Saia, Inc. Q2 FY2025 earnings call

• Focused on customer and controlling within their control, optimizing variable costs and network efficiency led to operating ratio improvement. - Revenue down due to muted volume trends, but strong customer acceptance in newer markets. - Relocated centralized customer service to field locations to be closer to customers, reducing overhead and improving service. - Invested in network, technology, and people, planning to spend $600M-$650M in capital expenditures this year. - Cost per shipment decreased 4% sequentially from Q1 despite lack of typical volume ramp, with headcount down 4.2%.

Second quarter revenue was $817 million, a slight decrease of 0.7% from the previous year due to muted volume trends. The operating ratio was 87.8%, compared to 83.3% in the second quarter of last year, representing a 330 basis point improvement from the first quarter. Revenue per shipment excluding fuel surcharge increased 2.7% year-over-year, and including fuel surcharge increased 1.8%. Tonnage per workday increased 1.1% compared to Q2 2024, weight per shipment was up 4%, and length of haul was slightly higher, but mix components decreased sequentially, creating a revenue headwind of $4.5 million to $5.5 million. Newer markets (terminals opened less than 3 years) saw a 4% sequential improvement in shipments for workday, operating in the mid-90s, up from breakeven in Q1. Legacy facilities (opened longer than 3 years) had a 2% sequential increase in shipments but were down 3.5% y-o-y.

• Q3 operating ratio expected to degrade ~100 basis points sequentially from Q2. - Pricing focus on ensuring returns and evaluating bids/renewals. - Lapping terminal openings in Q3 makes comps tougher for shipments and tonnage. - Expect Q3 to have ~100 basis point degradation in operating ratio from Q2, compared to historical 100-200 basis point degradation.

• Macro environment uncertainties affecting volume trends. - Competitive pricing environment impacting contract renewals. - Labor cost adjustments and potential impact on operating leverage during an upcycle. - Uncertainty around wage increases and their impact on costs.

Q: Good morning. My name is Drew, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter 2025 Saia, Inc. Earnings Conference Call.

A: Thank you, Drew. Good morning, everyone. Welcome to Saia's Second Quarter 2025 Conference Call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Holzgrefe. Before we begin, you should know that during this call, we may make some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and all other statements that might be made on this call that are not historical facts are subject to a number of risks and uncertainties and actual results may differ materially. We refer you to our press release and our SEC filings for more information on the exact risk factors that could cause actual results to differ. I will now turn the call over to Fritz for some opening comments.

Q: Kenneth Scott Hoexter asks about volumes and pricing outlook.

A: Matthew J. Batteh says comps get tougher due to lapping terminal openings, and pricing focus is on returns. Frederick J. Holzgrefe adds optimization efforts will continue into Q3.

Q: Richa Harnain asks about labor reductions and cost per shipment momentum in Q3.

A: Frederick J. Holzgrefe says it's both matching cost to business and network optimization, and sees additional cost optimization opportunities in Q3.

Q: Jordan Alliger asks about LTL capacity.

A: Frederick J. Holzgrefe says LTL capacity trend is shrinking, and Saia is poised to take advantage. Matthew J. Batteh adds capacity includes terminals, equipment, and drivers.

Q: Christian F. Wetherbee asks about volume in July and wage increases.

A: Matthew J. Batteh gives July tonnage trends, and Frederick J. Holzgrefe says wage increases typically in 3rd or 4th quarter, not formalized yet.

Q: Jonathan B. Chappell asks about contract renewals.

A: Matthew J. Batteh says 60-70% of business is under contract, renewal number reflects customer view, and pricing environment is rational.

Q: Ravi Shanker asks about cost actions and operating leverage.

A: Frederick J. Holzgrefe says short-term labor cost moves with volume, but linehaul network optimization has scale opportunities with less headcount add back.

Q: Stephanie Moore asks about pricing and network optimization.

A: Frederick J. Holzgrefe says pricing is a journey, and network optimization includes realigning freight routing to build density and reduce costs.

Q: Brian Ossenbeck asks about wage increase guidance and NMFTA.

A: Matthew J. Batteh says guidance includes wage increase expectations, and Saia supports NMFTA changes as good for industry.

Q: Tyler Brown asks about network balance and direct shipments.

A: Frederick J. Holzgrefe says network balance is improving but work remains, and direct shipments drive efficiency. Matthew J. Batteh says cost per shipment down 4% sequentially despite lack of typical ramp.

Q: Ariel Rosa asks about long-term prospects and revenue mix.

A: Frederick J. Holzgrefe says long-term opportunity exists with national network maturity, and revenue mix shift is from existing customers expanding business. Matthew J. Batteh says shift is not uncommon in history, serving more markets for existing customers.

Q: Daniel Imbro asks about service metrics and legacy vs new markets.

A: Frederick J. Holzgrefe says service metrics are high and consistent between legacy and new markets, important for national accounts.

Q: Jizong Chan asks about PT usage and network planning.

A: Frederick J. Holzgrefe says PT usage is based on customer needs and cost optimization, not a specific target percentage.

Q: Bascome Majors asks about margin seasonality and long-term recovery.

A: Matthew J. Batteh says Q4 seasonality average is 250 bps degradation, Frederick J. Holzgrefe says national network maturity provides incremental opportunities.

Q: Christopher Kuhn asks about pricing in new markets.

A: Matthew J. Batteh says entering new markets focuses on market rate and serving existing customers to build density.

Q: Thomas Wadewitz asks about revenue per hundredweight and OR improvement.

A: Matthew J. Batteh says no guide on revenue per hundredweight, focus on pricing and rational environment. Frederick J. Holzgrefe says methodical density building provides cost opportunities.

Q: Jason Seidl asks about tonnage comps and density gains in new terminals.

A: Matthew J. Batteh says tougher comps in back half of Q3, Frederick J. Holzgrefe says new terminals start with existing customers and expand to new business.

Q: Kenneth Scott Hoexter asks about stock movement and OR guidance.

A: Frederick J. Holzgrefe says Q3 operating ratio expected to degrade ~100 basis points, managing variables within that range.