anti-takeover effects;

•

issuances of equity that would dilute stock ownership;

•

weakness, disruption or loss of confidence in financial or credit markets; and

•

other financial, operational and legal risks and uncertainties detailed from time to time in the Company’s SEC filings.

These factors and risks are described in Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, as updated by Part II, Item 1A. of this Quarterly Report on Form 10-Q.

As a result of these and other factors, no assurance can be given as to our future results and achievements. Accordingly, a forward-looking statement is neither a prediction nor a guarantee of future events or circumstances and those future events or circumstances may not occur. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this Form 10-Q. We are under no obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by applicable law.

Executive Overview

The Company’s business is highly correlated to non-service sectors of the general economy. The Company’s strategy is to improve profitability by increasing yield while also increasing volumes to build density in existing geography and to pursue geographic and terminal expansion to promote profitable growth and improve our customer value proposition over time. The Company’s business is labor intensive, capital intensive and service sensitive. The Company looks for opportunities to improve safety, cost effectiveness and asset utilization ~~(primarily tractors and trailers)~~. Pricing initiatives have had a positive impact on yield and profitability. The Company continues to execute targeted sales and marketing programs along with initiatives to align costs with volumes and improve customer satisfaction. Technology continues to be an important investment ~~that is~~as the Company continues to work toward improving customer experience, operational efficiencies, safety and ~~Company~~company image.

~~Third~~Second Quarter Overview

The Company’s operating revenue ~~increased~~decreased by ~~18.4~~6.8 percent in the ~~third~~second quarter of ~~2022~~2023 compared to the same period in ~~2021. The increase~~2022. This decrease resulted primarily from ~~increases~~decreases in fuel surcharge revenue, resulting from lower diesel fuel prices, and decreases in shipments and tonnage. In the second quarter of 2023, LTL shipments were down 3.8 percent and LTL tonnage was down 1.7 percent compared to the prior year quarter. The decreases in revenue were partially offset by improved revenue per shipment, ~~and~~excluding fuel surcharge, ~~revenue.~~due to pricing and changes in business mix.

Consolidated operating income was ~~$128.4~~$120.3 million for the ~~third~~second quarter of ~~2022~~2023 compared to ~~$106.1~~$146.0 million for the ~~third~~second quarter of ~~2021. In the third quarter of 2022, LTL shipments were down 2.5 percent per workday and LTL tonnage was down 0.4 percent per workday compared to the prior year quarter.~~2022. Diluted earnings per share were ~~$3.67~~$3.42 in the ~~third~~second quarter of ~~2022,~~2023 compared to diluted earnings per share of ~~$2.98~~$4.10 in the prior year quarter. The operating ratio (operating expenses divided by operating revenue) was ~~82.4~~82.7 percent in the ~~third~~second quarter of ~~2022~~2023 compared to ~~82.8~~80.4 percent in the ~~third~~second quarter of 2021. The improved operating ratio compared to prior year is due to the Company’s continued focus on pricing initiatives, cost control and operating efficiencies in addition to the impact of our fuel surcharge program. Additionally, a real estate gain resulted in a benefit of 70 basis points in the third quarter of 2021 operating ratio.

2022. The Company generated ~~$344.1~~$291.4 million in net cash provided by operating activities in the first ~~nine~~six months of ~~2022~~2023 compared with ~~$267.7~~$207.9 million in the same period last year. The increase is primarily due to increased profitability partially offset by a change in working capital, primarily driven by increases in accounts receivable compared to prior year. The Company’s net cash used in investing activities was $278.0 million during the first nine months of 2022 compared to $148.9 million in the first nine months of 2021, primarily as a result of increased capital expenditures related to real estate and revenue equipment acquisitions in the first nine months of 2022. The Company’s net cash used in financing activities was $22.8 million in the first nine months of 2022 compared to $18.7 million during the same period last year. This change was primarily due to equity based compensation shares withheld for taxes partially offset by increased proceeds from stock option exercises during the first nine months of 2022, compared to the first nine months of 2021. The Company had no outstanding borrowings under its revolving credit agreement, total outstanding letters of credit of $33.0 million and a cash and cash equivalents balance of $149.8 million at September 30, 2022. The Company also had $34.9 million in obligations under finance leases at September 30, 2022. At September 30, 2022, the Company had $268.8 million in availability under the revolving credit facility. The revolving credit facility also has an accordion feature that allows for an additional $100 million availability, subject to certain conditions and availability of lender commitments. The Company was in compliance with the debt covenants under its revolving credit agreement at September 30, 2022.

General

The following Management’s Discussion and Analysis describes the principal factors affecting the results of operations, liquidity and capital resources, as well as the critical accounting policies and estimates of Saia, Inc. and its wholly-owned subsidiaries (together, the Company or Saia).

Saia is a transportation company headquartered in Johns Creek, Georgia that provides national less-than-truckload (LTL) services through a single integrated organization. While more than 9697 percent of revenue is historically derived from transporting LTL shipments across 45 states, the Company also offers customers a wide range of other value-added services, including non-asset truckload, expedited transportation and logistics services across North America.

Our business is highly correlated to non-service sectors of the general economy. Our business also is impacted by a number of other factors as discussed under ~~“Forward~~“Cautionary Note Regarding Forward Looking Statements” and Part II, Item 1A. “Risk Factors.” The key factors that affect our operating results are the volumes of shipments transported through our network, as measured by our average daily shipments and tonnage; the prices we obtain for our services, as measured by revenue per hundredweight (a measure of yield) and revenue per shipment; our ability to manage our cost structure for capital expenditures and operating expenses such as salaries, wages and benefits; purchased transportation; claims and insurance expense; fuel and maintenance; and our ability to match operating costs to shifting volume levels.

1413

Results of Operations

Saia, Inc. and Subsidiaries

Selected Results of Operations and Operating Statistics

For the quarters ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022

(unaudited)


							Percent										Percent
							Variance										Variance
	2022			2021			'22 v. '21				2023			2022			'23 v. '22
	(in thousands, except ratios, workdays, revenue per hundredweight, revenue per shipment and length of haul)										(in thousands, except ratios, workdays, revenue per hundredweight, revenue per shipment and length of haul)
Operating Revenue	$	729,561		$	616,216			18.4		%	$	694,622		$	745,554			(6.8	)	%
Operating Expenses:
Salaries, wages and employees’ benefits		297,247			277,087			7.3				311,888			295,052			5.7
Purchased transportation		85,452			72,193			18.4				49,771			91,819			(45.8	)
Fuel and other operating expenses												168,050			175,746			(4.4	)
Depreciation and amortization		40,682			35,742			13.8				44,658			36,944			20.9
Fuel and other operating expenses		177,825			125,077			42.2
Operating Income		128,355			106,117			21.0				120,255			145,993			(17.6	)
Operating Ratio		82.4	%		82.8	%						82.7	%		80.4	%
Nonoperating Expense		649			791			(18.0	)
Nonoperating (Income) Expense												(1,019	)		1,437			(170.9	)

Working Capital (as of September 30, 2022 and 2021)		212,933			111,988
Working Capital (as of June 30, 2023 and 2022)												311,575			197,227
Cash Flows provided by Operating Activities (year to date)		344,074			267,686							291,405			207,905
Net Acquisitions of Property and Equipment (year to date)		277,996			148,424							226,493			155,291

Saia Motor Freight Operating Statistics:
Workdays		64			64			-				64			64
LTL Tonnage		1,397			1,402			(0.4	)			1,421			1,446			(1.7	)
LTL Shipments		1,954			2,004			(2.5	)			1,970			2,048			(3.8	)
LTL Revenue per hundredweight	$	25.10		$	21.36			17.5			$	23.85		$	25.05			(4.8	)
LTL Revenue per hundredweight, excluding fuel surcharges											$	19.96		$	19.44			2.7
LTL Revenue per shipment	$	359.04		$	299.02			20.1			$	344.08		$	353.75			(2.7	)
LTL Revenue per shipment, excluding fuel surcharges											$	287.90		$	274.60			4.8
LTL Pounds per shipment		1,431			1,400			2.2				1,443			1,412			2.2
LTL Length of haul		897			915			(2.0	)			892			910			(2.0	)

Quarter and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to quarter and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022

Revenue and volume

Consolidated revenue for the quarter ended ~~September~~June 30, ~~2022 increased 18.4~~2023 decreased 6.8 percent to ~~$729.6~~$694.6 million. This decrease resulted primarily from decreases in fuel surcharge revenue, resulting from lower diesel fuel prices, and from decreases in shipments and tonnage. For the second quarter of 2023, Saia’s LTL tonnage was down 1.7 percent to 1.4 million ~~primarily as a result of increased revenue~~tons, and LTL shipments decreased 3.8 percent to 2.0 million shipments. Revenue per shipment, ~~and~~excluding fuel surcharge, ~~revenue. Saia’s revenue per shipment~~ increased ~~20.1~~4.8 percent to ~~$359.04~~$287.90 per shipment for the ~~third~~second quarter of ~~2022~~2023 as a result of changes in business mix and pricing actions. ~~Our~~In spite of overall volume declines, our service initiatives, including our network expansion, continue to allow us to support our improved pricing. For the ~~third~~second quarter of 2022, Saia’s LTL tonnage per workday was down 0.4 percent to 1.4 million tons, and LTL shipments per workday decreased 2.5 percent to 2.0 million shipments. Our organic network expansion continues to positively impact customer experience, as well as overall volume metrics. For the third quarter of 2022,2023, approximately 75 to 80 percent of ~~Saia’s~~the Company’s operating revenue was subject to specific customer price negotiations that occur throughout the year. The remaining 20 to 25 percent of operating revenue was subject to a general rate ~~increase which is based on market conditions.~~increase. For ~~these~~ customers subject to a general rate increase, ~~on January 24, 2022 and January 18, 2021,~~ Saia implemented ~~7.5~~6.5 and ~~5.9~~7.5 percent general rate increases on January 30, 2023 and January 24, 2022, respectively. Competitive factors, customer turnover and mix changes impact the extent to which customer rate increases are retained over time.

Operating revenue includes ~~fuel surcharge~~ revenue recognized from the Company’s fuel surcharge program, which is designed to reduce ~~the Company’s~~ exposure to fluctuations in diesel fuel prices by adjusting ~~total~~ freight charges to account for changes in the price of diesel fuel. The Company’s fuel surcharge is generally based on the average national price for diesel fuel (as ~~estimated~~published by the United States Energy Information Administration) and is typically reset weekly. Fuel surcharges are widely accepted in the industry and are a significant component of revenue and pricing. Fuel surcharges are an integral part of customer contract negotiations, but represent only one portion of overall customer price ~~negotiations, as customers may negotiate increases in base rates instead of increases in fuel surcharges or vice versa.~~negotiations. Fuel surcharge revenue as a percentage of operating revenue ~~increased~~decreased to ~~20.5~~15.9 percent for the quarter ended ~~September~~

June 30, ~~2022~~2023 compared to ~~13.9~~21.7 percent for the quarter ended ~~September~~June 30, ~~2021,~~2022, as a result of ~~increases~~decreases in the average cost of ~~fuel.~~diesel fuel, pricing structures and changes in mix for the quarter compared to the prior year.

For the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, operating revenues were ~~$2.1~~$1.4 billion, ~~up 27.8~~down 3.7 percent from ~~$1.7 billion~~operating revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022. This ~~increase is~~decrease resulted primarily ~~due to~~from decreases in fuel surcharge revenue, resulting from lower diesel fuel prices, and from decreases in shipments and tonnage. These decreases were partially offset by increased revenue per shipment, excluding fuel surcharge, ~~revenue and tonnage~~ during the first ~~nine~~six months of ~~2022~~2023 compared to the ~~comparable~~same period ~~last~~in the prior year. Fuel surcharge revenue as a percentage of operating revenue ~~increased~~decreased to ~~19.8~~16.8 percent for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~13.8~~19.4 percent for the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, as a result of ~~increases~~decreases in the cost of fuel.

Operating expenses and margin

Consolidated operating income was ~~$128.4~~$120.3 million in the ~~third~~second quarter of ~~2022~~2023 compared to ~~$106.1~~$146.0 million in the prior year quarter. Overall, the ~~increase~~decrease in consolidated operating income was the result of ~~improved pricing actions, the impact of our fuel surcharge program and business mix management~~decreased revenue, partially offset by lower operating expenses during the ~~third~~second quarter of ~~2022. These actions in 2022, along with continued focus on cost controls and operational efficiencies drove improvement during the quarter.~~2023. The ~~third~~second quarter of ~~2022~~2023 operating ratio (operating expenses divided by operating revenue) was ~~82.4~~82.7 percent compared to ~~82.8~~80.4 percent for the same period in ~~2021. A real estate gain resulted in a benefit of 70 basis points in the third quarter of 2021 operating ratio.~~2022.

Salaries, wages and employees’ benefits increased ~~$20.2~~$16.8 million in the ~~third~~second quarter of ~~2022~~2023 compared to the ~~third~~second quarter of ~~2021.~~2022. This change was primarily driven by ~~increased~~a Company wide wage increase in July of 2022 of approximately 4.3 percent combined with headcount ~~required~~increases which allowed us to optimize our internal resources to support ~~ongoing business growth~~our current volumes and network expansion. ~~In addition, in July 2022 the Company implemented a salary and wage increase of approximately 4.3 percent.~~ Purchased transportation ~~increased $13.3~~decreased $42.0 million in the ~~third~~second quarter of 2023 compared to the second quarter of 2022 primarily due to a decrease in purchased transportation miles compared to the ~~third~~same period in 2022, in addition to a decrease in cost per mile for purchased transportation. Fuel, operating expenses and supplies decreased by $12.0 million compared to the second quarter of ~~2021~~2022 largely due to decreases in fuel expense during the quarter, partially offset by increased investments in information technology network support, vehicle maintenance costs and an increase in facility costs due to the opening of 11 new facilities since June of 2022. Claims and insurance expense in the second quarter of 2023 was $2.7 million higher than the second quarter of 2022 primarily due to ~~higher rates~~increases in insurance premiums as well as accident related cost inflation. Depreciation and amortization expense increased $7.7 million in the second quarter of 2023 compared to the same period in 2022 primarily due to ongoing investments in revenue equipment and network expansion.

For the six months ended June 30, 2023, consolidated operating income was $219.4 million, down 12.0 percent compared to $249.4 million for ~~purchased miles,~~the six months ended June 30, 2022. This decrease was largely due to decreased revenue, partially offset by a decrease in ~~purchased~~operating expenses.

Salaries, wages and benefits increased $26.3 million during the first six months of 2023 compared to the same period last year. This change was primarily driven by a Company wide wage increase in July of 2022 of approximately 4.3 percent combined with headcount increases which allowed us to optimize our internal resources to support our current volumes and network expansion. Purchased transportation ~~volume~~decreased $73.6 million for the first six months of 2023 compared to the same period in the ~~2021.~~prior year primarily due to a decrease in purchase transportation miles, in addition to a decrease in cost per mile for purchased transportation. Fuel, operating expenses and supplies increased by $46.6 million, largely due to increased diesel fuel costs during the quarter. Claims and insurance expense was $0.5 million higher than the third quarter of 2021 primarily due to higher claims activity. Depreciation and amortization expense increased $4.9 million in the third quarter of 2022 compared to the same period in 2021 primarily due to revenue equipment, real estate and technology investments in late 2021 and throughout 2022.

For the nine months ended September 30, 2022, consolidated operating income was $377.8 million, up 58.9 percent compared to $237.8 million for the nine months ended September 30, 2021. This increase was largely due to pricing actions, improved fuel surcharge revenue and increased tonnage.

~~Salaries, wages and benefits increased $91.5~~$6.8 million during the first ~~nine~~six months of ~~2022~~2023 compared to the same period last year largely due to ~~salary~~increased vehicle maintenance costs, investments in information technology network support and ~~wage increases that were effective~~an increase in ~~August of 2021 and July of 2022, and increases in overall headcount over the past twelve months. Purchased transportation increased $75.8 million for the first nine months of 2022 compared~~facility costs due to the ~~same period last year primarily due to higher rates for purchased miles~~opening of 11 new facilities since the second quarter of 2022. These changes were partially offset by decreases in costs of fuel during the first nine months of 2022 in addition to linehaul capacity expansion to support growth and customer service requirements. Fuel, operating expenses and supplies increased $139.4 million during the first nine months of 2022 compared to the same period last year largely due to higher fuel costs resulting from increases in the price per gallon of diesel and volume increases during the first nine months of 2022.period. During the first ~~nine~~six months of ~~2022,~~2023, claims and insurance expense was ~~$3.4~~$6.1 million ~~lower~~higher than the same period last year primarily due to ~~lower claims activity.~~increases in insurance premiums as well as accident related cost inflation. Depreciation and amortization expense increased ~~$11.8~~$10.6 million during the first ~~nine~~six months of ~~2022~~2023 compared to the same period in ~~2021~~2022 primarily due to ongoing investments in revenue equipment ~~real estate~~ and ~~technology investments in late 2021 and throughout 2022.~~network expansion.

Other

Interest expense in the ~~third~~second quarter of ~~2022~~2023 was lower than the same period in ~~2021~~2022 as the Company continued to pay down finance lease obligations.

Interest income in the second quarter of 2023 was higher than the same period in 2022 due to increased interest rates on higher average deposit balances during the period.

The effective tax rate was ~~23.3~~24.7 percent and ~~24.3~~24.4 percent for the quarters ended ~~September~~June 30, 2023 and 2022, respectively. For the six months ended June 30, 2023 and ~~2021, respectively. The decrease in~~2022, the ~~third quarter~~ effective tax rate ~~in 2022 is primarily due to the impact of tax credits related to alternative fuels enacted during the third quarter of 2022. For the nine months ended September 30, 2022~~was 24.0 and ~~September 30, 2021, the effective tax rates were 23.5 percent and 23.9~~23.6 percent, respectively. For the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 approximately ~~$102.1~~$17.8 million in cash tax payments were made compared to ~~$58.7~~$71.4 million in the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022 due to the timing of estimated tax payments.

Net income was ~~$97.9~~$91.3 million, or ~~$3.67~~$3.42 per diluted share, in the ~~third~~second quarter of ~~2022~~2023 compared to net income of ~~$79.7~~$109.2 million, or ~~$2.98~~$4.10 per diluted share, in the ~~third~~second quarter of ~~2021.~~2022. Net income was ~~$286.6~~$167.4 million, or ~~$10.75~~$6.27 per diluted share for the first ~~nine~~six months of ~~2022~~2023 compared to net income of ~~$179.5~~$188.7 million, or ~~$6.72~~$7.08 per diluted share, for the first ~~nine~~six months of ~~2021.~~

~~Working capital/capital expenditures~~

~~Working capital at September 30, 2022 was $212.9 million, an increase from $112.0 million at September 30, 2021.~~

Current assets at September 30, 2022 increased by $100.8 million as compared to September 30, 2021 which includes an increase in cash and cash equivalents of $28.1 million and an increase in accounts receivable of $39.7 million. Current liabilities decreased by $0.2 million at September 30, 2022 compared to September 30, 2021 largely due to a decrease in accounts payable.

Cash flows provided by operating activities were $344.1 million for the nine months ended September 30, 2022 versus $267.7 million for the nine months ended September 30, 2021. The increase is primarily due to increased profitability, partially offset by a change in working capital compared to the prior year. For the nine months ended September 30, 2022, net cash used in investing activities was $278.0 million compared to $148.9 million in the same period last year, a $129.1 million increase. This increase resulted from increased capital expenditures related to real estate and revenue equipment acquisitions as the Company continues to expand its footprint and add density in markets. The Company currently expects that net capital expenditures in 2022 will be approximately $500 million. For the nine months ended September 30, 2022, net cash used in financing activities was $22.8 million compared to $18.7 million during the same period last year, as a result of equity based compensation shares withheld for taxes, partially offset by increased proceeds from stock option exercises during the first nine months of 2022 compared to the same period in 2021.2022.

Outlook

Our business remains highly correlated to non-service sectors of the general economy and competitive pricing pressures, as well as the success of Company-specific improvement initiatives. Our outlook for ~~2022~~the remainder of 2023 is dependent on a number of external factors, including ~~geopolitical developments,~~strength of the economy, inflation, labor availability, diesel fuel prices and supply chain constraints. The potential impact of these factors on our operations, financial performance and financial condition, as well as the impact on our ability to successfully execute our business strategies and initiatives, remains uncertain and difficult to predict.

In recent weeks we have learned of concerns surrounding the long-term viability of a large LTL competitor. If the competitor should cease operating, the impact on our operations and financial performance is uncertain and difficult to predict. In the short term, we believe such an event could have both positive and challenging effects on our business operations and financial performance. As freight from the competitor is absorbed into the market, it is uncertain as to how the freight will be redistributed. We believe a cessation could result in an increase in our volumes and resulting revenue. The profitability of any such increased volume is uncertain, as any revenue increases may be offset by higher expenses, or may otherwise be less profitable than our current business. In addition, there is uncertainty around the impact of a cessation of the competitor’s operations on our employees and any potential unionization efforts.

We are continuing initiatives to improve and enhance customer service in an effort to support our ongoing pricing and business mix optimization, while seeking to control costs and improve productivity. Planned revenue initiatives include building density in our current geography, targeted marketing initiatives to grow revenue in more profitable areas, further expanding our geographic and terminal network, as well as pricing and yield management. On January 30, 2023 and January 24, 2022 ~~and January 18, 2021,~~ Saia implemented a6.5 and 7.5 ~~and 5.9~~ percent general rate ~~increase,~~increases, respectively, for customers comprising approximately 20 to 25 percent of Saia’s operating revenue. The success of ~~cost improvement~~these revenue initiatives is impacted by what proves to be the cost and availability of drivers, dock workers and other employees and purchased transportation, fuel, self-insurance claims and insurance expense, regulatory changes, successful expansion of our service geography throughout the United States, the COVID-19 pandemicunderlying economic trends, competitor initiatives and other factors discussed under ~~“Forward-Looking~~“Cautionary Note Regarding Forward-Looking Statements” and Part II, Item 1A. “Risk Factors.”

If we build market share, including through our geographic and terminal expansion, we expect there to be numerous operating leverage cost benefits. Conversely, should the economy continue to soften, we plan to match resources and capacity to shifting volume levels to lessen unfavorable operating leverage. The success of cost improvement initiatives is impacted by a number of factors, including the cost and availability of drivers, dock workers and personnel, and availability and cost of purchased transportation, cost of diesel fuel, cost of insurance, and inflation.

Effective July 2023, the Company implemented a market competitive salary and wage increase for all employees. The compensation increase is expected to be approximately 4.1 percent, and the Company anticipates the impact will be partially offset by productivity and efficiency gains.

See ~~“Forward-Looking~~“Cautionary Note Regarding Forward-Looking Statements” and Part II, Item 1A. “Risk Factors” for a more complete discussion of potential risks and uncertainties that could materially adversely affect our ~~future performance.~~financial condition, results of operations, cash flows and prospects.

Financial Condition, Liquidity and Capital Resources

Working capital/capital expenditures

Working capital at June 30, 2023 was $311.6 million, an increase from $197.2 million at June 30, 2022.

Current assets at June 30, 2023 increased by $42.5 million as compared to June 30, 2022, driven by an increase in cash and cash equivalents of $97.1 million partially offset by a decrease in accounts receivable of $57.5 million. Current liabilities decreased by $71.9 million at June 30, 2023 compared to June 30, 2022 largely due to decreases in accounts payable and accruals for wages, vacation and employees’ benefits.

A summary of our cash flows is presented below:


	Six Months
	2023	2022
	(in thousands)
Cash and Cash Equivalents, beginning of period	$187,390	$106,588
Net Cash flows provided by (used in):
Operating activities	291,405	207,905
Investing activities	(226,493)	(155,291)
Financing activities	(17,305)	(21,331)
Net Increase in Cash and Cash Equivalents	47,607	31,283
Cash and Cash Equivalents, end of period	$234,997	$137,871

Cash flows provided by operating activities were $291.4 million for the six months ended June 30, 2023 versus $207.9 million for the six months ended June 30, 2022. The ~~Company~~increase is ~~party~~primarily due to ~~a revolving credit agreement with a group of banks that is available to fund capital investments, letters of credit and~~changes in working capital ~~needs.~~

~~Credit Agreement~~

~~The Company is~~compared to the prior year. For the six months ended June 30, 2023, net cash used in investing activities was $226.5 million compared to $155.3 million in the same period last year, a ~~party~~$71.2 million increase. This increase resulted from increased capital expenditures related to ~~a Sixth Amended~~real estate and Restated Credit Agreement with its banking group (the Amended Credit Agreement), which provides up to a $300 million revolving line of credit through February 2024. The Amended Credit Agreement also has an accordion feature that allows for an additional $100 million availability, subject to certain conditions and availability of lender commitments. The Amended Credit Agreement provides for aLIBOR rate margin range from 100 basis points to 200 basis points, base rate margins from minus 50 basis points to plus 50 basis points, an unused portion fee from 17.5 basis points to 30 basis points and letter of credit fees from 100 basis points to 200 basis points, in each case based on the Company’s leverage ratio. Under the Amended Credit Agreement,revenue equipment acquisitions as the Company ~~must maintain~~continues to expand its footprint and add density in markets. For the six months ended June 30, 2023, net cash used in financing activities was $17.3 million compared to $21.3 million during the same period last year, as a ~~minimum debt service coverage ratio set at 1.25~~result of less taxes withheld for equity based compensation shares during the first six months of 2023 compared to ~~1.00 and a maximum leverage ratio set at 3.25~~the same period in 2022, in addition to 1.00. The Amended Credit Agreement provides for a pledge by the Company of certain land and structures, accounts receivable and other assets to secure indebtedness under this agreement. The Amended Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants and provisions relating to events of default. Under the Amended Credit Agreement, if an event of default occurs, the banks will be entitled to take various actions, including the acceleration of amounts due.

At September 30, 2022, the Company had no outstanding borrowings and outstanding letters of credit of $31.2 million under the Amended Credit Agreement. At December 31, 2021, the Company had no outstanding borrowings and outstanding letters of credit of $29.3 million under the Amended Credit Agreement. The available portion of the Amended Credit Agreement may be used for general corporate purposes, including capital expenditures, working capital and letter of credit requirements as needed.

~~Finance Leases~~

The Company is obligated under finance leases with seven-year original terms covering revenue equipment. Total liabilities recognized under finance leases were $34.9 million and $50.4 million as of September 30, 2022 and December 31, 2021, respectively. Amortization of assets held under the finance leases is included in depreciation and amortization expense. The weighted average interest rates for the finance leases at September 30, 2022 and December 31, 2021 were 3.7 percent and 3.6 percent, respectively.

~~Cash Flows and Expenditures~~higher proceeds from stock option exercises during 2023.

The Company has historically generated cash flows from operations to fund a large portion of its capital expenditure requirements. Cash flows from operating activities were $382.6 million for the year ended December 31, 2021, while net cash used in investing activities was $277.8 million. Cash flows provided by operating activities were $344.1 million for the nine months ended September 30, 2022, $76.4 million higher than the first nine months of the prior year. The increase in operating cash flows is primarily due to increased profitability, partially offset by a change in working capital, largely increases in accounts receivable compared to the prior year. The timing of capital expenditures can largely be managed around the seasonal working capital requirements of the Company. The Company believes it has ~~significant~~adequate sources of capital to meet short-term liquidity needs through its cash on hand, operating cash flows and availability under ~~the Amended Credit Agreement. At September 30, 2022, the Company had $268.8 million in availability under the Amended Credit Agreement. The Company was in compliance with~~ its ~~debt covenants at September 30, 2022.~~credit agreement, discussed below. Future operating cash flows are primarily dependent upon the Company’s profitability and its ability to manage its working capital requirements, primarily accounts receivable, accounts payable and wage and benefit accruals.

~~Net capital expenditures pertain primarily to investments in tractors and trailers and other revenue equipment, information technology, land and structures. Projected~~The Company currently expects that net capital expenditures ~~for 2022 are expected~~in 2023 will be in excess of $400 million, subject to ~~be approximately $500 million, which represents an increase from 2021 net capital expenditures~~the ongoing evaluation of ~~$277.3 million.~~market conditions. Projected ~~2022~~2023 capital expenditures include a normal replacement ~~cycle~~cycles of revenue equipment and ~~technology investment for~~investments in technology. In addition, the Company plans to add revenue equipment and real estate investments to support our ~~operations and purchases of real estate.~~growth initiatives. Net capital expenditures were ~~$278.0~~$226.5 million in the first ~~nine~~six months of ~~2022.~~2023. Approximately ~~$189.0~~$157.1 million of the ~~2022~~2023 remaining capital budget was committed as of ~~September~~June 30, ~~2022.~~2023.

Credit Agreement

~~We are regularly~~Prior to February 3, 2023, the Company was party to a Sixth Amended and Restated Credit Agreement (the Amended Credit Agreement) with a banking group that provided up to a $300 million revolving line of credit through February 2024. The Amended Credit Agreement also had an accordion feature that allowed for an additional $100 million availability, subject to ~~claims resulting from bodily injury, property damage, casualty~~certain conditions and ~~cargo losses, group healthcare costs, and workers' compensation.~~availability of lender commitments. The Company has self-insured retention limits generally ranging from $250,000 to $1.0 million per occurrence for group healthcare, workers' compensation, casualty and cargo losses and certain property damage and from $2.0 million to $10.0 million for bodily injury and property damage related to auto liability. The Company’s automobile liability insurance policy for the four-year period ended March 1, 2023 provides coverageAmended Credit Agreement provided for a ~~single loss~~pledge by the Company of ~~$8.0~~certain land and structures, accounts receivable and other assets to secure indebtedness under the Amended Credit Agreement.

On February 3, 2023, the Company entered into a new unsecured credit agreement with a banking group (the 2023 Credit Agreement) and terminated the Amended Credit Agreement. The 2023 Credit Agreement maintains the amount of the previous line of credit of $300 million and extends the term until February 2028. The 2023 Credit Agreement contains an ~~aggregate loss limit~~accordion feature that allows the Company to increase the size of ~~$24.0~~the facility by up to $150 million, ~~for each policy year, and a $48.0 million aggregate loss limit for the four-year period,~~ subject to ~~risk retention~~certain conditions and availability of ~~$2.0 million per occurrence.~~lender commitments, for a total borrowing capacity of up to $450 million. Under the ~~policy,~~2023 Credit Agreement, the Company is ~~required~~subject to ~~pay additional~~a maximum consolidated net lease adjusted leverage ratio of less than 3.50 to 1.00 with the potential to be temporarily increased in the event the Company makes an acquisition that meets certain criteria. The 2023 Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants and provisions relating to events of default. Under the 2023 Credit Agreement, if an event of default occurs, the banks will be entitled to take various actions, including the acceleration of amounts due. The Company was in compliance with its debt covenants at June 30, 2023.

At June 30, 2023 and December 31, 2022, the Company had no outstanding borrowings and outstanding letters of ~~up to $11.5~~credit of $33.1 million ~~if losses paid by the insurer are greater than $18.4~~and $31.2 million, ~~over the four-year policy period. Based on claims occurring since March 1, 2019, no additional amount was accrued as of September 30, 2022. Commencing on August~~respectively, under these credit agreements. At June 30, 2023, the Company ~~may elect to commute the policy with respect to the insurer’s entire liability~~had $266.9 million in availability under the ~~policy in which case the Company would be entitled to a return of a~~2023 Credit Agreement. The available portion of the ~~premium paid, up to $18.4 million, based on the amount~~2023 Credit Agreement may be used for general corporate purposes, including capital expenditures, working capital and letter of ~~claims paid and the insurer would be released from all liability under the policy for the four-year period ending March 1, 2023. As a result, if the Company elects to commute the policy~~credit requirements, as to the entire policy term, the Company would be self-insured for $10.0 million per occurrence for the four years ended March 1, 2023. The Company is self-insured for auto liability for the first $10.0 million per occurrence for the one-year period ended March 1, 2019.needed.

Finance Leases

The Company ~~also maintains an insurance policy~~is obligated under finance leases with seven-year original terms covering revenue equipment. Total liabilities recognized under finance leases were $21.4 million and $31.0 million as of June 30, 2023 and December 31, 2022, respectively. Amortization of assets held under the three-year period ending March 1, 2025 that provides $5.0 million of coverage per occurrence after an occurrence exceeds $10.0 million, subject to an aggregate loss limit of $10.0 million for each policy year,finance leases is included in depreciation and ~~a $20.0 million aggregate loss limit~~amortization expense. The weighted average interest rates for the three-year term. Additionally, the Company is required to pay additional amounts of up to $7.5 million if losses paid by the insurer are greater than $1.4 million over the three-year policy period ending March 1, 2025. Based on claims occurring since March 1,finance leases at June 30, 2023 and December 31, 2022 ~~no additional amounts~~ were ~~accrued at September 30, 2022. Under the policy, the Company may elect to commute the policy for the three-year term if losses incurred are less than $1.4 million~~3.9 percent and the Company does not elect to renew the policy. In the event the Company elects to commute the policy for such period, it will be entitled to a return of a portion of the premium paid, up to $1.1 million, based on the amount of claims paid and the insurer will be released from all liability under the policy in connection with such period. As a result, if the Company elects to commute the policy as to such period, the Company will be self-insured for the $10.0 million to $15.0 million loss layer per occurrence for the three years ended March 1, 2025. The election to commute the policy cannot be made before June 1, 2024 and must be made prior to December 1, 2025, unless the insurer agrees to extend such date.3.7 percent, respectively.

Contractual Obligations

Contractual obligations for the Company are comprised of lease agreements, purchase obligations and long-term debt obligations related to any outstanding balance under the Company’s revolving line of credit. Contractual obligations for operating leases at ~~September~~June 30, ~~2022~~2023 totaled ~~$120.7~~$132.1 million, including operating leases with original maturities of less than one year, which are not recorded in our consolidated balance sheet in accordance with U.S. generally accepted accounting principles. Additionally, in April 2021, the Company committed to an additional terminal lease estimated to commence in 2023 of approximately $57 million with a lease term of 15 years with annual rent ranging from $3.1 million to $4.6 million. Annual rental payments under this lease are not included in the contractual obligations for operating leases at September 30, 2022. Contractual obligations in the form of finance leases were ~~$36.6~~$22.3 million at ~~September~~June 30, ~~2022,~~2023, which includes both principal and interest amounts. For the remainder of ~~2022, $2.1~~2023, $0.9 million of interest payments are anticipated based on borrowings and commitments outstanding at ~~September~~June 30, ~~2022.~~2023. See Note 5 to the accompanying unaudited condensed consolidated financial statements in this Current Report on Form 10-Q. Purchase obligations at ~~September~~June 30, ~~2022~~2023 were ~~$198.7~~$157.5 million, including commitments of ~~$196.5~~$157.1 million for capital expenditures. As of ~~September~~June 30, ~~2022,~~2023, the revolving line of credit had no outstanding principal balance.

Other commercial commitments of the Company typically include letters of credit and surety bonds required for collateral towards insurance agreements and amounts outstanding under the revolving line of credit. As of ~~September~~June 30, ~~2022~~2023 the Company had total outstanding letters of credit of ~~$33.0~~$34.9 million and ~~$74.1~~$56.6 million in surety bonds. Additionally at ~~September~~June 30, ~~2022,~~2023, the Company had ~~$268.8~~$266.9 million available under its revolving credit facility, subject to existing debt covenants.

The Company has accrued approximately ~~$3.9~~$4.3 million for uncertain tax positions and ~~$0.4~~$0.5 million for interest and penalties related to the uncertain tax positions as of ~~September~~June 30, ~~2022.~~2023. At ~~September~~June 30, ~~2022,~~2023, the Company has accrued ~~$127.8~~$94.0 million for claims and insurance liabilities.

Critical Accounting Policies and Estimates

There have been no significant changes to the application of the critical accounting policies and estimates contained in our Annual Report on Form 10-K atfor the year ended December 31, ~~2021.~~2022. The reader should refer to ~~the Notes to~~ our ~~Consolidated Financial Statements in our 2021~~2022 Annual Report on Form 10-K for a full disclosure of all critical accounting policies and ~~estimates.~~estimates of amounts recorded in certain assets, liabilities, revenue and expenses.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to a variety of market risks including the effects of interest rates and diesel fuel prices. The detail of the Company’s debt structure is more fully described in Note 5 “Debt and Financing Arrangements” of the ~~Notes to Consolidated Financial Statements set forth~~accompanying unaudited condensed financial statements in ~~the Company’s Annual Report on~~this Form ~~10-K for the year ended December 31, 2021.~~10-Q. To help mitigate our risk to rising diesel fuel prices, the Company has ~~implemented a~~an established fuel surcharge program. This program is well established within the industry and customer acceptance of fuel surcharges remains high. Since the amount of fuel surcharge is based on average national diesel prices (as estimated by the United States Energy Information Administration) and is typically reset weekly, exposure of the Company to fuel price volatility is significantly reduced. However, the fuel surcharge may not fully offset fuel price fluctuations during periods of rapid increases or decreases in the price of fuel and is also subject to overall competitive pricing negotiations.

The following table provides information about the Company’s third-party financial instruments as of ~~September~~June 30, ~~2022.~~2023. The table presents principal cash flows (in millions) and related weighted average interest rates by contractual maturity dates. The fair value of the fixed rate debt (in millions) was estimated based upon level two inputs in the fair value hierarchy. The fair value of finance leases is based on current market interest rates for similar types of financial instruments.


	Expected maturity date																	2022				Expected maturity date																2023
	2022			2023			2024			2025			2026			Thereafter		Total		Fair Value		2023			2024			2025			2026			2027		Thereafter		Total			Fair Value
Fixed rate debt	$	3.9		$	14.5		$	10.2		$	5.4		$	0.9		$	-	$	34.9	$	34.8	$	4.9		$	10.2		$	5.3		$	1.0		$	-	$	-	$	21.4		$	21.5
Average interest rate		3.7	%		3.7	%		3.7	%		3.7	%		3.7	%		-						3.9	%		3.9	%		4.2	%		3.5	%		-		-		3.9	%

1918

Item 4. Controls and Procedures

Quarterly Controls Evaluation and Related CEO and CFO Certifications

As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company conducted an evaluation of the effectiveness of the design and operation of its “disclosure controls and procedures” (Disclosure Controls). The Disclosure Controls evaluation was performed under the supervision and with the participation of management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO).

Based upon the controls evaluation, the Company’s CEO and CFO have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s Disclosure Controls are effective to ensure that information the Company is required to disclose in reports that the Company files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

During the period covered by this Quarterly Report on Form 10-Q, there were no changes in internal control over financial reporting that materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Attached as Exhibits 31.1 and 31.2 to this Quarterly Report on Form 10-Q are certifications of the CEO and the CFO, which are required in accordance with Rule 13a-14 of the Exchange Act. This Controls and Procedures section includes the information concerning the controls evaluation referred to in the certifications and it should be read in conjunction with the certifications.

Definition of Disclosure Controls

Disclosure Controls are controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed under the Exchange Act is recorded, processed, summarized and reported timely. Disclosure Controls are also designed to ensure that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. The Company’s Disclosure Controls include components of its internal control over financial reporting which consists of control processes designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles.

Limitations on the Effectiveness of Controls

The Company’s management, including the CEO and CFO, does not expect that its Disclosure Controls or its internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

2019

PART II. OTHER INFORMATION

Item 1. Legal Proceedings — For a description of ~~all material pending~~ legal proceedings, see Note 3 “Commitments and Contingencies” of the accompanying unaudited condensed consolidated financial statements.

Item 1A. Risk Factors—~~Risk Factors are described~~ In addition to the other information included in this report and in our other reports and statements that we file with the SEC, you should carefully consider the factors discussed in Part I, Item 1A. ~~“Risk Factors” of the Company’s~~"Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2021, as updated by~~2022, which could materially affect our business, financial condition and/or operating results. The risks discussed in our Annual Report on Form 10-K are not the ~~risk factor set forth below. Other than the risk factor set forth below, which revises, among other things, the duration, layers, thresholds~~only risks facing us. Additional risks and ~~applicable amounts payable under the Company’s automobile liability insurance, there~~uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

There have been no ~~other~~ material changes ~~from~~to the risk factors ~~disclosed~~identified in ~~the Company’s~~Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, ~~2021. The risk factor below replaces in its entirety the risk factor found under “Business and Operational Risks” originally filed with the same title.~~

~~Ongoing insurance and claims expenses could significantly reduce and cause volatility in our earnings.~~

We are regularly subject to claims resulting from bodily injury, property damage, casualty and cargo losses, group healthcare costs, and workers' compensation. The Company has self-insured retention limits generally ranging from $250,000 to $1.0 million per occurrence for group healthcare, workers' compensation, casualty and cargo losses and certain property damage and from $2.0 million to $10.0 million for bodily injury and property damage related to auto liability. We also maintain insurance with licensed insurance companies above these self-insured retention limits. In recent years the trucking business has experienced significant increases in the cost of liability insurance, in the size of jury verdicts in personal injury cases arising from trucking accidents and in the cost of settling such claims. If the number or severity of future claims continues to increase, claim expenses might exceed historical levels or could exceed the amounts of our insurance coverage or the amount of our reserves for self-insured claims, which would adversely affect our financial condition, results of operations, liquidity and cash flows.

The Company is dependent on a limited number of third party insurance companies to provide insurance coverage in excess of its self-insured retention amounts. Recently, several insurance companies have completely stopped offering coverage to trucking companies or have significantly reduced the amount of coverage they offer or have significantly raised premiums as a result of increases in the severity of automobile liability claims and sharply higher costs of settlements and verdicts. To the extent that the third party insurance companies propose increases to their premiums for coverage of commercial trucking claims, the Company may decide to pay such increased premiums or increase its financial exposure on an aggregate or per occurrence basis, including by increasing the amount of its self-insured retention or reducing the amount of total coverage. This trend could adversely affect our ability to obtain suitable insurance coverage, could significantly increase our cost for obtaining such coverage, or could subject us to significant liabilities for which no insurance coverage is in place, which would adversely affect our financial condition, results of operations, liquidity and cash flows. Additionally, as the number of third party insurance companies willing to provide insurance coverage to trucking companies decreases, the risk of failure of one of these companies increases. In the event of the failure of one of the insurance companies, the Company may be faced with a situation where the insurance company may not be able to fund a catastrophic loss.

Our self-insured retention limits can make our insurance and claims expense higher and/or more volatile. We accrue for the costs of the uninsured portion of pending claims based on the nature and severity of individual claims and historical claims development trends. Estimating the number and severity of claims, as well as related judgment or settlement amounts is inherently difficult. This, along with legal expenses associated with claims, incurred but not reported claims, and other uncertainties can cause unfavorable differences between actual self-insurance costs and our reserve estimates.

The Company’s automobile liability insurance policy for the four-year period ended March 1, 2023 provides coverage for a single loss of $8.0 million, an aggregate loss limit of $24.0 million for each policy year, and a $48.0 million aggregate loss limit for the four-year period, subject to risk retention of $2.0 million per occurrence. Under the policy, the Company is required to pay additional amounts of up to $11.5 million if losses paid by the insurer are greater than $18.4 million over the four-year policy period. Commencing on August 30, 2023, the Company may elect to commute the policy with respect to the insurer’s entire liability under the policy in which case the Company would be entitled to a return of a portion of the premium paid, up to $18.4 million, based on the amount of claims paid and the insurer would be released from all liability under the policy for the four-year period ending March 1, 2023. As a result, if the Company elects to commute the policy as to the entire policy term, the Company would be self-insured for $10.0 million per occurrence for the four years ended March 1, 2023. The Company is self-insured for auto liability for the first $10.0 million per occurrence for the one-year period ended March 1, 2019.

The Company also maintains an insurance policy covering the three-year period ending March 1, 2025 that provides $5.0 million of coverage per occurrence after an occurrence exceeds $10.0 million, subject to an aggregate loss limit of $10.0 million for each policy year, and a $20.0 million aggregate loss limit for the three-year term. Additionally, the Company is required to pay additional amounts of up to $7.5 million if losses paid by the insurer are greater than $1.4 million over the three-year policy period ending March 1, 2025. Under the policy, the Company may elect to commute the policy for the three-year term if losses incurred are less than $1.4 million and the Company does not elect to renew the policy. In the event the Company elects to commute the policy for such period, it

will be entitled to a return of a portion of the premium paid, up to $1.1 million, based on the amount of claims paid and the insurer will be released from all liability under the policy in connection with such period. As a result, if the Company elects to commute the policy as to such period, the Company will be self-insured for the $10.0 million to $15.0 million loss layer per occurrence for the three years ended March 1, 2025.

To the extent the Company incurs one or more significant claims not covered by insurance, either because the claims are within our self-insured layer or because they exceed our total insurance coverage, our financial condition, results of operation, and liquidity could be materially and adversely affected.

Furthermore, insurance companies, as well as certain states, require collateral in the form of letters of credit or surety bonds for the estimated exposure of claims within our self-insured retentions. Their estimates of our future exposure as well as external market conditions could influence the amount and costs of additional letters of credit required under our insurance programs and thereby reduce capital available for future growth or adversely affect our financial condition, results of operations, liquidity and cash flows. In addition, insurance companies are increasingly encouraging or requiring trucking companies to increase the level of technology and safety measures used in their fleet, which could increase the costs of our fleet in order to obtain acceptable coverage or avoid rate hikes.2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds —

Issuer Purchases of Equity Securities

Period

(a) Total
Number of
Shares (or
Units)
Purchased (1)

(b) Average
Price Paid
per Share
(or Unit)

(c) Total Number
of Shares (or Units)
Purchased as Part
of Publicly
Announced Plans
or Programs

(d) Maximum
Number (or
Approximate Dollar
Value) of Shares (or
Units) that may Yet
be Purchased under
the Plans or Programs

July 1, 2022 through

July 31, 2022

—

(2)

$
—

(2)

—

$
—

August 1, 2022 through

August 31, 2022

—

(3)

$
—

(3)

—

—

September 1, 2022 through

September 30, 2022

450

(4)

$
206.53

(4)

—

—

Total

450

—


Issuer Purchases of Equity Securities
Period	(a) Total Number of Shares (or Units) Purchased (1)		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may Yet be Purchased under the Plans or Programs
April 1, 2023 through
April 30, 2023	—	(2)	$—	(2)	—	$—
May 1, 2023 through
May 31, 2023	—	(3)	$—	(3)	—	—
June 1, 2023 through
June 30, 2023	—	(4)	$—	(4)	—	—
Total	—				—


(1)	~~Shares~~Any shares purchased by the Saia, Inc. Executive Capital Accumulation Plan ~~were~~are open market purchases. For more information on the Saia, Inc. Executive Capital Accumulation Plan, see the Registration Statement on Form S-8 (No. 333-155805) filed on December 1, 2008.
(2)	~~The Saia, Inc. Executive Capital Accumulation Plan sold 950 shares of Saia stock at an average price of $218.18 during the period of July 1, 2022 through July 31, 2022.~~
~~(3)~~	~~The Saia, Inc. Executive Capital Accumulation Plan sold 12,119 shares of Saia stock at an average price of $239.76 during the period of August 1, 2022 through August 31, 2022.~~
~~(4)~~	The Saia, Inc. Executive Capital Accumulation Plan had no sales of Saia stock during the period of ~~September~~April 1, ~~2022~~2023 through ~~September~~April 30, ~~2022.~~2023.
(3)	The Saia, Inc. Executive Capital Accumulation Plan had no sales of Saia stock during the period of May 1, 2023 through May 31, 2023.
(4)	The Saia, Inc. Executive Capital Accumulation Plan sold 370 shares of Saia stock at an average price of $313.65 during the period of June 1, 2023 through June 30, 2023.

~~Item 3. Defaults Upon Senior Securities—None~~

~~Item 4. Mine Safety Disclosures—None~~

~~Item 5. Other Information—None~~

2220

Item 6. Exhibits


Exhibit
Number		Description of Exhibit

3.1		Restated Certificate of Incorporation of Saia, Inc., as amended (incorporated herein by reference to Exhibit 3.1 of Saia, Inc.’s Form 8-K (File No. 0-49983) filed on July 26, 2006).

3.2		Certificate of Amendment to Restated Certificate of Incorporation of Saia, Inc. (incorporated herein by reference to Exhibit 3.1 of Saia, Inc.'s Form 8-K (File No. 0-49983) filed on July 2, 2021).

3.3		Certificate of Amendment to Restated Certificate of Incorporation of Saia, Inc. (incorporated herein by reference to Exhibit 3.1 of Saia, Inc.’s Form 8-K (File No. 0-49983) filed on June 9, 2022).

3.4		Certificate of Amendment to Restated Certificate of Incorporation of Saia, Inc. (incorporated herein by reference to Exhibit 3.2 of Saia, Inc.’s Form 8-K (File No. 0-49983) filed on June 9, 2022).

3.5		Amended and Restated By-laws of Saia, Inc. (incorporated herein by reference to Exhibit 3.1 of Saia, Inc.’s Form 8-K (File No. 0-49983) filed on July 29, 2008).

3.6		Certificate of Elimination filed with the Delaware Secretary of State on December 16, 2010 (incorporated herein by reference to Exhibit 3.1 of Saia, Inc.’s Form 8-K (File No. 0-49983) filed on December 20, 2010).

10.1		Amended and Restated Restricted Stock Agreement under the Saia, Inc. 2018 Omnibus Incentive Plan for Restricted Stock Awarded to Frederick J. Holzgrefe in 2023.*

10.2		Form of Amended and Restated Restricted Stock Agreement under the Saia, Inc. 2018 Omnibus Incentive Plan for Restricted Stock Awarded in 2023.*

31.1		Certification of Principal Executive Officer Pursuant to Exchange Act Rule 13a-15(e).

31.2		Certification of Principal Financial Officer Pursuant to Exchange Act Rule 13a-15(e).

32.1		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following financial information from Saia, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2022,~~2023, formatted in iXBRL (Inline Extensible Business Reporting Language) includes: (i) Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (unaudited), (ii) Condensed Consolidated Statements of Operations for the quarters and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 (unaudited), (iii) Condensed Consolidated Statements of Stockholders’ Equity for the quarters ended June 30, 2023 and ~~nine months ended September 30,~~ 2022 ~~and 2021~~ (unaudited), (iv) Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 (unaudited), and (v) the Notes to Condensed Consolidated Financial Statements (unaudited). XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

104		The cover page from Saia’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2022,~~2023, formatted in Inline XBRL (included as Exhibit 101).

23* Management contract or compensatory plan or arrangement.

SIGNATURE

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.


	SAIA, INC.

Date: ~~November 1, 2022~~July 28, 2023		/s/ Douglas L. Col
		Douglas L. Col
		Executive Vice President and Chief Financial Officer

2422