Saia, Inc. Q3 FY2025 earnings call

• Focus on customer service, network optimization, and cost control remains paramount. - Ramping markets improved operating ratio by over 100 basis points sequentially, with 17 terminals having completed their first year of operation. - Sequential revenue growth in both legacy and ramping markets. - Cargo claims ratio was 0.54% for the fourth straight quarter, a company record. - Contractual renewal rate for the quarter was 5.1%. - GRI of 5.9% implemented on October 1. - Wage increase of 3% effective October 1. - Annual engagement survey had over 80% participation rate for the third year in a row, with employee engagement remaining high.

Saia's third quarter revenue was $839.6 million, relatively flat compared to the prior year. The ramping markets, consisting of 39 terminals opened since 2022, grew sequentially and improved their operating ratio by over 100 basis points compared to the second quarter, now operating at a sub-95 OR. Revenue growth was seen in both legacy and ramping markets sequentially. Ramping facilities saw a 4.2% sequential improvement in shipments per workday in Q3 2025, while facilities opened prior to 2022 had a 3% sequential increase but a 4.8% decrease compared to Q3 2024.

• Q4 OR is expected to degrade by 300 to 400 basis points, with October trending lower than expected. - Thoughts on margin expansion in 2026 even with a lackluster environment, driven by network expansion and share of wallet growth. - October so far has shipments down around 3.5% and tonnage down about 4%.

• Macroeconomic uncertainty impacting volume trends. - Seasonality challenges in Q4, with holiday months presenting demand and fixed cost challenges. - Volume fluctuations and mix shifts affecting revenue and margins.

Q: Chris Wetherbee asked about October tonnage and Q4 OR.

A: Matthew Batteh said October shipments are down around 3.5%, tonnage down about 4%, and Q4 OR is likely to degrade by 300-400 basis points. Fritz Holzgrefe added on the overall muted environment.

Q: Jonathan Chappell asked about new terminals.

A: Frederick Holzgrefe said new terminals are maturing, with incrementals positive, and it's early innings on monetizing network expansion.

Q: Scott Group asked about pricing and Q4 yield.

A: Frederick Holzgrefe said pricing is disciplined, mix of business is changing, with growth in 1-2 day lanes but mix headwinds from certain regions.

Q: Jordan Alliger asked about network optimization.

A: Frederick Holzgrefe discussed AI models and network redesign to reduce handles, an ongoing early innings effort.

Q: Ken Hoexter asked about OR guide and CapEx.

A: Matthew Batteh said GRI and wage increase net neutral, and CapEx is being trimmed through real estate and equipment diligence.

Q: Thomas Wadewitz asked about pricing gap.

A: Frederick Holzgrefe said there's an opportunity to close the pricing gap with better service and national network, and service stacks up well.

Q: Bascome Majors asked about tonnage growth next year.

A: Frederick Holzgrefe said there's opportunity to grow share of wallet with customers, focusing on value and service.

Q: J. Bruce Chan asked about growth in new markets.

A: Frederick Holzgrefe said growth comes from national accounts, field accounts, and verticals valuing service, with margin uplift from underutilized facilities.

Q: Brian Ossenbeck asked about CapEx and margin expansion.

A: Matthew Batteh said CapEx is being trimmed, and there's opportunity to expand margins through efficiencies and pricing even with flat tonnage.

Q: Eric Morgan asked about customer conversations into 2026.

A: Frederick Holzgrefe said customers are incrementally more confident, but need next step for full green shoots.

Q: Richa Harnain asked about OR outlook and CapEx.

A: Matthew Batteh said November/December may bounce back to seasonality, and Frederick Holzgrefe is confident in margin expansion in 2026.

Q: Ari Rosa asked about cargo claims and shareholder returns.

A: Frederick Holzgrefe said cargo claims ratio isn't a limiter, and Saia is focused on creating long-term value for shareholders with network expansion.