Saia, Inc. (NASDAQ:SAIA) Q1 2022 Earnings Conference Call May 2, 2022 10:00 AM ET Company Participants Fritz Holzgrefe - President & Chief Executive Officer Doug Col - Executive Vice President & Chief Financial Officer Conference Call Participants Todd Fowler - KeyBanc Capital Markets Jon Chappell - Evercore ISI Amit Mehrotra - Deutsche Bank Ken Hoexter - Bank of America Allison Poliniak - Wells Fargo Scott Group - Wolfe Research Jordan Alliger - Goldman Sachs Bascome Majors - Susquehanna Chris Wetherbee - ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1: Financial Statements](index=3&type=section&id=Item%201%3A%20Financial%20Statements) The unaudited condensed consolidated financial statements for Q1 2022 show total assets of $1.93 billion, a 36.6% revenue increase to $661.2 million, net income of $79.4 million, and operating cash flow of $96.0 million [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Balance Sheet Items (in thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $510,666 | $416,255 | | **Total assets** | **$1,932,349** | **$1,845,250** | | **Total current liabilities** | $339,121 | $321,348 | | **Total liabilities** | $640,859 | $624,917 | | **Total stockholders' equity** | **$1,291,490** | **$1,220,333** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Income Statement Items (in thousands) | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | **Operating Revenue** | **$661,216** | **$484,074** | | Total operating expenses | $557,767 | $435,360 | | **Operating Income** | **$103,449** | **$48,714** | | **Net Income** | **$79,424** | **$37,291** | | **Diluted Earnings Per Share** | **$2.98** | **$1.40** | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) - Total stockholders' equity increased from **$1.22 billion** at December 31, 2021, to **$1.29 billion** at March 31, 2022. The growth was primarily driven by a net income of **$79.4 million** for the quarter[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Items (in thousands) | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$95,961** | **$60,971** | | Net cash used in investing activities | ($45,376) | ($25,388) | | Net cash used in financing activities | ($15,848) | ($7,631) | | **Net Increase in Cash and Cash Equivalents** | **$34,737** | **$27,952** | | Cash and Cash Equivalents, end of period | $141,325 | $53,260 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company's primary business is providing national less-than-truckload (LTL) services, which account for over **97%** of its revenue. Revenue is recognized over the transit time of a shipment, typically one to five days[24](index=24&type=chunk)[26](index=26&type=chunk) - The company has a **$300 million** revolving credit facility available through February 2024, with an additional **$100 million** accordion feature. As of March 31, 2022, there were no outstanding borrowings under this agreement[37](index=37&type=chunk)[38](index=38&type=chunk) - The company is obligated under finance leases for revenue equipment, with total liabilities of **$44.9 million** as of March 31, 2022, at a weighted average interest rate of **3.6%**[39](index=39&type=chunk) [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=12&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights strong Q1 2022 performance with operating revenue up 36.6% to $661.2 million, operating income more than doubling to $103.4 million, and an improved operating ratio of 84.4% Q1 2022 vs. Q1 2021 Performance Highlights | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Operating Revenue | $661.2 M | $484.1 M | +36.6% | | Operating Income | $103.4 M | $48.7 M | +112.4% | | Operating Ratio | 84.4% | 89.9% | -5.5 pts | | Diluted EPS | $2.98 | $1.40 | +112.9% | | LTL Tonnage (per workday) | - | - | +9.5% | | LTL Shipments (per workday) | - | - | +5.7% | - Revenue growth was primarily driven by increased revenue per shipment, higher tonnage, and a rise in fuel surcharge revenue, which constituted **16.8%** of operating revenue in Q1 2022, up from **12.9%** in Q1 2021[61](index=61&type=chunk)[62](index=62&type=chunk) - Operating expenses increased due to higher headcount to support growth, a **4.7%** wage increase in August 2021, expanded use of purchased transportation, and higher diesel fuel costs[64](index=64&type=chunk) - The company projects net capital expenditures for 2022 to be in excess of **$500 million**, a substantial increase from **$277 million** in 2021, to fund investments in equipment, real estate, and technology[69](index=69&type=chunk)[80](index=80&type=chunk) [Item 3: Quantitative and Qualitative Disclosures About Market Risk](index=19&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate fluctuations and fuel price volatility, with fuel risk largely mitigated by a weekly-reset surcharge program, and $44.9 million in fixed-rate debt at a 3.6% weighted average interest rate as of March 31, 2022 - The company's main market risks are interest rate fluctuations and fuel price volatility. A fuel surcharge program, which is reset weekly based on average national fuel prices, is used to mitigate exposure to fuel costs[86](index=86&type=chunk) Fixed Rate Debt Principal Cash Flows (as of March 31, 2022) | (in millions) | 2022 | 2023 | 2024 | 2025 | 2026 | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Fixed rate debt** | $14.0 | $14.5 | $10.2 | $5.3 | $0.9 | **$44.9** | | **Average interest rate** | 3.6% | 3.6% | 3.6% | 3.6% | 3.6% | **3.6%** | [Item 4: Controls and Procedures](index=21&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - The company's CEO and CFO concluded that as of the end of the period, the company's disclosure controls and procedures are effective to ensure that required information is recorded, processed, summarized, and reported within the specified time periods[89](index=89&type=chunk)[90](index=90&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[91](index=91&type=chunk) [PART II. OTHER INFORMATION](index=22&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1: Legal Proceedings](index=22&type=section&id=Item%201%3A%20Legal%20Proceedings) The company is involved in routine legal proceedings, for which management believes adequate provisions have been made, and does not anticipate a material adverse effect on its financial condition - The company is subject to routine legal proceedings but believes the ultimate outcome will not materially impact its financial condition, though it could affect results in a specific period[33](index=33&type=chunk)[97](index=97&type=chunk) [Item 1A: Risk Factors](index=22&type=section&id=Item%201A%3A%20Risk%20Factors) This section confirms no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2021[97](index=97&type=chunk) [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=22&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The report details the purchase of 8,137 equity shares in open market transactions during the quarter by the Saia, Inc. Executive Capital Accumulation Plan Issuer Purchases of Equity Securities (Q1 2022) | Period | Total Shares Purchased | | :--- | :--- | | Jan 2022 | 5,667 | | Feb 2022 | 2,470 | | Mar 2022 | 0 | | **Total** | **8,137** | [Other Items (3, 4, 5)](index=22&type=section&id=Other%20Items%20(3%2C%204%2C%205)) The company reported no defaults upon senior securities, no mine safety disclosures, and no other information required under Item 5 for the reporting period - The company reported "None" for Item 3 (Defaults Upon Senior Securities), Item 4 (Mine Safety Disclosures), and Item 5 (Other Information)[100](index=100&type=chunk) [Item 6: Exhibits](index=23&type=section&id=Item%206%3A%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and required CEO and CFO certifications - The exhibits filed with this report include corporate governance documents, CEO/CFO certifications pursuant to Exchange Act Rules and the Sarbanes-Oxley Act of 2002, and financial data formatted in iXBRL[101](index=101&type=chunk)

PART I. [Business](index=3&type=section&id=Item%201.%20Business) Saia, Inc. is a transportation company primarily focused on less-than-truckload (LTL) services, generating over **97%** of its revenue from this segment. The company has expanded its network, investing significantly in equipment, real estate, and technology to support growth and improve efficiency. Saia operates in a highly competitive and regulated industry, with a strategic focus on safety, pricing, service quality, and environmental responsibility, while managing a diverse, non-union workforce [Overview](index=3&type=section&id=Overview) Saia, Inc. is a transportation company primarily providing less-than-truckload (LTL) services across **45** states, with over **97%** of revenue from LTL. It also offers non-asset truckload, expedited, and logistics services. The company has expanded its network, opening **30** new terminals since **2017**, and invested over **$1.25 billion** in capital expenditures for equipment, real estate, and technology. In **2021**, Saia generated **$2.3 billion** in revenue and **$335.1 million** in operating income - Saia, Inc. is a transportation company headquartered in Johns Creek, Georgia, primarily providing less-than-truckload (LTL) services, which accounts for over **97%** of its revenue. It also offers non-asset truckload, expedited, and logistics services across North America[11](index=11&type=chunk) - Since May **2017**, Saia has opened **30** new terminals and invested over **$1.25 billion** in capital expenditures for revenue equipment, real estate, and technology to support growth, improve fuel economy, reduce emissions, and enhance safety[14](index=14&type=chunk) Saia Financial Performance (2020-2021) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Revenue | $2.3 billion | $1.8 billion | | Operating Income | $335.1 million | $180.3 million | [Industry](index=3&type=section&id=Industry) The trucking industry comprises private fleets and "for-hire" carriers (truckload and LTL). Saia primarily operates in the LTL segment, handling shipments between **100** and **10,000** pounds, which requires extensive networks of terminals and significant capital investment in infrastructure and technology. The LTL segment is more concentrated than truckload due to these high capital requirements - The trucking industry includes private fleets and 'for-hire' carriers, categorized into truckload (shipments >**10,000** lbs) and LTL (shipments <**10,000** lbs). Saia is primarily an LTL carrier[16](index=16&type=chunk) - LTL carriers typically pick up numerous shipments (**100-10,000** pounds), consolidate them at local terminals, and transport them to destination terminals, requiring expansive networks and significant capital for facilities, equipment, and technology[17](index=17&type=chunk)[20](index=20&type=chunk) - The LTL segment is more concentrated than the truckload segment due to the substantial infrastructure required, and LTL carriers face lower driver turnover compared to truckload, though shortages still occur[20](index=20&type=chunk) [Business Strategy](index=4&type=section&id=Business%20Strategy) Saia's business strategy focuses on organic growth and geographic expansion, with key elements including operating safely, managing pricing and business mix for profitability, increasing density in existing geographies, delivering best-in-class service, improving operating efficiencies, preparing for growth, and addressing environmental and social issues - Saia has historically grown through organic growth and geographic integration, with a recent focus on organic growth[21](index=21&type=chunk) - Continue to focus on operating safely to reduce injuries and accidents, protecting employees and communities, and improving stockholder returns - Manage pricing and business mix to operate the network more profitably, leveraging economic improvements and industry capacity tightening - Increase density in existing geographies to gain operating leverage and improve margins, asset turnover, and return on capital - Deliver best-in-class service through on-time delivery and reduced claims to improve market share and justify fair compensation - Improve operating efficiencies by optimizing linehaul scheduling and pick-up/delivery operations to offset cost increases and reduce fuel consumption/carbon emissions - Prepare for growth and enhanced geographic footprint by investing in new terminals, fleet, and technology, and considering acquisitions - Address environmental and social issues through fleet investments for fuel efficiency and emissions reduction, pilot programs for alternative fuels, and employee well-being initiatives - In **2020**, Saia achieved the highest rank (**Rank 1 – top 20%**) among EPA's SmartWay Carrier Performance Rankings for LTL carriers for Carbon Dioxide (CO2), Nitrogen Oxide (NOX), and Particulate Matter (PM) emissions per ton-mile[30](index=30&type=chunk) [Seasonality](index=5&type=section&id=Seasonality) Saia's revenues are subject to seasonal variations, with the first quarter typically being the weakest due to reduced shipments after winter holidays and higher operating expenses from lower capacity utilization and weather effects. The second and third quarters are generally the strongest in terms of revenue and profit - Saia's revenues are subject to seasonal variations, with the first quarter generally being the weakest due to reduced shipments after winter holidays and higher operating expenses from lower capacity utilization and weather effects[32](index=32&type=chunk) - The second and third quarters are typically the strongest in terms of revenue and profit, with quarterly profitability also influenced by the timing of salary and wage increases and general rate adjustments[33](index=33&type=chunk) [Human Capital](index=6&type=section&id=Human%20Capital) Saia prioritizes its workforce, with a human capital strategy focused on recruiting, hiring, training, retention, and competitive compensation/benefits. The company employs **11,600** union-free individuals, with a diverse workforce and initiatives for safety, professional development, diversity, inclusion, and employee engagement - Saia employs **11,600** union-free individuals, comprising approximately **50%** licensed commercial drivers, **25%** dock workers, and **25%** in sales, technology, and administration[35](index=35&type=chunk) - The company offers comprehensive benefits, including medical programs (**96%** participation, premiums waived for **10+** years of service), dental, vision, a **401(k)** savings plan with a company match, and paid vacation/personal days[36](index=36&type=chunk)[37](index=37&type=chunk) - Saia invests in employee development through over **40** hours of onboarding training for new drivers, annual Smith System defensive driving, weekly safety training, and a dock-to-driver program for commercial driver certifications[40](index=40&type=chunk)[41](index=41&type=chunk) - Saia is committed to fostering diversity and inclusion, launching a Diversity Council in early **2021** to promote a culture where individual differences are respected and all employees are valued[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - Saia's corporate culture is guided by its mission to safely drive customer success with values centered on people, purpose, and performance, emphasizing Customer First, Safety, Taking Care of Each Other, Dignity and Respect, Do the Right Thing, and Community[47](index=47&type=chunk) [Competition](index=8&type=section&id=Competition) Saia operates in a highly competitive transportation industry, facing national and regional LTL carriers, truckload, private fleets, small package carriers, final mile delivery, railroads, air freight, and third-party logistics providers. Key competitive differentiators include service quality, price, service variety, geographic coverage, responsiveness, and flexibility - Saia operates in a highly competitive environment against a wide range of transportation service providers, including large national and regional LTL carriers, truckload, private fleets, small package carriers, railroads, air freight, and third-party logistics providers[51](index=51&type=chunk) - Key competitive differentiators include service quality, price, variety of services offered, geographic coverage, responsiveness, and flexibility[50](index=50&type=chunk) - The LTL trucking segment has greater barriers to entry, particularly for larger service areas, due to the significant equipment, freight terminals, technology investment, and density required for adequate labor and asset utilization[51](index=51&type=chunk) [Regulation](index=8&type=section&id=Regulation) The trucking industry, despite deregulation of rates and services, remains subject to extensive federal and state regulations covering motor carrier operations, driver hours, safety, emissions, hazardous materials, food security, and data privacy. Compliance with these regulations can increase operational costs and impact business - The trucking industry is subject to extensive federal and state regulations governing motor carrier operations, driver hours of service, safety, insurance, fuel efficiency, emissions standards, and hazardous materials transportation[52](index=52&type=chunk) - **Department of Homeland Security (DHS):** Anti-terrorism measures, trailer security, driver identification, and border-crossing procedures can increase operational costs and disrupt deliveries - **Department of Transportation (DOT) / FMCSA:** Safety, insurance, and bonding requirements, hours of service regulations, the Compliance Safety Accountability Program (CSA), and the Commercial Driver's License Drug and Alcohol Clearinghouse impact operations, driver availability, and wages - **Environmental Protection Agency (EPA):** Regulations on air and water quality, diesel fuel sulfur content, engine emissions, and greenhouse gas emissions (e.g., Clean Trucks Plan, CARB standards) increase equipment and maintenance costs and may impact operations - **Food and Drug Administration (FDA):** Rules under the Sanitary Food and Transportation Act (SFTA) for food transportation security require written procedures for vehicle cleaning, inspection, and maintenance, potentially incurring additional expenses - **Data Privacy Regulations:** Increased regulatory efforts like GDPR and CCPA impose strict rules on customer data handling, potentially increasing compliance costs and reputational risks [Trademarks and Patents](index=10&type=section&id=Trademarks%20and%20Patents) Saia holds several registered service marks and trademarks, including Saia Guaranteed Select®, Saia Customer Service Indicators®, and Saia Xtreme Guarantee®, which are considered important for its marketing strategy - Saia has registered several service marks and trademarks in the United States Patent and Trademark Office, including Saia Guaranteed Select®, Saia Customer Service Indicators®, and Saia Xtreme Guarantee®, which are important components of its marketing strategy[66](index=66&type=chunk) [Additional Information](index=10&type=section&id=Additional%20Information) Saia provides its SEC filings free of charge on its website, www.saia.com, as soon as practicable after filing - Saia makes all its filings with the Securities and Exchange Commission (SEC) available free of charge through its website, www.saia.com, as soon as reasonably practicable after filing[67](index=67&type=chunk) [Executive Officers of the Registrant](index=11&type=section&id=Executive%20Officers%20of%20the%20Registrant) This section lists the executive officers of Saia, Inc., including their age and positions held, along with their tenure and previous roles. Officers are elected by the Board of Directors and serve at its discretion, with no family relationships between executive officers or directors Saia, Inc. Executive Officers (as of February 17, 2022) | Name | Age | Positions Held | | :--- | :--- | :--- | | Frederick J. Holzgrefe, III | 54 | President and Chief Executive Officer (since April 2020) | | Douglas L. Col | 57 | Executive Vice President and Chief Financial Officer (since April 2020) | | Patrick D. Sugar | 34 | Executive Vice President of Operations (since March 2021) | | Raymond R. Ramu | 53 | Executive Vice President and Chief Customer Officer (since May 2015) | | Rohit Lal | 61 | Executive Vice President and Chief Information Technology Officer (since August 2017) | | Karla J. Staver | 59 | Vice President of Human Resources (since October 2019, retiring March 1, 2022) | - Officers are elected by the Board of Directors and serve at its discretion. There are no family relationships between any executive officer and any other executive officer or director of Saia or its subsidiaries[69](index=69&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) Saia stockholders face various risks, including those related to general economic conditions, intense industry competition, and operational challenges. Key concerns include the cost and availability of qualified employees and fuel, significant insurance and claims expenses, risks associated with geographic expansion and technology dependence, and potential impacts from litigation, regulatory changes, and the ongoing COVID-19 pandemic [Industry and Economic Risks](index=12&type=section&id=Industry%20and%20Economic%20Risks) Saia faces risks from general economic conditions, including recessions, inflation, and global instability, which can impact customer demand and pricing. The highly competitive industry, characterized by downward pricing pressures, consolidation, and disruptive technologies, further challenges profitability. Dependence on qualified employees and fuel cost/availability are also significant risks - Saia's business is subject to general economic conditions, including recessionary cycles, inflation, and global instability, which can adversely affect customer business levels, demand for services, and pricing ability[71](index=71&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - Operating in a highly competitive industry with numerous transportation service providers, some with greater resources or competitive advantages - Potential for downward pricing pressures due to competition, customer consolidation, and alternative delivery mechanisms - Disruptive technologies (e.g., driverless trucks, AI) may alter historical business models, leading to increased capital expenditures and new competitors - Dependence on the cost and availability of qualified employees (especially drivers) and purchased transportation, exacerbated by labor shortages and regulatory requirements - Fuel is a significant operating expense; Saia does not hedge against price increases, relying on fuel surcharges which may not fully offset volatility [Business and Operational Risks](index=14&type=section&id=Business%20and%20Operational%20Risks) Operational risks include significant and volatile insurance and claims expenses due to self-insured retention limits and increasing claim severity. Geographic expansion into new markets requires substantial investment and carries risks of disruption and delayed profitability. Heavy reliance on technology exposes the company to cybersecurity threats and the need to keep pace with technological developments. Non-union status is a competitive advantage, but unionization efforts pose a risk. Other risks include fluctuating equipment prices, real estate availability/cost, supply chain disruptions, infrastructure constraints, and international operational risks - Ongoing insurance and claims expenses are significant and volatile, with self-insured retention limits generally ranging from **$250,000** to **$10 million** per occurrence, and increasing liability insurance costs and jury verdicts[81](index=81&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - Geographic expansion (e.g., **7** new terminals in **2021**, **10-15** planned for **2022**) requires significant investments in terminals, equipment, technology, and employees, with risks of disruption, higher costs, and delayed profitability[87](index=87&type=chunk) - Heavy reliance on technology exposes the business to cybersecurity threats, system disruptions, and the need to continuously update systems to maintain competitiveness and customer service[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - The non-union status of Saia's employees is an important competitive factor; unionization efforts could increase costs and reduce operating flexibility - Price fluctuations for new and used revenue equipment can impact capital expenditures and salvage values - Higher costs or limited availability of suitable real estate for terminal facilities can restrict growth and increase operating expenses - Ongoing supply chain disruptions, particularly for microchips and equipment, can delay deliveries, increase costs, and reduce operating capacity - Capacity and infrastructure constraints, including decaying highway infrastructure, could slow service times and increase maintenance expenses - International business operations expose the company to risks like restrictive trade policies, anti-corruption laws, and foreign COVID-19 policies - Seasonal factors, harsh weather, and climate change-related disasters can disrupt operations, reduce demand, damage assets, and increase costs - Geographic concentration of customers makes the company vulnerable to regional economic downturns - Creditworthiness of customers and their ability to pay for services poses risks of decreased demand, non-payment, and bankruptcy preference claims [Financial and Capital Risks](index=19&type=section&id=Financial%20and%20Capital%20Risks) Saia has significant ongoing cash requirements for capital investments, funded by operations and credit facilities. Inability to generate sufficient cash or obtain favorable financing could limit growth. The company is subject to debt covenants, and default could accelerate debt. Goodwill impairment is an annual risk - Saia has significant ongoing cash requirements for capital investments (e.g., **$277 million** in **2021**, over **$500 million** projected for **2022**), funded by cash flows from operations and credit facilities[105](index=105&type=chunk)[214](index=214&type=chunk) - The company is subject to debt covenants under its credit facilities, which limit dividends, stock repurchases, and require maintaining minimum debt service coverage and maximum leverage ratios; a default could cause debt acceleration[106](index=106&type=chunk)[108](index=108&type=chunk) - Goodwill is subject to annual impairment assessments, and a material, non-cash write-down could adversely impact financial condition and results of operations[109](index=109&type=chunk) [Human Resources and Reputation Risks](index=20&type=section&id=Human%20Resources%20and%20Reputation%20Risks) Saia's success depends on retaining key employees and senior management, for whom competition is intense. Changes in compensation and benefits could affect attraction and retention. Increasing healthcare costs pose a financial burden. The company's strong reputation is a valuable asset, but adverse publicity, especially via social media, could negatively impact operations and profitability - Saia's future success depends on retaining its current management team and attracting highly qualified personnel; competition for senior management is intense, and loss of key personnel could adversely impact financial results[110](index=110&type=chunk)[111](index=111&type=chunk) - Changes to compensation and benefits or increasing healthcare costs could negatively affect the ability to attract and retain qualified employees, potentially leading to increased costs or reduced operations[112](index=112&type=chunk)[113](index=113&type=chunk) - Saia's corporate reputation is a valuable asset, but susceptibility to adverse publicity, particularly from social media, could result in immediate damage and negatively impact operations and profitability[114](index=114&type=chunk) [Acquisition Risks](index=22&type=section&id=Acquisition%20Risks) Future acquisitions carry risks including integration difficulties, disruption of existing business, distraction of management, increased indebtedness or equity dilution, loss of key customers/employees, unionization risks, inability to achieve financial goals, asset impairment, and due diligence failures - Difficulty in integrating operations and personnel of acquired companies or unanticipated costs to support new business lines - Disruption of ongoing business and distraction of management and employees due to integration issues - Additional indebtedness or the issuance of additional equity to finance future acquisitions, which could be dilutive to stockholders - Potential loss of key customers or employees of acquired companies, along with the risk of unionization of employees - Inability to achieve the financial and strategic goals for the acquired and combined businesses - Potential impairment of tangible and intangible assets and goodwill acquired as a result of acquisitions - Potential failure of the due diligence processes to identify significant issues with legal and financial liabilities and contingencies [Litigation and Regulatory Risks](index=22&type=section&id=Litigation%20and%20Regulatory%20Risks) Saia faces various litigation risks, including accidents, workers' compensation, employment claims, and environmental liabilities, which can be costly and disruptive. The highly regulated industry is subject to new laws and regulations (e.g., corporate taxes, climate change, emissions, driver hours, food safety, data privacy), increasing compliance costs and operational burdens - Saia faces litigation risks regarding accidents, workers' compensation, labor and employment law claims, and environmental liability, which can be time-consuming, expensive, and disruptive, potentially exceeding insurance coverage or increasing costs[118](index=118&type=chunk) - The company may face higher corporate taxes and new regulations on climate change, greenhouse gas emissions (e.g., EPA's Clean Trucks Plan, CARB standards), employment, healthcare, and Department of Transportation initiatives, which could substantially increase operating expenses and compliance costs[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk)[127](index=127&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - FMCSA rules on driver hours of service limit maximum on-duty hours, potentially impacting customer demands, increasing driver wages, and raising purchased transportation costs - TSA security measures (trailer security, driver identification, border crossing) could increase operational costs, reduce qualified drivers, and disrupt delivery timing - FDA rules under the Sanitary Food and Transportation Act (SFTA) for food transportation security require specific procedures, potentially incurring additional expenses - The Commercial Driver's License Drug and Alcohol Clearinghouse may reduce the pool of qualified commercial motor vehicle drivers - The Infrastructure Investment and Jobs Act (IIJA) apprenticeship pilot program for **18-20** year old drivers could affect delivery times and costs - New and existing data privacy laws (e.g., GDPR, CCPA) increase compliance costs and risks of significant fines or reputational damage - CSA evaluations could damage customer relationships and reputation if unacceptable scores are publicly disclosed, and may shrink the industry's driver pool - Healthcare legislation (Affordable Care Act) and related regulations could increase labor costs or force reductions in benefits programs - Changes in accounting standards or the discontinuation of LIBOR could adversely impact financial reporting and interest expenses [Other Risks](index=26&type=section&id=Other%20Risks) The ongoing COVID-19 pandemic presents uncertain impacts on operations, financial performance, and liquidity, potentially heightening other risks. Increasing investor and customer sensitivity to ESG issues could affect stock price and demand for services. Certain provisions in governing documents and Delaware law have anti-takeover effects. Future equity issuances could dilute stockholder ownership, and financial market weakness could impact demand for services or stock - The severity, magnitude, and duration of the COVID-19 pandemic and its economic consequences are uncertain, posing risks to operations, financial performance, and liquidity, and potentially heightening many other existing risks[140](index=140&type=chunk)[141](index=141&type=chunk) - Operations-related risks from COVID-19 include increased operational challenges, higher expenses for employee health and safety, workplace disruptions, capacity constraints, and potential for lower demand and supply chain issues - Liquidity- and funding-related risks from COVID-19 include potential for lower cash from operations and failure to satisfy financial covenants, as well as limited or costlier funding from financial markets - Increasing investor and customer focus on Environmental, Social & Governance (ESG) metrics could impact Saia's stock price and demand for services if efforts are deemed insufficient or the industry is generally disfavored[144](index=144&type=chunk) - Certain provisions in Saia's governing documents and Delaware law (e.g., classified Board, prohibition on written consent, preferred stock authorization) could have anti-takeover effects, delaying or preventing a change of control[145](index=145&type=chunk)[146](index=146&type=chunk) - Future equity issuances could dilute stockholders' ownership and potentially cause the common stock price to decline[147](index=147&type=chunk) - Weakness or loss of confidence in financial markets could adversely impact demand for services, increase customer defaults, or lead to insolvency, affecting financial condition[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - The market value of common stock may fluctuate due to various factors, including actual or anticipated variations in earnings, analyst recommendations, general economic conditions, regulatory actions, and litigation[151](index=151&type=chunk) [Unresolved Staff Comments](index=27&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC regarding the company's filings [Properties](index=27&type=section&id=Item%202.%20Properties) As of December **31**, **2021**, Saia operated **176** facilities (**88** owned, **93** leased), including general offices in Johns Creek, GA (headquarters), Houma, LA, Boise, ID, and Dallas, TX. The company owns **49%** of its service facilities, accounting for **61%** of door capacity, aligning with its strategy to own strategically-located facilities and lease in smaller markets for flexibility. Saia also owned approximately **5,600** tractors and **19,300** trailers - As of December **31**, **2021**, Saia operated **176** facilities (**88** owned and **93** leased), including general offices in Johns Creek, GA (headquarters), Houma, LA, Boise, ID, and Dallas, TX[154](index=154&type=chunk) - Saia owns **49%** of its service facilities, accounting for **61%** of its door capacity, following a strategy to own strategically-located facilities and lease in smaller markets for flexibility[154](index=154&type=chunk) - The company owned approximately **5,600** tractors and **19,300** trailers as of December **31**, **2021**, inclusive of equipment acquired with finance leases[154](index=154&type=chunk) Top 20 Saia Terminals by Number of Doors (December 31, 2021) | Location | Own/Lease | Doors | | :--- | :--- | :--- | | Houston, TX | Own | 234 | | Atlanta, GA | Own | 217 | | Memphis, TN | Own | 200 | | Dallas, TX | Own | 174 | | Fontana, CA | Own | 162 | | Chicago, IL | Lease | 153 | | Indianapolis, IN (1) | Own | 147 | | Garland, TX | Own | 145 | | Harrisburg, PA (1) | Own | 130 | | Phoenix, AZ | Own | 121 | | Nashville, TN | Own | 116 | | Cleveland, OH | Lease | 115 | | Charlotte, NC | Own | 108 | | Kansas City, MO (1) | Own | 102 | | Newburgh, NY | Lease | 101 | | Newark, NJ | Lease | 101 | | Grayslake, IL (1) | Own | 100 | | St. Louis, MO (1) | Own | 99 | | Toledo, OH | Own | 96 | | Philadelphia, PA | Lease | 90 | [Legal Proceedings](index=29&type=section&id=Item%203.%20Legal%20Proceedings) Saia is involved in legal proceedings in the ordinary course of business. Management believes adequate provisions have been made for probable and estimable losses, and the ultimate outcome will not materially affect financial condition, though it could impact results in a given quarter or year - Saia is subject to legal proceedings that arise in the ordinary course of its business[158](index=158&type=chunk) - Management believes adequate provisions for resolution of all contingencies, claims, and pending litigation have been made for probable and estimable losses[158](index=158&type=chunk) - The ultimate outcome of these actions is not expected to have a material adverse effect on the company's financial condition, but could have a material adverse effect on its results of operations in a given quarter or annual period[158](index=158&type=chunk) [Mine Safety Disclosures](index=29&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Saia, Inc PART II. [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Saia's common stock is listed on the Nasdaq Global Select Market under the symbol "SAIA". As of January **31**, **2022**, there were **854** holders of record. The company has not paid cash dividends and future payments are restricted by its credit agreement. The Saia, Inc. Executive Capital Accumulation Plan made open market purchases and sales of common stock during Q4 **2021** [Stock Information](index=30&type=section&id=Stock%20Information) Saia's common stock is listed on the Nasdaq Global Select Market under the symbol "SAIA". As of January **31**, **2022**, there were **854** holders of record - Saia's common stock is listed under the symbol "SAIA" on the Nasdaq Global Select Market[162](index=162&type=chunk) - As of January **31**, **2022**, there were **854** holders of record of Saia's common stock[163](index=163&type=chunk) [Dividends](index=30&type=section&id=Dividends) Saia has not paid cash dividends on its common stock. Future dividend payments depend on financial condition, capital requirements, earnings, cash flow, and are restricted under the current credit agreement - Saia has not paid a cash dividend on its common stock[164](index=164&type=chunk) - Any payment of dividends in the future is dependent upon the company's financial condition, capital requirements, earnings, cash flow, and other factors, and is restricted under the current credit agreement[164](index=164&type=chunk) [Issuer Purchases of Equity Securities](index=30&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) The Saia, Inc. Executive Capital Accumulation Plan made open market purchases and sales of common stock during Q4 **2021**. In December **2021**, **990** shares were purchased at an average price of **$318.52**. The plan also sold shares in October, November, and December **2021** Issuer Purchases of Equity Securities (Q4 2021) | Period | Total Number of Shares Purchased (1) | Average Price Paid per Share (or Unit) | | :--- | :--- | :--- | | October 1, 2021 through October 31, 2021 | — | — | | November 1, 2021 through November 30, 2021 | — | — | | December 1, 2021 through December 31, 2021 | 990 | $318.52 | | Total | 990 | | - The Saia, Inc. Executive Capital Accumulation Plan sold **840** shares at an average price of **$312.16** in October **2021**, **540** shares at **$351.43** in November **2021**, and **421** shares at **$315.02** in December **2021**[166](index=166&type=chunk)[167](index=167&type=chunk) [Reserved](index=30&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of Saia's financial performance, liquidity, and capital resources, along with critical accounting policies. Saia experienced significant revenue and operating income growth in **2021**, driven by pricing actions and increased volumes, while managing rising operating expenses. The company maintains strong liquidity and plans substantial capital expenditures for future growth. The discussion also highlights forward-looking statements and the ongoing impact of the COVID-19 pandemic [Forward-Looking Statements](index=31&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements, identified by words like "anticipate," "estimate," and "expect," which are subject to various factors, risks, uncertainties, and assumptions that could cause actual results to differ materially. Investors should not place undue reliance on these statements, and the company undertakes no obligation to update them - This Annual Report contains forward-looking statements, identified by words such as "anticipate," "estimate," "expect," and "project," which are subject to important factors, risks, uncertainties, and assumptions that could cause actual results to differ materially[169](index=169&type=chunk) - 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[169](index=169&type=chunk)[172](index=172&type=chunk) - General economic conditions, including downturns or inflationary periods - Operation within a highly competitive industry and adverse impact from downward pricing pressures - Cost and availability of qualified drivers, dock workers, other employees, purchased transportation, and fuel - Inflationary increases in operating expenses and corresponding reductions of profitability - Claims expenses and other expense volatility, including for personal injury, cargo loss and damage, and workers' compensation - Failure to successfully execute the strategy to expand service geography - Costs and liabilities from the disruption in or failure of technology or equipment, including cyber incidents - Labor relations, including the adverse impact should a portion of the workforce become unionized - Supply chain disruption and delays on new equipment delivery - Seasonal factors, harsh weather, and disasters caused by climate change - The creditworthiness of customers and their ability to pay for services - The possibility of defaults under debt agreements, including violation of financial covenants - Widespread outbreak of an illness or any other communicable disease, including the COVID-19 pandemic [Executive Overview](index=33&type=section&id=Executive%20Overview) Saia's business is highly correlated with non-service sectors of the economy. The company's strategy focuses on improving profitability through increased yield and volumes, building density, and geographic expansion. It is a labor and capital-intensive business, emphasizing safety, cost-effectiveness, and asset utilization. Technology investments are crucial for customer experience and operational efficiency. The COVID-19 pandemic's impact remains fluid, but the company maintains significant liquidity - Saia's business is highly correlated to non-service sectors of the general economy, with a strategy to improve profitability by increasing yield and volumes, building density in existing geography, and pursuing geographic expansion[173](index=173&type=chunk) - The company's business is labor-intensive, capital-intensive, and service-sensitive, with a focus on improving safety, cost-effectiveness, and asset utilization, and technology investments enhancing customer experience and operational efficiencies[173](index=173&type=chunk) - The COVID-19 pandemic's situation remains fluid, but Saia has implemented safety protocols and maintains significant liquidity, including a revolving credit facility with up to **$300 million** in availability plus an additional **$100 million** accordion feature[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) Key Financial and Operational Highlights (2021 vs 2020) | Metric | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Operating Revenue | $2.3 billion | $1.8 billion | +25.6% | | Operating Income | $335.1 million | $180.3 million | +85.9% | | Net Cash from Operating Activities | $382.6 million | $309.1 million | +23.8% | | Net Cash Used in Investing Activities | $277.8 million | $218.8 million | +27.0% | | Net Cash Used in Financing Activities | $23.5 million | $65.3 million | -64.0% | | Cash & Cash Equivalents (Dec 31) | $106.6 million | $25.3 million | +321.3% | | Revolving Credit Facility Availability (Dec 31) | $270.7 million | $272.8 million | -0.8% | | Finance Lease Obligations (Dec 31) | $50.4 million | $71.0 million | -29.0% | [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Saia experienced significant revenue and operating income growth in **2021**, with consolidated revenue increasing **25.6%** to **$2.3 billion** and operating income surging **85.9%** to **$335.1 million**, improving the operating ratio to **85.4%**. This was driven by pricing actions and increased volumes, partially offset by rising operating expenses. In **2020**, revenue grew **2.0%** to **$1.8 billion**, and operating income increased **18.2%** to **$180.3 million**, with the operating ratio improving to **90.1%**. The company anticipates continued revenue growth through pricing and geographic expansion, while managing costs and productivity, with a **7.5%** general rate increase in January **2022** Selected Results of Operations and Operating Statistics (2021, 2020, 2019) | Metric | 2021 | 2020 | 2019 | Percent Variance '21 v. '20 | Percent Variance '20 v. '19 | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating Revenue (in thousands) | $2,288,704 | $1,822,366 | $1,786,735 | 25.6% | 2.0% | | Operating Income (in thousands) | $335,141 | $180,321 | $152,586 | 85.9% | 18.2% | | Operating Ratio | 85.4% | 90.1% | 91.5% | (4.7) | (1.4) | | LTL Revenue per hundredweight | $20.68 | $18.33 | $18.05 | 12.8% | 1.6% | | LTL Revenue per shipment | $289.00 | $240.86 | $234.81 | 20.0% | 2.6% | | LTL Tonnage (in thousands) | 5,401 | 4,842 | 4,820 | 11.5% | 0.5% | | LTL Shipments (in thousands) | 7,730 | 7,371 | 7,409 | 4.9% | (0.5)% | | LTL Pounds/shipment | 1,397 | 1,314 | 1,301 | 6.3% | 1.0% | | LTL Length of haul | 913 | 879 | 840 | 3.9% | 4.6% | [Year ended December 31, 2021 as compared to year ended December 31, 2020](index=36&type=section&id=Year%20ended%20December%2031%2C%202021%20as%20compared%20to%20year%20ended%20December%2031%2C%202020) - Consolidated revenue increased **25.6%** to **$2.3 billion** in **2021**, primarily due to pricing actions, including a **5.9%** general rate increase on January **18**, **2021**, increased volumes, terminal expansion, and improvements in business mix[189](index=189&type=chunk) - Operating income increased **85.9%** to **$335.1 million** in **2021**, improving the operating ratio to **85.4%** (from **90.1%** in **2020**)[192](index=192&type=chunk) - Key expense increases in **2021** included salaries, wages and employees' benefits (**$100.4 million**), purchased transportation (**$108.3 million**), fuel and other operating expenses (**$95.7 million**, largely due to increased fuel costs), and claims and insurance expense (**$11.6 million** due to increased premiums and accident severity)[193](index=193&type=chunk) - Fuel surcharge revenue increased to **14.0%** of operating revenue in **2021**, up from **11.1%** in **2020**, primarily due to increases in the cost of fuel[191](index=191&type=chunk) [Year ended December 31, 2020 as compared to year ended December 31, 2019](index=37&type=section&id=Year%20ended%20December%2031%2C%202020%20as%20compared%20to%20year%20ended%20December%2031%2C%202019) - Consolidated revenue increased **2.0%** to **$1.8 billion** in **2020**, primarily due to pricing actions (**5.9%** general rate increase on February **3**, **2020**) and terminal expansion, partially offset by a decrease in fuel surcharge revenue[197](index=197&type=chunk) - Operating income increased **18.2%** to **$180.3 million** in **2020**, improving the operating ratio to **90.1%** (from **91.5%** in **2019**)[199](index=199&type=chunk) - Key expense changes in **2020** included increased salaries, wages and benefits (**$15.3 million**, due to paid time off and healthcare costs), decreased fuel, operating expenses and supplies (**$40.8 million** due to lower fuel costs), and increased claims and insurance expense (**$6.7 million** due to increased premiums and accident severity)[200](index=200&type=chunk) - Fuel surcharge revenue decreased to **11.1%** of operating revenue in **2020**, down from **13.0%** in **2019**, primarily due to decreases in the cost of fuel[198](index=198&type=chunk) [Outlook](index=39&type=section&id=Outlook) - Saia's business remains highly correlated to non-service sectors of the general economy and competitive pricing pressures, with ongoing initiatives to increase revenue per shipment, reduce costs, and improve productivity[204](index=204&type=chunk) - A **7.5%** general rate increase was implemented on January **24**, **2022**, for customers comprising approximately **20-25%** of operating revenue, following a **5.9%** increase on January **18**, **2021**[204](index=204&type=chunk) - Salary and wage increases implemented in January and August **2021** are expected to cost approximately **$60.9 million** annually, with anticipated partial offset from productivity and efficiency gains[204](index=204&type=chunk) - The company plans to build market share, including through geographic expansion, and will match resources and capacity to shifting volume levels to manage operating leverage[205](index=205&type=chunk) [Accounting Pronouncements Adopted in 2021](index=40&type=section&id=Accounting%20Pronouncements%20Adopted%20in%202021) Saia adopted ASU No. **2019-12**, "Income Taxes (Topic **740**): Simplifying the Accounting for Income Taxes," effective January **1**, **2021**. This standard did not have a material impact on its consolidated financial statements or disclosures upon adoption - Saia adopted ASU No. **2019-12**, "Income Taxes (Topic **740**): Simplifying the Accounting for Income Taxes," effective January **1**, **2021**, which did not have a material impact on its consolidated financial statements or related disclosures[207](index=207&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=40&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) Saia's liquidity needs are primarily for capital investments (equipment, land, IT) and letters of credit. These are funded by operating cash flows and a **$300 million** revolving credit facility (with a **$100 million** accordion feature). The company had **$106.6 million** in cash and equivalents and **$270.7 million** in available credit at year-end **2021**. Projected capital expenditures for **2022** exceed **$500 million**, significantly higher than **$277 million** in **2021**, to support growth and normal replacements - Saia's liquidity needs primarily arise from capital investments in new equipment, land and structures, information technology, and letters of credit, funded by operating cash flows and availability under its revolving credit agreement[208](index=208&type=chunk)[209](index=209&type=chunk)[213](index=213&type=chunk) - The company has a **$300 million** revolving credit agreement with a term ending February **2024**, including an accordion feature for an additional **$100 million**, secured by certain land, structures, accounts receivable, and other assets[210](index=210&type=chunk) Liquidity and Capital Resources (as of December 31) | Metric (in thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $106,588 | $25,308 | | Outstanding borrowings under revolving credit | $0 | $0 | | Outstanding letters of credit | $29,300 | $27,200 | | Remaining availability under revolving credit | $270,700 | $272,800 | | Finance lease obligations | $50,404 | $70,976 | - Projected net capital expenditures for **2022** are expected to exceed **$500 million**, inclusive of equipment acquired using finance leases, significantly higher than **$277.3 million** in **2021**, to support growth initiatives and normal equipment replacement[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) [Contractual Obligations](index=41&type=section&id=Contractual%20Obligations) Saia's contractual obligations include operating leases (**$126.5 million** at Dec **31**, **2021**), finance leases (**$53.3 million**), and purchase obligations (**$60.2 million**). The revolving credit line had no outstanding principal balance. The company also has significant letters of credit (**$31.1 million**) and surety bonds (**$69.5 million**) for insurance Contractual Obligations (as of December 31, 2021) | Obligation Type | Total Amount (in millions) | | :--- | :--- | | Operating Leases | $126.5 | | Finance Leases (principal + interest) | $53.3 | | Purchase Obligations | $60.2 | | Revolving Credit Line (outstanding principal) | $0 | | Outstanding Letters of Credit | $31.1 | | Surety Bonds | $69.5 | - The Company has interest obligations of approximately **$2.8 million** for **2022**, decreasing for each year thereafter, based on borrowings and commitments outstanding at December **31**, **2021**[219](index=219&type=chunk) - As of December **31**, **2021**, the Company has accrued approximately **$1.4 million** for uncertain tax positions and **$0.1 million** for related accrued interest and penalties[219](index=219&type=chunk) - Total claims, insurance, and other liabilities amounted to **$114.7 million** at December **31**, **2021**[220](index=220&type=chunk) [Critical Accounting Policies and Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Saia's critical accounting policies and estimates include claims and insurance accruals, revenue recognition and related allowances, and depreciation and capitalization of assets. These involve significant management judgment and assumptions, which, if actual costs or conditions differ, could materially impact financial results - **Claims and Insurance Accruals:** Liabilities are estimated based on historical experience, actuarial analysis, and claim severity, with self-insured retention limits. Estimates are sensitive to changes in claim severity, medical cost inflation, and specific case facts - **Revenue Recognition and Related Allowances:** Revenue is recognized over the transit time of shipments, with estimates for shipments in transit and adjustments for billing and collectability. These estimates are sensitive to economic conditions, pricing arrangements, and other factors - **Depreciation and Capitalization of Assets:** Management establishes depreciable lives and salvage values for revenue equipment based on estimated useful lives and residual values, using the straight-line method. Actual useful lives and residual values could differ from these assumptions, impacting depreciation expense - The preparation of financial statements requires significant judgments and estimates, which are routinely evaluated and updated, but even under optimal circumstances, estimates may require adjustment[224](index=224&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Saia is exposed to market risks from interest rates and fuel prices. A fuel surcharge program helps mitigate fuel price volatility, though it may not fully offset rapid changes. The company's debt structure primarily consists of fixed-rate finance leases - Saia is exposed to market risks, including the effects of interest rates and fuel prices[225](index=225&type=chunk) - A fuel surcharge program, based on average national diesel fuel prices and reset weekly, is implemented to reduce exposure to fuel price volatility, though it may not fully offset rapid price fluctuations and is subject to competitive pricing negotiations[225](index=225&type=chunk) Third-Party Financial Instruments (as of December 31, 2021 and 2020) | Debt Type | 2021 Total (millions) | 2021 Fair Value (millions) | 2020 Total (millions) | 2020 Fair Value (millions) | | :--- | :--- | :--- | :--- | :--- | | Fixed rate debt (Finance Leases) | $50.4 | $50.8 | $71.0 | $71.2 | | Average interest rate (Fixed) | 3.6% | | 3.6% | | | Variable rate debt | $0 | $0 | $0 | $0 | [Financial Statements and Supplementary Data](index=43&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Saia's audited consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows for the years ended December **31**, **2021**, **2020**, and **2019**. It also includes the reports of the independent registered public accounting firm and detailed notes to the financial statements, covering accounting policies, debt, leases, equity, and other financial disclosures [Reports of Independent Registered Public Accounting Firm](index=44&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on Saia's consolidated financial statements for the years ended December **31**, **2021**, **2020**, and **2019**, stating they present fairly the financial position and cash flows in conformity with U.S. GAAP. KPMG also issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December **31**, **2021** - KPMG LLP issued an unqualified opinion on Saia's consolidated financial statements for the years ended December **31**, **2021**, **2020**, and **2019**, confirming they present fairly the financial position and cash flows in conformity with U.S. GAAP[233](index=233&type=chunk) - KPMG LLP also issued an unqualified opinion on the effectiveness of Saia's internal control over financial reporting as of December **31**, **2021**, based on criteria established in Internal Control – Integrated Framework (**2013**)[234](index=234&type=chunk)[244](index=244&type=chunk) - A critical audit matter identified was the evaluation of the estimated liabilities for self-insured workers' compensation and bodily injury claims due to the inherent uncertainty in settlement amounts and the need for specialized actuarial skills[238](index=238&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk) [Consolidated Balance Sheets](index=48&type=section&id=Consolidated%20Balance%20Sheets) Saia's total assets increased from **$1.55 billion** in **2020** to **$1.85 billion** in **2021**, driven by increases in cash and cash equivalents, accounts receivable, and net property and equipment. Total liabilities also increased, but stockholders' equity saw a significant rise from **$961.3 million** to **$1.22 billion** Consolidated Balance Sheet Highlights (as of December 31, in thousands) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Total current assets | $416,255 | $271,696 | | Net property and equipment | $1,280,454 | $1,136,027 | | Total assets | $1,845,250 | $1,548,774 | | Total current liabilities | $321,348 | $275,754 | | Long-term debt, less current portion | $31,008 | $50,388 | | Total liabilities | $624,917 | $587,486 | | Total stockholders' equity | $1,220,333 | $961,288 | - Cash and cash equivalents increased significantly from **$25.3 million** in **2020** to **$106.6 million** in **2021**[254](index=254&type=chunk) - Accounts receivable, net, increased from **$216.9 million** in **2020** to **$276.8 million** in **2021**[254](index=254&type=chunk) - Net property and equipment increased from **$1.14 billion** in **2020** to **$1.28 billion** in **2021**[254](index=254&type=chunk) [Consolidated Statements of Operations](index=49&type=section&id=Consolidated%20Statements%20of%20Operations) Saia reported strong financial performance in **2021**, with operating revenue increasing by **25.6%** to **$2.29 billion** and net income rising by **83.0%** to **$253.2 million**. Basic EPS grew from **$5.29** in **2020** to **$9.62** in **2021**. This growth was driven by higher revenue per shipment and volumes, partially offset by increased operating expenses such as salaries, purchased transportation, and fuel Consolidated Statements of Operations Highlights (Years Ended December 31, in thousands) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Operating Revenue | $2,288,704 | $1,822,366 | $1,786,735 | | Total operating expenses | $1,953,563 | $1,642,045 | $1,634,149 | | Operating Income | $335,141 | $180,321 | $152,586 | | Income Before Income Taxes | $332,773 | $176,278 | $146,652 | | Income Tax Expense | $79,538 | $37,938 | $32,933 | | Net Income | $253,235 | $138,340 | $113,719 | | Basic Earnings Per Share | $9.62 | $5.29 | $4.38 | | Diluted Earnings Per Share | $9.48 | $5.20 | $4.30 | - Operating revenue increased **25.6%** in **2021**, while net income grew **83.0%** from **$138.3 million** in **2020** to **$253.2 million** in **2021**[256](index=256&type=chunk) - Basic Earnings Per Share increased from **$5.29** in **2020** to **$9.62** in **2021**[256](index=256&type=chunk) - Key operating expenses in **2021** included salaries, wages and employees' benefits (**$1.06 billion**), purchased transportation (**$249.7 million**), and fuel, operating expenses and supplies (**$381.9 million**)[256](index=256&type=chunk) [Consolidated Statements of Stockholders' Equity](index=50&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Saia's total stockholders' equity increased from **$961.3 million** in **2020** to **$1.22 billion** in **2021**, primarily driven by net income of **$253.2 million**. Stock compensation, director deferred share activity, and stock option exercises also contributed to the increase in additional paid-in capital Consolidated Stockholders' Equity Highlights (Years Ended December 31, in thousands) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Total Stockholders' Equity | $1,220,333 | $961,288 | $815,226 | | Retained Earnings | $949,775 | $696,540 | $558,200 | | Additional Paid-in Capital | $274,633 | $267,666 | $260,871 | | Net Income | $253,235 | $138,340 | $113,719 | - Total stockholders' equity increased by **$259.0 million** in **2021**, primarily due to net income of **$253.2 million**[259](index=259&type=chunk) - Additional paid-in capital increased by **$6.9 million** in **2021**, influenced by stock compensation (**$7.2 million**), director deferred share activity (**$1.5 million**), and stock option exercises (**$3.7 million**), offset by shares withheld for taxes (**$6.6 million**)[259](index=259&type=chunk) [Consolidated Statements of Cash Flows](index=51&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In **2021**, net cash provided by operating activities increased to **$382.6 million**, up from **$309.1 million** in **2020**, primarily due to higher net income. Net cash used in investing activities increased to **$277.8 million**, reflecting higher capital expenditures. Net cash used in financing activities decreased significantly to **$23.5 million**, mainly due to zero net borrowings under the revolving credit facility compared to net repayments in **2020** Consolidated Statements of Cash Flows Highlights (Years Ended December 31, in thousands) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $382,592 | $309,145 | $272,876 | | Net cash used in investing activities | $(277,848) | $(218,817) | $(281,031) | | Net cash (used in) provided by financing activities | $(23,464) | $(65,268) | $6,209 | | Net Increase (Decrease) in Cash and Cash Equivalents | $81,280 | $25,060 | $(1,946) | | Cash and cash equivalents, end of year | $106,588 | $25,308 | $248 | - Net cash provided by operating activities increased by **$73.4 million** in **2021**, primarily driven by higher net income[262](index=262&type=chunk) - Net cash used in investing activities increased by **$59.0 million** in **2021**, reflecting higher acquisition of property and equipment[262](index=262&type=chunk) - Net cash used in financing activities decreased by **$41.8 million** in **2021**, largely due to zero net borrowings under the revolving credit agreement compared to net repayments in **2020**[262](index=262&type=chunk) [Notes to Consolidated Financial Statements](index=52&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on Saia's accounting policies, financial instruments, commitments, and specific financial statement line items. It covers the company's business description, significant accounting estimates, debt and lease arrangements, goodwill and intangible assets, earnings per share computation, stockholders' equity, stock-based compensation, employee benefits, income taxes, valuation accounts, and the impact of COVID-19 [1. Description of Business and Summary of Accounting Policies](index=53&type=section&id=1.%20Description%20of%20Business%20and%20Summary%20of%20Accounting%20Policies) - Saia is a leading less-than-truckload (LTL) motor carrier, with over **97%** of its revenue derived from LTL shipments, and also offers non-asset truckload, expedited, and logistics services[264](index=264&type=chunk) - The Chief Executive Officer is the Chief Operating Decision Maker, managing the business as a single operating segment[265](index=265&type=chunk) - The preparation of financial statements requires significant estimates and assumptions, particularly for revenue reserves, self-insurance accruals, long-term incentive compensation, tax liabilities, loss contingencies, litigation claims, and impairment assessments[267](index=267&type=chunk) - **Property and Equipment:** Carried at cost and depreciated using the straight-line method over estimated useful lives (e.g., structures **20-25** years, tractors **6-10** years, trailers **10-14** years) - **Claims and Insurance Accruals:** Estimated based on historical experience, actuarial analysis, and claim severity, with self-insured retention limits generally ranging from **$250,000** to **$10 million** per occurrence - **Revenue Recognition:** Revenue is recognized over the transit time of the shipment, with key estimates for shipments in transit and adjustments for billing and collectability - **Income Taxes:** Accounted for under the asset and liability method, recognizing deferred tax assets and liabilities for temporary differences - **Stock-Based Compensation:** Valued using Black-Scholes-Merton (stock options), intrinsic valuation (restricted stock), and Monte Carlo (Performance Unit Awards), with expense amortized over vesting periods [2. Debt and Financing Arrangements](index=56&type=section&id=2.%20Debt%20and%20Financing%20Arrangements) Debt and Financing Arrangements (as of December 31, in thousands) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Total debt | $50,404 | $70,976 | | Long-term debt, less current portion | $31,008 | $50,388 | | Outstanding borrowings under revolving credit | $0 | $0 | | Outstanding letters of credit (under credit agreement) | $29,300 | $27,200 | | Weighted average interest rate (finance leases) | 3.55% | 3.48% | | Estimated fair value of finance leases | $50,800 | $71,200 | - The company has a **$300 million** revolving credit agreement with a term ending February **2024**, including an accordion feature for an additional **$100 million**, and is subject to debt covenants requiring a minimum debt service coverage ratio (**1.25** to **1.00**) and a maximum leverage ratio (**3.25** to **1.00**)[295](index=295&type=chunk) Principal Maturities of Long-Term Debt (in thousands) | Year | Amount | | :--- | :--- | | 2022 | $20,956 | | 2023 | $15,409 | | 2024 | $10,606 | | 2025 | $5,453 | | 2026 | $919 | | Thereafter | $0 | | Total | $53,343 | | Less: Interest on Finance Leases | $2,939 | | Total Principal | $50,404 | [3. Commitments, Contingencies and Uncertainties](index=57&type=section&id=3.%20Commitments%2C%20Contingencies%20and%20Uncertainties) Operating Lease Commitments (as of December 31, 2021, in thousands) | Year | Amount | | :--- | :--- | | 2022 | $26,123 | | 2023 | $24,658 | | 2024 | $20,840 | | 2025 | $16,145 | | 2026 | $12,624 | | Thereafter | $26,106 | | Total | $126,496 | - In April **2021**, the Company committed to an additional terminal lease estimated to commence in **2023**, with a **15-year** term and annual rent ranging from **$3.1 million** to **$4.6 million**[302](index=302&type=chunk) - Purchase commitments related to capital expenditures were **$57.5 million** at December **31**, **2021**[304](index=304&type=chunk) - The Company had total outstanding letters of credit of **$31.1 million** and **$69.5 million** in surety bonds at December **31**, **2021**, required for collateral towards insurance agreements[218](index=218&type=chunk) [4. Leases](index=59&type=section&id=4.%20Leases) - As of December **31**, **2021**, finance leased assets, net of depreciation and amortization, were **$85.1 million**, and operating lease right-of-use assets were **$107.8 million**[254](index=254&type=chunk)[308](index=308&type=chunk) Lease Costs (Years Ended December 31, in thousands) | Lease Cost Type | 2021 | 2020 | | :--- | :--- | :--- | | Finance lease cost (amortization + interest) | $13,336 | $14,070 | | Operating lease cost | $28,859 | $27,960 | | Short-term lease cost | $8,322 | $6,355 | | Total lease cost | $50,517 | $48,385 | Maturities of Lease Liabilities (as of December 31, 2021, in thousands) | Year | Operating Leases | Finance Leases | | :--- | :--- | :--- | | 2022 | $26,043 | $20,956 | | 2023 | $24,658 | $15,409 | | 2024 | $20,840 | $10,606 | | 2025 | $16,145 | $5,453 | | 2026 | $12,624 | $919 | | Thereafter | $26,106 | $0 | | Total lease payments | $126,416 | $53,343 | | Less: Interest | $16,442 | $2,939 | | Present value of lease liabilities | $109,974 | $50,404 | [5. Goodwill and Other Intangible Assets](index=61&type=section&id=5.%20Goodwill%20and%20Other%20Intangible%20Assets) - Goodwill remained unchanged at **$12.1 million** for the fiscal years ended December **31**, **2021**, **2020**, and **2019**[312](index=312&type=chunk) Identifiable Intangible Assets (as of December 31, 2021, in thousands) | Asset Type | Gross Amount | Accumulated Amortization | | :--- | :--- | :--- | | Customer relationships (useful life of 6-15 years) | $19,000 | $12,756 | | Trademarks (useful life of 15 years) | $1,500 | $692 | | Total | $20,500 | $13,448 | - Amortization expense for intangible assets was **$1.2 million** for each of the years ended December **31**, **2021**, **2020**, and **2019**[313](index=313&type=chunk) [6. Computation of Earnings Per Share](index=62&type=section&id=6.%20Computation%20of%20Earnings%20Per%20Share) Earnings Per Share (Years Ended December 31, in thousands except per share data) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net income | $253,235 | $138,340 | $113,719 | | Weighted average common shares outstanding – basic | 26,322 | 26,140 | 25,952 | | Basic Earnings Per Share | $9.62 | $5.29 | $4.38 | | Weighted average common shares outstanding – diluted | 26,707 | 26,592 | 26,435 | | Diluted Earnings Per Share | $9.48 | $5.20 | $4.30 | - In **2021**, there were **19,386** anti-dilutive options or restricted stock, while there were no anti-dilutive options or restricted stock in **2020**[314](index=314&type=chunk) [7. Stockholders' Equity](index=62&type=section&id=7.%20Stockholders%27%20Equity) Deferred Compensation Trust Stock Activity (Years Ended December 31) | Metric | 2021 | 2020 | 2

Financial Data and Key Metrics Changes - Fourth quarter revenue reached $617 million, an increase of 29.5% year-over-year [8][16] - Operating income grew by 92.3% to $97.4 million, with an operating ratio of 84.2%, marking a 520 basis point improvement from the previous year [8][22] - Full-year revenue crossed $2 billion for the first time, totaling $2.3 billion, up more than 25% from the prior year [13][24] - Diluted earnings per share for the fourth quarter were $2.76, compared to $1.51 in the previous year [23] - Full-year diluted earnings per share were a record $9.48, up from $5.20 in 2020 [24] Business Line Data and Key Metrics Changes - LTL revenue per hundredweight increased by 19.6% in the fourth quarter, reflecting pricing actions and improvements in business mix [11] - Revenue per shipment rose by 28.4% to $317, a record for the company [12] - Tonnage grew by 9.2%, driven by a 1.6% increase in shipments and a 7.5% increase in average weight per shipment [16] Market Data and Key Metrics Changes - On-time service was reported at 98%, with a cargo claims ratio among the best in the industry [10] - Fuel surcharge revenue increased by 80.1%, accounting for 14.6% of total revenue compared to 10.5% a year ago [17] Company Strategy and Development Direction - The company plans to add 10 to 15 new terminals in 2022 and relocate 10 existing terminals to larger facilities [29] - Capital expenditures are anticipated to exceed $500 million in 2022, focusing on real estate, equipment, and technology investments [25][32] - The company is committed to enhancing service levels and expanding its terminal network to better meet customer expectations [28][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate ongoing supply chain challenges and labor shortages while maintaining high service levels [27][30] - The company aims to continue improving its operating performance and margin potential, with a focus on sustainable growth rather than just volume [49][55] - Management acknowledged the potential for market fluctuations but emphasized the importance of quality service as a differentiator in a competitive landscape [95] Other Important Information - The company opened seven new facilities in 2021 and invested $286 million in capital expenditures to enhance service levels [13][25] - Claims and insurance expenses increased by 86.8% in the fourth quarter, reflecting higher accident frequency and premium costs [21] Q&A Session Summary Question: Update on January trends - Management reported a 1.3% increase in shipments and a 7.5% increase in tonnage for January, with some weather-related disruptions impacting operations [39][40] Question: Impact of new terminals on capacity - New terminals are expected to expand the addressable market and improve service levels, particularly in key areas like Chicago and Harrisburg [41][42] Question: Margin opportunities - Management indicated a long-term margin improvement potential of 150 to 200 basis points, with a focus on execution and customer service [46][48] Question: Pricing renewals and GRI - Contractual renewals were running at a double-digit increase of 10.4%, reflecting ongoing supply chain challenges [57] Question: Labor competition and long-term OR - The company is competing for labor not only with LTL businesses but also with warehouse operations, and management sees potential for long-term OR improvements [88][90]

Financial Data and Key Metrics Changes - The company reported a record revenue of $616 million for Q3 2021, a 28% increase from the previous year [7][12] - Operating income grew by 92% to a record $106 million, with an operating ratio of 82.8%, marking the fifth consecutive quarter below 90% [7][16] - Adjusted diluted earnings per share were $2.86, compared to $1.56 in the previous year [16] Business Line Data and Key Metrics Changes - LTL revenue per hundredweight increased by 14.9%, with a 10.2% yield improvement excluding fuel surcharge [9][12] - Revenue per shipment, including fuel surcharge, reached a record $299, reflecting a 24.8% increase [10][12] - Tonnage grew by 11%, driven by a 2.3% increase in shipments and an 8.6% rise in average weight per shipment [12] Market Data and Key Metrics Changes - The company experienced consistent demand from shipper customers despite supply chain challenges and tight labor markets [8] - The fuel surcharge revenue increased by 72%, accounting for 13.9% of total revenue compared to 10.4% a year ago [12] Company Strategy and Development Direction - The company plans to open 10 to 15 new terminals in 2022, following the successful opening of 7 terminals in 2021 [19][20] - Investments in technology and human resources are seen as critical for supporting growth and operational efficiency [20][21] - The focus remains on pricing strategies and improving service quality to enhance profitability [9][20] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued supply chain disruptions and inflationary pressures in the economy, which may impact pricing and demand [35][66] - The company is optimistic about maintaining a favorable operating ratio and margin expansion in the coming year [29][30] Other Important Information - Total operating expenses increased by 19.7%, but the revenue growth outpaced this, leading to an improved operating ratio [16] - The company has a strong balance sheet with $121.7 million in cash and over $300 million available through credit facilities [17] Q&A Session Summary Question: Is the $300 revenue per bill a new baseline? - Management indicated that there is still room for improvement beyond $299, with ongoing initiatives to enhance pricing strategies [24][25] Question: What is the expectation for operating ratio in Q4? - Management expects a typical deterioration of about 150 basis points in Q4 due to seasonal factors [27][28] Question: What is the opportunity for ancillary charges in 2022? - Management believes there is significant potential for further penetration of ancillary charges, with a year-over-year increase expected [32][33] Question: How is the labor market affecting growth? - Management acknowledged challenges in the labor market but noted improvements in hiring due to targeted recruitment efforts [56][58] Question: How do new terminals impact operating ratio over time? - New terminals are expected to become more efficient over time, contributing positively to operating ratio improvements [68][70]

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for Saia, Inc [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Saia, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income statements, equity, cash flows, and detailed notes on accounting policies and debt [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a significant increase in total assets and stockholders' equity from December 31, 2020, to September 30, 2021, driven primarily by higher cash and accounts receivable, and retained earnings Condensed Consolidated Balance Sheet Highlights | Metric | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | Change | | :-------------------------- | :-------------------------- | :-------------------------- | :----- | | Cash and cash equivalents | $121,702 | $25,308 | +$96,394 | | Accounts receivable, net | $295,862 | $216,899 | +$78,963 | | Total current assets | $450,609 | $271,696 | +$178,913 | | Net property and equipment | $1,202,224 | $1,136,027 | +$66,197 | | Total assets | $1,789,259 | $1,548,774 | +$240,485 | | Total current liabilities | $338,621 | $275,754 | +$62,867 | | Total other liabilities | $305,912 | $311,732 | -$5,820 | | Total stockholders' equity | $1,144,726 | $961,288 | +$183,438 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported substantial growth in operating revenue and net income for both the third quarter and the nine months ended September 30, 2021, compared to the same periods in 2020, driven by increased revenue and improved operating efficiency Condensed Consolidated Statements of Operations Highlights | Metric | Q3 2021 (in thousands) | Q3 2020 (in thousands) | YoY Change (%) | 9M 2021 (in thousands) | 9M 2020 (in thousands) | YoY Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :------------- | :--------------------- | :--------------------- | :------------- | | Operating Revenue | $616,216 | $481,374 | 28.0% | $1,671,623 | $1,345,884 | 24.2% | | Total operating expenses | $510,099 | $426,158 | 19.7% | $1,433,867 | $1,216,211 | 17.9% | | Operating Income | $106,117 | $55,216 | 92.2% | $237,756 | $129,673 | 83.4% | | Net Income | $79,709 | $41,539 | 91.9% | $179,474 | $98,104 | 82.9% | | Basic Earnings Per Share | $3.03 | $1.59 | 90.6% | $6.82 | $3.76 | 81.4% | | Diluted Earnings Per Share | $2.98 | $1.56 | 91.0% | $6.72 | $3.69 | 82.1% | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity increased from $961.3 million at December 31, 2020, to $1,144.7 million at September 30, 2021, primarily due to net income contributions Stockholders' Equity Highlights | Metric | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | Change | | :----------------------- | :-------------------------- | :-------------------------- | :----- | | Total stockholders' equity | $1,144,726 | $961,288 | +$183,438 | | Retained earnings | $876,014 | $696,540 | +$179,474 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased for the nine months ended September 30, 2021, while net cash used in investing activities decreased due to lower capital expenditures Condensed Consolidated Statements of Cash Flows Highlights | Activity | 9M 2021 (in thousands) | 9M 2020 (in thousands) | Change | | :-------------------------------- | :--------------------- | :--------------------- | :----- | | Net cash provided by operating activities | $267,686 | $238,961 | +$28,725 | | Net cash used in investing activities | ($148,924) | ($197,510) | +$48,586 | | Net cash used in financing activities | ($18,698) | ($16,230) | -$2,468 | | Net Increase in Cash, Cash Equivalents and Restricted Cash | $100,064 | $25,221 | +$74,843 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide essential context to the financial statements, detailing accounting policies, EPS calculations, commitments, fair value measurements, debt structures, and the company's assessment of the COVID-19 pandemic's impact [(1) Summary of Significant Accounting Policies](index=8&type=section&id=(1)%20Summary%20of%20Significant%20Accounting%20Policies) The company primarily provides national less-than-truckload (LTL) services, recognizing revenue over transit time and self-insuring for certain claims - Saia, Inc. primarily provides national less-than-truckload (LTL) services, accounting for over **97% of its revenue** across 44 states, also offering non-asset truckload, expedited, and logistics services[24](index=24&type=chunk)[60](index=60&type=chunk) - Revenue for transportation services is recognized ratably over the transit time of the shipment, typically **1 to 5 days**, as performance obligations are satisfied[26](index=26&type=chunk)[27](index=27&type=chunk) - The company is self-insured for automobile liability, responsible for the first **$2.0 million** per occurrence, and for a 12-month period, self-insured for the first **$10 million** per occurrence[29](index=29&type=chunk)[86](index=86&type=chunk) - The company adopted ASU No. 2019-12, 'Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,' effective January 1, 2021, which did not have a material impact on its financial statements[30](index=30&type=chunk) [(2) Computation of Earnings Per Share](index=10&type=section&id=(2)%20Computation%20of%20Earnings%20Per%20Share) Diluted EPS significantly increased for both Q3 and the nine months ended September 30, 2021, reflecting higher net income Earnings Per Share Computation | Metric | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Net income (in thousands) | $79,709 | $41,539 | $179,474 | $98,104 | | Weighted average common shares outstanding – basic (in thousands) | 26,334 | 26,150 | 26,317 | 26,118 | | Basic Earnings Per Share | $3.03 | $1.59 | $6.82 | $3.76 | | Weighted average common shares outstanding – diluted (in thousands) | 26,713 | 26,615 | 26,699 | 26,569 | | Diluted Earnings Per Share | $2.98 | $1.56 | $6.72 | $3.69 | - Options and restricted stock for **19,250 shares** (9M 2021) and **53,025 shares** (9M 2020) were excluded from diluted EPS calculation due to their anti-dilutive effect[32](index=32&type=chunk) [(3) Commitments and Contingencies](index=10&type=section&id=(3)%20Commitments%20and%20Contingencies) The company is subject to legal proceedings and maintains letters of credit for workers' compensation claims, with adequate provisions for probable losses - The company's pro rata share of outstanding letters of credit for workers' compensation claims was **$1.8 million** at September 30, 2021[33](index=33&type=chunk) - Management believes that provisions for legal proceedings are adequate and that the ultimate outcome will not materially adversely affect financial condition, though it could impact results in a given period[34](index=34&type=chunk) [(4) Fair Value of Financial Instruments](index=10&type=section&id=(4)%20Fair%20Value%20of%20Financial%20Instruments) Most financial instruments' carrying amounts approximated fair value, with total debt's fair value slightly above its carrying value Fair Value of Debt | Metric | Sep 30, 2021 (in millions) | Dec 31, 2020 (in millions) | | :----------------------- | :------------------------- | :------------------------- | | Estimated fair value of total debt | $55.4 | $71.2 | | Carrying value of total debt | $55.2 | $71.0 | [(5) Debt and Financing Arrangements](index=11&type=section&id=(5)%20Debt%20and%20Financing%20Arrangements) The company's debt primarily consists of finance leases, with no outstanding borrowings under its $300 million revolving credit agreement Debt Composition | Debt Type | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Finance Leases | $55,171 | $70,976 | | Total debt | $55,171 | $70,976 | | Long-term debt, less current portion | $34,926 | $50,388 | - The revolving credit agreement provides **$300 million** in availability, with an accordion feature for an additional **$100 million**, and matures in February 2024, with **$29.3 million** in outstanding letters of credit as of September 30, 2021[38](index=38&type=chunk)[39](index=39&type=chunk) - Finance leases, primarily for revenue equipment, totaled **$55.2 million** at September 30, 2021, with a weighted average interest rate of **3.5%**[40](index=40&type=chunk) Principal Maturities of Long-Term Debt | Year | Amount (in thousands) | | :--- | :-------------------- | | 2021 | $5,240 | | 2022 | $20,956 | | 2023 | $15,409 | | 2024 | $10,606 | | 2025 | $5,453 | | Thereafter | $924 | | Total | $58,588 | [(6) COVID-19](index=12&type=section&id=(6)%20COVID-19) As an essential business, Saia continued operations without significant COVID-19 disruptions, assessing no material adverse financial impacts for Q3 2021 - Saia is considered an essential and critical business, continuing to operate under state of emergency orders with safety measures in place[43](index=43&type=chunk)[52](index=52&type=chunk) - No significant disruptions in LTL network operations have been experienced due to the COVID-19 pandemic through the filing date[43](index=43&type=chunk)[53](index=53&type=chunk) - Management determined no material adverse impacts on the company's Q3 2021 financial position from COVID-19, though future changes are possible[44](index=44&type=chunk) - The company does not believe it will be able to take advantage of the provisions of the CARES Act or the American Rescue Plan Act of 2021[45](index=45&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Saia's financial performance, condition, and outlook, analyzing operating results, liquidity, capital resources, and critical accounting policies, highlighting growth and COVID-19 management [Forward-Looking Statements](index=13&type=section&id=Forward-Looking%20Statements) The company includes forward-looking statements to inform investors about future prospects, cautioning that actual results may differ materially due to various factors - Forward-looking statements are included to help investors understand future prospects, but actual results may differ due to economic conditions, competition, labor costs, claims expenses, and other industry-specific and external factors[47](index=47&type=chunk)[48](index=48&type=chunk) - The company explicitly states it is under no obligation to update or alter any forward-looking statements, except as required by applicable law[50](index=50&type=chunk) [Executive Overview](index=14&type=section&id=Executive%20Overview) Saia's business performance is tied to non-service economic sectors, with a strategy focused on improving profitability through yield, volumes, expansion, and investment - The company's business is highly correlated to non-service sectors of the general economy[51](index=51&type=chunk) - Strategy involves improving profitability by increasing yield and volumes, building density in existing geography, and pursuing geographic expansion[51](index=51&type=chunk) - Key focus areas include improving safety, cost effectiveness, asset utilization (tractors and trailers), and investing in technology to enhance customer experience and operational efficiencies[51](index=51&type=chunk) [COVID-19](index=14&type=section&id=COVID-19) As an essential business, Saia maintained operations without significant LTL network disruptions, possessing ample liquidity to manage future pandemic impacts - The company has not experienced significant disruptions in its LTL network operations due to COVID-19 through the filing date[53](index=53&type=chunk) - Lower demand and increased costs were experienced in Q1 and Q2 2020 due to COVID-19[54](index=54&type=chunk) - The company has significant liquidity, including a **$300 million** revolving credit facility (with a **$100 million** accordion feature), to address potential future disruptions[54](index=54&type=chunk) - The impact of President Biden's directive for mandatory vaccination or weekly testing for employers with **100+ employees** could adversely affect the ability to hire and retain staff, potentially leading to service disruptions and higher costs[52](index=52&type=chunk)[53](index=53&type=chunk) [Third Quarter Overview](index=15&type=section&id=Third%20Quarter%20Overview) Saia achieved strong Q3 2021 results with significant increases in operating revenue and income, driven by higher revenue per shipment, tonnage, and operational efficiencies Third Quarter 2021 Performance Highlights | Metric | Q3 2021 | Q3 2020 | Change | | :-------------------------- | :------ | :------ | :----- | | Operating Revenue | +28.0% | | | | Operating Income | $106.1M | $55.2M | +92.2% | | LTL Shipments per workday | +2.3% | | | | LTL Tonnage per workday | +11.0% | | | | Diluted EPS | $2.98 | $1.56 | +91.0% | | Operating Ratio | 82.8% | 88.5% | -5.7 ppt | - The improved operating ratio was due to continued focus on pricing initiatives, cost control, and operating efficiencies, with a real estate gain contributing **70 basis points** to the **5.7 percentage point** improvement[57](index=57&type=chunk) - Net cash provided by operating activities for the first nine months of 2021 increased to **$267.7 million**, up from **$239.0 million** in the prior year, primarily due to increased profitability[58](index=58&type=chunk) - Net cash used in investing activities decreased by **$48.6 million** to **$148.9 million** for the first nine months of 2021, mainly due to COVID-19 related manufacturing delays for revenue equipment[58](index=58&type=chunk) [General](index=15&type=section&id=General) Saia, a national LTL service provider, sees its operating results influenced by shipment volumes, pricing, and effective cost management - Saia is headquartered in Johns Creek, Georgia, and primarily offers national less-than-truckload (LTL) services, with over **97% of revenue** from LTL shipments across 44 states[60](index=60&type=chunk) - Operating results are significantly affected by average daily shipments and tonnage, revenue per hundredweight (yield), revenue per shipment, and the ability to manage operating expenses such as salaries, purchased transportation, claims, and fuel[61](index=61&type=chunk)[62](index=62&type=chunk) [Results of Operations](index=16&type=section&id=Results%20of%20Operations) The company experienced robust revenue and operating income growth in Q3 and 9M 2021, driven by strong LTL volume and yield improvements, leading to margin expansion [Revenue and volume](index=16&type=section&id=Revenue%20and%20volume) Operating revenue significantly increased in Q3 and 9M 2021 due to higher revenue per shipment and tonnage, with substantial LTL yield growth Revenue and Volume Performance | Metric | Q3 2021 | Q3 2020 | Change (%) | 9M 2021 | 9M 2020 | Change (%) | | :-------------------------- | :------ | :------ | :--------- | :------ | :------ | :--------- | | Operating Revenue | $616.2M | $481.4M | 28.0% | $1.7B | $1.3B | 24.2% | | LTL Tonnage per workday | 1.4M tons | 1.26M tons | 11.0% | | | | | LTL Shipments per workday | 2.0M | 1.96M | 2.3% | | | | | LTL Revenue per hundredweight | $21.36 | $18.59 | 14.9% | | | | | LTL Revenue per shipment | $299.02 | $239.60 | 24.8% | | | | | Fuel surcharge revenue as % of operating revenue | 13.9% | 10.4% | +3.5 ppt | 13.8% | 11.3% | +2.5 ppt | - Approximately **75-80%** of operating revenue is subject to specific customer price negotiations, while the remaining **20-25%** is subject to general rate increases (**5.9%** implemented in January 2021)[65](index=65&type=chunk) [Operating expenses and margin](index=17&type=section&id=Operating%20expenses%20and%20margin) Consolidated operating income and ratio significantly improved, driven by pricing actions, operational efficiencies, and a real estate gain, despite rising expenses Operating Expenses and Margin Performance | Expense Category | Q3 2021 (in thousands) | Q3 2020 (in thousands) | Change (in thousands) | 9M 2021 (in thousands) | 9M 2020 (in thousands) | Change (in thousands) | | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | :--------------------- | :--------------------- | :-------------------- | | Operating Income | $106,117 | $55,216 | +$50,901 | $237,756 | $129,673 | +$108,083 | | Operating Ratio | 82.8% | 88.5% | -5.7 ppt | | | | | Salaries, wages and employees' benefits | | | +$25,000 | | | +$75,300 | | Purchased transportation | | | +$32,100 | | | +$83,200 | | Fuel, operating expenses and supplies | | | +$24,700 | | | +$51,500 | | Claims and insurance | | | +$3,600 | | | +$3,700 | | Gain from property disposals, net | | | +$3,500 | | | +$2,600 | - The **5.7 percentage point** improvement in the operating ratio for Q3 2021 was partly driven by a **70 basis point** contribution from a real estate gain[69](index=69&type=chunk) - Increased purchased transportation costs were due to rising demand, internal network capacity constraints, and higher rates for purchased miles[70](index=70&type=chunk)[72](index=72&type=chunk) [Other](index=17&type=section&id=Other) Interest expense decreased in Q3 2021 due to lower borrowings, while the effective tax rate slightly increased, leading to a significant rise in net income - Interest expense decreased in Q3 2021 compared to Q3 2020 due to reduced borrowings resulting from delayed capital expenditures[73](index=73&type=chunk) Other Financial Performance | Metric | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :-------------------- | :------ | :------ | :------ | :------ | | Effective tax rate | 24.3% | 23.7% | 23.9% | 22.2% | | Net income (in millions) | $79.7 | $41.5 | $179.5 | $98.1 | | Diluted EPS | $2.98 | $1.56 | $6.72 | $3.69 | - Cash tax payments for the nine months ended September 30, 2021, were **$58.7 million**, significantly higher than **$6.6 million** in the same period of 2020[74](index=74&type=chunk) [Working capital/capital expenditures](index=18&type=section&id=Working%20capital%2Fcapital%20expenditures) Working capital significantly increased, while net cash used in investing activities decreased due to manufacturing delays, with projected capital expenditures at $275 million Working Capital Changes | Metric | Sep 30, 2021 (in millions) | Sep 30, 2020 (in millions) | Change | | :-------------------------------- | :------------------------- | :------------------------- | :----- | | Working capital | $112.0 | $4.4 | +$107.6 | | Current assets increase | $170.5 | | | | Accounts receivable increase | $69.2 | | | | Cash and cash equivalents increase | $96.2 | | | | Current liabilities increase | $62.9 | | | - Net cash used in investing activities decreased by **$48.6 million** to **$148.9 million** for the nine months ended September 30, 2021, primarily due to COVID-19 related manufacturing delays for revenue equipment[77](index=77&type=chunk) - Projected net capital expenditures for 2021 are approximately **$275 million**, an increase from **$219 million** in 2020[77](index=77&type=chunk)[87](index=87&type=chunk) [Outlook](index=18&type=section&id=Outlook) The company's outlook remains tied to economic sectors and competitive pricing, with ongoing initiatives to improve yield, reduce costs, and enhance productivity amid COVID-19 uncertainty - The business remains highly correlated to non-service sectors of the general economy and competitive pricing pressures[78](index=78&type=chunk) - Ongoing initiatives include increasing yield, improving business mix, reducing costs, improving productivity, and focusing on top-quality service and safety[78](index=78&type=chunk) - The severity, magnitude, and duration of the COVID-19 pandemic and its economic consequences remain uncertain and difficult to predict[78](index=78&type=chunk) - A market competitive salary and wage increase of approximately **five percent** was implemented in mid-August 2021, expected to be partially offset by productivity gains[78](index=78&type=chunk) - Renewal of liability insurance policies effective March 1, 2021, is expected to result in approximately **$4.3 million** in cost increases for 2021 compared to 2020[78](index=78&type=chunk) [Financial Condition](index=18&type=section&id=Financial%20Condition) Liquidity is primarily met by operating cash flows and a revolving credit agreement, with $270.7 million available and compliance with all debt covenants - Liquidity needs are primarily funded by capital investments in new equipment, land, structures, information technology, letters of credit for insurance, and working capital requirements[80](index=80&type=chunk) - As of September 30, 2021, the company had **$270.7 million** in availability under its revolving credit facility and was in compliance with all debt covenants[85](index=85&type=chunk) - Projected net capital expenditures for 2021 are approximately **$275 million**, including a normal replacement cycle of revenue equipment and technology investment[87](index=87&type=chunk) - The company is self-insured for automobile liability, with a **$10 million** per occurrence retention for the four years ended March 1, 2022, following a policy commutation[86](index=86&type=chunk) [Contractual Obligations](index=22&type=section&id=Contractual%20Obligations) The company's contractual obligations, including finance leases, operating leases, and purchase obligations, total $268.5 million, with commercial commitments at $371.1 million Contractual Cash Obligations as of September 30, 2021 | Obligation Type | 2021 (in millions) | 2022 (in millions) | 2023 (in millions) | 2024 (in millions) | 2025 (in millions) | Thereafter (in millions) | Total (in millions) | | :-------------------------- | :----------------- | :----------------- | :----------------- | :----------------- | :----------------- | :----------------------- | :------------------ | | Finance Leases | $5.2 | $21.0 | $15.4 | $10.6 | $5.5 | $0.9 | $58.6 | | Operating leases | $7.3 | $27.6 | $23.7 | $20.3 | $15.8 | $38.4 | $133.1 | | Purchase obligations | $76.8 | $0.0 | $0.0 | $0.0 | $0.0 | $0.0 | $76.8 | | Total contractual obligations | $89.3 | $48.6 | $39.1 | $30.9 | $21.3 | $39.3 | $268.5 | Other Commercial Commitments as of September 30, 2021 | Commitment Type | 2021 (in millions) | 2022 (in millions) | 2023 (in millions) | 2024 (in millions) | 2025 (in millions) | Thereafter (in millions) | Total (in millions) | | :-------------------------- | :----------------- | :----------------- | :----------------- | :----------------- | :----------------- | :----------------------- | :------------------ | | Available line of credit | $0.0 | $0.0 | $0.0 | $270.7 | $0.0 | $0.0 | $270.7 | | Letters of credit | $0.0 | $31.1 | $0.0 | $0.0 | $0.0 | $0.0 | $31.1 | | Surety bonds | $0.4 | $60.0 | $8.9 | $0.0 | $0.0 | $0.0 | $69.3 | | Total commercial commitments | $0.4 | $91.1 | $8.9 | $270.7 | $0.0 | $0.0 | $371.1 | - The company has accrued **$1.4 million** for uncertain tax positions and **$0.2 million** for related interest and penalties, which are not included in the contractual obligations table due to inability to reasonably estimate timing of cash settlements beyond one year[92](index=92&type=chunk) - Claims and insurance liabilities of **$99.8 million** are also excluded from the table as the timing of cash settlements cannot be reasonably estimated beyond one year[93](index=93&type=chunk) [Critical Accounting Policies and Estimates](index=22&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Financial statements rely on significant judgments and estimates for claims, revenue recognition, and asset depreciation, which are continuously evaluated but subject to change - Key accounting policies requiring significant estimates include **Claims and Insurance Accruals** (based on historical experience, actuarial analysis, and management evaluation), **Revenue Recognition and Related Allowances** (for in-transit shipments, billing adjustments, and collectability), and **Depreciation and Capitalization of Assets** (estimated useful lives and salvage values)[94](index=94&type=chunk)[95](index=95&type=chunk) - Estimates for claims liabilities can be affected by severity of claims, medical cost inflation, and specific case facts, leading to short-term volatility[95](index=95&type=chunk) - Revenue recognition estimates for in-transit shipments are based on actual pickups, delivery days, and current rates, with typically **less than 5%** of monthly revenue in transit[95](index=95&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rates and fuel prices, mitigated by a fuel surcharge program, with fixed-rate debt fair value estimated based on market rates - The company is exposed to market risks related to interest rates and fuel prices[97](index=97&type=chunk) - A fuel surcharge program, based on average national diesel fuel prices and reset weekly, is used to reduce exposure to fuel price fluctuations, although it may not fully offset rapid changes[97](index=97&type=chunk) Fixed Rate Debt and Average Interest Rates as of September 30, 2021 | Metric | 2021 (in millions) | 2022 (in millions) | 2023 (in millions) | 2024 (in millions) | 2025 (in millions) | Thereafter (in millions) | Total (in millions) | Fair Value (in millions) | | :---------------- | :----------------- | :----------------- | :----------------- | :----------------- | :----------------- | :----------------------- | :------------------ | :----------------------- | | Fixed rate debt | $4.8 | $19.5 | $14.5 | $10.2 | $5.3 | $0.9 | $55.2 | $55.4 | | Average interest rate | 3.5% | 3.5% | 3.5% | 3.5% | 3.5% | 3.5% | | | [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[101](index=101&type=chunk) - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the quarter[102](index=102&type=chunk) - Disclosure controls are designed to ensure information required for SEC reports is recorded, processed, summarized, and reported timely, and communicated to management[104](index=104&type=chunk) - Management acknowledges that no control system can prevent all errors and fraud, providing only reasonable, not absolute, assurance due to inherent limitations like human judgment, simple error, or circumvention[105](index=105&type=chunk) PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, and other required disclosures [Item 1. Legal Proceedings](index=25&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding material pending legal proceedings is referenced in Note 3, 'Commitments and Contingencies,' of the accompanying unaudited condensed consolidated financial statements - For a description of all material pending legal proceedings, refer to Note 3 'Commitments and Contingencies' in the financial statements[108](index=108&type=chunk) [Item 1A. Risk Factors](index=25&type=section&id=Item%201A.%20Risk%20Factors) Risk factors are detailed in the company's Annual Report on Form 10-K for 2020, with no material changes reported in this quarterly filing - Risk Factors are described in Item 1A. 'Risk Factors' of the Company's Annual Report on Form 10-K for the year ended December 31, 2020, and there have been no material changes[108](index=108&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2021, the Executive Capital Accumulation Plan purchased 510 shares in July and sold 500 shares in August Issuer Purchases of Equity Securities | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that may Yet be Purchased under the Plans or Programs | | :-------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------------- | | July 1, 2021 through July 31, 2021 | 510 | $193.08 | — | $— | | August 1, 2021 through August 31, 2021 | — | $— | — | $— | | September 1, 2021 through September 30, 2021 | — | $— | — | $— | | Total | 510 | | — | | - The Saia, Inc. Executive Capital Accumulation Plan sold **500 shares** of Saia stock at an average price of **$224.85** during August 2021[110](index=110&type=chunk) [Item 3. Defaults Upon Senior Securities](index=25&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities for the period - There were no defaults upon senior securities[111](index=111&type=chunk) [Item 4. Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - There were no mine safety disclosures[111](index=111&type=chunk) [Item 5. Other Information](index=25&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - There was no other information to report[111](index=111&type=chunk) [Item 6. Exhibits](index=26&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, certifications from the CEO and CFO, and financial information formatted in iXBRL - Exhibits include Restated Certificate of Incorporation, Amended and Restated By-laws, CEO and CFO certifications (31.1, 31.2, 32.1, 32.2), and financial information in iXBRL format (Exhibit 101)[112](index=112&type=chunk) [Signature](index=27&type=section&id=Signature) The report was duly signed on October 28, 2021, by Douglas L. Col, Executive Vice President and Chief Financial Officer of Saia, Inc - The report was signed on October 28, 2021, by Douglas L. Col, Executive Vice President and Chief Financial Officer[116](index=116&type=chunk)

Saia, Inc. (NASDAQ:SAIA) Q2 2021 Earnings Conference Call July 29, 2021 10:00 AM ET Company Participants Douglas Col - Chief Financial Officer Frederick Holzgrefe - President & Chief Executive Officer Conference Call Participants Jack Atkins - Stephens Inc. Todd Fowler - KeyBanc Capital Markets Amit Mehrotra - Deutsche Bank Jonathan Chappell - Evercore ISI Tom Wadewitz - UBS Group AG Scott Group - Wolfe Research, LLC Jason Seidl - Cowen Jordan Alliger - Goldman Sachs Stephanie Moore - Truist Securities Tyle ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements for Saia, Inc. as of June 30, 2021, and for the three and six-month periods then ended [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Saia, Inc. as of June 30, 2021, and for the three and six-month periods then ended [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2021, total assets increased to **$1.65 billion** from **$1.55 billion** at year-end 2020, driven by increases in current assets, particularly accounts receivable and cash, with total stockholders' equity growing to **$1.06 billion** from **$961.3 million** Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $353.9 | $271.7 | | **Net Property and Equipment** | $1,156.9 | $1,136.0 | | **Total Assets** | **$1,647.4** | **$1,548.8** | | **Total Current Liabilities** | $284.9 | $275.8 | | **Total Liabilities** | $584.2 | $587.5 | | **Total Stockholders' Equity** | **$1,063.2** | **$961.3** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2021, operating revenue increased by **36.6%** to **$571.3 million**, operating income more than doubled to **$82.9 million**, and net income was **$62.5 million**, resulting in a diluted EPS of **$2.34**, an **118.7%** increase Q2 and Six Months Statement of Operations Highlights (in millions, except per share data) | Metric | Q2 2021 | Q2 2020 | YoY Change | Six Months 2021 | Six Months 2020 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Operating Revenue** | $571.3 | $418.1 | +36.6% | $1,055.4 | $864.5 | +22.1% | | **Operating Income** | $82.9 | $35.7 | +132.4% | $131.6 | $74.5 | +76.8% | | **Net Income** | $62.5 | $28.5 | +119.6% | $99.8 | $56.6 | +76.4% | | **Diluted EPS** | $2.34 | $1.07 | +118.7% | $3.74 | $2.13 | +75.6% | [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity increased from **$961.3 million** at year-end 2020 to **$1.063 billion** as of June 30, 2021, primarily due to **$99.8 million** in net income for the six-month period - Stockholders' equity grew by approximately **$101.9 million** in the first six months of 2021, mainly due to retained earnings from net income[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2021, net cash provided by operating activities was **$140.1 million**, while net cash used in investing activities decreased significantly to **$100.0 million**, resulting in a period-end cash balance of **$52.9 million** Six Months Cash Flow Summary (in millions) | Cash Flow Activity | Six Months 2021 | Six Months 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $140.1 | $148.2 | | **Net cash used in investing activities** | ($100.0) | ($142.7) | | **Net cash (used in) provided by financing activities** | ($12.6) | $23.5 | | **Net Increase in Cash** | $27.6 | $29.0 | | **Cash and cash equivalents, end of period** | $52.9 | $29.3 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including revenue recognition for freight transportation services, and confirm the company's primary business is national less-than-truckload (LTL) services, which accounts for over **97%** of revenue - The company's main business is providing national less-than-truckload (LTL) services, which generate over **97%** of its revenue[24](index=24&type=chunk) - Revenue from transportation services is recognized over the transit time of the shipment, which typically ranges from one to five days[26](index=26&type=chunk) - As of June 30, 2021, total debt was **$61.0 million**, consisting entirely of finance leases for revenue equipment, with no outstanding borrowings under the revolving credit agreement[36](index=36&type=chunk)[39](index=39&type=chunk) - The company is considered an essential business and has not experienced significant disruptions in its LTL network operations due to the COVID-19 pandemic[42](index=42&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=13&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q2 2021 performance to recovery, pricing initiatives, and increased freight demand, with operating revenue growing **36.6%** and the operating ratio improving to **85.5%**, while maintaining strong liquidity and planning **$275 million** in capital expenditures [Executive Overview and Second Quarter Overview](index=14&type=section&id=Executive%20Overview%20and%20Second%20Quarter%20Overview) The company's strategy focuses on improving profitability by increasing yield and volume, leading to a **36.6%** year-over-year increase in operating revenue in Q2 2021, driven by a **15.3%** increase in LTL shipments and a **23.1%** increase in LTL tonnage per workday, resulting in an **85.5%** operating ratio - The company's strategy is to improve profitability by increasing yield, building density in existing geography, and pursuing geographic expansion[51](index=51&type=chunk) Q2 2021 Key Performance Indicators vs. Q2 2020 | Metric | Change | | :--- | :--- | | Operating Revenue | +36.6% | | Operating Income | $82.9M (vs $35.7M) | | Operating Ratio | 85.5% (vs 91.5%) | | LTL Shipments per workday | +15.3% | | LTL Tonnage per workday | +23.1% | | Diluted EPS | $2.34 (vs $1.07) | [Results of Operations](index=16&type=section&id=Results%20of%20Operations) Q2 2021 revenue grew **36.6%** to **$571.3 million**, driven by a **10.5%** increase in LTL revenue per hundredweight and a **23.1%** increase in LTL tonnage, with the operating ratio improving by **600 basis points** to **85.5%** despite a **136.6%** surge in purchased transportation costs Q2 2021 vs Q2 2020 Operating Statistics | Metric | Q2 2021 | Q2 2020 | % Variance | | :--- | :--- | :--- | :--- | | LTL Tonnage (in thousands) | 1,406 | 1,142 | +23.1% | | LTL Shipments (in thousands) | 2,012 | 1,745 | +15.3% | | LTL Revenue per hundredweight | $19.84 | $17.95 | +10.5% | | LTL Revenue per shipment | $277.24 | $235.08 | +17.9% | - Fuel surcharge revenue increased to **14.4%** of operating revenue in Q2 2021 from **10.6%** in Q2 2020 due to higher fuel costs[65](index=65&type=chunk) - Purchased transportation costs surged by **$36.1 million (136.6%)** in Q2 2021 compared to Q2 2020, attributed to high demand, internal network capacity constraints, and higher rates for purchased miles[68](index=68&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=18&type=section&id=Financial%20Condition,%20Liquidity%20and%20Capital%20Resources) The company's financial condition remains strong with **$69.0 million** in working capital and **$270.7 million** available under its **$300 million** revolving credit agreement, with projected net capital expenditures of approximately **$275 million** for 2021 - The company has a **$300 million** revolving credit facility, extendable by a **$100 million** accordion feature, with no borrowings outstanding as of June 30, 2021[79](index=79&type=chunk) - Projected net capital expenditures for 2021 are approximately **$275 million**, focused on revenue equipment, technology, land, and structures[84](index=84&type=chunk) - Total liabilities under finance leases for revenue equipment were **$61.0 million** as of June 30, 2021[81](index=81&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk exposure to interest rates is minimal due to **$61.0 million** in fixed-rate finance leases, and fuel price risk is mitigated by a weekly fuel surcharge program - The company mitigates fuel price volatility through a fuel surcharge program that is reset weekly based on average national fuel prices[94](index=94&type=chunk) - As of June 30, 2021, all of the company's **$61.0 million** in debt consisted of fixed-rate finance leases, minimizing exposure to interest rate fluctuations[96](index=96&type=chunk) [Item 4. Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[98](index=98&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[99](index=99&type=chunk) [PART II. OTHER INFORMATION](index=23&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and exhibits [Item 1. Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to ordinary course legal proceedings, for which management believes adequate provisions have been made, and the ultimate outcomes will not materially adversely affect its financial condition - For details on material pending legal proceedings, the report refers to Note 3, "Commitments and Contingencies"[105](index=105&type=chunk) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020, were reported - No material changes to risk factors were reported for the quarter[105](index=105&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2021, **540 shares** were purchased at an average price of **$207.86** per share through the Saia, Inc. Executive Capital Accumulation Plan - During the second quarter of 2021, **540 shares** were purchased by the Saia, Inc. Executive Capital Accumulation Plan at an average price of **$207.86**[106](index=106&type=chunk) [Item 6. Exhibits](index=24&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the company's articles of incorporation, bylaws, and certifications from the CEO and CFO - Exhibits filed include CEO and CFO certifications pursuant to Exchange Act Rule 13a-15(e) and Section 906 of the Sarbanes-Oxley Act of 2002[109](index=109&type=chunk)

1Q21 Investor Presentation LTL Freight www.saia.com ax massa Forward Looking Statement 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 forwardlooking withi ...

Financial Data and Key Metrics Changes - First quarter revenue reached a record $484 million, an increase of 8.4% compared to the previous year, marking the highest revenue for any quarter in the company's history [7][15] - Operating income grew by 26% to $48.7 million, with an operating ratio of 89.9%, representing the third consecutive quarter below 90% [7][19] - Shipments per workday increased by 2.6%, while tonnage per workday rose by 5.3% [9][15] - Revenue per shipment, excluding fuel surcharge, increased by 8.5%, driven by pricing gains and increases in length of haul and weight per shipment [13][15] Business Line Data and Key Metrics Changes - The company implemented a general rate increase of 5.9% on January 18, with contract renewals averaging a 9% increase during the quarter [11][19] - The cargo claims ratio improved year-over-year to 0.65%, reflecting enhanced service quality [10] Market Data and Key Metrics Changes - The company experienced a significant impact from winter weather in mid-February, with up to 70 terminals closed or operating at limited capacity [8] - Despite weather disruptions, the company reported healthy daily shipment trends at the end of February, which continued into March [8] Company Strategy and Development Direction - The company is focused on service, productivity, and pricing improvements, with plans to open 3 to 6 new terminals in 2021 [23] - The company is investing in electric tractors as part of its commitment to sustainability and reducing environmental impact [25][26] - The strategy includes optimizing the mix of business to focus on customers that support the company's value proposition [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the pricing environment, indicating that the need for additional pricing is supported by rising operational costs [30] - The company anticipates a margin improvement of 250 to 300 basis points from Q1 to Q2, despite challenges related to wage inflation and driver recruitment [36][48] - Management noted that the operational execution has improved, reducing downside risk compared to historical performance [101] Other Important Information - Capital investments totaled $25.6 million in Q1, with expectations for full-year capital expenditures around $275 million [20] - The balance sheet remains strong, with $53.3 million in cash and over $300 million available through credit facilities [21] Q&A Session Summary Question: Pricing environment and contract renewals - Management indicated that the favorable pricing environment supports the 9% contract renewal increase, with ongoing efforts to push pricing further due to rising operational costs [30][31] Question: Margin improvement expectations - Management expects 250 to 300 basis points of margin improvement from Q1 to Q2, with a focus on maintaining operational efficiency despite labor market challenges [36][48] Question: Tonnage and shipment trends - March saw a significant recovery with shipments per workday up 12.1% and tonnage per workday up 11.5% [46][47] Question: Terminal expansion challenges - Management acknowledged challenges in the real estate market for terminal expansion but remains optimistic about opportunities in various regions [59][60] Question: Accessorial charges and pricing strategy - Management confirmed that the 9% increase includes efforts to charge for previously waived accessorial charges, reflecting a more comprehensive pricing strategy [66][70] Question: Capacity and growth potential - Management estimates a latent capacity of 10% to 15% in the network, with ongoing efforts to recruit drivers to support growth [78][79] Question: Electric and autonomous vehicle integration - Management discussed the potential for electric vehicles in urban operations and the exploration of autonomous options in the future [102][105]