Yahoo Finance Saia, Inc. (NASDAQ:SAIA) Q4 2023 Earnings Call Transcript
Saia, Inc. (NASDAQ:SAIA) Q4 2023 Earnings Call Transcript February 2, 2024
Saia, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 2023 Saia Incorporated Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Doug Col, Saia's Executive Vice President and Chief Financial Officer. Please go ahead.
Doug Col: Good morning, everyone. Welcome to Saia's fourth quarter 2023 conference call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Holzgrefe. Before we begin, you should know that during the call, we may make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and all other statements that might be made on this call that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. We refer you to our press release and our SEC filings for more information on the exact risk factors that could cause actual results to differ. I will now turn the call over to Fritz for some opening comments.
Fritz Holzgrefe: Good morning, and thank you for joining us to discuss Saia's fourth-quarter and full-year results. I must start my comments today with a word of thanks to the entire Saia team for their dedicated efforts, as we worked through volatile business trends in 2023. We started our 100th Anniversary Year with an engaged team that delivered a record number of shipments in 2023, just shy of $8 million in total for the year, and in turn 2023 revenue of $2.9 billion was also a record for our company. 2023 was really a tale of two halves, both shipments and tonnage per workday were down year-over-year for the first six months of the year, continuing a trend, which began in the second half of 2022, as the industrial economy slowed.
Turning the calendar to the month of July, our industry experienced a generational type of movement as a large national competitor began limiting service, and ultimately ceased operations. At Saia, we saw volumes increase by as much as 10% to 20% on a given day from trends just a month earlier. Our contingency planning in advance of this change, put us in a position to handle the increased volumes almost seamlessly, while still maintaining excellent service for our customers. In the months that followed that initial surge in business, we increased our staffing levels by adding nearly 1,500 dedicated employees in the second half of the year, 90% of which were drivers, dock workers, and frontline leadership to support growth. We focused our team on taking care of the customer, as we absorbed all the growth in the second half.
We've continued a painstaking process of investing in our network to maintain our service, while also optimizing how we provide the service with our expanding linehaul and driving teams. We have plans to open 15 to 20 new terminals in 2024. Our teams are committed to accomplishing this with an eye on always putting the customer first. Those customer-first initiatives have been the cornerstone of our success over the last several years and included in that is our desire to have more locations through which to serve new and existing customers. In Q4, Mastio released its latest survey results. The results highlight a couple of significant achievements for Saia. First, the scores highlight our continued improvement and positive feedback from our customers recognizing Saia's ongoing investment in service.
Second, it's becoming increasingly evident that customers are viewing us as a leading national LTL provider, reflecting not only our investments in services but the expanding footprint. It is critical to note there have been no drop-off in perceived levels of service. Importantly, we've added nearly 20 new facilities in the last two years. Customers are recognizing our ability to not only improve service but to replicate that improved service in new locations. So, today, we'll have to give a recap of 2023 results and provide an update on our plans for 2024. I will now turn it over to Doug for a review of fourth-quarter results and full 2024 financial highlights.
Doug Col: Thanks, Fritz. Fourth quarter revenue increased by $95.4 million to a record $751.1 million. Shipments grew by 18.1% and with weight per shipment decreasing by 8.3%, tonnage growth for the quarter was 8.2%. Yield, excluding fuel surcharge, improved by 11.7%, while yield including fuel surcharge increased by 7%. The reported yield results benefit from a lighter average weight per shipment versus the fourth quarter last year. Revenue per shipment, excluding fuel surcharge increased 2.4% to $295.22 compared to $288.34 in the fourth quarter of 2022. Fuel surcharge revenue decreased by 3.4% or 17% of total revenue compared to 20.1% a year ago, primarily the result of lower national average diesel prices, which are used to establish the surcharge rate in our fuel tables.
Shifting to the expense side, a few key items to note in the quarter. Salaries, wages, and benefits increased 20.2% from a combination of our increased employee headcount of approximately 14% year-over-year to support our network expansion and volume growth over the last six months, and also our July 2023 wage increase, which averaged 4.1% across our employee base. Purchase transportation expense increased by 8.4% compared to the fourth quarter last year, primarily due to increased purchase transportation miles, partially offset by a decrease in the cost per mile compared to the same period in 2022. PT expense was 8.7% of total revenue compared to 9.2% in the fourth quarter of 2022. Purchase transportation miles were 15.4% of total linehaul miles in the fourth quarter compared to 12% in last year's fourth quarter.
Fuel expense decreased by 12.1% in the quarter despite company miles increasing 7.6% year-over-year. The decrease in fuel expense was primarily the result of national average diesel prices decreasing by over 15.9% on a year-over-year basis. Claims and insurance expense increased by 21% year-over-year in the quarter and was up 5.1% or $0.9 million sequentially from the third quarter of 2023. The increase compared to the fourth quarter of 2022 was primarily due to increase in accident-related self-insurance and claims costs, as well as increases in insurance premiums. Depreciation expense of $45.7 million in the quarter was 15.3% higher year-over-year, primarily due to ongoing investments in revenue, equipment, and our network expansion. Total operating expenses increased by 13.4% in the quarter, and with a year-over-year revenue increase of 14.5%, our operating ratio improved to 85% compared to 85.9% a year ago.
Our tax rate for the fourth quarter was 22.8% compared to 24% in the fourth quarter last year, and our diluted earnings per share increased to $3.33 compared to $2.65 in the fourth quarter a year ago. Moving onto the financial highlights of our full year 2023 results, as Fritz mentioned, revenue was a record $2.9 billion and operating income was $460.5 million. Our operating ratio deteriorated by 90 basis points in 2023, to exactly 84.0%. For the full year 2023, our diluted earnings per share were $13.26 versus $13.40 in 2022. I'll now turn the call back over to Fritz for some closing comments.
Fritz Holzgrefe: Thanks, Doug. To continue to operate with an OR in the mid-80%s, given the activity in the network during the quarter is a testament to the improved operating performance of our team over the last few years. Our customer-first focus is yielding tangible results across our organization with the talented growing and engaged workforce, the value proposition to our customers continues to grow. We initially embarked on our geographic expansion in 2017 with four terminals in the Northeast. Since that time, we've opened 48 facilities as we've covered the Northeast geography, while also refining the strategy to enhance our coverage in legacy markets. Throughout, we've actually seen our underlying service offering continue to improve.
This success was attributable to our team across the organization, who have spent countless hours supporting these initiatives. I'm excited about the terminals acquired in January, and believe this to be a once-in-a-lifetime opportunity for us to be able to bring our offerings to more markets, meet new customers and serve our current customers more efficiently. The last seven years have proven our ability to execute an organic expansion strategy. Critical to our success, opening Saia facilities and intense focus on maintaining our culture, which starts with the customer, we believe the unique opportunities at hand, will allow us to systematically grow over the next couple of years as the facility additions provide an important supplement to our real-estate investment pipeline.
As seen from our results over the last several years, we've shown the ability to make substantial investments in our network to benefit our customers, while generating improved financial performance over time and efficiently and effectively deploying capital. Saia will approach record levels of capital investment in 2024, but at no time in the company's 100-year history have we had a similar opportunity. The capital is focused on continuing developing our terminal network as well as significant investments in our fleet, providing increased capacity and flexibility for our customers. Key to our success will be delivering the customer-first focus that started in Houma, Louisiana, 100 years ago, and has been refined over a century. We continue to have significant opportunity to develop the markets around the other nearly 20 terminals that we've opened over the last two years.
Although we're excited about the success of these locations to-date, we see considerable runway to build density in all these new markets. Finally, before opening the call for questions, I would say there is still lot of uncertainty around the strength of the economy. At Saia, we've emphasized the importance of the customer and focusing on the things that we can control. So, as our industry adjusts and adapts to the evolving economic environment over the coming months, my conviction about the long-term prospects at Saia remains steadfast. Great employees, great service, and a growing footprint are all key to securing our position as a long-term share gainer in our industry. With that said, we're now ready to open the line for questions, operator.
Operator: Thank you. [Operator Instructions] Your first question comes from the line of Jack Atkins with Stephens. Please go ahead.
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