Saia(SAIA) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION 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 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 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 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 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] Condensed Consolidated Statements of Cash Flows 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 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] - Revenue from transportation services is recognized over the transit time of the shipment, which typically ranges from one to five days[26] - 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][39] - 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] 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 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] - 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] Financial Condition, Liquidity and Capital Resources 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] - Projected net capital expenditures for 2021 are approximately $275 million, focused on revenue equipment, technology, land, and structures[84] - Total liabilities under finance leases for revenue equipment were $61.0 million as of June 30, 2021[81] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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] - 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] Item 4. Controls and Procedures 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] - 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] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, and exhibits Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 6. Exhibits 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]