Saia(SAIA) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The fourth quarter revenue reached a record $790 million, reflecting a 0.1% increase compared to the prior year [11] - The operating ratio for the fourth quarter increased to 91.9%, up from 87.1% a year ago, primarily due to increased operating expenses [15][16] - Diluted earnings per share decreased to $1.77 from $2.84 in the same quarter last year [16] Business Line Data and Key Metrics Changes - Shipments per day decreased by 0.5% year-over-year, while tonnage per day declined by 1.5% compared to the fourth quarter of 2024 [7] - Revenue per shipment, excluding fuel surcharge, decreased by 0.5% to $297.57 [11] - The Southern California region experienced an 18% volume decline, resulting in an estimated $4 million revenue reduction for the quarter [8] Market Data and Key Metrics Changes - The company reported a 6.6% increase in contractual renewals in January 2026, indicating strong customer acceptance trends [7] - Despite a challenging demand environment, the company saw a 21% reduction in preventable accident frequency and a 10% decline in lost-time injuries, reflecting improvements in safety metrics [6][18] Company Strategy and Development Direction - The company has invested over $2 billion in capital over the last three years to expand its national network, which is expected to drive long-term profitable growth [5][22] - The focus remains on leveraging the national network to enhance service quality and operational efficiency, with an emphasis on technology investments [22][23] - The company aims to ensure appropriate compensation for its investments as it continues to scale its operations [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for improved performance in 2026, even if macroeconomic conditions remain soft [23] - The company is focused on core execution and believes it can continue to gain market share in a flat market by providing high-quality service [91] - Management noted that the operational challenges faced in January due to weather conditions are expected to normalize, with a positive outlook for the remainder of the quarter [83][88] Other Important Information - The company reported a cargo claims ratio of 0.47% for the fourth quarter, a record low, indicating effective risk management and operational performance [10] - Total operating expenses increased by 5.6% in the quarter, driven by rising self-insurance costs and employee-related expenses [15] Q&A Session Summary Question: Can you discuss monthly tonnage data and its impact on margin seasonality? - Management provided monthly shipment data, indicating fluctuations in tonnage and shipments, with expectations for improved performance in Q1 [26][27] Question: What is the tonnage backdrop for the 100-200 basis points improvement mentioned? - Management indicated that positive macro data could lead to tonnage growth, contributing to the expected operating ratio improvement [36][37] Question: How do new terminals impact profitability and operating ratio? - New terminals are currently a drag on the overall operating ratio but are expected to improve as they mature and contribute to revenue growth [44][45] Question: What is the pricing environment and how does it relate to customer recognition of investments? - Management emphasized the importance of maintaining pricing discipline and noted that the national network enhances the value proposition for customers [51][54] Question: How does the company plan to manage costs and capacity? - Management indicated that they have excess capacity to absorb additional volume and are focused on managing costs effectively [75][76]