Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Saia Inc (SAIA, Financial) achieved a record third-quarter revenue of $842 million, marking an 8.6% increase from the previous year.
- The company opened 11 new terminals in the third quarter, a record for any quarter in its history, expanding its service to all contiguous 48 states.
- Contractual renewals remained strong at 7.9%, indicating robust pricing initiatives and customer retention.
- The new terminals, particularly those opened in the second quarter, have shown significant improvement in operating ratios, becoming profitable within a short period.
- Saia Inc (SAIA) continues to invest in its network with a planned capital expenditure of approximately $1 billion for 2024, focusing on long-term growth and customer service enhancement.
Negative Points
- The operating ratio deteriorated to 85.1% from 83.4% in the previous year, indicating increased operational costs.
- Salaries, wages, and benefits rose by 15.5%, driven by headcount growth and wage increases, impacting overall expenses.
- Fuel surcharge revenue per workday decreased by 6.3%, reflecting lower diesel prices and impacting revenue.
- Claims and insurance expenses increased by 6.9% year-over-year, adding to the cost pressures.
- The company's diluted earnings per share decreased to $3.46 from $3.67 in the third quarter of the previous year, reflecting the impact of increased expenses.
Q & A Highlights
Q: Can you discuss the sequential growth in October and any one-time impacts on workers' compensation?
A: Matthew Batteh, Executive Vice President and CFO, explained that shipments per workday in October were up about 4%, with tonnage up about 6.5%. He noted that comparisons are affected by last year's cyber issue at a competitor and a recent hurricane. Regarding workers' compensation, he mentioned it as part of business development with no specific scale to call out.
Q: How is the market environment affecting your operations, especially with new facilities?
A: Frederick Holzgrefe, President and CEO, stated that the market is somewhat comparable to previous quarters with some noise. He emphasized that new facilities typically align with the rest of the portfolio and haven't significantly impacted operations one way or another.
Q: Can you elaborate on the revenue per hundredweight excluding fuel and its trend?
A: Matthew Batteh noted that mix impacts revenue per hundredweight, and they focus more on revenue per bill. He highlighted strong contractual renewals and a recent GRI (General Rate Increase) of 7.9%, indicating a focus on mix management and maintaining margins.
Q: What is the normal seasonality for operating ratio from Q3 to Q4, and how does this year compare?
A: Matthew Batteh mentioned that the average sequential degradation is around 250 basis points. However, with current momentum and customer acceptance, they aim to beat that average this year.
Q: How do you view the potential for margin improvement in 2025 if the macro environment is stable?
A: Frederick Holzgrefe expressed optimism about expanding margins even in a stable macro environment. He noted that the company is positioned to grow its operating ratio and that a stronger environment could further accelerate growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
