Yahoo Finance Saia, Inc. (NASDAQ:SAIA) Q1 2024 Earnings Call Transcript
Saia, Inc. (NASDAQ:SAIA) Q1 2024 Earnings Call Transcript April 27, 2024
Saia, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning and welcome to Saia's First Quarter 2024 Earnings Conference Call. All participants are in a listen-only mode. After the speakers' remarks, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to Doug Col, Executive Vice President and Chief Financial Officer. Please go ahead.
Douglas Col: Thank you. Good morning, everyone. Welcome to Saia's First Quarter 2024 conference call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Holzgrefe. Before we begin, you should know that during this call, we may make some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and all other statements that might be made on this call that are not historical facts are subject to a number of risks and uncertainties and actual results may differ materially. We refer you to our press release and our SEC filings for more information on the exact risk factors that could cause actual results to differ. I'll now turn the call over to Fritz for some opening comments.
Frederick Holzgrefe: Good morning, and thank you for joining us to discuss Saia's first quarter results. While underlying macro trends remain lackluster in our view, our year-over-year results in the first quarter reflected tremendous share gains made since last summer. In the quarter, we averaged approximately 33,000 shipments per day compared to approximately 28,500 per day last year or an increase of nearly 16%. We've opened seven new locations in the past 12 months and our employee count has grown significantly, allowing us to staff the new locations and enabling us to handle the growth in volumes while still providing our customers with excellent service. I'm particularly pleased to see all of our key service performance indicators continue to trend positively as we continue our expansion.
Our first quarter revenue of $754.8 million increased from last year's first quarter by 14.3% and is a record for any first quarter in our company's history. Yield or revenue per hundredweight, excluding fuel surcharge, increased 10.5%, reflecting a constructive pricing backdrop despite a subdued demand environment in a traditionally slower period in our business. Revenue per shipment, excluding fuel surcharge, increased 1.4% despite a headwind from weight per shipment, which was down 8.2% in the quarter and length of all also down modestly by 0.4%. Our revenue per shipment growth ex-fuel surcharge continues to be the result of positive pricing and effective mix management. With our continuing high-service levels, we actively review the performance of all of our accounts and are not shying away from having rate discussions when necessary based on profitability, not the calendar.
Our first quarter operating ratio of 84.4% improved by 60 basis points compared to our operating ratio of 85% posted in the first quarter last year and matches our best ever Q1 OR posted in 2022. As we continue to absorb the growth in volumes compared to the prior year, we've continued investing in our network to maintain our services while also optimizing how we provide the service with our expanding linehaul and driving teams. Our plans to open 15 terminals to 20 terminals in total this year remain and we'll also continue relocating some existing terminals as we've done with four so far this year. Relocations are an important part of the story as these relocated terminals often offer us multiple benefits, including better strategic position in the market and added capacity to better serve existing customers and also perhaps put us in a better position to serve new customers.
Our teams are committed to -- accomplishing this growth with an eye on always putting the customer first. Our customer-first initiatives have been the cornerstone of our success over the last several years and in -- included in that is our desire to have more locations through which to serve new and existing customers. The roll -- results of Mastio's latest survey highlight a couple of significant achievements for Saia. The scores highlight our continued improvement and positive feedback from our customers are recognizing Saia's ongoing investment in service and expanding footprint and customers are viewing us as a leading national LTL provider. We've added 20 new facilities in the last two years with improving perceived levels of service, which is critical to note.
Customers are recognizing our ability to not only improve service, but to replicate that improved service in new locations. I'll now turn the call over to Doug for more details from our first quarter results.
Douglas Col: Thanks, Fritz. As mentioned, first quarter revenue increased by $94.2 million to $754.8 million. Yield excluding fuel surcharge improved by 10.5% and yield increased by 7.6%, including fuel surcharge. Fuel surcharge revenue increased slightly by 0.8% and was 15.7% of total revenue compared to 17.8% a year ago. Revenue per shipment ex-fuel surcharge increased 1.4% to $293.96 compared to $289.87 in the first quarter of 2023. Tonnage increased 6.2% attributable to a 15.7% shipment increase, partially offset by an 8.2% decrease in our average weight per shipment. Our length of haul decreased 0.4% to 888 miles. Shifting to the expense side for a few key items of note in the quarter. Salaries, wages and benefits increased 14.3% from a combination of our employee headcount growth of over 15% year-over-year in response to an overall increased volumes during the quarter and also the result of our July 2023 wage increase, which averaged approximately 4.1%.
Purchase transportation expense increased by 12.4% compared to the first quarter last year and was 7% of total revenue compared to 7.1% in the first quarter of 2023. Truck and rail PT miles combined were 11.4% of our total linehaul miles in the quarter. Fuel expense increased by 3.7% in the quarter, while company linehaul miles increased 10.6% year-over-year as a result of increased shipments and decreased cost of diesel fuel compared to the prior year. Claims and insurance expense increased 24.2% year-over-year and was down 8% or $1.5 million sequentially from the fourth quarter of 2023. The increase compared to the first quarter of 2023 was primarily due to an increased activity and a small increase in premiums. Depreciation expense of $48.8 million in the quarter was 13.9% higher year-over-year, primarily due to ongoing investments in revenue equipment, real estate and technology.
Total operating expenses increased by 13.4% in the quarter and with the year-over-year revenue increase of 14.3%, our operating ratio improved to 84.4% compared to 85% a year ago. Our tax rate for the first quarter was 23.7% compared to 23.2% in the first quarter last year and our diluted earnings per share were $3.38 compared to $2.80 -- $2.85 in the first quarter a year ago. I'll turn the call back over to Fritz for some closing comments.
Frederick Holzgrefe: Thanks, Doug. Our customer-first focus continued to deliver tangible results across our organization. In January, we were excited to close on what we view as the generational opportunity for our Company to build our real estate pipeline and have developed an opening plan that spans 2024 and 2025. As we stated from the outset of our geographic expansion initiatives in 2017, it is absolutely imperative that we improve while replicating service as we execute this plan. As we continue to invest in our network and expand our footprint to better serve our customers, we anticipate capital expenditures for 2024 to be approximately $1 billion. As noted in Doug's comments, we are seeing the impact of depreciation related to this increased capital expenditure over the past couple of years.
These investments will continue throughout the year as we approach a record amount of investment for the company, which we believe will create value for both our shareholders and our customers over the long-term. As we continue our expansion plans, we remain focused on measuring our performance for customers. The Mastio radiant ratings clearly highlight our improved service profile and our internal service metrics have never been better, yet we continue to emphasize a customer-first focus with a priority on achieving even higher levels of service. With a focus on our customers in advance of relocating our Laredo facility, we executed a new cross-border agreement with a leading Mexican LTL carrier, Fletes, which will allow us to expand our service both North and South bound.
Although we do not see the seasonal pickup that we expected, Q1 was nonetheless a record quarter for Saia. The organization delivered a 14.3% increase in revenue to $754.8 million. While we made significant investments in the business and in advance of several openings, we'd still delivered an 18.9% increase in operating income to $117.9 million. As always, we remain intently focused on the long-term opportunity to enhance our service offering and coverage for our customers, while delivering significant value to our shareholders. Our results included relocating four facilities in Q1. More significantly, we've already opened four new facilities in April alone and we'll plan to open two and relocate an additional facility before the end of the quarter.
We proudly look to our 100-year history as a foundation for our success. However, as we continue to build a talented and engaged workforce, we're proving that we are not stagnant, but are instead continuing to build a best-in-class organization rooted in this 100-year history that can meet and exceed customer expectations. As always, we remain flexible with the timing of openings and want to be mindful of the natural cyclicality of our business. After Q2, we expect to open as many as 15 additional new locations this year with a majority of these in Q3, covering additional Great Plains locations. We maintain flexibility of these openings as it's critically important that we replicate our service. We may find it necessary to delay or pause openings, whether due to staffing challenges or other uncertainties.
At this stage, we are excited on the core competency of opening terminals organically that we have developed over the past seven years and we'll continue to follow that blueprint going forward. Establishing a great culture in a terminal is a critical step in making sure that terminal is successful over the long-term and we strive to get that right from day-one with all new openings. So as we move forward through 2024, we continue to see macro uncertainty. At the same time, we continue to sit -- continue to see widespread customer acceptance of Saia's now national network. I should highlight that this is a national network that will be poised to scale as customers seek to grow with a trusted partner as the macro-environment becomes more certain.
As a result, we are confident in our ability to continue to execute on our plans that will position Saia for long-term success. Before we open the line for questions, I would like to highlight this morning's other Saia press release. Our CFO, Doug Col, has decided it's time to pursue his next chapter and will be retiring from Saia. As many of you well know, Doug has been in and around the transportation space in a variety of roles, but most significantly with Saia over the past decade. Doug has been a big help with setting up our strategic course and communicating with you on Saia's progress. For those of us that have been fortunate enough to work with Doug on a daily basis, we'll miss his wisdom and wit. I'm personally quite grateful for the opportunity to work with him.
In time, we'll name Doug's successor, but Doug has built and developed a great team at Saia and will be with us through the year and to help facilitate any transition. With that said, we're now open -- ready to open the line for questions, Operator?
See also
15 Most Conservative States in the US and
25 Countries with the Highest Informal Employment in the World.
To continue reading the Q&A session, please click here.
