Saia (SAIA) 4 Feb 192018 Q4 Earnings call transcript

Company Profile

Participants

Douglas Col	Treasurer
Richard O'Dell	President and Chief Executive Officer
Frederick Holzgrefe	President and Chief Operating Officer
Todd Fowler	KeyBanc Capital Markets
Jason Seidl	Cowen Securities
Stephanie Benjamin	SunTrust Robinson Humphrey
Ravi Shanker	Morgan Stanley
David Ross	Stifel Nicolaus and Co
Amit Mehrotra	Deutsche Bank
Matthew Brooklier	Buckingham Research
Willard Milby	Seaport Global Securities

Call transcript

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Operator

Good day and welcome to the Saia, Inc. Fourth Quarter 2018 Earnings Conference. Today's conference is being recorded. And at this time, we would like to turn the conference over to Mr. Doug Col. ahead. go Please

Douglas Col

Chief Good XXXX Savannah. O'Dell, Welcome our President to Executive Thank call. morning, Hosting quarter and our Holzgrefe, conference and Rick Officer. today's fourth Officer, you, Fritz everyone. Operating call Chief are

that historical may refer statements during of and on actual our to XXXX. Before facts risk filings may not a call, and and risks exact that These number are release the the of SEC factors forward-looking make know are Litigation the Securities subject results differ other within differ. we to the statements could statements the for Private uncertainties and we that forward-looking on actual more our Reform press you results should most made begin, meaning recent We information you call might that, materially. be some Act to all of cause

over Executive Now, the turn O'Dell, call I Rick Chief like would to Saia’s to Officer.

Richard O'Dell

of revenue thank share to us per billion. board. of record Fourth closed grew you record all-time million, an diluted the out across Well, earnings we XXXX. good XX.X% $X.XX earned to compares Fourth-quarter of share the per XXXX results by high quarter adjusted in for full-year were pushing fourth XXXX that Saia’s morning it to to results. quarter pleased report and earnings joining $XXX and with $X.XX, to $X.X I'm a discuss favorably diluted Saia by revenue

consecutive an quarter yield. with earnings of XXth quarter of LTL in our in fourth customers to Rate diluted share hundredweight quarter adjusted in the year increase our $X.XX year-over-year LTL and For resulted overall compared contractual reported improvement diluted fourth earnings The XXXX, per in X.X% renewals share per of revenue XX%. the $X.XX average increased were our full XXXX. per represented

the mix length slightly reflects in drop quarter also part handle. we our of but and improve Yield not is from per haul the a taken business actions the weight improvement longer to a yield efforts of due in shipment. small only that to Our our positive fourth on pricing, in benefited

Some decreased shipments LTL to workday reflecting fourth X.X%. are the tonnage quarter. workday decreased LTL in per as XXXX a the from follows. by by weight comparisons per quarter decrease fourth X.X% per shipment. Compared X.X%, of

total the I As compared related miles miles, to haul to to transportation of coverage X.X% miles expansion XX% per XX.X% rose of Purchased into XXX increase revenue of continued mentioned, haul by the Northeast. to $XXX.XX. length line increased in map LTL XXXX. our shipment X.X% were being

Purchased did weighted by moderate X.X% of for by as weight gallon per reported and to the were investments Length density tight region haul year, year. that our XXXX, improved we from early gallon across truckload yield increased more transportation per In yield. prior per part flat The in heavier in markets we claims own year. the with service through cargo a slightly like higher turn going results more expand Our of while call our call miles ratio our our to our fourth full are quarter of miles of in I’d line grew X.X%, increases metrics that, efficient LTL and add highlight to grew reliability of and detail. our to details. than for I'm trailers. to These Fritz XXXX, In level average over as our by X.XX% before the X.X%. costs. more mileage, XX.X%. XXX by XX.X% was up to turn maintenance over X.XX improve out miles, more due than the service, handled shipments X.X% grew and optimize shipment than lower tractors fleet in [ph] and haul put we helping review couple In Average Holzgrefe in XXXX, haul the Fritz? from XXXX. tractors was by year and us LTL from financial fuel results shipment XX.X% to X.XX% builds. of shipments continue workday to as Northeast the miles the I the LTL new achieved were benefits full to tonnage per the With we opportunity and total X.XX X,XXX XXXX, essentially engines. our economy line more into fuel new improved per Fritz revenue

Frederick Holzgrefe

fourth XX.X% the of Rick. increase. quarter tonnage the quarter revenue as million growth from of Revenue compared prior record Good We million addition fuel $XXX.X morning, total year the and $XXX.X quarter. positive benefited terminals the pricing opened terminals generated to in XX% in fourth trends, Thanks, as increase also in A new and in everyone. revenue year. the a during XXXX, from well contributed the surcharge to shipment in

our prior-year of on XX.X% fourth-quarter were Northeast of result expense mentioned, mentioned of the This quarter insurance rose XX.X% X.X% X.X% focus Fuel X% severity compares basis: amortization benefits the at expense Claims XXXX. fourth increase in wages, the the equipment, [ph] moderate largely from an quarter, rose reflects in offset driven revenue expansion. by Salaries the more profitability end, key year. or and PT quarter of the the impact to accident rose due compared of million of and $X.X Rick and expense fourth average A million $XX.X to and year-over-year XX% continued in transportation Purchased by mix and of XX.X% expense our impacted continued to real $XXX.X which technology. was the quarter wages primarily of quarter most a in for million, X.X% Salaries, prior of employee fourth-quarter and decreased a Depreciation previously by fourth in estate, rose by surcharge million significantly, fuel XX.X% count our wage XX%, in the pricing last revenue quarter $XX.X and revenue. levels of X.X% yield versus million to and results in LTL items effective year. increase $XX.X or the revenue. in reflecting investment As July, of few to and management. the year’s on to in X% expense rose increase approximately

fourth As $XX.X XX.X% a The percentage from amortization compared X.X% of better the of of revenue fourth-quarter earned last year. income than was to Operating $XX.X operating in prior a revenue, ratio record XX.X% depreciation XXXX. basis was year. and to million X.X% XXX points the of quarter million rose

financial results. to Moving on the XXXX highlights our of full-year

was record for $X.X up and billion XXXX. As billion Saia in revenues of XX.X% from Rick of a mentioned, $X.X revenue

$XXX.X basis $X.XX million and operating to the the to XXXX. Our XX% ratio were XXXX. income year fourth fourth XX.X% diluted of income compares quarter compared for share improved in as points of operating by the earnings XXXX of operating than share million. quarter higher follows. per Record was XX.X% Fourth-quarter Diluted full $XX.X per XXX in to earnings of $X.XX

For XXXX. per $X.XX share our diluted earnings the in full-year XXXX, were versus $X.XX

As was Cut in tax of the tax of passage a result deferred fourth as and the that required Tax reduction recorded company a XXXX, of the reminder, a liability -- Act. income quarter Jobs in the

and XXXX. $X.XX our $X.XX This of capital to fourth XXXX That of to GAAP XXXX. reconciliation Excluding of I per In you improvement capital for million provided XX, were XXX.X expenditures share to in million in of capital leases. quarter earnings Net this $XXX table $XXX.X at debt for the continued and estate, equipment share to reduction, refer total million, with net forecast diluted $XXX compares earnings in net per total year are of the the including XXXX, acquired earnings This to of release expenditures net actual capital on XXXX. between XX, XXXX total for and this total $XXX.X our approximately our million, to to XX% million, $XXX an explanation adjusted capital for call. projects, investments our debt in debt December the XX.X%. technology. in debt capital was be and earnings earnings infrastructure expenditures was including difference Net was reported were real expenditures. compares At discussed XXXX, terminal full capital December investments million. fleet,

Now, to return the I’d Rick. call like to

Richard O'Dell

brand hold new loyal customers in In employees all that expanded the taking for service even exciting our to markets to results. have by effort us in record these see It’s great closing, to Saia satisfying of regions. gratifying XXXX support and like to would Thanks, given just trusting produced provide an more our who and it's our the the Fritz. at dedicated are of thank all time growth I of

year. this to four plan we’re into in Looking continuing XXXX May to Northeast. of the the region our and since push opened terminals open our to We've new XXXX, six about terminals launch out XX excited

excited Our own proposition legacy in supply even we’re growth a look Northeast, of ability to our we tenet chain. of to in customers’ serve our our markets our to become reach areas. within is more to coverage important our opportunities improve our the more customers value service Outside an and key for continue part of and

where in serve our of and third under terminal existing Just customers as a coverage. that better to an enable serve we Dallas, our customers and be Tacoma, us Seattle, number terminals have review with new added to in terminal second opened in markets we XXXX market, or there, new additional may terminal service

We transfer a to the that better in winter the offer month, a month of schedule centers new the last like location. year first like. over early pretty at feels freight this January new with say as per to to but some our year. actually pretty hit year, And weather these slowed last through was X.X% go January and they tough typical questions. January looking tonnage or With just would better regard I draw underlying of tonnage the month to the say days XX% I’d for Sometimes, even trends compared was said, the open further allow several of if with so day I’d point. good what to environment, the employees hard in month finally, had current comparisons, commune the some the about January up terms us our to blast like the well. and it’s our we last of this that that, up call down comparisons and was environment of activity, the tough year-over-year, conclusions ahead really had

Operator

our from Capital KeyBanc first will Instructions]. And Please question Thank take Todd [Operator Markets. with Fowler go we ahead. you.

Todd Fowler

morning, was if your bit – pricing a Great. you everyone. could I about the Rick, and just wondering little talk Thanks. expectations Good

Richard O'Dell

Good morning, Todd.

Todd Fowler

Can everyone. morning, good Hey, hear me you okay?

Operator

mute. may you on be Todd,

Todd Fowler

Can you guys guys me? hear me okay? hear Can you

Operator

– And to next well comes and our Jason Seidl next Company. ahead. from Please question move Cowen our go question on from

Jason Seidl

Hello? call. hear conference the problem me? morning, I Can Good guys. there’s on Anyone? a you think

Richard O'Dell

lines the sure open. are You

Jason Seidl

They're not open.

Richard O'Dell

be having Seem to some here. problems

Jason Seidl

They're open. not

Operator

one Just moment.

on things. check some me Let

Jason Seidl

me? Can you guys hear and team, me? hear Rick you can

Douglas Col

Savannah?

Operator

your repeating try could you question. if Jason, Yes.

Jason Seidl

Yes. now? you guys Can hear me

Richard O'Dell

able you are If to the Savannah, questions? you able could to, them repeat us? you're to hear

Operator

am I through being I staff unable can't to answer conference. the they informed the main by them questions. am hear that hear line

repeating your one Jason, question Just now. moment. I try apologize.

Jason Seidl

Not now? problem. everyone a Can me hear

Richard O'Dell

We can. got We it.

Jason Seidl

Hey.

Richard O'Dell

Good morning.

Jason Seidl

interesting It’s hey, I clients because email me morning. a we you. Good couple that, hear had could of

Douglas Col

Jason. pressure, No

Jason Seidl

all. at mentioned look Again, not taking you impacts. the some always No, When all. of questions. pressure weather at Rick, here. you the some as Couple tonnage No you at thank that, time obviously, quick had gentlemen, for January, in

close you If a you guys be you tough that to comp parse basis? think flat could on out, will

Richard O'Dell

actually modestly. were up up the early Probably. trending month, in We

probably is fair. flattish So,

Jason Seidl

Okay.

release $XXX to says Okay, of $XXX I because expect that’s wanted at good. net a million your CapEx And heard clarification you XXXX, in net million. CapEx get but I

Frederick Holzgrefe

that Yes. million. different is I the Thank looking the real The opportunities to more low $XXX you we’re out, and stated at. upper a million estate probably as Jason. difference pointing of is $XXX comment that that for the in of have range should the end around it

things those So, choppy. be tend pretty to

the can get a a end at lower close, and it’d if they be end of upper closed, didn't opportunities would on – that we if end. the lower So, we the at range, be couple couple

Jason Seidl

the it side? still expansion Is Northeast on Okay. for or more renting that are guys you

Frederick Holzgrefe

require Northeast, the make for enhancements in locations and our to terminal be a the capital – that have one continue in the of lease, projects projects some the particular markets, looking incremental Northeast. question at, we’re some but sort that year we’ll there are legacy items that ones in next are smaller would to in the – These we likely would pipeline

Jason Seidl

I And question more find can and here. maybe guys try to have fair again Okay, Todd you then enough. one

you an was a pricing the talking slowdown, of bit Just incredible side, year we about side. truck on are a pricing little And seeing last little on for year bit obviously, to especially I the a side. think, rate about side. if in see the little the contractual Talk where truckload bit growth, you pricing in the us on of will, a on XXXX

Richard O'Dell

digits. probably I would mid-single expect

probably I think right. you're

and modestly been base. stepping of us us, certain probably action a it’s For least and pricing, our at taking part some number corrective because extent behind to that's we've with that's of account down

So, service that renewal at look opportunities as they come the that correctly for we we the for again, be to need and we’re up things compensated providing.

that it’s really So, increases. think those you're adjustments would But more lane larger right. I drive

market the been in digits. and we've probably high-single mid-single think digits I is more the

Jason Seidl

gentlemen. Okay. the you time. Thank for Fair enough,

Operator

question next SunTrust. with our come go And will Stephanie Benjamin from ahead. Please

Stephanie Benjamin

XXXX, going good with morning. Hi, through then, that monthly, to calls kind helpful I see I throughout service changed question. you XXXX? the growth Is of would for levels. your that was of positive there. could in continue this be to there tonnage quarter, the you margin walk not anything in increasing forward in of that kind again, would think just you the Thank overall just able and that hoping and terms – by improvement prior be to on maybe that positive see just you've Thanks. said then cause improvement has margin to environment pricing inability And

Richard O'Dell

questions. the for Thanks

Let breakout. me start the tonnage with

that was And quarter. year-over-year X%, year-over-year feel same certainly only achievable in talked tonnage by fall rebuild minus the December quarter we hurricane if would the were typically, year, The point as in there. prior-year of November, around We've the can an was plan, out month think comfortable at X.X%. last December plus the that offer X%. thing plus terms think think positive for periods about, an for OR I of the October, we gave the look change as would a they I tonnage. sort we’ve October the to basis And previous in of us at year minus XXX basis, to the impacts November sort X%; we plus was I conversations X.X%. fourth months shipments Shipments continue that's of somewhere on XXX, holiday the year our So, – for has full X.X%. year-over-year, full color changes pointed that, year. on impact. year where and we you and that for execute minus certainly

Stephanie Benjamin

again helpful. Very time. for Thanks your

Operator

Markets. Please question KeyBanc And go will from next our we take ahead. comes Todd with Fowler Capital

Todd Fowler

okay me Hey, can you hear guys now?

Richard O'Dell

We can.

Todd Fowler

questions been my have of All asked.

of shown expect is, I'd – I a on I ramping you’d where Hey, been margins, you know headcount margin kidding. throughout improvement you I'm for here high-level what maybe just Okay, guess, has nice commentary and gave of up. just Can kind the normalized some I incremental like talk to XXXX. the have guys start for you But kind environment. about that XXXX know Fritz,

still environment about tonnage growth Should can stronger a How some had you incremental decent shift get to some margins? we you earlier the think tonnage in maybe slower growth You year. improvement? XXXX, do yield but into

Frederick Holzgrefe

incrementals. sort think as basis makes sense. I that those points, the of I points to I've XXX year, XXX for mentioned, full think basis

just we likely same is resources quarter, I particular, the feel in continue range the first full initiatives year, the other the Northeast, for good in about think, in in I investment or training us quarter traditionally think trendline the staffing, the incremental as as in for pretty quarter. or have investments sales I do markets. we an first But and think our don't I we’ll which that

investment quarter, to it’s first quarter. It’s going pressured us. for an So,

full back been. business, feel look pretty of year, ourselves we good you the kind kind the about of seasonality If that. always of for in prepare of we has kind how It’s it history, but,

Richard O'Dell

Yeah.

us so an one on impact has well. workday this also has quarter as year, that less First

Todd Fowler

just or is [indiscernible]? that that calendar calendar the shift the is with Easter Rick,

Richard O'Dell

workdays versus XX in year. last XX QX Just

Todd Fowler

Okay.

and tonnage understand us – there some just actions. then, specific give with is difficult – there's And there that, Okay. and comparisons. the issues in the January, trends I a you think pricing that I are weather some sense Can

by is of have moving are existing you an Do or idea any of of you I growth out. us think that the are to shipments year heavier-weighted where on the that and in And reported grow give tonnage the there's impacted your XXXX, some can a the you you basis think more going Northeast first are of then or idea half tonnage as underlying about overcome? is year seeing into comps too the a you some sort company-specific full-year truckload customers kind actions? of with probably – can difficult

Richard O'Dell

We would expect modest and months growth in quarters. future

a bid an take which up for to lot that in in – your I show to expanded think bid opportunity history, opportunities coverage your have of lanes coverage. share particularly wait with on expanded our customers, continue larger and our come we and they’ll contractual till new we

expect So, the would year. some modest growth we for

Todd Fowler

makes the to of would the growth look That that the have specific down the kind things the it either about thinking flexibility And and growth be you in and environment? might would tonnage to then, step you negative on plans continue into sense. CapEx and how it at, based more that the factor see you changes any things growth that economic good. to or economy cause Okay, the what trends down CapEx the lastly, you of or much into something up in would Northeast, you if do in slow some step the just maybe you both

Frederick Holzgrefe

a CapEx to this So, couple Todd, our of year I think of break around equipment. just big going pieces. is slug be into that A investment

the we’ll next estate and in that this deliveries in quarter the on and real quarter So, take opportunities. equipment in

retire would commitment we likely a you would equipment aggressively. we’ll slowed, So, there. do, more have economy what But older the

in that get trade a actually you situation, maintenance-favorable then, So, out.

On drag. pretty going we’re capital-lite buy that sort our Everything into what put but opportunities we philosophy almost don't just The And the this we is that that You've a facility Harrisburg we’re looking we anything characterize than like they're older the year, in the is they're that Northeast the investments. I with – around some we them, required opened substantially this lower-cost of Northeast, pipeline. facilities. taken that. we to capital of is lease for January biggest and continue terminal, would of have which these in this strategic, maintenance sort have Harrisburg smaller extent to the for at a out equipment

about certainly a that. markets, So, those. amount of flexibility in around the I period, we slowdown think we we a But the in larger delay on have projects or fair And legacy defer can be able is CapEx feel our to sheet level particularly profile positioned where this see what we handle now, of balance XXXX. the to very operating of of right strongly sort in

Todd Fowler

That's helpful. year? this Fritz, did CapEx you for of the was stock how say rolling much

Frederick Holzgrefe

It’s all That’s $XXX revenue roughly equipment. million. for

tractor, that's So, trailers, forklifts.

Todd Fowler

Thanks perfect. help for the Okay, this morning.

Operator

our from with Shanker ahead. will we question Ravi And Please take Stanley. next go Morgan

Ravi Shanker

Thanks. Good morning, guys.

follow-up of implications on to that. macroenvironment, the kind Just from again

health XXXX, the the I But environment think and this XXXX than more through similar of I one you next the XXXX, and and I end XXXX or setup XXXX if will, recessions, two, the the if what be a the war. to XXXX the going think of of think competitor crystal if is bit go price or little – our of in and stable look Obviously, pretty back it’s for current the XXXX Do war and think maybe based recession next setup, year here. you gazing the didn't But see do that industry as last big like, at year XXXX, environment on you to to you was a big early and you whenever. price environment? think you everyone. hurt more much a space players it in earnings went ball

Richard O'Dell

wasn't price place good for so. Yeah. I very would industry. think in the that anyone took Obviously, our war

you pretty through lower And In well. to think got have doesn't we've learned cost volume price that. very more work business, from high just a it at to the fixed putting LTL network. You've tend

discipline. slowdown. you you think was the And So, that would better demonstrated said, the like last would industry have itself it in again,

Ravi Shanker

what your new are it. volumes kind kind of terminal, or in the customers of you that lower? said Is value you number prop. consistent with is the with And rollout who that on in the expected other during that know of existing release just or got [ph] the coming higher regions Okay, XX%

Richard O'Dell

we are Yeah, could Northeast at we beginning, I they and would existing that we they doing because many our base say, leverage originally, were. knew customer already cases, in they the knew – the business our in thesis who

support we've of pleased that been level it value to think speaks very proposition. that with our I because

would say it's that – customers what interpret So, of way I two our a legacy with and come that, think to Ravi, ways. they've validation what in we expect. do would the I I One,

we an opportunity think in don't opportunities to currently says business that continue find frankly, also we customers it new to with. I grow do that new market have that, or and

have the of we knew Did that we to we had think, that say I at that that with I but can't opportunity. this had compared original we forecast XX% expectation, stage? specificity, we knew it it. we’d forecast we

think I we positive, it do to it's experienced, but So, says what have supports what in also customers kind that well market. we grow can of and continue

Frederick Holzgrefe

Yeah.

that large that But that have – of you playing I because is surprising to there. destined a XX% overlap. shipments there a it’s customer also that then, competitive to just legacy surprising really coverage the – market we’re and we point is little or we price so of up have And starting in obviously, from think in this our a haul in not up is more at market. extent, and market intermediate type time, Northeast a have, originated interesting get part point not regional the strategy our part than not compete that’s to we’re network. to of either lower the from secondarily, that's the are to other again, Again, it’s that the the not regional

Ravi Shanker

Great. guys. Thanks,

Operator

question come with Research. from next Please Scott ahead. our Wolfe Group will And go

Unidentified Analyst

points what on into impact It's points expansion a morning, XXX of basing bit improvement of XXXX? Northeast basis out for the your talk to XXXX guys. we and look the Scott. about Hey, impact in [ph] you're Could XXX basis little as good the you in on Rob profitability

Richard O'Dell

the it’s goes hard of commented, exactly guess business from our we legacy XX% to I because, and say to network. as Yeah.

what’s of the of originally we've to just look And through in has opened. the look hey, But improved you also you ratio, the back I’d growth. since obviously, if that. So, operating have profitability then, have at it terms just materially saying, the Northeast business,

costs. you growth, fixed your the have With

has fixed leveraged Some any been to of you also cost there. Do other been network our want make comments?

Frederick Holzgrefe

I the that, think what one – would add expansion, of when targeted that one benefit on things I of things that was focused this this would that we to the we network. our contiguous

places And in or course like that areas year. over So, Charlotte the Cincinnati. of we've the seen

leveraging force, operating infrastructure, We’re those the those sales costs.

to what specifically business. because of tough impact network Northeast permanent to it’s the So, the just more carveout a the sort has impact broader, of it is

that as surfaced So, positive but well. it of and half I of the year, certainly second elements benefited into think been contributor a the business the other it's

Richard O'Dell

and I open within then resource, as regional thing look the – our all leadership, leadership prevention we It’s as expansion our is a sales human right, of cost at, think the overhead. our already incremental other there, some you we upfront. put we safety, and claim when then obviously, up you and have that first resources you terminals, for your region, open do

period margins reflected incremental improve we've over and, of company’s in the time the obviously, do results. seen a So, that

Unidentified Analyst

to is trying out model much investment get costs in just what No, we next that's to at, think fixed of were year. as fair. for was the how basically looking is we about were That already

Richard O'Dell

sure. Yeah,

Unidentified Analyst

of can fewer we’re relative Saia guess, we’re give working in us configuring to and reflect today to about as you just network run of day? cost so where your kind cost daily fixed one the follow-up, your model to thinking sense a the the kind the properly what so daily is, I past, of a – what it’s

Frederick Holzgrefe

Yeah.

variable I sort your work think would out I what I look by lines would you what costs And over can time if figure if at fixed likely and basis. that was and and days sitting public quarter. of can things be you in look the would been the see costs model at would on I the or P&L, you the the do have in the chair, I that

you. that’s of I think help the I best probably can sort give

Richard O'Dell

business that Yeah. also change, generally would $X.X full it’s million $X to say, And a probably. it’s day, I one somewhere million assuming around workday

Unidentified Analyst

time, the Appreciate guys. Perfect.

Operator

Stifel. we question Ross will from our ahead. next And Please with David go take

David Ross

Good morning, gentlemen.

Richard O'Dell

morning. Good

David Ross

All guidance for XXXX, color there, right. Real Fritz? quick, any tax rate

Frederick Holzgrefe

Yeah.

I think XX.X%. somewhere between XX% and

around out comments that. don't fuel some there. have Currently, we So, tax

have an into impact could that the year. So,

it’s is that. range of around the there, So, part

also tax and had credit. a probably the to anyway. XXXX element for in that how wildcard hope We is any not And of compensation the hurricane sort the kind repeating. over other this related of We equity credit That's treatment with accounting then, is of not biggest how changes time.

So, comfortable with range. that kind of a we’re

David Ross

going OR have the to margin would And I given guess even strong back I the on the little expected yields, OR maybe questions improvement, bit better this quarter.

improvements and why you're leverage more yield there? change what from So, I think could not guess, how the about getting you do

Frederick Holzgrefe

quarter? first about talking You're

David Ross

little would the No, a would fuel it’s but I'm I helped but out, maybe and know in are though out about – I think, percent we I still surcharge up labor cost it not If yields inflation there’s it quarter. XX%, price fourth drag talking have the and the better. helped haul something? a a missing been to it Northeast, have bit in few tailwind, was only Are specifically

Richard O'Dell

I think kind every and the there around I but there’s – quarter, the how and falls holidays. operate is calendar for through – the there's positive the fourth it of you trends in then comment sure, the one where

like as we to – been. that as we’d have efficient probably that weren't So, think I

and see bit December at you choppy. was tonnage If can the the and a positive trends look October quarter, in volume you pretty was a

to at to. operate difficult it same makes level you'd that the think like I as

our it’s of December with productivity generally period. time over though, pleased, challenged We’re in sort the but that in quarter,

of tell and We would in Northeast going a also We it our We of Northeast our density bills yet, I the our the higher it don't stop up. and are now, two many has per our of to terminal but production coverage even just rest well, is we run keep comment the rest while miles isn't routes is network. the we would have network. think of we’ve we there whole that, So, what right? terminals when we’re lot opened expansion we a you, in service I our the have where very So, is service a than quality I and in in cover in the up with gone there and December sometimes open of lot start, to have our geography, Northeast right? don't for

David Ross

volatility with of back matching side think management the either labor matching, of on are if I Is improve dynamic to process-wise the to the you guys the that's you quarter, I comment labor around at will? Fritz’s looking anything IT demand most and there guess, that And then, levels. fourth and

Richard O'Dell

Yeah.

David, think, in thing data the business this sooner, capture make – analyze, I we’ve with is how faster you and about talked before, better about decisions it. big as

us those in in investments pricing, software, case, So, our beyond, more this we’re investments at are XXXX but managed our from around that, things as very everything discreetly, we around our drive how allow to force. and focused we've that look on our optimization decision-making labor optimize

think an continue we that opportunity that's I top in. invest

ahead. in additional that something and so pretty in tools some that's investments continue and both we that made I invest we've in years there this think far, think I year we’ll the but to are refine, good

Frederick Holzgrefe

Yeah. as I some major as there, should going which our our dispatch would in system, your city line planning we system, on just us rolls well. benefit that planning comment, to inbound major enhancements investment of have well as our a being two into haul project systems which

David Ross

good. you, Thank Sounds guys.

Frederick Holzgrefe

All right. Thanks.

Operator

our from take next Mehrotra ahead. And Please we go from Deutsche Bank. question Amit will

Amit Mehrotra

Thanks, Hi, guys. operator.

first in the do provide sequential in us quarter. here Just of progression the wondering actually help OR if a you and bit could work the little

think incremental margins a that I then, provided obviously, on just question, something, margins. the in And follow-up related that's past. you've question to and

You're basically XXXX, guiding in is company. great OR to a a pretty for which sub-XX milestone the

incurred the shipment of If just absorbed being that to talk volume some in you able can better the or expansion your Northeast as that tonnage what maybe that progress scenarios, in achieve costs confidence be growth about XXXX? through is maybe you've given you in just and various

Frederick Holzgrefe

Okay.

the would be a we so right? worse less partially results, First little January. impact the well So, first our question workday than outlook one bit as as kind had late normal, – is of, in because weather quarter that of current two-point

modest to some flattish quarter. currently and that expanded the the usually then, feel is expect able fourth quarter fourth have. we a that And generate in the coverage doing operating about good we’re with from the within very organization, So, we things first deterioration the we tonnage, particularly of be quarter ratio to positive to

XXX basis environment basis high to I would we are range. little basis quite at is confidence XXX obviously, year, better, guess And it good get more don't be from a And growth, would show income, points the some point probably that. operating we XXX if environment then, gets end some end worse, be higher a still gets we of obviously. at with meaningful say, maybe would of the level. if topline the if So, point bit for pricing maybe I it but would bottom the and have our the difficult, I volumes a

Amit Mehrotra

about in bit can think some you would costs where of in there. you you Maybe background on I I'm a And it I if noise. different way the I terms Maybe ask do sorry us to operating can help business? bit of non-volume guys guess, you the, more. Maybe Maybe can Yeah. ask there's workforce imagine, little some driven could little is – I expand leverage purchase so, side. a the leverage transportation leverage Northeast, as the

you the the some gets density-based see leverage bigger that in can As of gets cost where and enterprise scale, structure? the business more

Frederick Holzgrefe

it's said in we to adding across our think you corporate sort as office as the continue we Northeast, think always of about So, of costs, grow, we’re sort certainly, kind the corporate leveraging the right? that P&L, overheads. not of Atlanta expand I we've the if corporate

So, X% that's the that's total to of a point XX% leverage there. and

Rick what Northeast center the over I would – the more simply those out time that schedules, getting think, get in closely Northeast of around filling network we like. our the the in So, around to leverage right? looks as the operate described terminals

So, those the of leverage are us. opportunities kind for

right? focus how network. customers. that or then So, how of have you price, network, sense in job better it, that to and you volume the I to can identified an on business finding also utilize also good going a do you do Because of do the network that for optimize that matching behind the effectively continued think if pricing there's be effectively effectively around opportunity priced makes with you assets mix

elements there think that. multiple I to So, are

that in continue We of kind of trend. – sort

I how leverage and improvement we think that's get year-over-year. range that of OR

Richard O'Dell

and obviously, also then, suboptimal that get the use increase look length in would customers’ service comment, the we I Yeah. some purchase purchase freight, we you move back, you to transportation have growth and need. transportation. And do at of the the times, haul,

obviously, optimally resources to, our looking group a drivers more it that with move of over well. and time we’re as So, staff with own

a process of well. So, that's kind as constant

Amit Mehrotra

I'm went there UPS And here. kind period there benefit through – the we for quarter? in can the quarter sneaking from any a quarter., of in any any benefit from freight in one I what question, short was at way guess, was disruptions But last in the and of they that time, the quantify

Frederick Holzgrefe

what did can I right? They looks ideally, about to is do business see we of quantify That’s our things opportunity see like. some positive. see go, that So, value don't experience we Saia. the it. one with good a to But of know customers proposition and got come the it that

from with So, that, we kind largely set. I customer back of think were the or get help it did some historically but it's where the mode pickup

Amit Mehrotra

questions. Got it. guys. Appreciate, Thanks my for taking

Richard O'Dell

Sure.

Operator

next Buckingham our ahead. Matt [Operator question go take with from will Instructions]. we Research. Please And Brooklier

Matthew Brooklier

Hey, thanks. Good morning.

about a talk broader driver about you a cost you. specifically had XXXX? expectations maybe I for little your bit for question cost So, expectations? pay inflation can talk But And in

Richard O'Dell

Yeah, sure.

you assessment we where probably workforce X% rest for wages looking the X%. expect X% salary that this up of of be an – The potentially I look to at every mechanics, would number to year, our how we we’re you're just at do if of at and and just looking and the – line, you by kind So, drivers we do if market look markets. stack And drivers. think to – in see

have The year-over-year. low healthcare is cost. other big teens That's probably factor increase you

of modeling as high this, we've I think investment. had pretty levels capital you're

So, to depreciation increases in year-over-year and expense the you're with going that. see associated amortization

of we’re think those. going comes making sort the around But to that emphasis with of cost are that along investments, where inflationary sort big I this those you're drivers So, have investments.

items, think the like other what years things insurance, I seen line other expense markets past. in that we've not or

So, salary on that's good. But those are would kind line you. of I that that the wages think, for and highlighted big ones, be I

Matthew Brooklier

Okay, in it’s your a and so then, are market of you the gotten of growing, – that's a bit game driver the you different But realize the little realizing marketing has the guys and, past, obviously, just perspective. availability, bit curious better little a in LTL, for the helpful. but guys. I or has relative recruitment And versus over process the that on driver that driver from let’s six hear market maybe TL tightness so more is months commentary say, overall to

Richard O'Dell

Yeah. It’s our still But, difficult, it by market. and varies still pretty been experience. tight somewhat has obviously, pretty And, pretty yeah, tight.

Matthew Brooklier

one And I last just may. one, if

earlier like in terms positive pricing environment. seems comments pretty Your of the

year. months, you GRI last XX next a did the Over

May. effective I think in it was

year? environment, the your it general for thoughts the Saia was in on curious Thank X.X%. think I a be to But current cards you. if increase given could rate this just hear it,

Richard O'Dell

the tend market. to We Yeah. follow

rate As people increase. I'm aware, several sure have general announced you're

could it’s tariffs to so with you general assume keep rate the market-competitive. follower Especially when a that. a if increase. on tend discount, smaller your We fast be you So, need to customer, a you sell

follow the So, you could assume market? that we’ll

Matthew Brooklier

the Appreciate great. time. Okay,

Operator

ahead. Seaport go our question And take Willard will from from Global. Please we Milby next

Willard Milby

a Hey, Can a the to morning, where profitability again whole? different compared standpoint from that to region ask, maybe I was way. the guess, just are I y'all from bit efficiency question an in everybody. Northeast us a remind hoping you little density or network as

Frederick Holzgrefe

of by tell you but in out was that, OR growth or like anytthing I for in still market terms kind broken of – phase, is statistics can it’s those the haven't we XXX below Now, that density the quarter.

So that's good.

compared that. frankly I where with getting of we’d routes but continue But a through think to and kinds us like places, building see be tonnage or to it opportunities just have ultimately, go. to a we for happy to like those terminal. of around We’re those tracking ways it's density on to around Dallas But Houston,

So, in be an but that’s the expect it sort still we opportunity, to state… of of kind

Richard O'Dell

Production the would be, up ballpark there, XX% just average. company below say, let’s

Willard Milby

of I timeframe the of OR? you been location, Okay. being but to or the And average that it open in about sub-XXX terminal, vary terminal? to a by one, guess, market how long once the will it kind to opening day you profitability talked terminal region. from sub-XXX get Whats

Frederick Holzgrefe

ramped widely, pretty rural vary pretty the case If one They Maryland, right? quickly. that of in up

break look compare But just Pennsylvania, But months X XX similar. terminal animals. at terminal. to, if you pretty it’s in Scranton, there was sort that two in around a they totally of speaking, are Newark generally think wide XXX-some-door to It’s general. is you I that The it, we Harrisburg different recently, are variation. a those And operation. the opened say,

generalize So, them. it’s tough to

Willard Milby

of if could And from what increases we XXXX? collectively, the question, saw drivers the inflation to I out in rest to the we think should split the a back wage of of jump you Okay. cost workforce. whole, kind But similar as

Frederick Holzgrefe

I think that's probably fair.

Willard Milby

the for all for That's Thanks me. time, Okay. guys.

Richard O'Dell

Thanks.

Operator

take will Markets. Capital we a Please go ahead. follow-up KeyBanc with Fowler And from Todd

Todd Fowler

a Thanks follow-up. taking Great. for

quick ones. Just two

had insurance into ago. on to claims of insurance? like from the talking was along you the on less about severity. unusual tough there relative anything quarter, the a model, maybe and In made it's item standpoint? insurance of something accident the levels line XXXX I this the And the of of couple moderate or then, least I true-up the just know on rate quarter, about headwind any of lines I you should insurance being think a know thoughts a a at line First but increases we comment how And years to item? thoughts just think were

Frederick Holzgrefe

the you in quarter. that have nothing unusual There's nothing

as think severity I we've was down. disclosed,

in you at quarter, seeing, we've safety, in returns the the I see think equipment least the made investments the fourth you're all all safety. around what on

based a on can’t This time probably particular And trends trend But so, see that. as are the over discretely in you a probably compared tonnage what we call incident, I sort where proxy. impact. was would about I I been think Could positive now. be. of ex-liability do our past, reasonable that that to would That's have to Obviously, out? I

Todd Fowler

Okay. amount? can XXXX, depreciation a And have do – a you range for last share then, just one, dollar my expense in you

Frederick Holzgrefe

that the I of break – don't of out. is if nature what think you the don't because investing of generally in. But part reason I we we're No, and

right? a a big the wildcard So, $XX estate, the number the seven-year of there a Trailers we’ll of take sort million large a $XXX number. you've schedule. estate then, is that's year. trailers, first different that sort depreciation and and in half of the That's range million of equipment, real tractors, a got a deal roughly that's going revenue how of over there is have happens, on tractors transaction if real we to impact depreciation. longer So, much with And and

I So, guidance it. result, we necessarily guidance, any around give a give don't as don't but

Todd Fowler

Okay. We guess. Thanks some Fair ourselves, I do enough. for time work actually can today. the

Frederick Holzgrefe

No problem, Todd.

Todd Fowler

guys. All Thanks. right,

Operator

Please go ahead. will follow-up take another we And Mehrotra from Amit Bank. Deutsche from

Amit Mehrotra

lot. a Thanks Thanks follow-up for the again.

are the level and broadly, in for data you can a take or ISM December strength if the to and would seen big January. your down just uncertainty be discussions, bounce you've And obviously conversations? wondering low-double-digit customers or seeing outlook that tone, be body XXXX seems then, the the confidence think, the dominating more the in in be with dip helpful So, double-digit the helpful points the mood, given macro what would language, yields just in pricing? the about talk I respect given to commercial anecdotes, Any then anything the revenue growth customer your discussions, maybe

Richard O'Dell

around that. know expert color Yeah. we have don't any add to that I real

to know As I the quarters. are I into now, been for right materialize our what look know at last going of if renewals XXXX, XXXX. Those contract have couple at I look I what

Northeast. for in trend a you positive and and then So, that's I modest tonnage line our some of the yield in expansion sort top think add growth

see a a going they what tempered number. compared double-digit in I think environment. were can’t a I but it’s to that Customers, happen similar maybe of necessarily kind It’s XXXX, that, I execute all. where I world that. just is macroenvironment. like one at say are. gets an to end the where you coming we’re a predict things going don't would portends theme, what's a don't in to it’s world are to have think to is continue is the that if not I or bad gosh, to balance. to my But I – things think, there to we The but to that that in

Amit Mehrotra

for Thanks the Appreciate color. it. All Okay. right.

Operator

to with back or further additional I’d like questions, And no for turn closing call further the any O'Dell remarks. Rick to

Richard O'Dell

Saia. in Well, great, your We interest appreciate Thanks for it.

Operator

And this participation concludes now you today’s conference. and your may Thank disconnect. for you

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