Q3 2023 Saia Inc Earnings Call

Okay.

Thank you for standing by my name is Eric and I will be your conference operator today.

This time I would like to welcome everyone to the Q3 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. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question Press Star one again.

Thank you.

Now I'd like to turn the call over to Doug Col Executive Vice President and CFO. Please go ahead.

Thanks, Good morning, everyone welcome to <unk> third quarter 2023 conference call.

With me for today's call is besides president and Chief Executive Officer Fritz holds great.

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 1995 of.

These forward looking statements and all other statements that might be made on this call.

Or 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'll now turn the call over to Fritz for some opening comments.

Good morning, Thank you for joining us to discuss <unk> third quarter results, our third quarter revenue of 775 million surpassed last year's third quarter revenue by six 2% and is a record for any quarter in our company's history shipments per workday increased by 12, 2% compared to last year, obviously imp.

Packaged in a positive way from the shuttering of operations at a competitor began in late July.

The sudden elimination of industry capacity has presented challenges for customers and carriers alike, but the transition to other providers seems to have gone relatively smoothly at Shire, we monitor our critical service indicators daily I was pleased to see that despite the influx of freight in a matter of days, we were able to sustain very high levels.

As a service and our view is critical to maintain high service levels. This time provided a unique opportunity to show customers. Our differentiated service in the midst of industry disruption as we've been able to maintain high service levels pricing has been positive and our yield or revenue per hundredweight, excluding fuel surcharge increased by eight 4%.

Compared to last year, the reported yield improved in part due to the 5% decline in average weight per shipment, but despite the lower weight revenue per shipment, excluding fuel surcharge still increased by 3%.

The weeks and months that have followed the major industry disruption has been marked by long days for our employees, we have been putting forth a concentrated effort to maintain great customer service and meet the needs of our customers. We supplemented our growing Whitehall network with additional purchase transportation where needed to keep our network fluid and service levels high at the same.

Time, we've also incurred quite a bit of overtime to handle the immediate step up in volumes. We felt since the end of June we've hired and on boarded more than 1000, new site employees the scale of that hiring effort and the training that is required to onboard each associate has been a necessary cost headwind that had to be absorbed our third quarter.

Our operating ratio of 83, 4% compares to 82, 7% posted in the second quarter of 2023, and 82, 4% posted in the third quarter of last year.

I'll now turn the call over to Doug for more details from our third quarter results.

Thanks Rich.

Third quarter revenue increased by $45 6 million to $775 1 million as Fritz mentioned.

Yield excluding fuel surcharge improved by eight 4%, while yield increased three 1%, including fuel surcharge revenue.

Revenue per shipment, excluding fuel surcharge increased 3% to $290 79 <unk>.

Compared to $282 41 in the third quarter of 2022.

Fuel surcharge revenue decreased by 12, 3% and was 16, 9% of total revenue compared to 25% a year ago as national average diesel prices are lower than in 2022.

Tonnage per workday increased six 7% attributable to a 12, 2% increase in shipments per workday.

Set by a 5% decrease in our average weight per shipment.

Length of haul remained essentially flat compared to prior year at 896 miles.

Shifting to the expense side for a few key items of note in the quarter salaries wages and benefits increased 15, 9%. This change was primarily driven by an increase in employee hours and eight 9% increase in head count in response to overall increase volumes during the quarter combined with companywide wage increase and drive approximately.

<unk> four 1%.

Purchase transportation expense decreased by 10, 2% compared to the third quarter last year, primarily due to a decrease in cost per mile partially offset by an increase in <unk> purchase transportation miles compared to that same period in 2022.

PT miles were 18% of total line haul miles in the quarter compared to 17, 1% last year.

<unk> expense was nine 9% of total revenue compared to 11, 7% in the third quarter of 2022.

Fuel expense decreased by nine 1% in the quarter in spite of company miles, increasing five 5% year over year.

Decrease in fuel expense was primarily the result of national average diesel prices decreasing by over 17% on a year over year basis.

Claims and insurance expense increased by 12, 7% year over year in the quarter and was up six 3% or $1 1 million sequentially from the second quarter of 2023, the increase compared to the third quarter of 2022 was primarily due to increases in insurance premiums as well as accident related self insurance cost.

Depreciation expense of $45 6 million in the quarter was 12, 1% higher year over year, primarily due to ongoing investments in revenue equipment and network expansion.

So our total operating expenses increased by seven 6% in the quarter and with the year over year revenue increase of six 2% of our operating ratio deteriorated to an 83, 4% number compared to 82, 4% a year ago.

Our tax rate for the third quarter was $24 six compared to 23, 3% in the third quarter last year and our diluted earnings per share were flat at $3 67, compared to the third quarter a year ago.

I'll now turn the call back over to Fritz for some closing comments. Thanks, Doug.

The last few months of increased activity have been refreshing following a year of negative freight trends I think it is important to highlight that the macro freight environment outlook remain uncertain.

We will continue to put the customer first and seek to fulfill service commitments for both existing and new customers. Our first half operating results highlighted an important underlying business trend is our internal growth initiatives are proving successful we look to continue to leverage those initiatives, along with maintaining new business to grow and growing in the mid.

This quarter's market disruption is important to note in the early days of the industry consolidation customers often we're looking for available capacity longer term, we strongly believe that customers will gravitate to those partners that provide the best service and best support of their customers' value proposition.

Thank you for standing by.

Maintaining those service levels requires continuous reinvestment in the business.

Operator: My name is Eric and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 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 an answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.

Thank you.

As we have a long history of doing we're going to make sure that freight rates are commensurate with the quality of service. We provide we will continue to be opportunistic as it relates to terminal expansion is terminal acquisitions, and we'll continue down the path of expanding our network not only to reach new customers and markets, where we may not be currently reserving, but also to get <unk>.

Closer to customers in existing markets, our financial performance positions us to take advantage of investment opportunities. We continue to manage a pipeline for expansion and will look to match those investments with the economic environment. In some cases, we may accelerated opportunity prioritizing those that most immediately enhanced our service proposition.

Douglas Col: I would now like to turn the call over to Doug Cole, Executive Vice President and CFO. Please go ahead. Thanks. Good morning, everyone. Welcome to Saia's third quarter 2023 conference call.

With me for today's call, the Saia's president, 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 security's litigation reform act 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.

Our value proposition is raised in the eyes of our customers always moves closer to them and are able to provide more for them.

We're also intent and developing business around the 20 or so terminals opened over the last three years history shows us that if we have a meaningful footprint in the market. We have a service offering that enables us to have an outsized share compared to our national average industry share with this strategy being executed by the best team in the business I remain excited about.

Our ability to gain market share and do so with improving profitability over time with asset with that said, we're now ready to open the line for questions operator.

Frederick Holzgrefe: I'll now turn the call over to Fritz for some opening comments. Good morning. Thank you for joining us to discuss Saia's third quarter results.

Thank you.

Our third quarter revenue of 775 million surpassed last year's third quarter revenue by 6.2% and is a record for any quarter in our company's history. Shipments per workday increased by 12.2% compared to last year. Obviously impacted in a positive way from the shuttering of operations and a competitor began in the late July. The sudden elimination of industry capacities presented challenges for customers and carriers alike, but the transition to other providers seems to have gone relatively smoothly.

Time, I would like to remind everyone that in order to ask a question Press Star then the number one on your telephone keypad.

We'll pause for just a moment to compile the Q&A roster.

Your first question comes from Chris Wetherbee with Citigroup. Please go ahead.

Hey, Thanks, good morning, guys.

Obviously, you took on a significant amount of volume sequentially and had to sort of respond to that with increased resources, where do you think you are today in terms of resources relative to what maybe you see the opportunity over the course of the next couple of quarters, maybe kind of holding in specifically on the fourth quarter, how does that impact DLR as you think about it sequentially.

At Saia, we monitor our critical service indicators daily. I was pleased to see that despite the influx of freight in a matter of days, we were able to sustain very high levels of service. In our view, it is critical to maintain high service levels as this time provided a unique opportunity to show customers our differentiated service in the midst of industry disruption. As we've been able to maintain high service levels, pricing has been positive in our yield or revenue per 100 weight, excluding fuel surcharge increased by 8.4% compared to last year.

Yes, good morning, Chris.

Yes, like you say I mean sequentially.

Q3, compared to Q2 shipments per day up low double digits.

Quite a big step up but I think we absorbed the change pretty well even in late July and got into a better place in August.

So.

The reported yield improved in part due to the 5% decline in average weight per shipment, but despite the lower weight, revenue per shipment, excluding fuel surcharge still increased by 3%. The weeks and months that have followed the major industry disruption has been marked by long days for our employees. We've been putting forth the concentrated efforts to maintain great customer service and meet the needs of our customers. We supplemented our growing line-hole network with additional purchase transportation were needed to keep our network fluid and service levels high.

Ftes I think.

Q2 to Q3 basis were up almost nine 5% compared to a head count increase of about 7%. So you can see we are.

Use and using a lot more hours to handle the business to onboard and train new associates and all of that.

I mean, if I just look at our performance.

Our wise as we move from July and August and September I got quite a bit better. So I think we absorbed that initial I'll call. It 10, 11% step up and then got into a better run rate. So.

At the same time, we've also incurred quite a bit of overtime to handle the immediate step-up and vibes we've felt. Since the end of June, we've hired an onboarded more than 1,000 new Saia employees. The skill of that hiring effort and the training that is required onboard each associate has been a necessary cost headwind that had to be absorbed.

I expect kind of more normal seasonality now.

And not only in the volume trends, but how we operate and historically Q3 to Q4.

Is about a 200 basis point degradation, if we look back last three to five years.

We've got less than a month under our belt I hope, we do a little better it adds a little bit better than that so maybe it's a range of 150 to 200 basis points of degradation as well as what we might expect.

Our third quarter operating ratio of 83.4% compares to 82.7% posted in the second quarter of 2023 and 82.4% posted in the third quarter last year.

Okay. That's helpful. Appreciate the color and I guess, just maybe a quick one on the price environment just wanted to get a sense of how youre thinking about that obviously, we can see some of the metrics and your results have shown that acceleration I guess, where do you think we are in this process of kind of moving through obviously you put an <unk> in relatively recently and that stepped up so how do you think about sort of the pricing setup.

Douglas Col: I'll now turn the call over to Doug for more details from our third quarter results. Thanks, friends. Third quarter revenue increased by $45.6 million to $775.1 million as Fritz mentioned, yield excluding fuel surge charge improved by 8.4% while yield increased 3.1% including fuel surge charge. Revenue per shipment excluding fuel surge charge increased 3% to $290.79 compared to $282.41 in the third quarter of 2022. Fuel surge revenue decreased by 12.3% and was 16.9% of total revenue compared to 20.5% a year ago as national average diesel prices are lower than in 2022.

Over the course of the next several quarters.

Yes, Chris as we look at managing the book of business. I mean, this is kind of in our playbook, where we make we.

We make the assessment, we understand the investments we have to make to support high levels of service and then as the.

Contractual renewals come up I would expect that we will continue to.

Work on making sure we're driving our pricing to market and.

At this stage I think there is.

Douglas Col: Tonage per work they increased 6.7% attributable to a 12.2% increase in shipments per workday all set by a 5% decrease in our average weight per shipment. Length of haul remained essentially flat compared to prior year at 896 miles.

<unk> continues to be runway for us in that regard and I think that we're have a.

A product that we that our sales team can get out and help drive that get us to closer to where our market should be for the level of service that we're providing to customers.

Shifting to the expense side for a few key items of note in the quarter salaries, wages and benefits increased 15.9%. This change was primarily driven by an increase in employee hours and an 8.9% increase in headcounting response to overall increased volumes during the quarter. Combined with company wide wage increase in July of approximately 4.1%. Purchase transportation expense decreased by 10.2% compared to the third quarter last year primarily due to a decrease in cost per mile partially all set by an increase in LTO.

I think it probably our Gi.

It reflects that and I think you will see that across our book of business going forward.

I appreciate the time thank you.

Thank you. Your next question comes from the line of Jack Atkins with Stephens. Please go ahead.

Okay.

My apologies our next question comes from the lineup.

Mehrotra with Deutsche Bank. Please go ahead.

Thanks, Operator, Hi, guys, Hey, Doug I wanted to just circle back on that or commentary for the fourth quarter. Because I know you are comparing it to the last three to five years I just don't know how relevant that period is given where you are in the industry are today and so if I were to just think about.

Purchase transportation miles compared to that same period in 2022. PT miles were 18% of total line haul miles in the quarter compared to 17.1% last year. PT expense was 9.9% of total revenue compared to 11.7% in the third quarter of 2022. Fuel expense decreased by 9.1% in the quarter in spite of company miles increasing 5.5% year over year. The decrease in fuel expense was primarily the result of national average diesel prices decreasing by over 17% on a year over year basis.

The amount of Onboarding you did in the third quarter I guess it takes.

10 days to train somebody and you got 63 days or whatever in the quarter. So there is a big productivity.

Deficit I would imagine so as you kind of think about the relationship between PT and labor costs.

Claims and insurance expense increased by 12.7% year over year in the quarter and was up 6.3% or 1.1 million sequentially from the second quarter of 2023. The increase compared to the third quarter of 2022 is primarily due to increases in insurance premiums as well as accident related self insurance costs. Appreciation expense of 45.6 million in the quarter was 12.1% higher year over year, primarily due to ongoing investments in revenue equipment and network expansion.

Why couldnt, we see kind of.

Much better than that two to 300 basis points sequential because I think the wage increase went in early July so a long winded way of saying is that just conservatism or just talk about the walk in terms of the productivity.

<unk> you guys have in third quarter.

Yeah.

Hi, Amit.

And go back to My example in Q3 I mean, the LR in July North of 86 of I think kind of a monthly LR and then for the quarter to end up where it did I feel like we got back in a pretty good spot, even though or even to even today I mean, hopefully its a near term peak I think over.

So our total operating expenses increased by 7.6% in the quarter and with the year over year revenue increases of 6.2% are operating ratio deteriorated to an 83.4% number compared to 82.4% a year ago. Our tax rate for the third quarter was 24.6 compared to 23.3% in the third quarter last year and our diluted earnings for share were flat at $3.67 compared to the third quarter of year ago.

Time percentage, probably hopefully it peaked in September we see it down a little bit in October Thats. Good news, but I mean, we're still we're bringing on are still rent a lot of equipment to handle that this business and we will step up our equipment deliveries and buys next year and stuff to operate well at these higher levels, but we still got some cost there.

Frederick Holzgrefe: I'll now turn the call back over to Fritz for some closing comments. Thanks, Doug. While the last few months of increased activity have been refreshing following a year of negative freight trends, I think it is important to highlight the macro freight environment outlook remain uncertain. At SIO we'll continue to put the customer first and seek to fulfill service commitments for both existing and new customers. Our first half operating results highlighted an important underlying business trend as our internal growth initiative is improving successful.

Related to this unusual event.

So.

There is not in my view I'm not Belmont a lot of conservatism there.

<unk>.

150 to 200 basis points is.

Kind of a little bit more open range, then guidance straight to the historical 200, <unk> I hope to do better than that but.

I think we're still investing to maintain a high service level.

Frederick Holzgrefe: We look to continue to leverage those initiatives along with maintaining new business and growing and growing in the midst of this core's market disruption. It's important to note in the early days of the industry consolidation customers often were looking for available capacity. Longer term we strongly believe that customers will gravitate to those partners that provide the best service and best support of their customers' value proposition. Maintaining those service levels requires continuous reinvestment in the business.

The <unk>.

It's been announced that will go into effect beginning of December and that impacts 2025% of the book of business, but again, it's a seasonally slow month to be putting that in place. It's just necessary and you know from finalists closely.

We've absorbed all of this volume we've done a good job for our customer I don't think you've heard any anecdotes during the quarter, a big service disruptions in our network or anything like that so we spent money to provide good service and now. It's just work right. Now is just go into that grind, we've been going through for a few years, we handle the business. Then we go say hey, we've done a good job for you.

Frederick Holzgrefe: And as we have a long history of doing, we're going to make sure that freight rates are commensurate with the quality of service we provide. We will continue to be opportunistic as it relates to thermal expansion, thermal acquisitions, and we'll continue down the path of expanding our network. Not only to reach new customers in markets where we may not be currently be serving, but also to get closer to customers in existence.

It looks like we are or.

We're below market for the value, we're adding and we need a rate increase so.

Yes, we will.

We don't mind running off low volume if it doesn't work. So now it's just we've got the new volumes part of it with existing customer we met some new customers and now we've just got to work right. We got to price it and play the long game here, but we're really pleased with how good service state throughout this and we didn't we didn't really have many weeks, we walked into where we are.

Frederick Holzgrefe: Our financial performance positions us to take advantage of investment opportunities. We continue to manage a pipeline for expansion and we'll look to match those investments with the economic environment. In some cases we may accelerate an opportunity prioritizing those that most immediately enhance our service proposition. Our value proposition is raised in the eyes of our customers who move closer to them and are able to provide more for them. We're also intent and developing business around the 20 or so terminals open in the last three years. History shows that if we have a meaningful footprint in the market, we have a service offering that enables us to have an outsized share of compared to our national average industry share.

Werent prepared and Thats, just kudos to all the folks that made it happen out in the field and our ops team and all the investments that we've made over there over the years to do a good job. We will now we're going to go out and try to get paid for.

Okay, and then just as a follow up.

I, obviously pay very close attention to the nastier data and if you look at the master data carefully.

Looks like you guys are even more of a value today in your eyes of the customers than you were last year and you're already pretty nice value last year.

With this strategy being executed by the best team in the business, I remain excited about our ability to gain market share and do so with improving profitability over time.

Just wonder if the pricing is keeping pace with the service sustainability and whether there is an opportunity more aggressive I mean, I know you did a <unk>, 7% the highest <unk> 2021 so it's a little bit of a.

Operator: With that said, we're now ready to open the line for questions, operator. Thank you. At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster.

A weird question, but I wonder if you could be even more aggressive given in the eyes of your customers. The survey tells you that you are even more of a value today than you were last year.

Christian Wetherbee: Your first question comes from Chris Weatherby with City Group. Please go ahead. Hey, thanks.

Yes.

We've as you might expect have studied the <unk> data as well and one of the things is particularly pleasing.

Good morning, guys. Obviously you took on a significant amount of volumes sequentially and had to sort of respond to that with increased resources. Where do you think you are today in terms of resources relative to what maybe you see the opportunity over the course of the next couple quarters, maybe holding in specifically on the fourth quarter? How does that impact the LR as you think about it sequentially?

As we look across all the attributes how many that we approve improved on year over year and turn that customer experience.

And that's really important because that then gets to the place it says.

That level of service requires a high level of investment on our part and that's going to require that we continue to push the and making sure that.

Frederick Holzgrefe: Yeah, good morning, Chris. Yeah, like you say, sequentially Q3 compared to Q2, shipments per day, upload double digits, quite a big step up. But I think we absorbed the change pretty well even in late July and got into a better place in August. So, you know, FTEs, I think, you know, Q2 to Q3 basis. We're up almost 9.5% compared to a headcount increase of about 7%. So you can see we were, you know, using a lot more hours to handle the business to onboard and train new associates and all.

We're paid for all of that investment customers getting a lot of value for it.

And at the same time that requires investment from us and Thats going to require that we make sure. The pricing is in line with where it needs to be so I look at that data.

I am pleased with the service performance because I think what that says is that <unk> has an opportunity to continue to be.

Best.

Pursue the best in class opportunity and then.

Get paid for that.

It's all part of it and it requires investment to be able to maintain that service.

Frederick Holzgrefe: But, you know, I mean, if I just look at our performance, you know. O-R-Y, as we move from July and August and September, I got quite a bit better. So, I think we absorbed that initial, you know, call it 10-11% step up and then got into a better run rate. So, you know, I expect kind of more normal seasonality now, not only in the volume trends, but how we operate and historically Q3 to Q4 is about a 200 basis point degradation if we look back last three to five years.

Thank you very much.

Thank you. Your next question comes from the line of Scott Group with Wolfe Research Research. Please go ahead.

Hey, Thanks, good morning.

Did you guys give the October tonnage and pricing renewals. If you could I don't think I heard those if you can give us and then Doug can you just clarify your comment about like the July <unk> versus the Q3 or is that somewhat seasonally normal where July is always the worst or of the month in the quarter.

Frederick Holzgrefe: And, you know, we've got less than a month under our belt. So, I hope we can do a little better at that. So, a little bit better and that's maybe it's a range of 150 to 200 basis points of degradation is what we might expect. Okay, that's helpful.

In Q3.

Sure Good morning, Scott.

September I don't think you have the September numbers, yet we havent given notice of September shipments were up 16, 3%.

Appreciate the color.

Christian Wetherbee: And I guess just maybe a quick one on the price environment. You want to get a sense of, you know, how you're thinking about that. Obviously, you know, we can see some of the metrics and your results have shown that acceleration.

The tonnage was up nine 7%.

I guess, you know, where do you think we are in this process of kind of moving through obviously you put a GRI and relatively recently and that's stepped up. So, anything about sort of the pricing setup over the course of the next several quarters? Yeah, I mean, Chris, as we look at managing the book of business, I mean, this is kind of in our playbook where we make a, we make the assessment.

With weight per shipment down five 7% all of those per workday numbers.

October shipments per workday up 18, 6%.

And tonnage is up eight 4% per work day here in October so weight per shipment continuing to run lower down eight 6% so far in October.

We understand the investments. We have to make the support high levels of service. And then as the, you know, contractual renewals come up, I would expect that we'll continue to work on making sure we're driving our pricing to market. And, you know, at this, at this stage, I think there's a, there's continues to be runway for us in that regard. And I think that we're have a product that we, our sales team can get out and help drive that, get us to closer to where market should be for the level of service that we're providing to customers. So, I, you know, I think it probably, you know, our GRI reflects that. And I think you'll, we'll see that across our book of business going forward.

I appreciate the time.

Thank you.

That's through the middle of this week.

And in terms of <unk> I mean look July has got 20 days of this year, we kind of figure we had a half a day and they are too because of where the fourth of July fell Monday was kind of hang in day. So yes, I mean, that's a tough tough month with $19 five work days in it, but but I am just saying the magnitude of it.

Prudent in August.

Yeah.

300, 400 basis points.

Shows as well more than that for a 500 basis points really shows us that we absorbed it pretty well despite the need for the extra labor in line haul support.

Debt.

We're pretty pleased with how we adapt to those volumes and as we get folks settled in and can bring the PT.

Jack Atkins: The next question comes from the line of Jack Atkins with Stevens. Please go ahead.

Overtime costs down more of that as an opportunity.

Yes.

Mirocha: Well, my apologies. The next question comes from the line of Mirocha with Deutsche Bank. Please go ahead. Thanks operator. Hi guys. Hey, Doug, I wanted to just circle back on that OR commentary for the fourth quarter because I know you're comparing it to the last three to five years. I just don't know how relevant that period is given where you and the industry are today. And so if I were to just think about the amount of onboarding you did in the third quarter, I guess, you know, it takes, you know, 10 days to train somebody and you've got 63 days or whatever in the quarter.

As we run into these seasonally slower months. The next few months I mean, that's what you do right. I mean, you managed down hours every day in every term loan.

And get ready for it because seasonally that's what we're we're walking into next few months.

Yes.

Then.

People, maybe people are disappointed near term.

Are fine.

I wanted to just ask you about like ultimately what the operating leverage and margin profile could look like a year from now I think in the past you've talked about 100 to 200 basis points of margin improvement a year.

Mirocha: So there's a big productivity deficit, I would imagine. So as you kind of think about the relationship between PT and labor costs. I mean, why couldn't we see kind of much better than that two to 300 basis points, the cultural because I think the wage increase went in early July.

I know it's early but.

We're digesting some costs in CRM.

We will have opportunities to get more price next year.

Is next year, a year, where it should be.

In that 1% to two point range should it be better than that given what you know today, just how should we think about ultimately where the operating leverage and margins can go.

So long-winded way of saying, is that just conservatism or just talk about the walk in terms of the productivity deficit you guys have in third quarter? I don't know. I mean, if I think of, I mean, go back to my example in Q3. I mean, the LR and July, you know, north of 86, I think kind of a monthly LR. And then for the quarter to end up where it did, I feel like we got back in a pretty good spot, even though we're, you know, even today.

Well I think I think the big Big thing to think about is that if you look at this over the longer term.

See an impediment for us not driving this into the <unk>.

That's out there that's available to us.

We have proven that we can handle a disruption.

Big step up in volume changes and all those things our team is really condition to maintain very high levels of service and if you do that you've got an opportunity to continue to push our pricing to where it ought to be in the market now.

I mean, hopefully at the near term peak, I think over time percentage probably, you know, hopefully it peaked in September. We see it down a little bit in October. That's good news. But I mean, we're still, you know, we're bringing on, you know, we're still renting a lot of equipment to handle this business and we'll step up our equipment deliveries and buys next year and stuff to operate well at these higher levels.

The tough part about the question you asked Scott is going to require it into next year I would expect to have or improvement over where we exit this year and I think the range. As you talk about are they make some sense, maybe its a 150 to 200 basis points that makes some sense, but.

But we still got some costs that are related to this unusual event. You know, so there's not, in my view, I'm not building a lot of conservatism there. You know, 150 to 200 basis points is, you know, kind of a little bit more open range than guidance straight to the historical 200. I hope to do better than that, but, you know, I think we're still investing to maintain the high service level and, you know, the GRI has been announced.

I cant really opine yet on what the overall macro environment is going to look like next year.

You hear things that are a little bit positive and constructive I'd sure like to see that realized.

But I think that what's most important on the things that <unk> can control I think we have done a great job of handling our customers business. This quarter and I think what that does is that positions us to continue to drive the result, and I think that that.

It'll go into effect beginning of December. And that impacts, you know, 20, 25% of the book of business, but again, it's a seasonally slow month to be put in that in place. It's just necessary and, you know, from finalists closely. I mean, we've absorbed all this volume. We've done a good job for our customer. I don't think you heard any anecdotes during the quarter of big service disruptions in our network or anything like that.

I think we ought to perform wall next year in a good environment and I think most significantly longer term I don't see a limit to what we can do as an organization.

I am excited about the prospects.

So is the answer Fred said Hey.

We've never had mid teens high teens shipment growth before ultimately this is going to be great but.

So, so we spent money to provide good service. And now it's just work right now. It's just going through that grind. We've been going through for a few years. We handle the business and we go say, hey, we've done a good job for you, but it looks like we're below market for the value we're adding and we need a rate increase. So, you know, we, yeah, we, we don't mind running off a little volume if it doesn't work.

And that's a big number it's just going to take maybe a little bit longer to sort of fully digest and leverages is that sort of the idea.

Got it Scott we've got it we're going to build.

We talked about the 1000 folks that we added on the team.

So now it's just we've got the new volume. A lot of it with existing customer. We met some new customers and now we just got to work. Right. We got to price it and play the long game here, but we're really pleased with how good service state throughout this. And, you know, we didn't, we didn't really have many weeks. We walked into where we weren't prepared. And that's just kudos to all the folks that made it happen on the field and our ops team and all the investments that we've made over there over the years to do a good job for people.

The third quarter.

40% of those were drivers. So what that is is that's US building density in our in our internal resources Thats driving our line haul costs leveraging our line haul network as we get scale in the business I think we're going to see the benefits of scale.

But what's important while we're getting that figured out and getting that scale to the right level, we cannot absolutely cannot come short on service with customers. So our focus is always going to be service first and then let's get everything let's build the cost structure around that and I think there is an opportunity for us to serve.

Now we're going to go out and try to get paid for. Okay.

And then just as a follow up, you know, I obviously paid very close attention to the mass deal data. And if you look at the mass deal data carefully, it looks like you guys are even more of a value today in your eyes of the customers than you were last year. And you're already pretty nice value last year.

Leverage the business that that's the great value of of what we can drive in the organization because we've proven that we can provide repeatable high levels of service.

I just wonder if the pricing is keeping pace with the service sustainability and whether there's an opportunity more aggressive. I mean, I know you did a GRI 7.5% the highest year I tied the 2021. So it's a little bit of a weird question, but I wonder if you could be even more aggressive given in the eyes of your customers, the survey tells you that you're even more of a value today than you were last year.

Yeah makes sense. Thank you guys appreciate the time.

Thank you. Your next question comes from the line of Jack Atkins with Stephens. Please go ahead.

Okay, great. Good morning, guys and thanks for taking my questions here so.

Maybe if I could just follow up on that last line of questioning there for a moment and Fritz I mean is the best.

You know, I mean, we might expect to study the mass deal data as well and one of the things is particularly pleasing to us as we look across all the attributes, how many that we approved, improved on year over year in turn, that customer experience. And that's really important because that then gets to the place that says, you know, that level of service requires a high level of investment in our part.

Grows and matures and as you as you add.

Terminals and service centers across the network and gain density on the investments that you've been making.

Could you maybe update us on how your thoughts around the incremental margin profile of the business should look I mean, I know right now it's obviously it's.

It's tougher in the short term given given how dynamic the market is but.

How are you thinking about incremental margin.

And that's going to require that we continue to push the making sure that we're, you know, we're paid for all that investment customers get a lot of value for it. And at the same time, that requires investment from us and that's going to require that we make sure the pricing is in line with where it needs to be. So I look at that data and I'm pleased with the service performance because I think what that says is that science has an opportunity to continue to be best, and pursue the best in class opportunity and then, you know, get paid for it. I mean, that's all part of it and it requires investment to be able to maintain that service.

Incremental margins on your business over the over the longer term now.

I think when you look back the last couple of years and we saw a more favorable.

Environment is we grew adding facilities I mean, you saw it's getting so our incrementals will sort of 25% to 30% in there.

As you go forward.

As we get more normal normalized we've been.

Brought all those new freight into our network added to stabilize continue to open facilities I think youll see us rich.

<unk> our margins so that level of that of course.

If most of that comes in the revenue line in the form of.

Pushing our pricing to more market levels than maybe we push up that incremental margin profile, but.

Thank you very much. Thank you.

Your next question comes from the line of Scott Group with Wolf Research. Please go ahead. Hey, thanks. Good morning.

As the company and build scale over time I think.

Scale automatically means that those incrementals are going to get better at.

<unk>.

Did you guys give the October tonnage and pricing renewal goals? I don't think I heard those if you can give those. And then, Doug, can you just clarify your comment about the July OR versus the Q3 OR? Is that somewhat seasonally normal where July is always the worst OR of the month and OR of the quarter in Q3?

Feel really good about that I think thats whats going to drive this the ore ended the end of the seventies frankly, it's because our ability to execute on that.

Yes.

Absolutely right and we've seen accelerating incrementals from some of your competitors is that's happened so that that makes a lot of that I guess, maybe for my for my follow up question.

Just kind of kind of going back to October for a moment. There was further disruption from a from another competitor due to a cyber attack.

Scott Group: Sure. Good morning, Scott. So September, I don't think you have the September numbers yet. We haven't given those. The September shipments were up 16.3%. The tonnage was up 9.7% with weight pressure and down 5.7%. All of those per workday numbers. October shipments per workday up 18.6% and tonnages up 8.4% per workday here in October. So weight per shipment continuing to run lower down 8.6% so far in October. That's through the middle of this week.

Did you guys see much of have you seen much of an impact from that and then I guess that would have been the first half of October end.

I guess, how do you think about all things considered the amount of latent capacity you have in the network as it stands today.

Yes, good morning, Jack.

We definitely saw an impact.

For a few days there I mean normal seasonality for Us September to October is down about 2% and we're running better than that were down call. It 1% now so we definitely saw some effects from that disruption there and.

Scott Group: In terms of the OR, I mean, look, July's got 20 days this year. We had a half a day in there, too, because of where the 4th of July fell. Monday was kind of a hanging day. So yeah, I mean, that's a tough month with 19.5 workdays in it. But I'm just saying the magnitude of improvement in August, you know, of, you know, 3, 400 basis points really shows us, well, more than that, 400 basis points really shows us that, you know, we absorbed it pretty well, despite the need for the extra labor and line haul support that, you know, we're pretty pleased with how we adapt to those volumes.

It feels like that got it resolved, but there were a few days there were it was we saw it flow through so.

In terms of incremental capacity.

We're probably Jack.

<unk> can be pretty similar response that I've had in other quarters. It depends on the location, but I think we're sort of 15% to 20% incremental capacity.

Some of the pinch points.

We had salt Lake City.

We opened a replacement facility in that market in this quarter and that's a huge opportunity for us so that helps the capacity numbers. So it.

I think we're in that range, but what we can we also know how to flex we have to so we can go beyond that if need be.

Scott Group: And as we get folks swelled in and can bring the PT or the overtime cost down more, that's an opportunity. Yeah, now as we run into these seasonally slower months, the next few months, I mean, that's what you do, right? I mean, you manage down hours every day and every terminal and get ready for it, because seasonally, that's what we're walking into next few months. And then, you know, people, maybe people are disappointed near term, you know, are fine.

Okay. Thanks again for the time guys.

Thank you. Your next question comes from the line of Ken <unk> with Bank of America. Please go ahead.

Great Good morning.

Great detail on the cost leverage just to follow up on that last question there.

You've got 15 to 20, but you grew volumes, 18% October sofa was 15% to 20 before or was it 2025%, 30% before and now you're at 15 20, I just want to understand just what the phenomenal.

Frederick Holzgrefe: You know, Fred, so I want to just ask you, right, about like, ultimately, what the operating leverage and margin profile could look like a year from now, right? I think in the past, you've talked about 100 to 200 basis points of margin improvement a year. I know it's early, but we're digesting some costs this year. I'm guessing we'll have opportunities to get more price next year. Like, is next year a year where it should be, you know, in that one to two point range, should it be better than that given what you know today?

And then just other data maybe on time performance and claims ratio can can you give us an update on those.

Yes.

On the capacity.

Sort of comment I mean, one of the things that we know how to leverage we know how to leverage the line haul network well and.

Judiciously have used purchase transportation in that we know how to manage that well keep maintained service levels with that.

Frederick Holzgrefe: Just how should we think about ultimately where the operating leverage and margins can go? Well, I think the big thing to think about is that, you know, if you look at this over the longer term, I don't see an impediment for us. Not driving this into the 70s OR, right? I mean, that's out there. That's available to us. We have proven that we can handle a disruption, big step up and volume changes and all those things.

So thats kind of our flex capacity.

We have long done that so we're pretty comfortable with it.

The respect to the.

The service levels, we measure service levels on a variety of different.

<unk>.

Points, whether it's picking up pick up completion on time delivery its claims and we're tracking at or below at or above where we were prior to not only this disruption, but if you go back to even the most disruptive types. So we're we're very pleased with where we are with that that's an important.

Frederick Holzgrefe: Our team is really conditioned to maintain very high levels of service. And if you do that, you've got an opportunity to continue to push our pricing to where it ought to be in the market. Now, you know, the tough part about the question you ask, Scott, is it's going to require you to, next year, I would expect to have OR improvement over where we exit this year. And I think the ranges you talk about are, they make some sense.

Measurement for our customers and as you know we measure that every day.

So is there a number that you gave in terms of on time performance and claims ratio.

Claims number is what five years.

And on time.

We measure it we have our internal measurements and we're at <unk> 98 on time outside for 90 899 out.

Frederick Holzgrefe: Maybe it's 150 to 200 basis points. That makes some sense. But, you know, I can't really opine yet on what the overall macro environment is going to look like next year. You know, you hear things that are a little bit positive and constructive. I'm sure I like to see that realized. But I think that what's most important on the things that SIA can control. And I think we have done a great job of handling our customers business this quarter.

As we report customers and internally, we measure our own metrics were well above our internal standards.

Yes.

<unk>.

Just.

I guess with such a strong volume gain thoughts on the sustainability of those volume gains we've heard some of the peers struggled we saw one carrier it give some back in October any thoughts on.

On the movement back of some of these volumes or the sustainability continue to grow in the face of of other struggling.

Frederick Holzgrefe: And I think what that does is that positions us to continue to drive the result. And I think that that, you know, I think we ought to perform well next year in a good environment. And I think most significantly longer term, I don't see a limit to what we can do as an organization. So I'm excited about the process. So the answer for it's that, hey, we've never had mid-teens, high-teens, shipment growth before.

Well I think people that valued service and on time and quality, they're going to gravitate desire I think folks that may be you are looking for.

Cheaper service lower quality service, they're going to move on and we're okay with that we're not we're not in the game.

See how much incremental volume could drive we're looking at creating value not only for our customers, but for our shareholders. So it's.

Frederick Holzgrefe: Ultimately, this is going to be great, but that's a big number. It's just going to take maybe a little bit longer to sort of fully digest and leverage. Is that sort of the idea? We've got it, Scott, we've got it. We've got to build the, you know, we talked about the thousand folks that we added on the team in the third quarter. I mean, 40% of those were drivers. So what that is, is that's us building density in our, in our internal resources that's driving our line haul costs, leveraging our line haul network.

I'm not necessarily worried about seeing how fast we can grow.

We're more worried about executing and making sure that we're in a position where we can get paid for very high levels of service and consistency.

Great. Thank you I appreciate the time its just obvious the concern here is just phenomenal growth in the concern on how you get that cost leverage but it sounds like that's something that continues over time as you kind of work through the a quick added costs and just get the benefit with the pricing overtime I appreciate that thought yes, absolutely.

Frederick Holzgrefe: As we get scale in the business, you know, I think we're going to see the benefits of scale. You know, but what's important while we're getting that figured out and getting that scale to the right level, we cannot, absolutely cannot come short on service with customers. So our focus is always going to be service first. And then let's get everything. Let's build the cost structure around that. And I think there's an opportunity for us to certainly leverage the business. That's the great value of what we can drive in the organization. Because we've proven that we can provide repeatable high levels of service. Makes sense.

Thank you. Your next question comes from the line of Allison <unk> with Wells Fargo. Please go ahead.

Scott Group: Thank you guys. Appreciate the time.

Good morning.

Wanted to go back to your comment on the pinch points. Thank you mentioned in terms of terminal investment, maybe some incremental acceleration into next year potentially.

Is this influx of volume.

Highlighting any potential holes or to your point pinch points that maybe we would see that in the first half of the year just any thoughts there.

I think it was great to get the Salt Lake facility Salt Lake City facility open.

That helped kind of our western region kind of the.

The big break operation for Us so that's pretty exciting.

Jack Atkins: Thank you. Your next question comes from the line of Jack Atkins with Stevens.

We've got some projects coming online in the first quarter.

Mirocha: Please go ahead. Okay. Great.

Good morning guys. And thanks for taking my questions here. So maybe if I could just follow up on on that last line of questioning there for a moment. And you know, Fred, I mean, as the business grows in maturers and as you as you add, you know, terminals and service centers across the network and gain density on the investments that you've been making. You know, can you maybe update us on how your thoughts around the incremental margin profile, the business should look.

If we continue at these levels, we're going to get some benefits primarily in the ones coming in the first quarter are ones that frankly, it's an incremental service opportunity for our customers. So I think that's exciting.

And so.

Don't think Theres, one call out per se that would say that it's a capacity play most of these that are online at this point are ones that are really related to.

Getting closer to the customers. So those are great value.

I mean, I know right now it's obviously it's tougher in the short term given given how dynamic the market is. But, you know, how are you thinking about incremental margin, incremental margins on your business, you know, over the over the longer term now. Yeah, I think we need to look back the last couple of years and we saw a more favorable environment as we grew adding facilities. I mean, you saw us getting so incremental sort of 25 to 30% in there.

Got it and then just in terms of some of the new volume Brian is there any way to understand sort of the mix between new customers versus existing customers, where you can sort of increases density and scale that you have with them just any thoughts there yes. So a good a good portion of what we brought all of it actually was with May.

Maybe there were sure we had an account that we shared with.

The rest of the market.

And I think as you go forward. As we get more normal normalize we've been, you know, brought all this new freight in our network, got it stabilized, continued open facilities. I think you'll see us return on our incremental margins to that level now. Of course, if the if most of that comes in the revenue line in the form of, you know, pushing our pricing to more market levels, then, you know, maybe we push up that incremental margin profile.

One player exits the market, we pick up incremental levels of business from a customer.

Those that freight so you get some economies that the pickup part, but as delivery may actually go to a different markets have different profiles and in those cases that may not operate quite as efficiently or effectively. So it's very important that we then make sure we understand what the impact of this new volume is some of this volume.

Not be something that makes a whole lot of sensor side of it.

But, you know, as the company builds scale over time, I think that, you know, scale automatically means that those incrementals are going to get better. And I feel really good about that. I think that's what's going to drive this the OR into the into the 70s. Frankly, it's because our ability to execute on that. Yeah, absolutely right. And we've seen accelerating incrementals, you know, from some of your competitors as that happens. That makes a lot of sense.

They need maybe to gravitate to somewhere else in the market worse, there could be a customer that we picked up shared account or we picked up some additional business as I say, while the service level is really helping drive value in our organization I needed to do more business with <unk>.

We just got to make sure we get the pricing right and we get that right and I think thats.

Winning proposition both for the customer and us and Thats business, we keep overtime.

Great. Thank you.

Jack Atkins: I guess maybe for my follow up question, just kind of kind of going back to October for a moment. You know, there was further disruption from another competitor due to a cyber attack. Did you guys see much of an impact from that and I guess that would have been the first half of October.

Okay.

Thank you. Your next question comes from the line of Bruce Chan with Stifel. Please go ahead.

Thanks, operator, and good morning gents.

<unk>, maybe you want to get some clarification around the Capex guidance, Doug Yes, maybe if you can give us a break out of what's maintenance and what's growth and then when you think about the fleets I know, Chris you talked about the opportunity to flex up on the line haul but didi.

And I guess, you know, how do you think about all things considered the amount of latent capacity you have in the network as it stands today? Yeah, good morning, Jack. Yeah, we definitely saw an impact, you know, for a few days there. I mean, normal season hourly for us, September that October is down, about 2% and we're running better than that. We're down, call it, you know, 1% now. So we definitely saw some effect from that disruption there and it feels like they got it resolved, but there were a few days there where it was, we saw it flow through.

Do you need to maybe grow the tracked our trailing fleet as we move into next year as well.

Yes, I mean, it's a little early to give some real clear capex guidance, but we're expecting a pretty big year next year as you point out on the equipment side.

Both are in both in our network operations as well as city operations, we see a good benefit for.

If we are able to secure more equipment put put more trailers out there at customers and customers' yards.

So, you know, in terms of incremental capacity, you know, we're probably, Jack's going to be pretty similar response that I've had in other quarters, you know, it depends on the location, but I think we're, you know, sort of 15 to 20% incremental capacity, you know, some of the pinch points we had Salt Lake City. We opened a replacement facility in that market in this quarter and that's a huge opportunity for us.

Our network.

Fluidity requires more pumps, each and every year and especially after this volume step up so you'll see a step up in investment for sure on the trailer side, our age of fleet on track side in pretty good shape, we will have some growth equipment coming in but I can see a capex number.

Next year, certainly running in excess of half a billion dollars and again, we're still in the 2020 for planning stages right now a lot of moving pieces as you are familiar with on the real estate front. So.

So, you know, that helps the capacity number. So it, you know, I think we're in that range, but you know what, we can, we also know how to flex if we have to. So we can go beyond that if need be.

We'll give you some some better guidance as we are able to put it together ourselves, but a big opportunity on the equipment side I think to to be in a position to keep running the network effectively take downs in PT cost and then take share if we can put foot trailers and big customers yards, we're renting a lot of equipment right now so we want to.

Okay, thanks for here for the time, guys. Thank you.

Kenneth Hoexter: Your next question comes from the line of Ken Hexter with Bank of America. Please go ahead. Great.

Kenneth Hoexter: Good morning. You know, great detail on the cost leverage. Just follow up on that last question there. You got 15 to 20, but you grew volumes 18% October. So, if it was 15 to 20 before or was it 20, 25, 30% before and now you're at 15, 20? I just want to understand just with the phenomenal thoughts. And then just other data, you know, make some time performance and claims ratio. Can you give us an update on those?

Pull that rental cost out and get our own equipment out there.

Okay I appreciate that and maybe just for a follow up here any broad commentary on end markets.

Whether it's industrial versus consumer anything to call out there on general inventory levels.

Whether some of those mix changes may be affecting the weight per shipment.

Kenneth Hoexter: Yeah, so on the capacity sort of comment. I mean, one of the things that we know how to leverage, we know how to leverage a line hall network well. And, you know, we judiciously have used purchase transportation in that. We know how to manage that well, keep maintained service levels with that. So that's kind of our flex capacity. We've long done that, so we're pretty comfortable with it. You know, with respect to the service levels, you know, we measure service levels on a variety of different points, whether it's picking up pickup completion on time delivery.

No I mean, I think I think primarily.

What we've seen in our weight per shipment is customer driven like Fritz mentioned some of the accounts. We may have been servicing that others were into and as a competitor leaves you get more opportunities there and some of that for US. It's obvious we've had some.

Increases with retail customers and some of that is tending to be lighter weight and like Fred said I mean, if you go into the same location and get an extra shipments. That's great you take out a piece of the cost component, even if the revenue per shipments lower that map works, but.

As instances, where we're serving one DC for a big retailer and all of a sudden they need help and another DC. So it is not pick up economies it.

Kenneth Hoexter: It claims and we're tracking at or above where we were prior to not only this disruption, but if you go back to even the most disrupted time. So we're we're very pleased with where we are with that. That's an important measurement for our customers. And we, as you know, we measure that every day. So is there a number that you give in terms of on time performance and claims ratio? And the claims number is what 0.5% and on time, we measure it, we have our internal measurements and, you know, we're 98 on time outside for 98.99 out as we report customers.

It's another it's another pick up cost and the revenue per shipment on some of that retail steps lighter and thats.

The weight slider, and Thats whats driving the revenue per shipment.

That's great I appreciate the color.

Thank you.

Question comes from the line of Jordan <unk> with Goldman Sachs. Please go ahead.

Yes, just.

Okay.

Just a follow up I think you had talked earlier about the hiring process of <unk>.

Folks and as you sort of think ahead and the influx of business from redistributed freight how do you think about your head count driver needs et cetera. As you as you move ahead from here. Thanks.

Kenneth Hoexter: And internally, we measure it. Our own metrics were well above our internal standards. Okay. Just, you know, I guess with such a strong volume gain, you know, thoughts on the sustainability of those volume gains. We've heard, you know, some of the peers struggled. You know, we saw one carrot give some back in October. And he saw it's on, you know, on the movement back of some of these volumes or the sustainability continue to grow in the face of other struggling.

Yes.

For us as we build scale and density in this certainly we want to make sure we leverage our internal assets and capabilities.

One of the exciting things that.

That I think we have to offer is a great place to work for somebody that's interested today.

Business career in transportation and logistics and a professional truck driver in the business is growing healthy a lot of opportunity. So I think that it's when you're recruiting drivers in this market.

Kenneth Hoexter: Well, I think people that value service and on time and quality, they're going to gravitate to Saia. I think folks that maybe you're looking for cheaper service lower quality service, they're going to move on and we're okay with that. We're not, we're not in the game to see how much of incremental volume can drive. We're looking at creating value not only for our customers, but for our shareholders. So I'm not necessarily worried about seeing how fast we can grow. I'm just we're more worried about executing and making sure that we're in a position where we can get paid for very high levels of service and consistency.

That's an effective place to be a great place to be and I think we are.

Track to that and we will continue focus on hiring because I think that it's we see runway to grow the business, we see runway to optimize the business.

We continue to utilize more of our the scale that we developed in our in our line haul network that gives us an opportunity to release support and build that driver for surround that and I think it's something that.

It is a challenge always is but I think thats a competency we are developing around recruiting too.

Thank you. I appreciate the time. It's just obviously the concern here is that you phenomenal growth and the concern on how you get that cost leverage, but it sounds like just something that continues over time as you you kind of work through the quick added cost and just get the benefit with the pricing over time. Appreciate the thought. Yeah, absolutely.

Got it thank you.

Yes.

Yes.

Thank you. Your next question comes from the line of Eric Morgan with Barclays. Please go ahead.

Hey, good morning, Thanks for taking my question.

Allison Poliniak: Thank you. Your next question comes from the line of Allison Poliniak with Wells Fargo. Please go ahead.

Just wanted to ask on the freight onboarding process this quarter.

Release mentioned your focus on ensuring.

Allison Poliniak: Hi, good morning. Just want to go back to your comment on the pinch points. You know, I think you mentioned in terms of terminal investment, maybe some incremental acceleration into next year potentially. Is this influx of volumes sort of highlighting any potential holds or to your point, pinch points. That maybe we would we would see that in the first half of the year. Just any thoughts there.

The freight profile is appropriate and margins met expectations.

We wanted to.

See if you could speak to that process a bit more obviously you took on more freight than others.

From the outside it wasn't too profitable at the prior carriers. So just wondering if you could comment on some of the variables you look at with respect to margins returns density things like that.

Yeah, you know, I think it was great to get the Salt Lake Salt Lake City facility open that that helped kind of our Western region kind of the big break operation for us. That's pretty exciting. We've got some projects coming online in the first quarter that, you know, if we continue at these levels, we're going to get some benefits primarily in the ones coming in the first quarter or ones that frankly it's like it's an incremental service opportunity for our customers.

Yes sure.

Our focus is really making sure we understand the freight characteristics. The freight that we pick up make sure that it's.

Understanding what its impact is.

On our network, where we're going to make those pickups and deliveries and when you do that all of those things you've got to make sure. The pricing is right. So we.

Pretty rigorously review that on an ongoing basis and to the extent that there are situations where.

So I think that that's exciting. And so I, you know, I don't think there's one call out per se that would say that it's a capacity play most of these that are online at this point are ones that are really related to. You know, getting closer to the customer, so those are great value. Got it.

It is not priced appropriately then we've got to go have the conversation with the customer or we've got to come through.

Provide the customer remind the customer of the service, they're getting and then being in a position that we can.

Make the appropriate pricing adjustments we.

And then just in terms of some of the new volume brought on, is there any way to understand sort of the mix between sort of new customers versus existing customers where you can sort of increases density or scale that you have with them. Just any thoughts there. Yeah, so a good, a good portion of what we brought on actually was with, you know, maybe there were shared where we had an account that we shared with.

We started that.

As soon as we saw the changes in the marketplace, we've been kind of a rigorously on that shows up in our results you saw the <unk>.

We've communicated earlier this week and those are all pointing to.

Our focus around making sure that we're compensated for these high levels of service, we know what our customers are telling us we watch very closely what the.

You know, the rest of the market is, you know, one player exits the market, we pick up incremental levels of business from a customer. You know, those that freight, so you get some economies to pick up part but that delivery may actually go to different markets or have different profiles. And in those cases, you know, that may not operate quite as efficiently or effectively. So it's very important that we then make sure we understand what the impact of this new volume is.

The feedback is both internally as we measure.

Customer satisfaction.

Daily basis to them, we watch with third party say about are what we're doing to satisfy the customer and we look at that and we say listen the pricing has got to be right based on what we're providing to the customer.

And that makes it critically important that we do not disrupt service.

Some of this volume may, may not be something that makes a whole lot of sense or so. It may need to, it may need to gravitate somewhere else in the market, whereas there could be a customer that we picked up a shared account or we picked up some additional business. And they say while the service level is really up and drive value in our organization, I need to do more business with style. And we just got to make sure we get the pricing right and we get that right. And I think that's a winning proposition both for the customer and us. And that's business we keep over time.

You only get paid when you're providing great service. So that's kind of our focus.

Great, thank you.

I appreciate that and maybe just a quick follow up on the end market question and specifically underlying demand I know you mentioned youre expecting normal seasonality from here just wondering outside of the industry disruption, if youre, saying I need any kind of shifts on the horizon in terms of underlying demand conversations from.

Customers.

Yes, maybe theres, a little bit of optimism out there, but I think it's.

Well, it's kind of get a few months.

Bruce Chan: Thank you. Your next question comes from the line of Bruce Chan with Steeple. Please go ahead. Thanks operator, and morning, James. Just maybe you want to get some clarification around the cat-x guidance. Doug, you know, maybe if you can give us a breakdown of what's maintenance and what's growth.

Under our belt before we.

I think that we steered through choppy waters, but I think that.

Into next year, maybe it's a little bit more optimism, but we'll see kind of.

We're sort of show me look at let's see the evidence of things being better in the meantime, let's focus on handling the freight for the customer so when the business does in the market does return, which I think whenever that is b. It next year or the year. After we need to be in a position where the customer says we've got great service from sites. So we're going to stay.

Bruce Chan: And then, you know, when you think about the fleets, I know for it's you talked about the opportunity to fuck up on the line haul. But you need to, you know, maybe grow the tractor or trailing fleet as we move into next year as well. Yeah, I mean, it's a little early to give, you know, some real clear cat-x guidance, but we're expecting a pretty big year next year on as you point out on the equipment side.

Here in <unk>.

We continue to grow that relationship so today.

Bruce Chan: You know, both in our, in both in our network operations, as well as city operations, you know, we see a good benefit for if we're able to, you know, secure more equipment, put more trailers out there at customers and customers yards, you know, our network, you know, fluidity requires, you know, more pups each and every year, and especially after this volume step up. So you'll see a step up in the investment for sure on the trailer side or our age of fleet on the tractor sides and pretty good shape.

Don't know that there is a big call out there, but it's we've continued to operate through this.

Thank you.

Thank you and next question comes from the line of Ravi Shanker with Morgan Stanley. Please go ahead.

Hi, Thanks, Good morning, guys apologies if I missed this earlier on the call, but did you say how much excess capacity you have right now in the network.

Yes, we think it's about 15% to 20% across the whole network.

Got it so if you have 15% to 20% on the door side, obviously not market.

Bruce Chan: You know, we'll have some growth equipment coming in, but I could see a cat-x number, you know, next year certainly running an excess of half a billion dollars. And again, we're still in the 2024 planning stages right now. A lot of moving pieces as you're familiar with on the real estate front. So we'll give you some better guidance as we're able to put it together ourselves, but a big opportunity on the equipment side.

On the variable side kind of given.

What happened this quarter.

Im wondering kind of what happens next year when volumes come back with the up cycle right I mean, how do we ensure that.

There is operating leverage and you guys can grow into that capacity is it just to keep the C.

You're really adding more resources now or kind of how do we think about operating leverage.

The cycle is going up.

Bruce Chan: I think to be in a position to keep running the network effectively, take down some PT costs and then take share if we can put trailers and, you know, in big customers yards, we're renting a lot of equipment right now. So we want to pull that rental cost out and get our own equipment out there.

Yes.

We look at right now we've had a pretty big step up in shipment count So we've.

Immediately as we saw that developed really ramped up our recruiting efforts.

We added.

Employees as a result of that.

Okay, I appreciate that. And maybe just for a follow up here, any broad commentary on end markets, you know, whether it's industrial versus consumer, you know, anything to call out there on general inventory levels and, you know, whether some of those mix changes may be affecting the way of procurement. Now, I mean, I think, I think primarily what we've seen in the wait for shipment is customer driven, like Fritz mentioned, some of the accounts we may have been servicing that others were into.

I think we will be judicious about that but I think as we continue.

Continue to scale, we will continue to add resources, where it's appropriate.

I think that that.

We feel pretty good about our ability to do that we've also as we've opened facilities in new markets. We've done a good job around recruiting there.

And I think that's something that we've been successful with so I don't necessarily I think into next year. I think we can continue to scale the business and look for opportunities as we build density maybe.

And as a competitor leaves, you get more opportunities there. And some of that for us, it's obvious we've had some, you know, increases with retail customers and some of that's pending to be lighter weight. And like Fritz said, I mean, if you're going to the same location and get extra shipments, that's great. You take out a piece of the cost component, even if the revenue for shipments lower that math works. But, you know, there's instances where, you know, we're serving one DC for a big retailer and all of a sudden they need help, you know, in another DC.

Find that lower cost line haul option and Thats, usually internally Reese.

Resource line haul so if we make that happen.

Think we can continue to grow this and build density in the business.

Very good thank you.

Thank you. Your next question comes from the line of Jason Seidl with TD Cowen. Please go ahead.

Thank you Robert or gentlemen, good morning, I wanted to shift the focus back to the additional employees hired I think you commented that 40% of the 1000 where drivers did.

So it's not pick up economies. It's, you know, it's another, it's another pickup cost in the revenue for shipment on some of that retail stuff lighter and that's, you know, the weight slider and that's what's driving the revenue for shipment. That's great. Appreciate the color.

Thank you.

Did you guys experienced a little bit of a productivity shift downward if a bunch of them were from yellow because you got to train them a little bit more in the quarter just curious.

Yes, anybody anybody that we hire.

Jordan Alliger: Your next question comes from the line of Jordan Alliger with Goldman Sachs. Please go ahead.

It comes to the site, we're going to focus on.

Jordan Alliger: Yeah, just to follow up, I think you talked earlier about the hiring process of folks and as you sort of think ahead and the influx of business from the redistributed freight, how do you think about your headcount driver needs, et cetera, as you move ahead from here? Thanks. Yeah, I mean, for us, as we built scale and density in this, certainly we want to make sure we leveraged our internal assets and capabilities.

Principle that we have which is we're going to put the customer first so that's the first kind of screen that we think about we're going to work in a collaborative environment.

And then we have kind of how we operate and provide differentiated service so that requires the appropriate level of training.

And we do that with anybody that we bring through our recruiting process. The worst thing that we can do is that provides sort of uneven service to our customer customer kit.

Jordan Alliger: You know, one of the exciting things that I think we have to offer is a great place to work for somebody that's interested in a career and transportation logistics and a professional truck driver and the business that's growing healthy, a lot of opportunity. So I think that it's, when you're recruiting drivers in this market, that's an effective place to be or a great place to be and I think we've attracted that and we'll continue focus on hiring because I think that it's, you know, we see runway to grow the business, we see runway to optimize the business, you know, as we continue to utilize more of our, the scale that we developed in our, in our line haul network, that gives us an opportunity to really support and build that driver force around that. And I think that it's something that, you know, it's a challenge always is, but I think that's a competency we're developing around recruiting too. Got it.

They are counting on us to provide the appropriate training and the team that will provide the high level of service. So that's kind of how we think about it.

And what percentage of the drivers did come from yellow.

Listen what we focus on as we recruit everywhere and we take.

Thank you.

Full range of candidates.

Put people through the process and once we we find the folks who meet those kind of core values were going to operate from there.

Okay fair enough and as we look at your sort of legacy terminal network not the expansion areas are there any places you foresee that you might be tried them more aggressive at trying to get at terminals to expand.

The exciting thing when you're providing the service levels that we are we have an opportunity we think to grow in just about every market that we're in in the country I mean, we.

We're thrilled with what we've done in Atlanta, we have opened two terminals here in the last few years, we've seen great success there.

Eric Morgan: Your next question comes from the line of Eric Morgan with Barclays. Please go ahead. Hey, good morning. Thanks for taking the question. I just wanted to ask on the freight onboarding process this quarter, you know, your release mentioned your focus on ensuring the, you know, the freight profile is appropriate and margins met expectation. So just wanted to see if you could speak to that process a bit more. Obviously, you took on more freight than others, at least from the outside, you know, it wasn't too profitable at the prior carrier. So just wondering if you could comment on some of the variables you look at with respect to, you know, margins, returns, density, things like that.

Three of our highest performing terminals in the company now in the Atlanta market historically.

<unk> terminal, we had we struggled with but maybe there is an opportunity for for us to add a fourth year.

Because the customers are getting a good experience and you have the opportunity to grow that so in that case, it's not a capacity issue. It's really about just reached a customer so.

I think that those opportunities are kind of around the country.

It can be new markets, we haven't been in long and it can be ones. We've been in for a long time I think there is.

What's exciting about where we are.

Jaret, Jason and just to follow up on that I mean, I think if you were able to go forward and look back in a few years and say where did all the growth come from I still think our biggest opportunity is in markets that we already say we have a presence.

Yeah, sure. You know, our focus is really making sure we understand the freight characteristics that the freight that we pick up, make sure that it's understanding what its impact is in our, on our network, where we're going to make those pickups and deliveries. And when you do that, all those things, you've got to make sure the pricing is right. So we pretty rigorously review that on an ongoing basis and, you know, the extent that there are situations where, you know, it's not priced appropriately, then we've got to, you know, go have the conversation with the customer or we've got to come through and, you know, provide the customer, remind the customer of the service they're getting and then being in a position that we can, you know, make, make the appropriate pricing adjustments.

But we don't have a representative footprint to provide the same level of coverage of some of our peers. When I think of some of our legacy markets of I think.

Our Gulf States routes, you can think about Louisiana and across through Texas. I mean, we have we have much higher market share there.

Terms of revenue share than we do in other parts of the country. So.

If I look at Texas for example, we've got.

And so we started that, you know, as soon as we saw the changes in the marketplace, we've been kind of rigorously on that shows up on our results. You saw the GRI that we've communicated earlier this week. And those are all pointing to, you know, our focus around making sure that we're compensated for these high levels of service. We know what our customers are telling us. We watch very closely what the, you know, the feedback is both internally as we measure customer satisfaction on a daily basis.

Posted a couple of dozen terminals down there we've got a representative footprint that matches some of our national peers, We've got a double digit revenue share there and you compare that to our headline share in the industry and we're a 5% or 6% share of revenue, but in a market where we've got a similar footprint. Our service allows us to go take share.

And then we watch what third party say about our, what we're doing to satisfy the customer and we look at that and we say, listen, the pricing has got to be right based on what we're providing to the customer. And that makes it critically important that we do not disrupt service. You only get paid when you provide a great service.

If we go do that and in the northeast we've grown from zero there.

Like probably three to three 5% share. These days in a matter of a few years, but there is a several regions in the country, where we just we just need to be closer to the customer we say we cover the market, but if we had two or three more terminals. We can get share. So it's an exciting time and we look we look forward to.

Getting a more representative footprint and taken that sure well Doug in terms of taking more share getting getting back to the hires that you had in the quarter I mean.

Eric Morgan: So that's kind of our, that's kind of our. I appreciate that. And maybe just a quick follow up on the end market question, specifically, underlying demand. I know you mentioned you're expecting normal seasonality from here, just wondering outside of the industry disruption, if you're seeing any any kind of ships on the horizon, in terms of underlying demand conversations from customers. Thanks. Maybe there's a little bit of optimism out there, but I think it's what's kind of get a few months under our belt before we, you know, think that we're steered through choppy waters.

At 40% with drivers that may 60% work.

Potentially out there that could be salespeople. So did you have a lot of sales higher in the quarter is that good sort of ramp up and sort of give you. Some of that density that you are looking for and some of those areas.

We certainly added a complement of sales folks as well in the quarter.

<unk>.

It's great to be in a position where you've got it you can attract salespeople because they've got a great product to sell so that's been good and we've been able to add salespeople in not only developing markets, but ones that we've been in for a while so that's a good place to be.

I appreciate the color guys and the time thanks guys.

Eric Morgan: But I think that, you know, in the next year, maybe it's a little bit of more optimism, but we'll see. I mean, I'm kind of a, we're sort of show me, okay, let's see the evidence of, you know, things being better. In the meantime, let's focus on handling the freight for the customer. So, when the business does in the market does return, which I think whenever that is be it next year or the year after, we need to be in a position where the customer says we, we got great service from Saia, so we're going to stay here and that, you know, we continue to grow that relationship. So today I, I don't know that there is a big call out there, but it's, you know, we've continued to operate through this. Thank you.

Thank you. The next question comes from the line of Tom <unk> with UBS. Please go ahead.

Yes. Good morning, So I wanted to ask you a quick one on price and then I have a question on the terminals as well.

Yes.

How should we think about revenue revenue per hundredweight ex fuel at a pretty strong number eight 4% in the quarter is that something that can build further as.

As you reprice more of the book or is that kind of a good run rate that we said look at going forward.

Yes.

Yield calc itself.

As influenced a little bit by the.

Ravi Shanker: Your next question comes from the line of Ravi Shankar with Morgan Stanley. Please go ahead. Thanks, morning, guys. Apologies if I missed this earlier on the call, but did you say how much excess capacity you have right now in the network? Yeah, we think it's about 15 to 20% across the whole network. God, if you have 15 to 20% on the door side and obviously like not much eventing on the kind of variable side, kind of given what happened this quarter, I don't want to be kind of what happens next year when volumes come back with the up cycle, right? I mean, how do you ensure that there is operating leverage and you guys can grow in that capacity?

The weight per shipment decline, we saw but.

I mean, our revenue per shipment growth was still positive at 3% X fuel.

Sure.

With a seven 5% announced IRI and.

Growth in some of our national account customers.

It may not be operating as well with these new volumes, we're going to push for at least that our contractual renewals in the quarter were five 6%.

And that's stuff that was really started.

Leading up to the disruption in the industry. So they don't really even reflect the tightness that's going on post that event.

Is it just a case of seriously adding more resources now or kind of how do we think about operating leverage when the cycle turns up? Yeah, I mean, what we look at right now, we've had a pretty big step up in shipment count. So we've, you know, we immediately as we saw that develop really ramped up our recruiting efforts and, you know, we added, you know, a thousand employees as a result of that.

Event, so I mean that rate was higher as we exited Q3 than the headline five 6%. So our recent renewals are running higher than that.

We continue to think Theres an opportunity to.

<unk>.

Raise rates in the yield will be influenced a little bit by where the way it goes from here.

Yes.

And, you know, I think we'll be judicious about that, but I think as we continue to scale, we will continue to add resources where it's appropriate. And, you know, I think that that we feel pretty good about our ability to do that. We've also, as we've opened facilities and new markets, we've done a good job around recruiting there. And I think that's something that we've been successful with. So I, you know, I don't necessarily, I think in the next year, I think we can continue to scale the business.

Okay.

Alright, and then.

I wanted to ask you.

Kind of related to the growth in our terminal network, how we should think about your approach with the yellow terminals.

I guess, it's kind of two fold one would be high.

How do you think we should measure success. So the results come out you issue an 8-K.

If you get.

More terminals is that a good thing I would tend to think so I don't know if it's like Hey, you get five thats kind of not as good yet 30 terminals. That's great. So I guess, just kind of high level, how might we think about.

And, and look for opportunities as we build density. Maybe we, you know, find that lower cost line haul option, and that's usually internally resource line haul. So if we make that happen, you know, I think we can continue to grow this and build density in the business.

Very good. Thank you.

Whether you're <unk>.

Tesla not with the yellow terminal bid process, and then I guess related to that it does seem like you have a real opportunity to pull forward some of that or or build the pipeline and future growth and I think the market has got a lot of confidence notwithstanding some noise today in your ability to <unk>.

Jason Seidl: Your next question comes from the line of Jason Sidel with TD Cohen. Please go ahead. Thank you, Robert, gentlemen. Good morning. I wanted to shift the focus back to the additional employees. I think you commented that 40% out of 1,000 were drivers. Did you guys experience a little bit of a productivity shift downward if a bunch of them were from yellow because you had to train them a little bit more in the quarter?

Execute so can you think about hey, we'll just really pull forward and what kind of load up on future growth because we had this strategic opportunity to add a lot more terminals as opposed to doing kind of year by year.

Jason Seidl: Just curious. Yeah, anybody, anybody that we hire that comes into Saia? We're going to focus on, you know, there's a principle that we have which is we're going to put the customer first so that's the first kind of screen that we think about. We're going to work in a collaborative environment. And then we have kind of how we operate and provide differentiated service. So that requires an appropriate level of training. And we do that with anybody that we bring through our recruiting process.

Jason Seidl: The worst thing that we can do is that provides sort of uneven service to a customer customer can't, they're counting on us to provide the appropriate training and the team that will provide the high level of service. So that's kind of how we think about it. And what percentage of the drivers did come from yellow? Well, tonight, what we, what we focus on is we recruit everywhere and we take a whole range of candidates and we put people through our process. And, you know, once we, we find the folks that meet those kind of core values, we're going to operate from there. Fair enough.

Yes, so Tom.

Way I would think about this as a little bit how we've been thinking about ongoing is that we are continuously looking at our pipeline of opportunities which extends out for a couple of years.

And we're very judicious about identifying locations, where they need to be.

What what the profile of those facilities are where our customers and making sure. The facilities that we add or are there I think if you look back at our track record we know how to open things organically, we know how to build facilities and open them.

And do that in a pretty.

Value, adding way.

As far as what is going on with it.

In the.

Yellow process, I mean, I think that the.

Those are all facilities that are.

And sub four and we're going to be available to the market right. So.

We consider anything thats out there those are facilities that we look at our position in the market are ones that we take it.

Frederick Holzgrefe: And as we look at your sort of legacy terminal network, not the expansion areas, you know, are there any places you foresee that you might be trying to more aggressive at trying to get at terminals to expand? You know, the exciting thing when you, when you're providing the service levels that we are, we have an opportunity we think to grow and just about every market that we're in in the country. I mean, we've, we're thrilled with what we've done in Atlanta.

We're not buying.

Facilities from companies that are much larger than we are in our space. So the available assets are there and we have the opportunity to participate in those or as others, maybe pursue opportunities in need of vacated facility. Those are things that we do pretty successfully so.

Frederick Holzgrefe: We've opened two terminals here in the last few years and we've seen great success there. And I, you know, they're three of our highest performing terminals in the company now in the Atlanta market. Historically, the one terminal we had, we struggled with, but you know, maybe there's an opportunity for us to add a fourth here because the customers are getting a good experience and you have the opportunity to grow that. So in that case, it's not a capacity issue.

I don't have a measurement around.

How many we need to have at any given point in time, we'll have a measurement that says we think we probably need to get to 240 to 250 facilities to provide apples to apples coverage and service to best in class.

<unk>.

We build to that point.

We will do it in a way thats judicious over time in which we are not only creating value for our shareholders, but also for our customers. So it is still a multi year process. However, you think about it.

Frederick Holzgrefe: It's really about just reached a customer. So, you know, I think that those opportunities are kind of around the country and, you know, it can be new markets. We haven't been in long and it can be ones we've been in for a long time. I think there's that that's what's exciting about where we are.

Yes.

Just one follow up on that do you consider a bigger step up is that something that could make sense or do you want to keep it more smooth.

You know, Jason and just to just to follow up on that. I mean, I think if you were able to go forward and look back in a few years and say, you know, where did all the growth come from? I still think our biggest opportunity is in markets that we already say we have a presence, but we don't have a representative footprint to provide the same level of coverage as some of our peers.

Yes.

It's all about what the opportunities are so.

If the macro environment is favorable we've seen that we're pretty good accelerating.

If things were maybe a little bit softer more tepid will slow down and be judicious about how we open it.

I know there are lots of outcomes that could come up in the real estate market industrial real estate market in the next six months a year.

When I think of some of our legacy markets, if I think, you know, go down to our Gulf States roots and think about, you know, Louisiana and across through Texas. I mean, we've have we have much higher market share there in terms of revenue share than we do in other parts of the country. So, you know, if I look at Texas, for example, you know, we've gotten probably close to a couple dozen terminals down there.

So either.

Infinite number of variables, there and we'll see how it plays out and what the opportunity looks like.

Okay. Thanks.

And you see that in this year's activity as well right. We've opened six terminals year to date and we will have a 701 open next week and we've got a couple more that we could probably push it over the fence and they're kind of in our view new share opportunity markets and we can probably get them over the fence in December, but we'll push them out into Q1. So.

We've got a representative footprint that matches some of our national peers, you know, we've got a double digit revenue share there. And you compare that to our headline share in the industry and, you know, we're a five or six percent share of revenue. But in a market where we've got a similar footprint, our service, you know, allows us to go take share. So, you know, if we go do that in the Northeast, we've grown from zero there, you know, to something like probably three to three and a half percent share these days in a matter of a few years.

We read the tea leaves and we say what we have going on in our business and then we kind of flow them and as we think we can do it most smoothly so.

We should have a pretty exciting year next year in terms of openings.

Okay.

Okay, great Yeah that makes sense. Thank you.

But there's, you know, several regions in the country where, you know, we just, we just need to be closer to the customer. We say we cover the market, but if we had two or three more terminals, you know, we can get share. So, it's an exciting time. We look forward to, you know, getting a more representative footprint and taking that share.

Thank you. Your next question comes from the line of Stefan anymore with Jefferies. Please go ahead.

Hi.

Morning.

Good morning.

Morning, I think pretty much every topic thats been well addressed here, so I'm going to ask just kind of one bigger picture question here, maybe with just the benefit of hindsight now as you kind of navigate at this major disruption for the industry in terms of how everything has panned out of the last couple of months, maybe thats in terms of volume acceleration month over month.

Jason Seidl: Well, Doug, in terms of taking more share, you know, getting back to the hires that you had in the quarter. I mean, if 40% were drivers, I mean, 60% were, you know, potentially out there that could be salespeople. So did you have a lot of sales hire in the quarters? That could sort of ramp up and sort of give you some of that density that you're looking for in some of those areas?

Pricing capacity additions service performance is there anything that has surprised you.

Jason Seidl: We certainly added a complement of sales folks as well in the core. You know, it's it's great to be in a position where you've got to you can attract salespeople because they got a great product to sell. So that's been good. That built and we've been able to add salespeople and not only developing markets, but ones that we've been in for a while so that it's a good place to do. Appreciate the color guys in the time. Thanks.

What are the one of the things about the <unk> business I would say is that there is.

Net never two days in a row the same.

<unk>.

I think we all saw Canada.

What was going to come.

Potentially come in the early part of the year has read the news in the marketplace.

The pace at which.

Thank you. Your next question comes from the line of Tom Waterwitz with UBS. Please go ahead. Yeah. Good morning. So I wanted to ask you a quick one on price and then I have a question on terminals as well. How should we think about, you know, revenue, revenue per 100 way to exceed a pretty strong number 8.4% in a quarter?

The competitor exited was probably it was a little bit maybe surprising, but what was exciting about it is having lived through the last few years with the pandemic and all the challenges that came along with that our team was ready to go.

We executed on taking care of the customer so.

The pace, probably surprises price me and my kind of experience, but I was thrilled to see how we responded to it so.

Tom Waterwitz: Is that something they can build further as you reprice more of the book or is that kind of a good run rate that we should look at going forward? Yeah. I mean, the yield calc itself, like, you know, is influenced a little bit by the, you know, the way for shipment decline we saw. But, you know, I think, I mean, our revenue per shipment growth was, you know, was still positive at 3% X fuel.

We will see how the how the opportunity unfolds over the next several months to a year.

And just as a follow up the pace, meaning the amount of volumes initially so what youre, saying, yes.

Basically we went from sort of.

Slow growth no growth limited growth in total then all of a sudden we have 10 11, 12% increase in shipments in a matter of days.

Tom Waterwitz: You know, with a 7.5% announced GRI and, you know, with growth and some of our national account customers, you know, that may not be operating as well with these new volumes. We're going to push for at least that our contract for renewals in the quarter were 5.6%. And, you know, that stuff that was really started, you know, leading up to the disruption in the industry. So, they don't really even reflect the tightness that's going on post that event.

And to watch our team respond to that was frankly was awesome and so.

So that was the exciting part.

Got it thanks, so much.

Thank you.

Your final question comes from the line of Chris <unk> with the Benchmark company. Please go ahead.

Tom Waterwitz: So, I mean, that rate was higher as we exited Q3 than the headline 5.6% so our recent renewals are running higher than that. And, you know, we continue to think there's an opportunity to, you know, raise rates and the yield will be influenced a little bit by where the weight goes from here. Yeah. Okay. All right.

Yeah.

Hey, guys.

Sorry go ahead.

No. It doesn't look like Chris was able to join us or anything else.

That concludes Gary.

Look somebody there.

Yes go ahead sorry.

Tom Waterwitz: And then I wanted to ask you, you know, kind of related to the growth and the terminal network, how we can think about your approach with the yellow terminals. I guess it's kind of twofold. One would be, you know, how do you think we should measure success. So, you know, the results come out, you issue an AK, you know, if you get, you know, more terminals is that a good thing. I would tend to think so, I don't know if, you know, if it's like, hey, you get five that's kind of not as good, get 30 terminals, that's great.

Hey, Doug stretch its Chris can you hear me.

Yes got it Chris Thanks, guys sorry.

Just bigger picture with the shipments up and the costs up in the short term.

Just given the higher step up in volume if I, just if you think longer term once things sort of.

Settle in and get to normal seasonality do you think youll get to that 70 or handle faster than than you might've thought I know you didnt give a timeframe on it but just curious just given the higher volume and maybe the increased density yes.

Yes.

That's very much in play.

Tom Waterwitz: So, I guess just kind of high level, how might we think about, you know, whether you're successful or not with the yellow terminal bid process. And then I guess related to that, it does seem like you have a real opportunity to, you know, pull forward some of that or build the pipeline and future growth. And I think the market's got a lot of confidence notwithstanding the, you know, some noise today in your ability to execute.

And you're going to need a little bit about <unk>.

Several macro environment, but I think that the pace at which we can get there.

Tom Waterwitz: So, can you think about, hey, we'll just really pull forward and we'll kind of load up on future growth because we have this strategic opportunity, you know, to add a lot more terminals as opposed to doing, you know, kind of year by year.

It is absolutely in play.

I think that the ability to maintain this stepped up volume at a high level of service is going to be critical of that.

Excited to see where we are right now.

I appreciate it guys. Thanks.

Thank you.

Question comes from the line of <unk> majors with Susquehanna. Please go ahead.

Fritz I wanted to follow up on Tom's question about the terminal auction, but from an industry perspective from <unk> and the broader industry and you guys is what is a good outcome.

Yeah, so Tom, the way I would think about this is a little bit out. We've been thinking about it ongoing is that we are continuously looking at our pipeline of opportunities, which extends out for a couple of years. And we're very judicious about identifying locations where they need to be, you know, what what the profile those facilities are. We're our customers and making sure the facilities that we have that are there.

For the LTE industry <unk> industry on where these terminals and up and how they are redeployed what is a bad outcome and how are you kind of operationally preparing for a lot of different ways. This can go as you already noted a lot of different things can happen over the next six months with with how this capacity is brought back into the market. Thank you yes.

My guess is what will happen there.

I think if you look back at our track record, we know how to open things organically. We know how to build facilities and open them and do that in a pretty value adding way. You know, as far as what is going on with in the yellow process. I mean, I think that those are all facilities that are, you know, in some form are going to be available to the market, right? So we we consider anything that's out there that those are facilities that we look at in our position in the market are ones that, you know, we take it, you know, we're not buying facilities from companies that are much larger than we are in our space.

Pretty big footprint and there will probably.

It will be disbursed to the market to other.

The all <unk> operators are probably have some.

Our potential opportunity either in the kind of how that process plays out or the secondary part of that process as people, maybe reposition their networks to match what.

What's available with the new new facilities or so.

This can be some cases that some of those don't get returned to the <unk> business because it maybe it's the economics are make more sense for that to turn into a warehouse or industrial real estate property of sub counts. So I think it remains to be seen what's going to happen to all of them.

So, you know, if the available assets are there and we have the opportunity to participate in those or as others maybe pursue opportunities and need to vacate a facility, you know, those are things that we do pretty successfully. So, you know, this, I don't have a measurement around, you know, how many we need to have at any given point in time. I have a measurement that says we think we probably need to get to 240 to 250 facilities that provide apples, apples, coverage, and servers, the best in class and, you know, I think we build to that point, you know, we'll do it in a way that's judicious over time in which we are not only creating value for our shareholders, but also for our customers. So it's, you know, it's still a multi-year process, however you think about it.

My guess is is that.

Even if even if.

One player gets them, all but I think that.

I'm not sure how likely are an outcome that is but if it if it is what I think what happened then is even that those players or a player that would still probably lead to facilities being shifted around.

Some staying in service in the industry and others exiting.

<unk>.

I think what's important to note is that kind of ongoing even without.

This current situation I mean these these.

<unk> assets are getting traded amongst competitors as it is now.

The facilities that we've opened this year certainly we've opened new ones, but we've also.

Just one follow up on that. Do you consider a bigger step up? Is that something that could make sense or you want to keep it more smooth? Yeah, well, you know, it's all about what the opportunities are. So, you know, if the macro environment is favorable, you know, we've seen that we're pretty good at accelerating. If things are maybe a little bit softer, more tepid, we'll slow it down and be judicious about how we open it.

Purchased ones from.

Folks that are repositioning their footprints and their networks.

I think what's important is the ability to get those facilities and then replicate service and.

As these.

As facilities trade and move within the industry I think youll see that so it'll be kind of a probably a combination.

Combination of all those things so first would be whoever ends up.

You know, I know there are lots of outcomes that could come up in the real estate market, industrial real estate market in the next six months to a year, and so, there are infinite number of variables there, and, you know, we'll see how it plays out and what the opportunity looks like. Okay, thanks.

One bidder that gets at all and they probably repositioned some of those.

And their own network, others, maybe they sell they get traded amongst other competitors and some will ultimately probably exit the market entirely.

The exited that capacity.

And you see that in this year's activity as well, right? We've opened six terminals here today. We'll have a seventh one open next week, and we've got a couple more that we could probably push over the fence, and they're kind of an our view, new share opportunity markets, and we could probably get them over the fence in December, but we'll push them out into key one. So, you know, we read the tea leaves, and we see what we all have going on in our business, and then we kind of flow them in as we think we can do it most smoothly. So, we should have a pretty exciting year next year in terms of openings. Okay, great. Yeah, that makes sense. Thank you.

Tightened the market from a pricing perspective overnight do you have concerns that the redeployment, even if gradual can loosen it even as the economy is hopefully getting better next year and thereafter.

No I think the if I look at how the market has responded here in the last several years I think.

Generally this is a high cost inflationary business that requires a lot of capital.

Those.

As facilities get redeployed in some good expanded.

As the macro economy grows I think those things will all kind of match I'm not really concerned about significant changes in increases in capacity frankly, if you watch what's happened over time it continues to shrink.

Stephanie Moore: Your next question comes from the line of Stephanie Moore with Jeffries. Please go ahead. Hi, good morning. I think pretty much every topic has been well addressed here. So I'm going to ask just kind of one bigger picture question here. You know, maybe with just the benefit of hindsight now. As you kind of navigated this major disruption for the industry in terms of how everything has channed out of the last couple of months.

And remember Baskin.

The industry was only able to absorb the.

The volumes so relatively smoothly.

Because as an industry, we all seen shipments and tonnage negative for the better part of a year.

This event occurred so I mean, it's already had capacity a year before you add more capacity after 12 or 15 months are down so.

If your model says ISN is always going to be negative and near shoring benefits arent arent going to be a tailwind and that's one thing, but remember we've been in a freight slump here. So thats why we had capacity as a group to kind of fill.

Stephanie Moore: You know, maybe that's in terms of volume acceleration month over month pricing capacity addition service performance. Is there anything that has surprised you? You know, one of the one of the things about the LTL business that I would say is that it there's never two days in a row that is the same. You know, I think we we all saw kind of the what was going to come potentially come in the early part of the year is you know read the news in the marketplace.

Filling the holes for customers, but if you get back to a more normalized industrial environment, we get some growth going again or activity down again, you get benefits of near shoring.

That's another kind of mode around pricing.

Stephanie Moore: The pace at which the competitor exited was probably it was a little bit maybe surprising, but what was exciting about it is having lived through the last few years with the pandemic and all the challenges that came along with that our team was ready to go. And we execute on taking care of the customer. So the pace probably surprised me and my kind of experience, but I was thrilled to see how we responded to it.

Thank you Doug Thank you for it.

Thanks, Brad.

Thank you I will now turn the call over to Chris <unk> for closing remarks. Please go ahead.

Thank you for everyone who called in.

Here's the update on the exciting opportunities at Scioto.

Look for success in the coming quarters, and look forward, giving everybody an update next quarter. Thank you.

So, you know, we'll see how the how the opportunity unfolds over the next several months to year. And just as a follow up the pace and meaning the amount of volumes initially for your thing. Yeah, we basically we went from sort of slow growth, no growth limited growth in total then all of a sudden we have a 10, 11, 12% increase in shipments in a matter of days. And to watch our team respond to that was frankly was awesome and so that that was the exciting part. Got it. Thanks so much.

Okay.

Thank you ladies and gentlemen. This concludes today's call. Thank you all for joining and you may now disconnect your lines.

Thank you.

Okay.

[music].

Yes.

Chris Conn: Your final question comes from the line of Chris Conn with the benchmark company. Please go ahead. Hey, I'm ready. Sorry, go ahead. No, it doesn't look like Chris is able to join. Is there anything else? I got a clue. Somebody there.

[music].

Hey, Doug, for instance, Chris, can you hear me? Yes, got it, Chris. Thanks, guys. Sorry. I just think of a picture with the shipments up and the cost up in the short term just given the higher step up and volume. If I just if you think longer term, once things sort of settle in and get to normal seasonality, do you think you can get to that 70 or handle faster than then you might have thought?

I know you didn't give a time frame on it, but just just curious just given the higher volume and maybe the increase then. Yeah, no, I think it's very much in play. And, you know, you're going to need a little bit of a favorable macro environment. But, you know, I think that the pace at which we can get there is absolutely in play. I think that the ability to maintain the stepped up volume at a high level of service is going to be critical of that. And, you know, I'm excited to see where we are right now. Appreciate it, guys. Thanks.

Chris Conn: Thank you.

Your next question comes from the line of Bascome majors with Seth Guajana. Please go ahead. For it's wanted to follow up on Tom's question about the terminal auction, but from an industry perspective, you know, from for Saia in the broader industry and you guys eyes, what is a good outcome for the LT industry LTL industry on where these terminals end up and how they're redeployed. What is a bad outcome and how are you kind of operationally preparing for a lot of different ways this can go as you already noted.

And a lot of different things can happen over the next six months with with how this capacity is brought back into the market. Thank you. Yeah, my guess is what will happen there, you know, it's a pretty big footprint. And there will probably, it will be dispersed to the market to other, you know, LTL operators are probably have some, you know, potential opportunity, either in the, you know, kind of how that process plays out or the secondary part of that process.

As people maybe reposition their networks to match what, you know, what's available with the new new facilities are. So, you know, and there could be some cases that some of those don't get returned to the LTL business because it, you know, maybe it's the economics are make more sense for that to turn into a, you know, warehouse or industrial real estate property of some kind. So, I, you know, I think it's remains to be seen what's going to happen to all of them.

I, you know, my guess is is that, you know, even if, even if, you know, the one player gets them all, but I think that I'm not sure how likely of an outcome that is, but if it is what I think would happen then is even that those players or a player that would still probably lead to facilities being shifted around. And some staying in service in the industry and others exiting and, you know, I think what's important to note is that, you know, kind of ongoing, even without this current situation.

I mean, these LTL assets are getting traded amongst competitors as it is now. You know, we've, the facilities that we've opened this year, certainly we've opened new ones, but we've also, you know, purchased ones from folks that are repositioning their footprints in their network. So, you know, I think what's important is the ability to get those facilities and replicate service. And I think as these facilities trade and move within the industry, I think you'll see that.

So, it'll be kind of a, probably a combination of all those things. So, first would be whoever ends up, you know, if there's one bitter that gets it all, and they probably repositioned some of those in their own network. Others, maybe they sell and they get traded amongst other competitors and some will ultimately probably exit the market entirely. The exit of that capacity tighten the market from a pricing perspective overnight. Do you have concerns that the redeployment, even if gradual, can loosen it even as, you know, the economy is hopefully getting better next year and the year after?

No, I think the, if I look at how the market is responded here in the last several years, I think that, generally, this is a high cost inflationary business that requires a lot of capital. And, you know, those as facilities get redeployed and some get expanded and as the macro economy grows, I think those things will all kind of match. I'm not really concerned about significant changes in, you know, increase in capacity.

Frankly, if you watch what's happened over time, it continues to shrink. And remember, Bascome, the industry was only able to absorb the, you know, the volumes so relatively, simply because there's an industry, we've also seen, you know, shipments and tonnage negative for, you know, the better part of a year, you know, when this event occurred. So, I mean, if you thought you had capacity, the year before you had more capacity after 12 or 15 months of down.

So, you know, if your model says ISM is always going to be negative and near-shoring benefits aren't going to be a tailwind, then that's one thing. But remember, we've been in a freight slump here. So, that's why we had capacity as a group to kind of, you know, fill in the holes for customers. But if you get back to more normalized industrial environment, we get some growth going again, you get poor activity going again, you get benefits and near-shoring. Well, then that's another kind of mode around pricing. Thank you, Doug. Thank you for it. Thank you, buddy. Thank you.

Frederick Holzgrefe: I will now turn the call over to Fritz Holstgreve for closing remarks. Please go ahead. Thank you for everyone that called in to hear the update on the exciting opportunities in science or look for success in the coming quarters and look forward to giving everybody an update next quarter.

Thank you. Thank you, ladies and gentlemen.

Operator: This concludes today's call. Thank you all for joining and you may now disconnect your lines.