Q2 2025 Saia Inc Earnings Call

Operator: At this time, I would like to welcome everyone to the second quarter 2025 Saia Inc. Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded.

Good morning. My name is Drew and I will be your conference operator. Today at this time I would like to welcome everyone. To the second quarter, 2025 Saia Inc, earnings conference call. All participants will be in listen-only mode. Should you need assistance? Please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask

Operator: I would now like to turn the conference over to Matthew Batteh, Saia's Executive Vice President and Chief Financial Officer. Please go ahead. Thank you, Drew.

Questions to ask a question. You may press star then 1 on your telephone keypad to withdraw your question. Please press star then 2. Please note. This event is being recorded. I would now like to turn the conference over to Matthew pait sai's Executive Vice, President and Chief Financial Officer. Please go ahead.

Matthew Batteh: Good morning, everyone. Welcome to Saia's second quarter 2025 conference call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Holzgreve.

Speaker Change: Thank you, drew.

Matthew Batteh: Before we begin, you should know that during this call, we may make some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and all other statements that might be made on this call that are not historical facts are subject to a number of risks and uncertainties that 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.

Speaker Change: Good morning, everyone. Welcome to Sia's second quarter. 2025 conference call with me for today, is President and chief executive officer for Fritz Hill Street. Before we begin, you should know that. During this call, we may make some forward-looking statements within the meeting of the private Securities, litigation Reform, Act of 1995,

Speaker Change: 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 that and actual results May differ materially.

Fritz Holzgreve: I will now turn the call over to Fritz for some opening comments. Good morning, and thank you for joining us to discuss Saia's second quarter results. Our second quarter operating ratio was 87.8% compared to our operating ratio of 83.3% in the second quarter of last year, and the results represent a 330 basis point improvement from the first quarter of this year. The sequential operating ratio improvement outperformed the historical average of 250 to 300 basis points, despite the lack of typical volume ramp that is usually seen throughout the second quarter. We operate our business with a focus on the customer and managing the things that are within our control.

Speaker Change: 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.

Fritz: I will now turn the call over to Fritz for some opening comments.

Fritz: Good morning and thank you for joining us to discuss Sia's second quarter results. Our second quarter, operating ratio was 87.8% compared to our operating ratio of 83.3% in the second quarter of last year. And the results represent a 330 basis, point Improvement for the first quarter of this year, the sequential operating ratio Improvement, outperformed the historical average of 250 to 300 basis points. Despite the last

Fritz: Like a typical volume ramp that is usually seen throughout the second quarter.

Fritz Holzgreve: Our efforts to optimize our variable costs and improve our network efficiency contributed to this outperformance, and these results reflect our ongoing efforts to manage the business in the short term with an intense focus on executing our long-term strategy. I'm pleased with the team's ability to focus on the things we can control during this quarter, taking care of the customer, mix management, core execution, and operational efficiency. Throughout the quarter, we were able to adjust our cost structure to align with volumes that trended below historical seasonality. We typically see significant monthly volume increases throughout the second quarter, and while June trended more in the line of historical seasonality, on a per-workday basis, tonnage for the quarter was only up 0.4% from the first quarter.

We operate our business with a focus on the customer and managing the things that are within our control. Our efforts, to optimize our variable costs and improve our Network efficiency. Contributed to this outperformance and these results reflect our ongoing efforts to manage the business in the short term with an intense focus on executing our long-term strategy.

Fritz Holzgreve: Our second quarter revenue of $817 million decreased slightly from last year's second quarter by 0.7% due to continued muted volume trends as a result of the macroeconomic landscape. Overall, shipments per workday were down 2.8% year-over-year. Customer acceptance in our newer markets remains strong, which continues to demonstrate the value of our long-term strategy of getting closer to the customer and providing unique solutions to meet their needs. Terminals opened less than three years saw about a 4% sequential improvement in shipments per workday in the second quarter of 2025 compared to the first quarter. In aggregate, these facilities operated in the mid-90s in the second quarter, improving from break-even in the first quarter.

Fritz: The second quarter. And while June trended more in the line with historical seasonality on a per workday basis tonnage, for the quarter was only up 0.4% from the first quarter.

Fritz Holzgreve: In our legacy facilities, those opened longer than three years. Shipments were up about 2% sequentially in the second quarter of 2025 compared to the first, and were down about 3.5% compared to the second quarter of 2024. While we continue to see strong results in our newer markets, the overall shipment trends reflect a continued cautious approach from customers amidst an ever-changing economic landscape. That said, we remain pleased with the opportunities we're seeing with both new and existing customers, which is reinforced by the volume trends seen in our newer facilities. Revenue per shipment excluding fuel surcharge increased 2.7% compared to the second quarter of last year, while revenue per shipment including fuel surcharge increased 1.8% in the quarter.

Fritz: Our second quarter revenue of 817 million decreased slightly from last year's second quarter by 0.7% due to continued muted volume Trends as a result of the macroeconomic landscape overall shipments for workday were down. 2.8% year-over-year. Customer Acceptance in our newer markets remained strong which continues to demonstrate the value of our long-term strategy of getting closer to the customer and providing unique solutions to meet their needs terminals. Opened, Less Than 3 years saw sequential about a 4%, sequential Improvement in shipments for workday in the second quarter of 2025 compared to the first quarter in aggregate. These facilities operated in the mid 90s, in the second quarter, improving from break, even in the first quarter and our Legacy facilities are those open longer than 3 years shipments, were up about 2% sequentially in the second quarter of 25 compared to the first or down about 3.5% compared to the second quarter of 2024. Well, we continue to see strong

Fritz Holzgreve: For the second quarter, we saw tons per workday increased 1.1% compared to the second quarter of 2024, weight per shipment increased 4%, and length of haul increased slightly compared to the second quarter of last year. However, both of these components of mix decreased sequentially from the first quarter, creating a revenue headwind of approximately 4.5 to 5.5 million compared to the first quarter. Our pricing and mix optimization initiatives remain an intense focus. Sequentially, our mix of business shifted to handling slightly more national and retail customers, which partially led to a lower weight per shipment compared to the first quarter.

Fritz: Results in our newer markets, the overall shipment Trends. Reflect the continued cautious approach from customers admits. An ever-changing economic landscape. That said, we remain pleased with the opportunities. We're seeing with both new and existing customers, which re is reinforced by the volume Trend seen in our newer facilities revenue for shipment excluding fuel surcharge. Increased 2.7% compared to the second quarter of last year, while Revenue per shipment, including fuel surge charge increased 1.8%. In the quarter for the second quarter. We saw tons per workday increase 1.1% compared to the second quarter of 2024, wait for shipment increased 4% and length of the hall increased slightly compared to the second quarter of last year. However, both of these components have mixed decrease sequentially from the first quarter, creating a revenue headwind of approximately 4.5 to 5.5 million compared to the first quarter, our pricing and mix optimization initiatives remained in intense, Focus sequentially, our mixing.

Fritz Holzgreve: Additionally, we saw muted trends out of our Los Angeles region, partially contributed to shorter length of haul compared to the first quarter, which is a headwind to sequential revenue per shipment. Throughout the quarter, we were able to continue to provide unique solutions for our customers in both new and existing markets, which further validates our value proposition. Contractual renewals averaged 5.1% in the quarter, reflecting our customers' confidence in the high-quality service that we continue to provide. We remain steadfast in our approach to providing industry-leading service levels, while also managing controllable costs and productivity. While we cannot control the external factors, our focus remains intently on what we can control, and taking care of our customers is at the forefront.

Fritz: The business shifted to, to handling slightly more National and Retail customers, which partially led to a lower weight per shipment. Compared to the first quarter. Additionally, we saw a muted Trends out of our Los Angeles region partially contribute to the shorter length of haul compared to the first quarter, which is a headwind to sequential Revenue per shipment.

Fritz Holzgreve: Customers value certainty and reliability in their supply chain. We believe that we're well-positioned to provide that service in every market. This hyper-focus on the customer remained on display in Q2 as we achieved a cargo claims ratio of 0.5% this quarter. From an operating expense standpoint, we drove a 4% sequential decrease in cost per shipment compared to the first quarter, despite headwinds.

Fritz: Throughout the quarter, we were able to continue to provide unique solutions for our customers in both new and existing markets which further validates our value. Proposition contractual renewals averaged 5.1% in the quarter, reflecting our customers confidence in a high quality service that we continue to provide. We remain steadfast in our approach to providing industry-leading service levels while also managing controllable costs and productivity while we cannot control the external factors. Our Focus remains intently on what we can control and take care of our customers, is at the Forefront, customers value, certainty and reliability in their supply chain. We believe they were well, positioned to provide that service in every Market, this hyper focus on the customer remained on display in Q2 as we achieved a cargo claims ratio of 0.5%, this quarter.

Fritz Holzgreve: as a result of investments in our fleet and network expansion. We continue to focus on adjusting our resources to the shifting volume levels and reduced headcount by about 4.2% from March to the end of June. We continued our focus on optimizing our maturing network as the 2024 network investments and related growth, while beneficial for the long-term, created unique short-term challenges and inefficiencies in our network, particularly in the slower Q1 operating environment. We accelerated our network optimization efforts in Q1 and saw the benefit emerging in Q2 as we leveraged density in our larger network and our efforts to drive greater efficiencies began to materialize.

Fritz: From an operating expense standpoint, we drove a 4% sequential decrease in cost per shipment compared to the first quarter despite headwind.

Fritz: As a result of investments in our Fleet and network expansion, we continue to focus on adjusting our resources, to the shifting volume levels, and reduce headcount by about 4.2%, from March, to the end of June.

Fritz: We continue our focus on optimizing, our maturing Network as a 2024, Network investments, in related growth, while beneficial for the long term created unique short-term challenges, and inefficiencies, in our Network, particularly in the slower q1 operating environment. We accept we accelerated our Network optimization efforts.

Fritz Holzgreve: These results reinforced our commitment to expanded geography and nationwide footprint, which increasingly allows us to compete on a more even playing field with peers. As we look forward, we'll continue to execute our long-term strategy and keep an eye on the macro environment, maintaining discipline around our cost structure and adapting the changing landscape across our network.

Matthew Batteh: I'll now turn the call over to Matt for more details from our second quarter results. Thanks, Chris. Second quarter revenue decreased year-over-year by 0.7% to $817.1 million, while revenue per shipment, excluding fuel surcharge, increased 2.7% to $298.71 compared to $290.72 in the second quarter of 2024. Revenue per shipment, including fuel surcharge, increased 1.8% to $351.36 compared to $345.07 last year. Fuel surcharge revenue declined by 5.8% and was 14.6% of total revenue compared to 15.4% a year ago. Yield excluding fuel surcharge decreased by 1.2% while yield including fuel surcharge decreased by 2.1% compared to the second quarter of last year.

Fritz: In q1 and saw the benefit emerging in Q2 as we leveraged density in our larger Network and our efforts to drive greater efficiencies began to materialize. These results, reinforce our commitment to the expanded geography and Nationwide footprint which increasingly allows us to compete on a more even playing field with peers. As we look forward we'll continue to execute our long-term strategy and keep an eye on the macro environment. Maintaining discipline around our cost structure and adapting the changing landscape across our Network.

Matt: I'll now turn the call over to Matt for more details from our second quarter results.

Matt: Thanks Chris.

For Revenue per shipment including fuel S charge increased 1.8% to 351.36, compared to 345.7 last year.

Matt: Fuel S charge Revenue declined by 5.8% and was 14.6% of total revenue compared to 15.4% a year ago.

Matthew Batteh: Tonnage increased 1.1% compared to the second quarter last year, attributable to a 4% increase in our average weight per shipment, partially offset by a 2.8% shipment decline. Our length of haul increased year-over-year by 0.6% to 893 miles.

Matt: Yield excluding fuel S, charge decreased by 1.2% while yield including fuel S charge decreased by 2.1% compared to the second quarter of last year.

Matthew Batteh: Shifting to the expense side for a few items to note in the quarter, total operating expenses increased by 4.7% in the quarter compared to the second quarter last year. Salaries, wages, and benefits increased 5%, which is primarily driven by our July 2024 wage increase, which averaged approximately 4.1% for all employees, excluding executives, as well as increased employee costs, including group insurance, as the inflationary pressures continue to drive this line item's elevated level. Purchase transportation expense, including both non-asset truckload volume and LTL purchase transportation miles, decreased by 5.5% compared to the second quarter last year, and with 7.1% of total revenue compared to 7.4% in the second quarter of 2024, and 7.6% in the first quarter of 2025.

Tej increased 1.1% compared to the second quarter last year attributable to a 4% increase. In our average weight per shipment partially offset by a 2.8% shipment decline, our length of haul increased year-over-year by 0.6% to 893 MI.

Matt: Shifting to the expense side for a few items to note in the quarter total operating expenses increased by 4.7% in the quarter compared to the second quarter last year.

Salaries wages and benefits increased 5% which is primarily driven by our July 2024 wage increase, which to average, which averaged approximately 4.1% for all employees. Excluding Executives as well as increased employee costs including Group insurance as the inflationary pressures, continue to drive this line items elevated level

Matthew Batteh: Truck and rail PT miles combined were 12% of our total line haul miles in the quarter. Fuel expense decreased by 4.3% in the quarter compared to the second quarter last year, while company line haul miles increased 2.1%. The decrease in fuel expense was primarily the result of a decrease in national average diesel prices by over 7.8% on a year-over-year basis, partially offset by the increase in line haul miles run.

Matt: Purchase Transportation expense, including both non-asset truckload volume and LTL purchase Transportation miles decreased by 5.5% compared to the second quarter last year and with 7.1% of total revenue compared to 7.4% in the second quarter of 2024 and 7.6% in the first quarter of 2025.

Matt: Truck and rail, PT miles combined, were 12% of our total line, haul miles in the quarter.

Fuel expense decreased by 4.3% in the quarter compared to the second quarter last year. While company line, haul miles increased 2.1%

The decrease in fuel expense was primarily the result of a decrease in national average diesel prices by over 7.8% on a year-over-year basis. Partially offset by the increase in line haul, Mi run.

Matthew Batteh: Claims and insurance expense increased by 21.2% year-over-year. The increase compared to the second quarter of 2024 was primarily due to the development of open claims, increased claim activity, and increased cost per claim.

Matthew Batteh: Depreciation expense of $62.5 million in the quarter was 19.1% higher year-over-year, primarily due to ongoing investments in revenue, equipment, real estate, and technology. We believe the investments we have made and continue to make in our network, technology, and our people during this down cycle position us well for the future. We are constantly evaluating investments to ensure they meet the return profile we expect, and we plan to spend approximately $600 to $650 million in capital expenditures this year. Consistently investing in our network expansion equipment and our people aligns with our long-term strategy. Compared to the second quarter of 2024, cost per shipment increased 7.7%, primarily due to increased salaries, wages, and benefits to support a broader network of terminals and increased depreciation expense associated with the record investments made in the network in 2024.

Matt: Claims and ensure its expense increased by 21.2% year-over-year. The increase compared to the second quarter of 2024 was primarily due to the development of open claims increased claim activity and increased costs per claim.

Matt: Depreciation of expensive 62.5 million in the quarter was 19.1% higher year-over-year. Primarily due to ongoing investments in Revenue equipment, Revenue equipment, real estate and Technology.

Matt: We believe the Investments we have made and continue to make in our Network Technology and our people during this down cycle position, as well for the future, we are constantly evaluating Investments to ensure they meet the return profile. We expect and we plan to spend approximately 600 to 650 million in capital expenditures this year.

consistently investing in our Network expansion equipment, and our people aligns with our long-term strategy,

Matthew Batteh: As Fritz mentioned, our cost per shipment decreased 4% sequentially from the first quarter in spite of the lack of typical volume uplift that would allow us to better leverage our fixed costs. Decreased headcount of 4.2% compared to the first quarter of 2025 was a contributing factor to this sequential improvement. Additionally, we were able to manage our costs in the second quarter while maintaining a claims ratio that was largely flat sequentially, reflecting our ability to make these adjustments while preserving core execution and customer service.

Matt: compared to the second quarter of 2024 cost per shipment increase 7.7%, primarily due to increase salaries, wages and benefits to support a broader network of Terminals, and increased depreciation expense associated, with the record Investments made in the network in 2024

Spritz: As Spritz mentioned our cost per shipment decreased 4% sequentially from the first quarter in spite of the lack of typical volume uplift. That would allow us to better leverage our fixed costs.

Spritz: Decreased headcount of 4.2% compared to the first quarter of 2025 was a contributing factor to this sequential Improvement.

Matthew Batteh: Our tax rate for the second quarter was 25.3% compared to 24.4% in the second quarter of last year, and our diluted earnings per share were $2.67 compared to $3.83 in the second quarter a year ago.

Spritz: Additionally, we are able to manage our costs in the second quarter while maintaining a claims ratio that was largely flat, sequentially reflecting. Our ability to make these adjustments while preserving core execution and customer service.

Fritz Holzgreve: I'll now turn the call back over to Fritz for some closing comments.

Fritz Holzgreve: Thanks, Matt. As I mentioned in the opening, I'm pleased with our team's focus on things that we can control. The operating performance of our team continues to be among the best in the industry, and we remain focused on our customers' needs. While volume did not step up as traditionally seen in the second quarter, margins outperformed the normal sequential progression. representing our team's ability to adapt to a dynamic environment. In Q2, we relocated our centralized customer service function to our field locations. We reduced our overhead costs in this process, but more significantly, moved our customer service capabilities closer to the customer.

Spritz: Our tax rate for the second quarter was 25.3% compared to 24.4% in the second quarter of last year and our diluted earnings per share were 2.67 compared to 3.83 in the second quarter a year ago. I'll now turn the call back over to Fritz for some closing comments.

Thanks Matt.

Fritz: As I mentioned in the opening, I'm pleased with our team's focus on things that we can control the operating performance of our team continues to be in among the best in the industry. And we remain focused on our customers needs. While volume did not step up as traditionally seen in the second quarter margins outperformed the normal sequential progression.

Fritz Holzgreve: Our customer first focus is yielding tangible results, especially in our new markets, as our facilities opened for less than three years, continue to lead the charge in volume and revenue growth, performing in line with seasonality in these markets. We're excited about the early success of these locations, and we see considerable runway as we continue to penetrate those markets. With our talented and engaged workforce, the value proposition to our customers continues to expand to match our national network of facilities. A key component of our long-term strategy is to get closer to the customer and give them a chance to choose Saia for their LTL needs more often.

Fritz: Representing our team's ability to adapt to a dynamic environment and Q2, we relocated our centralized customer service function to our field locations. We reduced our overhead costs in this process but more significantly. Moved our customer service capabilities, closer to the customer.

Fritz Holzgreve: At Saia, we've emphasized the importance of the customer and focusing on things that we can control as our industry adapts to the evolving economic landscape over the coming months. My conviction about the long-term prospects of Saia remains steadfast. Great employees, great service, and a national footprint are all key to securing our position as a long-term leader in the industry. Our network planning tools, continually refined and honed from our original deployment several years ago, are foundational to our resilience and our ability to operate and monetize a now complex national network. At the same time, these tools are key catalysts to continue to find cost-optimal solutions to meet customer expectations.

Fritz Holzgreve: Over the coming quarters, we'll be further investing to continue and enhance these robust capabilities, which we believe will continue to generate returns in the business. Although these network planning tools provide a framework for the company Fundamentally, core execution remains in the hands of a highly engaged team focused on supporting our customer success and delivering returns in the substantial investment in creating a national network. We remain in the early innings of tapping the potential of this business.

Fritz: Penetrate those markets with our talented and engaged, Workforce the value. Proposition to our customers continues to expand to match our Network, national network of facilities. A key component of our long-term strategies, to get closer to the customer and give them a chance to choose Sia for their LTL needs more. Often at Sia, we've emphasized, the importance of the customer, and focusing on things that we can control. As our industry, adapts to the evolving, economic landscape over the coming months, my conviction about the long-term, prospects of society remains steadfast great employees, great service, and a national footprint are all key to securing our position as a long-term leader in the industry. Our Network planning tools, continually refined and honed from our original deployment. Several years ago, our foundational to our resilience and our ability to operate and monetize and now complex national network. At the same time, these tools are key Catalyst to continue to find cost Optimal Solutions to meet customer expectations over the coming quarter.

Fritz: Will be further investing you to continue and enhance these robust capabilities, which we believe will continue to generate returns in the business.

Operator: With that said, we're now ready to open the line for questions, operator. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press star then 2.

Fritz: Although although these Network planning tools provide a framework for the company to operate fundamentally core execution remains in the hands of a highly engaged team focused on supporting our customers success and delivering returns in the substantial investment creating in creating a national network. We remain in the early Innings if the tapping the potential of this business with that,

Fritz: Said, we're now ready to open the line for questions, operator.

Operator: At this time, we will pause momentarily to assemble our roster.

Fritz: We will now begin the question and answer session to ask a question. You may press star then 1 on your telephone keypad. If you're using a speaker-phone, please pick up your handset before pressing the keys. If any at any time your question has been addressed and you would like to withdraw your question please press star then 2

Fritz: At this time, we will pause momentarily to assemble our roster.

Ken Hoexter: The first question comes from Ken Hoexter with Bank of America. Please go ahead. Hey, great. Good morning, Fritz and Matt. Great job on the pricing. I think that's really a nice flow-through.

Fritz: The first question comes from Ken hexar with Bank of America. Please go ahead.

Fritz Holzgreve: But given normal seasonality, should we see volumes, will they stay, can they turn positive or will they stay negative in third quarter, just if you think about seasonality? And given the strong pricing and mid-single-digit renewals, should pricing continue to climb? And I guess that's leading me to the OR thoughts, right? Normal seasonality, I think, is flattish from 2Q to 3Q. Just maybe your thoughts on an outlook.

Fritz Holzgreve: Yeah, just on the tonnage piece, we'll keep in mind that we opened six terminals in Q2 last year, many of those in the back part of the quarter, and then we opened 11 terminals in Q3. So the comps get tougher on the shipments and tonnage line as we start to lap those new openings. And then on the pricing side, we're focused on what we've been focused on. We're making sure that the business meets the returns that we expect and that we're evaluating what we're handling for customers throughout each bid, each renewal. That's core to what we do over the years, and it continues to be a focus.

Ken Hexar: A great, uh, good morning, uh, Fritz and Matt, uh, great job on on the pricing. I think that that's really a nice, uh, flow through. Um, but given normal seasonality, uh, should we see volumes uh, will, will they stay, can they turn positive or will they stay negative in in third quarter? Just if you think about seasonality, and given the strong pricing and mid single digit renewals, should should pricing continue to to climb and I guess that's leading me to the the, oh thoughts, right? In normal seasonality, I think is flattish from 22 to. 3/2 just want to maybe your thoughts on on an Outlook.

Speaker Change: Yeah, just on the the tonnage piece we'll keep in mind that we opened 6 terminals in Q2 last year. Many of those, in the back part of the quarter. And then we opened 11 terminals in Q3. So the comps get tougher on the shipments in tonnage line, as we start to lap those, those new openings. Um,

Fritz Holzgreve: If you look at history on the OR line, typically Q2 to Q3, OR degradates between 100 to 200 basis points sequentially, and we think we can keep it around 100 basis points of degradation sequentially from Q2 to Q3 this year. I think that just to add to that, Ken, I think the important part is that we have made significant, you know, through the core optimization efforts in Q2 to kind of better match our national line haul network and network overall to meet kind of what a now national network looks like, right? So I think that part of the efficiencies that we drove through Q2 will continue into Q3.

Speaker Change: And then on the pricing side, we're focused on what we've been focused on. We're making sure that the business meets the returns that we expect, and that we're evaluating what we're handling for customers throughout each each bit of each renewal. That's, that's core to what we do, um, over the years and it can continues to be a focus. If you look at history on the o line, typically, Q2 to Q3 o r, degradates between 100 to 200 basis, points sequentially, and we think we can keep it around 100 basis points of degradation sequentially from Q2 to Q3 this year.

Fritz Holzgreve: So I think, you know, that's part of that, how we can get to the bottom end of that range that Matt described.

Speaker Change: I I think that just to add to that. I think the important part, uh, is that we have made significant, you know, through the quarter optimization efforts in Q2 to kind of better match, our national wine Hall Network um and network overall to meet kind of what a now national network looks like alright so I think that part of the efficiencies that we drove through um, uh, Q2 will continue into Q3. So I think, you know, that's part of that how we can get to the bottom end, end of that range that that Matt described

Fritz Holzgreve: So Fritz, I don't mean to do another follow-up, but is that just because of the optimization on a national network, or was that because you were talking about seeing a slowing volume so you moved to pull costs and cut employees? No, it's both. In this business, you always have to match costs to what the available business is. But at this time last year, we didn't have 21 facilities. We have 21 facilities that are maturing from last year, that we opened last year. And the opportunity that we have, part of that opportunity is as you build densities across that network now.

Speaker Change: So, for Tommy to do another follow-up. But is, is that just because of the, the optimization on a national network, or was that because you were talking about seeing a slowing volume. So you moved to full cost and cut employees.

Ken Hoexter: We described for you in the facilities that hadn't been opened that long. And now we're starting to see some of the benefits of that. We continue to look for opportunities to redesign our line haul network. As you know, that's the biggest cost bucket in this business. And that's an area that as you adult maturity, that becomes sustainable cost advantage over time. Great. Thanks for the time, guys. Appreciate it.

Speaker Change: Facilities that hadn't been opened that long. And uh, now we're starting to see some of the benefits of that. Uh, we continue to look for opportunities to redesign our line haul Network. As you know, that's the biggest cost bucket in this business. Um, and that that's that's an area that you, as you develop maturity, that becomes sustainable cost advantage over time.

Great. Thanks for the time, guys. Appreciate it.

Risha Harnain: The next question comes from Risha Harnain with Deutsche Bank. Please go ahead. Hey, thanks guys for the time.

Speaker Change: The next question comes from, Risha harna with Deutsche Bank, please go ahead.

Risha Harnain: So I wanted to ask a little bit about the labor reductions that you've done and sort of what you did with wages this year. I just wanted to clarify, was there a wage increase this year? And then in terms of the labor force, you know, what type of cuts were made?

Fritz Holzgreve: And as we look out going forward, as you try to balance, you know, your customer centric focus, and building out the network with sort of where we are in the cycle and trying to manage costs, like what's further runway for that, what should we expect? Thank you. Yeah, so our sort of wage increase program, typically we do that in the second half of the year, so we haven't done anything with that yet. As far as the headcount, it's real important in an environment like this where you see volume changes, you actually have to match the hours that are available hours to what the volume levels are.

Hey, thanks guys for the time. So um, I wanted to ask a little bit about the labor. Um, reductions that you've done and sort of what you did with wages this year. I just wanted to clarify, was there a wage increase this year and then in terms of the labor force, um, you know, what type of cuts were were made and um, as we look out going forward as you try to balance, you know, your customer Centric focus and building out the network with sort of where we are in the cycle and trying to manage costs like what's further runway for that which we expect thank you.

Fritz Holzgreve: So that's really about how we manage headcount by location or hours by location, I think is a better sort of picture of that, because somebody that maybe a year ago was working a lot of overtime, at this point we're maybe not working overtime, so it's a cut in hours to build some efficiency that way or productivity that way.

Yeah, so I just to kind of our our sort of wage increase program. Typically we do that in the second half of the year so we haven't, we haven't done anything with that yet. Um, the uh, as far as the headcount uh it's real important in environment like this, where you see volume changes. You've got a, you actually have to match the hours that are available hours to, you know, what the volume levels are. So

Fritz Holzgreve: The line haul network is a really important story for Saia, though. One of the things that you do when you have a now national network, some of those facilities that we have added, places like Youngstown, Ohio, part of the reason why we bought that facility was to be able to drive line haul cost savings across the eastern part of the country, and we have a facility now that allows us to run triples across Ohio. Well, that's a 30% reduction in cost compared to a traditional network. Two pups connected, right? So those are important cost savings that you can start deploying across the network.

That's really about how we, um, manage headcount by location or hours by location. I think is a better sort of, uh, picture of that because, you know, somebody that maybe a year ago was, uh, you know, working a lot of overtime at this point. We're maybe not working overtime. So that's a cut in hours, build some efficiency that way or productivity. That way, the line haul network is a really important story for Sci though. Um, you know, 1 of the things that you do when you have a now national network, some of those facilities that we have added, you know, places like Youngstown, Ohio. We part of the reason why we bought that facility was to be able to drive line haul, cost savings across the eastern part of the country and we have a facility now that allows us to run triples across Ohio. Well, that's a 30% reduction in cost compared to a traditional. Um,

Fritz Holzgreve: And that's sort of agnostic to what's going on in the environment, right? This is just taking advantage of having a now national network. And there are people who are certainly impacted by that. You optimize to more of internal drivers. Maybe you reposition your line haul drivers into different locations to better match where volume movements are, where customers are. And that all creates efficiencies. You use a little bit less PT in some markets. And if you look at our cost structure, Q1 to Q2, I think that shows up there for sure.

2 2, uh, 2, pups connected, right? So that those are important cost savings that you can start deploying across the network and that's sort of agnostic to what's going on in the environment, right? You've, this is just taking advantage of the having a now national network. And, um, and there are people that are certainly impacted by that, you optimize to more of internal. Um, you know, drivers, maybe you reposition your line line, haul drivers into different locations to better, um, match where volume movements are, where customers are. And that all creates efficiencies you use a little bit less PT in some markets. And if you look at our cost structure, uh, q1 to Q2, I think it's

Speaker Change: That shows up there for sure.

Fritz Holzgreve: Okay, great. So as we think about Q3 then, should we continue to see that momentum in the cost per shipment line? We'll have to see what the market has in store for us, but I think we've got some additional sort of opportunities through the quarter that I think we'll see materialize. We're still not 100% certain around what the top line looks like, but I do know that we will continue to look for cost optimization opportunities and deploy our tools to do that. And that's built in that why we think we're going to beat our sort of historical trend from Q2 to Q3.

Speaker Change: Okay, great. So as we think about Q3 then, should we continue to see that momentum in the costs per shipment line?

Speaker Change: The better performance. I think it's, uh, we we'll have to see what the market has in store for us but I, you know, I think we've got some additional sort of opportunities, uh, through the quarter, uh, that I think we'll see materialize. Um, you know, I we're still not 100% certain around what the Top Line looks like, but I do know that we have will continue to uh, look for cost optimization opportunities and deploy our tools to do that. And that's built in that why we think we're going to beat our sort of historical trend from Q2 to Q3.

Risha Harnain: Awesome, thank you.

Speaker Change: Awesome. Thank you.

Jordan Alliger: The next question comes from Jordan Alliger with Goldman Sachs. Please go ahead. Yeah. Hi, morning. So there's been a lot of there's been talk, of course, of industry capacity. Just sort of curious your take on it.

Fritz Holzgreve: Would you say going into the next up cycle, that overall LTL capacity should look less actually than pre-yellow bankruptcy levels due to the various unsold terminals, even though, you know, some of the larger players out there do have excess stores today? And what could this mean for pricing on a recovery? Thanks. Yeah, I think that, you know, if you look at a little, I don't think the long term trend around LTL capacity is going to change. In other words, it's been shrinking over time. And I think that, you know, there are Yes, certainly there is available capacity, you know, today with number of the competitors.

Jordan Allure: The next question comes from Jordan. Allure. With Goldman Sachs, please go ahead. Yeah. Hi morning. Um, so there's been a lot of there's been talk. Of course of Industry capacity. Um, just sort of curious, your take on it, would you say going into the next upcycle that overall LTL capacity? Uh, should look less actually than pre-? Yellow bankruptcy levels, uh, due to the various unsold terminals. Uh, even though, you know, some of the larger players out there, do have excess doors today, and what could this mean for pricing on a recovery? Thanks.

Yeah, I think that, you know, if you look at the, I don't think the long-term Trend around LTL capacity is going to change. In other words, it's been shrinking over time and I think that, you know, there are yeah, certainly, there is available capacity uh, you know, today with the number of the competitors. Um

Fritz Holzgreve: I think what is really significant is that this remains an inflationary business, I think that people expect to get a return on a substantial capital investment in this business, we're no different than anybody else. So I think that that will keep the industry healthy. I think that the for us, and what we look at is that we're really excited about the opportunity to leverage what we have, right, the market returns, Saia is poised to take advantage of this, we know how we can, we know how to operate in an up market. So that this is the time we've been waiting for.

Jordan Allure: Look at, is that?

Fritz Holzgreve: So we think for us, it's a unique opportunity.

Fritz Holzgreve: And keep in mind to Jordan, terminals and doors are absolutely important, but capacity also comes in equipment, and it comes in drivers. And the next up cycle, it's drivers that are critically important, you need the terminals, the doors, but if you don't have drivers and equipment, that's a capacity constraint. Like Fritz said, we feel great about the investments that we've made, we've never been better positioned, but capacity comes in all three of those. Thank you.

We're really excited about the opportunity to leverage what we have, right? The, the market returns Sia is poised to take advantage of this. We know how we can, we know how to operate in an up market, so that this is the time we've been waiting for. So, um, we think for us, it's a unique opportunity and keep in mind too. Jordan Terminals and doors are absolutely important but capacity also comes in equipment and it comes in drivers and the next. Next up cycle, its drivers that are critically important. You need the terminals of the doors but if you don't have drivers and Equipment that's a capacity constraint. And like for said, we feel great about the Investments that we've made. We've never been better positioned but capacity comes in all 3 of those

Thank you.

Chris Wetherbee: The next question comes from Chris Wetherbee with Wells Fargo. Please go ahead. Hey, thanks for joining us.

The next question comes from Chris Weatherbee with Wells. Fargo. Please go ahead.

Chris Wetherbee: Maybe can you give us a sense of how things are going from a volume perspective, maybe some insight into what July tonnage looks like and maybe your sort of overall view on what you're seeing from your customers in the end? Hey, Chris, could you repeat I think you get garbled there a little bit on the on the question. Apologies. Hopefully you can hear me a little bit quicker now. There we go. Yeah, thank you. Sorry about that.

Speaker Change: Guys, um, maybe, can you give us a sense of how things are going, from a volume perspective, maybe some insight into what July tonnage looks like and maybe your sort of overall view on what you're seeing from your customers in the end markets.

Hey, Chris, could you uh repeat. I think you get garbled there a little bit on the on the question.

Fritz Holzgreve: Curious if you give us an update on what you're seeing from a tonnage perspective in July and sort of how the third quarter starting what you're hearing from customers in the market from the end markets at your service. Sure, I'll go ahead and give the monthly Q2 as well. So, April shipments per day were down 1.9%, tonnage per day up 4.4%. May shipments per day down 3.2%, tonnage per day down 0.4%. June shipments per day down 3.4 percent, tonnage per day down about down 0.8 percent. And if we look at July month-to-date, obviously still have a week or so to go, but shipments per day are down about two and a quarter percent.

Apologies. Hopefully, you can hear me a little bit quicker. Now, there we go. Curious about. Yeah, thank you. Uh, sorry about that curious. If you give us an update on what you're seeing from a tonnage perspective in July and sort of how the third quarter is starting what you're hearing from customers in the market, from the end markets that you're serving.

Sure, I'll go ahead and give the monthly Q2 as well. So, um,

April shipments, per day, were down 1.9% tonnage per day up, 4.4%.

May shipments per day, down, 3.2% tonnage per day down 0.4%.

June shipments per day down, 3.4% tonnage per day down about down 0.8%.

Fritz Holzgreve: Tonnage is trending around flat. And as mentioned earlier, there's, you know, we're lapping comps in the back half of Q3 with terminal ads. But from an in-market standpoint and customers, I don't know that we'd really call anything out differently than what we've been seeing. And we continue to stay really close to our customers, understanding their business and their trends more and more. But I don't know that there's anything specific for us to call out that we've seen differently over the past few weeks than what we were seeing in June. Yeah, I think we pointed out that our sort of LA region was a little bit.

Fritz Holzgreve: Stood out as a little bit softer. Some of that is our own action around making sure that we're compensated appropriately. Part of that, I think there's a little, has been, at least for us, a little bit of softness in that area, but other markets have been pretty good. Okay, that's helpful.

Speaker Change: And if we look at July month to date, obviously still have a week week or so to go. But, uh, shipments per day are down about 2 and a quarter percent ton of just trending around flat. And as mentioned earlier, there's, you know, we're lap and comps in the, in the back half of Q3 with, with terminal ads but from an End Market standpoint and customers. I, I don't, I don't know that we'd really call anything out differently than what we've been seeing. And, uh, we continue to stay really close to our customers, understanding their business, and their Trends, more and more, but I don't know that there's anything specific for us to call out that we've seen differently over the past few weeks than what we were seeing in in June. Yeah, I think we pointed out that the, our sort of La region was a little bit, uh,

Speaker Change: Stood out as a little bit softer, some of that is our own action around. Making sure that, you know, we're compensated appropriately, part of that. Um, you know, I think there's a little has been at least for us a little bit of softness in that area, but other markets have been pretty good.

Fritz Holzgreve: And just to follow up on the comment about normal wage increases for the third quarter, I was just kind of curious, are you suggesting that you haven't done it yet or that it may not happen in the third quarter? Just want to get a sense of how you're thinking about that normal process. Yeah. And if you look at our request over time is that we would typically do that in the third or fourth quarter. We haven't made a formal call on that yet, so it could still happen this quarter or it could be in the fourth quarter.

Chris Wetherbee: But we'll let you know as we kind of what we need to Thanks for the time.

Speaker Change: Okay, that's helpful and just a follow-up on the comment about normal wage increases for the third quarter. I just kind of curious. Are you suggesting that you haven't done it yet or that it may not happen in the third quarter. Just want to get a sense of how you're thinking about that normal proxy process. Yeah and if you look at our Chris over time is that we would typically do that in a third or fourth quarter. We haven't made a formal uh call on that yet so it could still happen this quarter or you know it could be in the fourth quarter but we'll let you know as we kind of figure out where where the market is and and you know what we need to do.

Jon Chappell: I appreciate it. The next question comes from Jon Chappell with Evercore ISI. Please go ahead. Thank you. Good morning.

Got it. Thanks for the time. Appreciate it.

The next question comes from John Chapple with evercore isi. Please go ahead.

Jon Chappell: I know contract renewals are just a small piece of the portfolio, but the 5.1% that you mentioned is much lower than a lot of the 8% that you mentioned. Thank you for watching.

John Chapple: Thank you, good morning. Um, I know contract renewals are just a small piece of the portfolio, but the 5.1% that you mentioned uh, as much lower than a lot of the 8 and ends we've seen recently. If I just a function of more difficult comparisons or should we read that in the more competitive pricing environment, overall,

Fritz Holzgreve: John, we heard you clearly the first half, but then it broke up a little bit. Would you mind repeating? Yeah, sorry. 5.1% contractual renewals in the quarter, a lot a little bit lower than the 8-9% that we've seen recently. Is this representative of just more difficult comparisons? Or is this speaking more to the competitive nature of the market right now? Well, and just to provide a little clarity on the first part of that about 60 to 70% of our business is subject to a contract. Those renew pretty radibly throughout the year, so it's the majority of our business.

John, could we heard you clearly the first half? But then it it broke up a little bit. Would you mind repeating?

John Chapple: Yeah, sorry, um, 5.1% contractual renewals in the quarter, a lot a little bit lower than the 8 and 9 percents that we'd seen recently is this representative of just more difficult comparisons or is this, uh, speaking more to the competitive nature of the market right now?

John Chapple: Well, and just to, uh,

John Chapple: provide a little Clarity on the first part of that about

John Chapple: 60 to 70% of our business is subject to a contract. Those renew pretty rapidly throughout the year. So, it's a majority of our business.

Fritz Holzgreve: The renewal number, it gives us an indication of how the customers are viewing our service and what they're willing to pay for the quality and service that we provide. But what's most important that we track very diligently is what happens after that goes into place. Are we handling the volume that we expect? Are we growing in the lanes that we expect? That's where we look really closely to understand what's happening afterwards and be able to talk with our customers to better understand their freight flows and where we should be handling business and making sure that it's at our rate.

Fritz Holzgreve: So the pricing environment remains rational. We haven't seen anything different in that. We remain really focused on making sure that we get compensated fairly for what we do and provide for customers. So no change from that perspective. And where we get really excited is we continue to see great opportunities with both new and existing customers throughout the network. We've never had 213 facilities like we do right now to sell to our customers. And we're getting more and more of that than we have in prior periods. So that gives us more opportunities.

Fritz Holzgreve: And I think it's important to note too, Jonathan, is that that renewal number is reflected of the book of business that actually got renewed in the quarter and So that can change quarter to quarter. So it's reflective of that set of customers. Yeah, that makes sense.

John Chapple: Really closely to understand what's happening afterwards and be able to talk with our customers to better understand their Freight flows and and where we should be handling business and making sure that it's at our rates. So the pricing environment remains rational. We haven't seen anything different in that, we remained really focused on making sure that we get compensated fairly for what we do and provide for customers. So no change from that perspective and where we get really excited, is we continue to see great opportunities with both new and existing customers throughout the network. We've never had 213 facilities like we do right now to sell to our customers and getting more and more at bats and we have in Prior periods so that that gives us more opportunities. Yeah, I think it's important to know too. That is that the that our renewal numbers reflected of of the book of business that actually got renewed in the quarter, and it's so that that can change quarter to quarter. So it, it's reflective of those that set of customers only

Fritz Holzgreve: And first, just a quick follow up. The move in the new terminal OR from break-even to mid-90s, you're doing that in an environment where, you know, freight demand is still somewhat compressed. Is that strictly a function of just getting experience, repetitions, a little bit of scale there? Or are you making some of the big cost changes in the new terminal that you're doing? Well, the first thing that has to happen in a new terminal is you better be doing a good job, right? So claims have got to be good, on time has got to be good, customers care about that, right?

Speaker Change: Yeah, that makes sense and so it's just a quick follow up the the move in the new terminal or from Break Even to mid 90s. You're doing that. In an environment where, you know, Freight demand is still somewhat compressed, is that strictly a function of just getting experience repetitions. Uh a little bit of scale there. Or are you making some of the big cost changes in the new terminals that you're doing?

Ravi Shanker: So if you do that, you get a shot at more business. And the great thing about those facilities is because they are, you know, well-positioned, we've got a good team in place, the opportunity to scale those, meaning the incrementals on them can be pretty good, and that's kind of what you saw Q1 to Q2. So good execution, actually great execution, customer satisfaction, and that leads to profitability improvement because you're basically leveraging your investment at that point. Thank you.

Speaker Change: Well the the first in uh, first thing, it has to happen in a new terminal, is you better be doing a good job, right? So claims are got to be good on, time's got to be good, uh, customers care about that, right? So if you do that, you get a shot at more business. And the great thing about those facilities is because, uh,

They are, you know, well positioned, we've got a good team in place the opportunity to scale those meaning the incremental is on them, can be pretty good and that's kind of what you saw q1 to Q2. Um so good execution, actually some great execution customer satisfaction and that leads to uh profitability Improvement because you're you're basically leveraging your investment at that point.

Speaker Change: Thank you.

Ravi Shanker: The next question comes from Ravi Shanker with Morgan Stanley, please go ahead. Good morning, everyone. Hopefully, you can hear me okay. Just one from me on the cost side. You said that you're taking these cost actions in response to the volume environment, which is completely understandable. But how much of these cost actions do you think would be classified as short-term tactical, given the downturn versus long-term structural gains? And also, if you are taking cost actions now, particularly in headcount, is there a risk that might limit the operating leverage a little bit when the upcycle does come?

Speaker Change: The next question comes from Ravi Shanker with Morgan Stanley. Please go ahead.

Fritz Holzgreve: Thank you.

Uh, great thanks. Good morning, everyone. Hopefully you can hear me. Okay? Uh, just a couple 1 from me on the call side. Uh how much you said that you are taking these uh cost actions and response to the volume. Environment is completely understandable. Uh but how much uh of these cost actions? Do you think would be uh classified as you know, short-term tactical given the downturn versus longer term? Structural gains. Uh and also kind of if you are taking cost actions now, particularly in headcount uh is there a risk that that might limit the operating? Leverage a little bit when the upcycle does come, thank you.

Fritz Holzgreve: Ravi, that's a fair question. You've been around it long enough to know I mean, the core core tenet of this business is is volume goes up and down the variable nature of your short term labor costs that tends to that tends to move with it as well. So it that you know, there's certainly a fair number of the the of the headcount that were impact or the hours that were impact would come back at the volume scales, but I think what is really significant for us that might be different than a traditional model is that, you know, as we optimize our line haul network, we're building density as we grow from here.

Stephanie Moore: The density play is really significant, so the incrementals potentially can be pretty good, and they don't require a lot of headcount add-backs. So to the extent that in our legacy facilities, which is where most of the impacted hours are, they would, you know, naturally some of those would come back, but I would not expect the line haul hours or the network cost to radically increase simply because I think there's a scale opportunity for us. That's why we made those changes in those investments. Very good, thank you.

Speaker Change: Hey, Robbie it's it's a fair question. You've been around it long enough to know. I mean the core core tenant of this business is is volume goes up and down the variable nature of your short-term labor costs that tends to that tends to move with it as well. Um, so it that, you know, there's certainly a fair number of the, the, uh, of the headcount that were impacted or the hours that were impact would come back if the volume scales. But I think what is really significant for us, that might be different than a traditional, uh, model is that, you know, as we optimize our line haul Network, we're building density as we grow from here. The density play is, is really significant. So the incremental have potentially can be pretty good, um, and they don't require a lot of headcount addback. So to the extent that in our Legacy facilities, which is where, uh, most of the impacted hours are, uh, they would, you know, naturally some of those would come back but I would not expect the the line haul hours or the network.

Speaker Change: Um cost to to rapidly increase, simply because I think there's a scale opportunity for us. That's why we made those changes and those Investments.

Speaker Change: Very good. Thank you.

Stephanie Moore: The next question comes from Stephanie Moore with Jeffreys. Please go ahead. Hi, good morning. Thank you. You know, I wanted to maybe touch on the pricing environment a little bit. You know, you talked about making progress on kind of reprice, I guess, if you could talk about the progress you've made on repricing some legacy freight, as well as freight in new terminals, clearly mix is always a factor, but maybe any opportunity that you've seen in terms of winning heavier freight and the like. Thanks.

The next question comes from Stephanie Moore with Jeffrey's. Please go ahead.

Hi, good morning. Thank you.

Um, you know, wanted to maybe touch on the pricing environment a little bit. Um, you know, you talked about making progress on kind of re I, I guess if you could talk about the progress, you've made on repricing some Legacy Freight, as well as Freight and new terminals, clearly mix is always a factor, but maybe any opportunity that you've seen in terms of winning heavier Freight and the like, thanks.

Fritz Holzgreve: Well, I think it's important, Stephanie, just in general, that the pricing actions are a bit of a journey sometimes, right? Is it over time as you win new customers, you come in, you want to be at market, sometimes you find out maybe you're not. Sometimes you find out the customer freight's a little bit more complex than you expected, so you've got to make some adjustments there. I think what we are, internal measurements, we simply look at public data that's out there, revenue per shipment versus our peers, our now peers, national footprint peers, and we continue to see opportunity there.

Fritz Holzgreve: So, to the extent that we're pleased with progress in the quarter, in the last quarters for that matter, I think there's still a fair amount of runway there. And as I look around and I look at sort of public data, you know, and I look at the national footprint, which looks more and more like others, we've got to continue to press to market. We can only do that if we continue this sort of high level of service that we're providing. So, that's kind of how it is.

Fritz Holzgreve: We're early innings, so opportunity remains for sure, but pleased with progress.

Speaker Change: Are now peers National footprint peers and we continue to see opportunity there. Um, so to the extent that we're, you know, we we're pleased with progress in the quarter in the last quarters for that matter. Uh I I think there's still a fair amount of Runway there and I as I look around and I look at sort of public data, um, you know, and I I look at the national footprint, which more it looks more and more like others. Um, we got to continue to press to Market. Um, we can only do that in if we can continue this sort of high level of service that we're providing. So, that's kind of how it is that we're early Innings. So, um, opportunity remains for sure but pleased with progress.

Fritz Holzgreve: And just to follow up to some comments you made previously in terms about optimizing your business or your network, given now being a national carrier and making, you know, pretty swift actions in the second quarter, could you just give us a couple of maybe the key areas that changed in the second quarter? What specific actions were put into place that really optimize your network for the national footprint? Sure, I mean, I think that the real center of this is that When you have a network that was established over a number of years and it didn't have sort of full national coverage, a lot of our, your freight goes through different sort of routings in our network.

Speaker Change: And and just a follow-up to some comments you made in um previously in terms about optimizing your, your business or your network given now being a national carrier and making you know pretty slip actions in the second quarter. Could you just give us a couple of maybe the the key areas that changed in the second quarter, what specific actions were put into place that really optimize your network for for the national footprint.

Speaker Change: Sure. I mean I think that the the rule Center of this is that

Fritz Holzgreve: So, if we were, probably the easiest example is that historically we haven't had that corridor across North Dakota, Montana, all the way to the West Coast. Now we can actually run direct line haul from, say, Minnesota to Seattle, and, you know, having that ability to build density along that will introduce triples of those lanes in the coming months. That'll be important. That's a density play. I mentioned earlier the Ohio example around line haul, about building the triple sort of operation in a recently purchased facility. That's all about line haul optimization, and that's in the first quarter we talked about the challenges we have with new facilities having to route freight through our big break operations.

Speaker Change: When you have a network that was, you know, established over a number of years and it didn't have sort of full, uh, National coverage. A lot of our, you know, your Freight goes through different sort of routings in our Network. So you know, if we were, um, probably the easiest example is that historically, we haven't had that Corridor across North Dakota Montana.

Speaker Change: All the way to the West Coast.

Fritz Holzgreve: Well, now if you build a little bit of density in the originating market, now you can build a direct that maybe bypasses a break operation. Well, that's one less handle in the network. That's important. So we realigned where some of our hub and sort of where we routed freight in the second quarter. That allowed us to build some density in some key lanes, and doing that, you see cost leverage. It surfaces in our line haul network, and that, you know, I would encourage you to study not only the salary and wages line, but the PT line together.

Now, we can actually run direct line haul from say, Minnesota to Seattle. And, you know, having that ability to build density along that will introduce triples of those Lanes, uh, in the coming months. That'll be important. That's a density play. Um, I mentioned earlier, uh, the uh, Ohio example, around line, haul about building the triple uh sort of operation in a recently. Purchased facility that's all about line. Haul optimization. And that's uh in the first quarter. Uh, we talked about the challenges, we had with new facilities, having a route Freight through, uh, our big break operations well. Now, if you build a little bit of density in the originating market, now you can build a direct that maybe bypasses a a brake operation. Well, this is 1 less handle in the network. That's, that's important. So, we realigned where some of our Hub and sort of where we, uh, routed Freight in the second quarter, that allowed us to build some density. Uh,

Fritz Holzgreve: Those two together are really kind of how we measure kind of our wage structure, and that performance is driven largely, I mean, certainly some of it at the terminal levels as well, but a big part of that came to the line haul cost savings.

Speaker Change: and some key lanes and doing that, uh, you see cost leverage at surfaces in our line, haul Network and that that, you know, I would encourage you to study the not only the salary and wages line, but the PT line together. Those 2 together are really kind of what how we measure, um, kind of our wage structure. And, and that was, that performance is driven exclusive largely. I mean, certainly some of it at the terminal levels as well, but big part of that came to the line, haul cost savings.

Fritz Holzgreve: Thank you.

Speaker Change: Thank you.

Brian Ossenbeck: The next question comes from Brian Ossenbeck with J.P. Morgan. Please go ahead. Hey guys. Good morning. Thanks for taking the question. First, just a clarification. I got a couple of questions already, but just clear.

Brian Austin: The next question comes from Brian, Austin back with JP Morgan. Please go ahead.

Brian Ossenbeck: Is the quarter-to-quarter guidance you're talking about, is that assuming you put the wage increase through in the third quarter or not, just to be clear? And then one thing I thought was pretty interesting, we've seen this NMSC shift coming for a little while now, but largest carrier earlier this week pushed it out for 150 days or so to early December. Just wanted to see if that had any implications for your business, for the broader industry. As I say, shippers are having a hard time getting there with the new codes, so just some thoughts on those two.

Brian Austin: Hey guys. Good morning. Thanks for taking the question. Um, first is a clarification, I got a couple questions already but just, um, clear is the order a quarter guidance you're talking about? Um, is that assuming you put the wage increase through in the third quarter or or not just to be clear? Um, and then 1 thing, I thought was pretty interesting, you know, we've seen this MSC

Fritz Holzgreve: Thanks. Yeah, in terms of the guide and the wage increase, like Fritz mentioned, we are evaluating our timeline. Our guide includes what our forecast is on that. So it's inclusive of where we stand right now, and we'll provide some information on that as time moves on. But in terms of the NMFTA changes, look, we're not backing down on the implementation of that. It's good for the industry. Long term, we feel like this is a trend in the right direction. We sell space on our trailers, and this aligns more of the book to be density-based, which we feel is important for us, important for our shippers.

Shift coming for a little while now. But uh, largest carrier earlier this week pushed it out for its 150 days or so to early December just wanted to see if that had any implications um for your business for the broader industry you guys that say that shippers are having a hard time uh getting there with the new codes so just some thoughts on those too. Thanks.

Speaker Change: Yeah, in terms of the guide and the wage increase, we like Chris mentioned, we we are evaluating our timeline, our guide includes what, what our forecast is on on that. So it's inclusive of of where we stand right now and we'll provide some information on that as

Matthew Batteh: So from our standpoint, we dimension 75% of our freight every day. We get a view of what that looks like. We've invested heavily in dimensioners over the years for that exact reason. We leverage that technology. So we're working closely with our shippers, and we feel like we had a good opportunity to get in front of that and get ahead with them and talk about what the impact could look like. That's all about the partnership with our customers. So we don't have any plans to back that off. I guess it remains to be seen what that does for others.

Matthew Batteh: But in our view, it's a good. These changes from the NMFDA are good for the industry and we're here to support it.

Speaker Change: With our customers. So we don't we don't have any plans to to back that off I guess it remains to be seen what that does um for others. But in our view it's a good

These changes from the nmfta are good for the industry and and we're we're here to support it.

Matthew Batteh: Just to be clear, it's been a long week, so the current guide for the sequential is based on what you think right now, which is to be determined, so I guess we'll have to Stay tuned for an update, is that right? Yeah, yes.

Just to be clear. It's been a long week. Um, the so the current guide for the sequential was based on what you think right now, which is to be determined. So I guess we'll have to stay tuned for an update. Is that right?

Yeah.

Matthew Batteh: All right, okay, thanks very much.

Yes.

Speaker Change: All right. Okay. Thanks very much.

Eric Morgan: The next question comes from Eric Morgan with Barclays, please go ahead. Hey, good morning. Thanks for taking my question.

Speaker Change: The next question comes from Eric Morgan with Barclays. Please go ahead.

Eric Morgan: I wanted to ask about the mixed management initiatives you referenced, just, you know, looking at second quarter shipments, I think you have the smallest sequential improvement in, you know, maybe at least 20 years outside the pandemic. So just curious how much of that is action you to manage the book relative. underlying demand You know, looking ahead, is there more work to do on that, or should we be thinking about sequentials from here as more reflective of underlying demand? Just to confirm, Eric, you're talking about the sequential change Q1 to Q2? That's right. Correct. Well... Keep in mind, we're starting to lap terminals that we opened last year.

Eric Morgan: Hey, good morning. Thanks for taking my question. Um, I wanted to ask about the mix management initiatives. Do you referenced? Um, just, you know, looking at second quarter shipments. I think you have the smallest sequential Improvement in, you know, maybe at least 20 years outside the pandemic. So, just curious how much of that is action, you took to manage the book relative to underlying demand softness and um, you know, looking ahead, is there more work to do on that? Or should we be thinking about sequential? From here as more reflective of underlying demand, you're seeing

Just to confirm Eric, you're talking about the sequential change. Q1 to Q2 correct. Well

Fritz Holzgreve: We opened six in Q2 last year. Those were some of the larger facilities that we opened. We've been bucking the trend because we've been growing, but the freight environment's been negative for three years now. Industrial production hasn't been great. Our legacy markets are looking a little bit more like what others are, but less because we're getting more and more opportunities with customers. So I think that's really just a component of what the industrial backdrop looks like, what the landscape looks like. But again, we've never had 213 facilities like we do now to sell to our customers, which we feel like really positions us So I mean, I think just to add to that, Eric, the, you know, our focus is on what we can control, right?

Keep in mind, we're starting the lap terminals that we opened last year. And we opened 6 in Q2 last year. Those were some of the larger facilities that that we opened, but

We've been bucking the trend because we've been growing but the freight environment's been negative for 3 years now industrial production hasn't been great. Our our Legacy markets are looking a little bit more like what what others are but less, because we're getting more and more opportunities with customers. So I think that's really just a component of what the industrial backdrop looks like with the landscape looks like, but we're again, we've never had 213 facilities like we do now to sell to our customers, which we feel like really positions us. Well,

Fritz Holzgreve: So we've got to perform for the customer. We've got to do that in a cost-optimal way. That was a big part of what we achieved in the second quarter. But at the same time, we spent a billion dollars in capital last year, and we're providing a very high level of service. So there is a, you know, we have an expectation that we'll get a return on that. So we are continuing to focus on, you know, finding the customers that value that sort of strategic and long-term investment in them. And so the pricing is part of that as well, and mixed management is part of that.

Fritz Holzgreve: You know, in the environment we're in right now, maybe it's a little bit muted. Certainly, as you look at our trends through the quarter, I mean, we're off, have not been on seasonality, the historical seasonality. That, to be quite honest, in the business, that's a little bit of life in the big city. So you've got to focus then on, you know, what can we handle inside our four walls? And that's what we do.

Eric Morgan: So I I mean, I think just to add to that Eric the, um, you know, our our focus is on what we can control, right? So we've got to perform for the customer, we got to do that in a cost optimal way, that was a big part of where we achieved in this in the second quarter. Uh, but at the same time, uh, we we spent a billion dollars in capital last year. Um, and we're providing a very high level of service. So there is a, you know, we have an expectation that we'll get a return on that. So we are going to continue to focus on, you know, finding the customers that value, that sort of strategic and long-term investment in them. Um, and so the pricing is part of that as well and mixed managers as part of that, um, you know, in an environment, we're in right now, you

Eric Morgan: Maybe it's it's it's a little bit muted. Um, certainly as you look at our Trends through the quarter, I mean it's we're off have not been on seasonality the historical seasonality. Um, that'd be quite honest in the business. That's a little bit of life in the big city so you got to focus that on, you know what, what can we handle inside our 4 Walls and that's that's what we do.

Fritz Holzgreve: Appreciate that, and maybe just a quick one on the balance sheet, if I could, I think your capex should be coming down in the back half, do you think you'll be able to start reducing your leverage and interest costs in the back half, or how should we be thinking about how to manage our expectations for cash on the line? Yeah, well, we'll still be into the line. We've got some some spend in the back half of the year. 600 to 650 is probably where we land in terms of the full year on the CapEx line.

Eric Morgan: Appreciate that. And maybe just a quick 1 on the balance sheet. If I could, um, you're, I think your capex should be coming down in the back. Half. Do you think you'll be able to start reducing, um, your leverage and interest costs in the back half or, uh, how should we be thinking about, you know, how to manage our expectations for? Uh,

Fritz Holzgreve: But I'd expect it to, you know, start to taper down on online usage in the back part of the year in Q4. But a lot of that depends on timing with some of the real estate opportunities that are in our pipeline. But we will still be into the line. But I expect that will start to trend down in the back quarter of the year. Thanks a lot.

Eric Morgan: Cash on the balance sheet. Yeah, well, we'll still be into the line, and we've got some, some spend in the back half of the year. Um, 600 to 650 is probably where we land in terms of the full year on the capex line. But I'd expect it to um, you know, start to taper down on online usage in the back part of the year in Q4, but a lot of that depends on timing with some of the real estate opportunities that are in our pipeline. But we we

Will still be into the line, but I expect that'll start to Trend down in the back back. Quarter of the year.

Eric Morgan: Thanks a lot.

Tyler Brown: The next question comes from Tyler Brown with Raymond James. Please go ahead. Hey, good morning, guys. Can you all hear me? Hey, Fritz, you've given some really good operational color, but I just kind of want to hammer this home. So what are you guys seeing from a network balance perspective? So have you guys started to see that those new market have built on the outbound side? Just any color maybe on that inbound-outbound ratio in those newer terminals? Because I would assume that if that balance has started to improve, that's been maybe a driver to that mid-90s outcome.

The next question comes from. Tyler Brown with Raymond James, please go ahead.

Hey, good morning guys. Can you all hear me?

Speaker Change: We can loud and clear.

Hey hey Fritz, you've given some really good operational color, but I just kind of want to hammer this home. So what are you guys seeing from a network balanced perspective? So

Speaker Change: Um, have you guys started to see that those New Market? Bill have built on the outbound side, just any color. Maybe on that inbound, outbound ratio in those newer terminals, because I would assume that if that balance has started to improve, that's been maybe a driver to that 9, mid 90s outcome,

Fritz Holzgreve: At Tyler, it's a good read. Yes, the answer is it's improving. Is it where it needs to be? No. And I think that the opportunity is, that's the opportunity for us, you know, not only this year, but in the next year, as we continue to mature those facilities. We're not in the game of trying to fill them up, though, in the sense of let's go see how much volume we can get in there. We've got to be very strategic around that, make sure we're picking up freight that works. But I think the opportunity absolutely to build scale in those facilities, and it really shows up in the line haul network costs.

At Tyler's, a good good read. Uh yes, the answer is it's, it's improving, is it where it needs to be? No. And I think that the opportunity is, uh,

Fritz Holzgreve: You know, as we move freight through our operation, not only, you know, building a direct from Trenton West surely drives some efficiency versus building a pump that goes through Harrisburg somewhere else, right? So we know those are efficiencies that we're gaining as we build maturity in these markets. And we're really excited to see that trend. I think you see that in the cost per shipment, Tyler, too. It's down 4% sequentially, and usually, if you're on seasonality, Q2 typically is the best volume ramp and volume quarter for us. So you'd get even more leverage on those fixed cost lines, like depreciation, that we got a little bit of, but not all of.

Tyler: As we continue to mature those facilities. Um, we're not in a game of trying to fill them up though. In the sense of, let's go see how much volume we can get in there to its? We've got to be, um, very strategic around that. Make sure we're picking up Freight that works. But I think the opportunity absolutely to build scale in those facilities and it really shows up in the line, haul Network costs. Um, you know, as we move Freight through our operation, not only, you know, building a direct from Trenton, uh, West Shirley uh, Drive some efficiency versus building a, uh, pup that goes through Harrisburg somewhere else, right? So that we know, those are efficiencies that we're gaining as we build maturity in these markets. Um, and I, I that's, we're really, um, excited to see that Trend. I think we see that in the cost per shipment Tyler too. It's down 4% sequentially. And usually, if you're on seasonality, Q2 typically is the best volume ramp and volume quarter for for us. So you

Fritz Holzgreve: So that balance and that execution you see in our cost per shipment line, despite that lack of typical ramp that helps you leverage a fixed cost. And that's where, when this thing ramps back up, great incremental margin opportunity for us, because you're able to leverage that even more over a network that's becoming more balanced, that you've got more in and out opportunities. These terminals have really been open less than a year that we opened last year. So each month that passes, we continue to work on. Right, so the message is it's improved, but there's still plenty of work to do.

Tyler: Get even more leverage on those 6. Cost lines like depreciation that we got a little bit of but not not all of. So that balance and that execution you see in our cost per shipment line, despite that lack of typical ramp that helps you leverage the fixed cost and that's where when this thing ramps back up

Tyler: Great incremental margin opportunity for us because you're able to leverage that even more over a network. That's becoming more balanced that you've got more in and out opportunities. These terminals have really been open less than a year that we we opened last year, so?

Tyler: Each month that passes, we continue to work on that.

Fritz Holzgreve: Oh yeah, this business, we don't see a reason why it shouldn't operate in the 70s and part of getting there is building densities in those markets. Right.

Tyler: Right. So the the message is it's improved but there's still plenty of work to do.

Tyler: Oh yeah, this this business I we don't see a reason why it shouldn't operate in the 70s. And part of getting there is is building densities in those markets.

Fritz Holzgreve: And then this kind of goes hand in hand with that last question. But one of the key side effects of a greenfield strategy in LTL is that you need more breaks. You just can't run a lot of directs without that outbound density, right? So I don't know how you measure it, but if you looked at something like breaks per bill or your direct percentage, do you feel like you've seen peak pain on those metrics at this point and basically on the downward slope? Well. Freight flows change, but if we look at our productivity metrics very closely, one of the things that we monitor is handling, and handling or touches.

Right. And then this kind of goes hand in hand with that last question. But 1 of the key side effects of a green field strategy in LTL, is that you need more breaks, you just can't run a lot of directs without that outbound density, right? So I don't know how you, how you measure it. But if you looked at something like, breaks per bill, or your direct percentage, do you feel like you've seen Peak pain on those metrics at this point? And basically, we're on the downward slope,

Well.

Fritz Holzgreve: And touches improve sequentially from Q1 to Q2, and we saw that continue into June. So you always have to continue that work because freight flows change and customer patterns change, but we were really pleased with the execution. We saw that come through in the productivity metrics and the handles. We gave that example before about how things have to route differently, and Fritz talked about it. When you can route direct and you eliminate a handle, that's a big deal. Not only is it service to a customer that could be different, but you eliminate a cost that's associated with a handle, and we saw that improvement, but we are always working on that because every day is a little bit different in the business.

Tyler: Freight flows change. Uh, but if we look at our productivity metrics very closely and 1 of the things that we monitor is handling and handling or touches and touches improved sequentially from q1 to Q2 and we saw that continued into into June. So it's you always have to continue that work because Freight flows change and customer patterns change, but we were really pleased with the execution. We saw that come through in in the productivity metrics and the handles, we we gave that example before about how things after

Tyler: Out differently. In Fritz talked about it when you can route direct and you eliminate a handle. That's a big deal. Not only is it service to a customer that could be different, but you eliminate a cost, that's associated with a handle. And we saw that Improvement, but we are always working on that because every day is a little bit different and The Business

Fritz Holzgreve: Yeah, right. I mean, if you run more directs, you run more triples, I would assume that would have a profound impact on line haul. Yeah, listen, like, like for like triples versus A set is 30% reduction, right? So that's a big deal. Right. Okay.

Yeah, right. I mean if you run more directs, you run more triples. I would assume that would have a profound impact on linol. Hey listen. Like like for like triples versus

Tyler: a set is 30% reduction, right? So that that that is that's a big deal.

Fritz Holzgreve: Thanks for your time, guys.

Tyler: Right. Okay. Thanks for your time, guys.

Ariel Rosa: The next question comes from Ariel Rosa with Citigroup. Please go ahead. Hey, good morning. Fritz, you mentioned in your prepared comments, just conviction around the long term prospects remain intact. I was hoping you could speak a bit more to that. Just what's the progression to getting to a sub-ADLR and really growing the revenue in a meaningful way from here? Well, I, I think that they're one of the things that would help broadly, right? I think that if we saw a little bit stronger macro backdrop, I think you'd see a little more conviction from our customers.

Ari Rosa: The next question comes from Ari. Rosa with croup please, go ahead.

Ari Rosa: Hey, good morning. Uh, Fritz. You mentioned in your prepared comments. Uh, just conviction around the long term. Prospects remain intact. I I was hoping you could speak a bit more to that. Just what's the progression to getting those sub? Adore and and and really growing the revenue in a meaningful way from here.

Ari Rosa: Well, I

Ari Rosa: I think that there.

Ari Rosa: 1 of the things that would,

Fritz Holzgreve: And there's probably a little bit more growth. We've been dealing with this sort of freight economy for a number, you know, a couple of years now. But I with that said, I think that there is an opportunity for us to continue to methodically grow our business winning in the marketplace, taking share, frankly, because we're performing at a high level. And, you know, we may not get the outsized growth that you might see in a, you know, more stronger backdrop, but I think we have an opportunity to continue to drive improvements. Now, do I know what that's going to look like in the next year?

Broadly, right? I think that if we saw a little bit stronger, macro backdrop, I think you'd see a little, a more conviction from our customers and there's probably a little bit more growth. Uh, we've been dealing with this sort of freight economy for a number, you know, a couple years now. Um, but I with that said, uh, I think that there is an opportunity for us to continue to method.

Fritz Holzgreve: I think, I think to be fair, I think we all need to figure out what exactly that macro looks like. But what I would say, though, is if I look across our operation, we look at our reference benchmark facilities where we have the most maturity, the most sort of long established, well-known brand efficiencies, all those things, this business operates in the 70s. So in those in those markets, we don't see a potential that says the newer markets or newer regions of the country for us couldn't approach those sort of levels. So the long term opportunity is certainly there.

Fritz Holzgreve: I think I'm still open as to what the timing of that would be. You know, I think we need to get a little more clarity around what that looks like. But I think the fundamentals for us are good. And, you know, as we were pointing out to in the last question, is that this the ability to develop maturity in a national network is a important scaling opportunity for the overall cost structure.

Known brand, efficiencies all those things, this business operates in the 70s. So in those, in those markets, we don't see a potential that says, the newer markets or newer regions of the country for us couldn't approach those sort of levels. So I the long term opportunities, certainly there. Uh, I think I'm still open as to what the timing of that would be. Um, you know, I think we need to get a little more clarity around what that looks like but I I I think the fundamentals for us are good and I, you know, as we're pointing out to uh, in the last question is that this the ability to develop maturity in a national network is a important scaling opportunity for the overall cost structure of the business?

Fritz Holzgreve: That's encouraging to hear. Thanks for that. And then I just wanted to clarify, I think you mentioned that there was a shift in mix towards more national customers, more retail accounts. I'm a little surprised by that, because when we hear from some of your peers, it seems like there's a big focus on moving the other way with kind of regional accounts being more profitable. So I was hoping you could just kind of address what's driving that strategy and what's really driving the revenue mix. Thanks. Yeah, and just to clarify that a little bit, Ari, it's not necessarily new customers that are coming in that are in more national retail.

Fritz Holzgreve: It's more business with customers that we already work with and have worked with for a long time. If you look back in our history, that's not uncommon. In Q2, maybe late Q1, but more so Q2, that trend to a little bit more seasonal retail type freight is not uncommon for us. And when you get an opportunity to serve more markets for customers that you already work with and have worked with for a long time, you get more opportunities that freight in some of these newer markets and even legacy markets, because you can just do more for them.

Ari Rosa: That's encouraging to hear, thanks for that. And then I just wanted to clarify, I think you mentioned that there was a shift toward it, shift in mix towards more National customers more retail accounts. Uh I'm a little surprised by that because when when we hear from some of your peers it seems like uh there there's a big focus on moving the other way with kind of regional accounts uh being more profitable. So I was hoping you could just kind of address, what's driving that strategy and what's really driving the revenue mix. Thanks. Yeah. And just to clarify that a little bit Ari, it's not necessarily new customers that are coming in that are that are in more National Retail. It's more business with customers that we already work with and have worked with for a long time. If you look back in our history, that's not uncommon in Q2, maybe late, q1 but more. So Q2 that trend is a little bit more seasonal, retail type

Fritz Holzgreve: So that shift is not something that's uncommon for us in our history. And that's not necessarily a bad thing. I mean, you certainly have things like pickup economies. If you further penetrate a national account, meaning you get more business there, you have the opportunity, you have some density, you build on your pickups or, frankly, even on your deliveries. So part of what may be driving that is some of those national accounts are tapping a national network. And, you know, that's part of the opportunity for us. Now, you could argue that part of our opportunity in some of these new markets, those regional accounts or field accounts that haven't gotten an OSAI yet, that's opportunity for us.

Ari Rosa: Rate is not uncommon for us and we uh when you get an opportunity to serve more markets for customers that you already work with and have with work with for a long time, you get more opportunities that Freight in some of these newer markets and even Legacy markets because you can just do more for them. So that shift is is not something that's uncommon for us in our history.

Fritz Holzgreve: That's runway. So, you know, I look at this as kind of a, you know, maybe a win-win problem, if that makes sense. You know, geez, we're growing some of the business that we've done has had good partnerships with historically. That's good. And we still have opportunities in new markets. So it may drive that mix of business a little bit different. Got it.

Ari Rosa: And it's not necessarily a bad thing, right? I mean, it's you, you certainly have things like pick up economies, if you P further penetrate a national account meaning, you've get more business there, uh, you have the opportunity, you have some density, you build on your pickups, or frankly, even on your delivery. So, uh, part of what may be driving, that is some of those national accounts are tapping a national network and, um, you know, that's part of the, uh, opportunity for us. Now, you could argue that part of our opportunity and some of these new markets, those those uh, Regional accounts or field accounts that haven't gotten to know sigh yet that's that's opportunity for us. That's Runway. So, um, you know, I, I looked at this as kind of a, you know, maybe a win-win problem, if that makes sense. You know, well, geez, we we're growing some of the business that we've done has had good Partnerships with historically, that's good. And we still have opportunities in New Markets, so it may drive that mix of business, a little bit different in the future.

Fritz Holzgreve: Okay, thanks for the time. Good luck with that.

Speaker Change: Got it. Okay. Thanks for the time. Good luck with that.

Daniel Imbro: The next question comes from Daniel Imbro with Stevens, please go ahead. Hey, good morning, guys. Thanks for taking our questions. First, maybe a follow up just on the service. I think you mentioned claims ratio was flat at 0.5% from the first quarter. I guess what about other service metrics, you know, on time deliveries, missed pickups, and then continuing that discussion on legacy versus new markets? I mean, how different are the service metrics that you're getting from the field between the legacy and the new markets? Well, the good on-time, and we're pleased with the results there, on-time as well as pick-up completion, those are all trending at high levels, which are key service metrics for our team, very, very competitive, we think probably as good as anybody in the industry.

The next question comes from. Daniel imbro with Stevens. Please go ahead.

Yeah. Hey, good morning guys, thanks for taking our questions.

Maybe a follow up just on the surface. I think you mentioned claims ratio was flat at 0.5% from the first quarter. I guess. What about other service metrics? You know, on-time deliveries Miss pickups and then continuing that discussion on Legacy versus new markets. I mean how different are the service metrics that you're getting from the field between the Legacy and the new markets?

Daniel Imbro: What's really exciting is that the service metrics generally between the new facilities and the old facilities are pretty consistent, and that matters to those national account customers because they know they can count on the same service everywhere they go. That's how you win share in new markets.

Speaker Change: Well, the the good on time and uh we're uh, pleased with the results there. Um, on time as well as pick up completion. Those are all trending at at high levels, which are key service metrics for our team. Um, very, very competitive. Uh, we think probably as good as anybody in the industry. Uh, what's really exciting is that the service metrics generally between the new facilities and the old facilities are pretty consistent, and that matters to those national account customers because they know they can count on the same service. Everywhere they go. That's how you win. Share in New Markets.

Matthew Batteh: Okay, that's helpful.

Matthew Batteh: And then, Matt, maybe as a follow-up, I'll ask the wage increase question in a different way. Understanding, we don't know what happens this year, but historically, how much of the normal degradation of 100 to 200 basis points is from the wage increase? So we can understand how impactful this either will or won't be for the third quarter. Yeah, and like Chris said, we're evaluating our timeline on that. So if you look back in history, it ranges, but depending on the volume levels and the hours worked and things like that in the period, but I'd say probably in the 75-ish BIFS range on that.

Speaker Change: Okay, that's helpful. And then Matt maybe as a follow-up boss, the wage increase question, a different way understanding. We don't know what happens this year, but but historically how much of the normal degradation of 100 to 200 basis points is from the wage increase. So we can understand how impactful this either will or won't be for the third quarter. Yeah and like Chris said, when we were evaluating our timeline

Matthew Batteh: on that number in the past. Again, varies with some of the volume and seasonal patterns and trends like that, but that's probably a pretty good long term average. Okay, super helpful. I appreciate the color.

So, um, if you look back in history, it it, you know, ranges, but depending on the volume levels and the hours worked and things like that in the, uh, in the period, but I'd say probably in the 75th bips range on that. Um,

Speaker Change: On that number in the past again varies with some of the volume and seasonal patterns and trends like that. But that's probably a pretty good long-term average.

Speaker Change: Okay, super helpful, I appreciate the color.

Bruce Chan: The next question comes from Bruce Chan with CFL. Please go ahead. Good morning, gents. A lot of, you know, helpful commentary around the line haul density so far. And, you know, maybe just related to that, you know, Matt, I think you mentioned that you're a 12% outsourced PT now. How are you thinking about that number as you go forward, especially with, you know, the maturing network and the planning tools that you have in place? And you know, some of the changes like Youngtown that Fritz mentioned? Is there sort of a target number that you're thinking about over the next year or so?

Bruce Chan: The next question comes from Bruce Chan with stifel, please go ahead.

Bruce Chan: You know, maybe just related to that, you know, Matt, I think you mentioned that you're a 12%, outsourced PT. Now, uh, how are you thinking about that number as you go forward, especially with, you know, the maturing Network and the planning tools that you have in place and, you know, some of the changes like Youngtown that, uh, Fritz mentioned, is there sort of a target number that you're thinking about over the next year or so?

Matthew Batteh: So Bruce, I'll jump in on this one. Our target number is to get whatever we have to do to provide great service to a customer that gets a 75 OR. or 70s OR, right? So there could be times where it makes the most sense for us to use PT, you know, as long as we meet, we do not in any way disappoint the customer. That's kind of the critical decision-making. So when we think about what it takes to run our line haul network, you know, it's sort of the network cost sort of perspective. The decision tree starts with, what's the customer need?

Bruce Chan: So Bruce um I'll jump in on this 1. Our Target number is to get whatever we have to do to provide great service, to a customer that gets to 750 r.

Matthew Batteh: And in any way, do we impact the customer? Answer, no. Or we meet their expectations. That's critical. And then the second step is, what's the most cost-optimal way to do that? So what that could mean is in some markets, we use more PT, because it may be a market that is not in balance, and we know that we don't have outbound freight from the market. It could be in other markets, like when you build the triples operation, you say, well, we've got a lot of efficiency we can drive here, because we're in balance. So that's kind of how the decision works for us.

Matthew Batteh: So we figure out, we're focused more on sort of the financial return and meeting customer expectation than we are specifically around a target around what percentage of PT. Okay, that's fair enough.

Speaker Change: 70 ZR, right? So there could be times where it makes the most sense for us to use PT, uh, you know, as long as we meet, we do not in any way. Disappoint, the customer, that's kind of the critical decision making so when we think about what it takes to run our line haul Network. Um, you know, it's sort of a network cost sort of perspective. The decision trees starts with what's the customer need? Um, and in any way, do we impact the customer answer? No, or we meet their expectations. That's critical. And then the second step is what's the most cost? Optimal way to do that. So what that could mean is in some markets, we use More PT because it may be a market that, you know, is not in balance. And it we know that we don't have outbound Freight from the market. Um, it could be in other markets uh like when you build the triples operation. You say that boy. We got a lot of efficiency we could drive here because we're we're in Balance, so it it's, um, that's kind of how the decision works for us. So we

Figure out, we're focused more on sort of the financial return and and meeting customer expectation than we are specifically around a Target around what percentage of pt.

Fritz Holzgreve: And then maybe just a quick follow-up on a comment that you made, Fritz, you know, appreciate, you know, what you said about moving the customer service to field locations. Sounds like a, you know, wise investment in service. Just curious if there was any cost impact to call out as a result of that, you know, whether one time or ongoing. Now, over time, we think that will actually be a lower investment because we took out a duplicative sort of resource, so both groups were focused on touching the customer. We think that having the frontline engage with the customer is the best, easiest, most efficient, transparent way to help that customer get what they need.

Okay, yeah, that's fair enough. And then maybe just a quick follow-up on a comment that you made for it, you know, appreciate, um, you know what you said about moving the the customer service to field locations sounds like a, you know, Wise investment in service. Just curious. If there was any cost impact to call out as a result of that, you know, whether 1 time or ongoing,

Fritz Holzgreve: So yeah, there's a bit of a cost savings in there, but we'll also invest in some areas we may add back resources and field locations to meet that, so it's kind of a transition right now. Pleased with the early results with it. Okay, great.

Uh, yeah, know over time. That'll that'll we think that'll actually be a a lower investment because what we're we took out of the duplicative sort of resource. So both groups were focused on, um, touching the customer. We think that having the Frontline, uh, engage with the customer is the best easiest, most efficient transparent way to help that customer get what they need. Um, so yeah, there's a bit of a cost Savings in there, but, you know, we'll also invest in some areas. We may, uh, add back, uh, resources and field locations to meet that. So it's kind of a transition right now. Uh, pleased with the early results with it, though.

Bascome Majors: Appreciate the time. The next question comes from Bascome Majors with Susquehanna. Please go ahead. Thanks for taking my questions. Matt, just sort of a housekeeping item. I think last year you said normal margin seasonality in the fourth quarter was about 250 bps of degradation. You know, without commenting on where you might come in versus that, is that still a decent measure of a seasonal bogey? Uh, yeah, we're really focused on Q3 for now, but that... Probably the right long-term average. Q4 always varies depending on where the holidays fall and calendar and things like that, especially now where holidays tend to be a little bit more stretched out in some of the business environment demand and things like that, but that's where we're standing right now.

Speaker Change: Okay, great. Appreciate the time.

Bascom Majors: The next question comes from Bascom. Majors with Susana, please go ahead.

Thanks for taking my questions. Uh Matt just sort of a housekeeping item I think last year you said normal margin season alley in the fourth quarter was about 250 bips of degradation, you know, without commenting on where you might come in versus that, is that still a decent measure of a seasonal, bogey?

Matthew Batteh: But I'd be, I'd caution you a little bit of that, Bascom, because this will be the first time that we've had 21 facilities that we didn't have before, so I don't know, we don't know exactly what that, what that, what history looks like there yet. You know, we're intently focused on Q3 and you know, we'll have a better view and picture of what we think Q4 will be down the road.

Bascom Majors: Uh, yeah, we're we're really focused on Q3 for now, but that's probably the right long-term average Q4, always varies depending on where the holidays fall and, uh, calendar and things like that. Especially now we're holidays tend to be a little bit more stretched out, uh, in some of the, the business environment demand and things like that. But that's where we stand right now. But I'd be, I'd caution you a little bit of that ask them because this will be the first time that we've had 21 facilities that we didn't have before. So I don't know. We don't know exactly what that, what that, what history looks like there yet. Um, you know, we're we're intently focused on Q3 and um, you know, we'll have a better View and picture of what we think, Q4 will be down the road.

Bascome Majors: understood and thank you for clarifying that with the color about the new facilities and you know I think uh you certainly with just kind of following seasonality out um it does feel that volume's going to be under pressure through the back half this year maybe even the the one cue with the comp and I think analysts and investors are are coming to terms and understand that but you're rather than talking about when it gets better and how quickly it gets better just from a macro perspective you know if we were to enter a world where we're back to kind of low to mid single digit tonnage growth in the Saia network do you have a sense of you know how to how we should think about that financially I don't know if it's an incremental margin framework just any way to kind of tops down think about without necessarily putting a date on it you know what the recovery looks like for Saia so we can kind of run your thoughts into our models thank you yeah no problem that's a fair question I think the first thing I would do, I would go back and look at what Saia did through our Northeast expansion.

Speaker Change: Understood and and thank you for clarifying that with the color about the new facilities. And, you know,

Fritz Holzgreve: I think we can see the incrementals that we were generating per quarter as we mature those parts of our network. I think we return to that and arguably, because this is a national scale, we might be able to do even better than that. The benefits of having a national network certainly provide all kinds of benefits to customers. But it also allows us to build scale. So the opportunity for us to drive incrementals, I think there would be some of the incrementals you saw in the highest, the best periods as we grew out of the Northeast expansion.

Speaker Change: Through, uh, after our Northeast, through our Northeast expansion and see the incremental that we were generating per quarter. Uh, as we, uh, matured those parts of our Network. I think we return to that and arguably, because this is a national scale, um, it we might be able to do even better than that. Um, so it's, um,

Fritz Holzgreve: And I think you'd see that going forward from here. I just don't know when that starts. Certainly, a little volume will help that. But I think the incremental volumes in a facility that's running at 30% capacity today, boy, those are pretty good. Adding a third line haul trailer. That's all incremental, right, in terms of efficiency for our line haul network, so all those things. All right. Thank you. Thank you for that.

Speaker Change: The network, the benefits of having a national network, certainly provide all kinds of benefits to customers, but it also allows us to build scale, so the opportunity for us to drive incremental, I think they would be some of the incremental you saw in the highest the best periods as we grew out of the Northeast expansion and I think you'd see that going forward from here. I, I just I don't know where that when that starts um you know, certainly a little volume will help that but I think the incremental volumes in a facility that's running at 30% capacity. Today boy, those are pretty good. Uh, adding a uh,

Speaker Change: Third, uh, line haul trailer.

Speaker Change: That that's all incremental right in terms of efficiencies for our line haul Network. So all those things would could contribute to some very very long-term, nice performance and returns to shareholders.

Speaker Change: Thank you for that.

Fritz Holzgreve: The next question comes from Christopher Kuhn with Benchmark. Please go ahead. Yeah, hey, thanks for the questions, Matt. I'm just wondering on the pricing, maybe out of the new markets or from the newer freight you've taken on, you know, how that's been progressing? well it's I mean we're just starting to lap some of these and what we really try to do when we enter a new market is is find what the market rate is and work with our customers and find that one of the great things about entering into these new markets is our lead list every single time is our existing book of customers We get to go to them and say, hey, we're doing a great job for you in these markets.

Christopher K: The next question comes from, Christopher K with Benchmark. Please go ahead.

Yeah. Hey thanks for uh the questions. Matt puts I'm just um wondering on the pricing maybe out of a new markets or from the newer Freight you taking on you know how that's been uh progressing.

well, it's, I mean, we're just starting to lapse some of the

Fritz Holzgreve: We're now in these. We can provide national service. So we get to have conversations about the freight mix and the characteristics. Now, we can't necessarily go turn around and raise the rate the next day because we are growing and building density and inefficient in some of these markets. But we're trying to find the market rate. And the big opportunity for us is that when we do more for customers and we improve our share of wallet, we're able to provide service in more markets, we become stickier with them. We are harder to change out because we're doing a great job for them in a lot of markets.

Christopher K: what we really try to do when we enter a new market is, is find what the market rate is and work with our customers and find that 1 of the great things about entering into these. New markets is our lead list. Every single time, is our existing book of customers. We get to go to them and say, hey we're doing a great job for you in these markets. We're now in these. We can provide national service so we get to have conversations about the freight mix and the characteristics now we can't necessarily go turn around and

Fritz Holzgreve: Over time, that gets us price. So we continue to see that and we see those opportunities. And it often opens us up to a larger mix of that customer's business that we may not have had access to before because we weren't able to cover that directly or at the level that they wanted us to. So that's an ongoing initiative for us. And number one, first and foremost, like Fred said before, you have to do a great job for the customer in that market. None of the rest of it happens without doing a good job for them.

And you know, raise the rate the next day because we are growing and building density and inefficient in some of these markets but we're trying to find the market rate and the big opportunity for us is that when we do more for customers and we improve our share of wallet, we're able to provide service and more markets we become stickier with them. We are harder to change out because we're doing a great job for them and a lot of markets over time that gets us priced. So we continue to see that and we see those opportunities and it often opens us up to a larger mix of that customer's business. That we may not have had access to before because we weren't able to cover that Direct

Fritz Holzgreve: So we get that opportunity every day and more at best than we've ever had. So you still, you see opportunity to price those, you know, as you continue to serve the customers. Very simply, we look at the publicly available data and it tells us that we are cheaper than our peers that are national coverage. That's what we look at. That's our benchmark. So, absolutely. Got it. Thanks, guys. Appreciate it.

Directly or at the level that they wanted us to. So that's an ongoing Initiative for us. And number 1, first and foremost, like Fred said before you have to do a great job for the customer in that market, none of the rest of it happens without doing a good job for them. So we get that opportunity every day and more at best and we've ever had

Christopher K: So you still, you see opportunity to to price those, uh, those you know, as you as you continue to serve the customers. Very simply, we look at the publicly available data and it tells us that we are

Christopher K: Cheaper than our peers that are National coverage. That's what we look at. That's our Benchmark. So absolutely.

Got it. Thanks guys. Appreciate it.

Tom Wadewitz: The next question comes from Tom Wadewitz with UBS. Please go ahead. All right, yeah, good morning. So I wanted to, I know you've had a good amount of discussion on, I guess, price and a little bit on mix, but Can you give any thoughts on how we might model revenue per 100 weight x fuel or revenue per shipment in 3Q versus 2Q? Do you think that keeps going up sequentially, or I guess I think revenue per 100 weight was up sequentially, but per shipment down sequentially? Just trying to think about how that potentially moves and whether it's reasonable to model that up sequentially.

Tom wits: The next question comes from Tom wits with UBS. Please go ahead.

Tom wits: Uh, yeah, good morning. So I I wanted to, I know you've had a good amount of discussion on, uh, I guess price a little bit on mix, but

Tom wits: Can you give any thoughts on how we might model? Uh, you know, Revenue per 100 weight X fuel or Revenue per shipment in 3Q versus 2q? Is it do you think that keeps going up sequentially? Or I guess, I think Revenue per 100 weight was up sequentially, but for shipment and down sequence, we just trying to think about how that that potentially moves and whether it's reasonable to model that up sequentially.

Matthew Batteh: Well, we don't give a guide on that, but MIX plays a big component of that. We saw some muted trends out of the Los Angeles region that maybe is an indicator of what some of the port activity was, but MIX plays a role in that, so we don't give a guide on that, but we're critically focused on... Making sure that we get compensated appropriately for the service that we provide. We don't take a day off from that, but we're focused on ensuring that margins meet our expectations with each individual customer, but mix plays a role in that.

Tom wits: Well, we don't give a guide on that but mix plays a big component of that. Are we saw some muted Trends out of the Los Angeles region that, um, maybe is an indicator of what some of the port activity, was but mix plays a role in that. So we don't give a guide on that, but we're critically focused on.

Matthew Batteh: When wafer shipment moves around a little bit and length of haul does, those are components of mix, but direction also matters, freight flows, the balance of the network. So no guide from us there, but we're focused on price and the environment remains rational for that. That's where we remain intently focused.

Matthew Batteh: Okay, and I guess in terms of the You know, impact and kind of runway on idiosyncratic initiatives that help the OR in the current freight environment, which is, you know, continues to be pretty muted, right? Relative to just showing tons of operating leverage when, you know, when freight really picks up, right? Because, you know, I think it's fairly clear you said it really strongly. How do you think about that? Like, can you can you keep, you know, can you show meaningful OR improvement to kind of mid 80s, you know, 100 basis points a year if you don't get a freight improvement?

Tom wits: Okay.

Tom wits: And I, I guess in terms of the

Tom wits: Um, you know, uh, impact and, and kind of runway on idiosyncratic initiatives, that help the O in the current Freight environment, which is, you know, continues to be pretty muted, right? Uh,

relative to just showing tons of operating leverage when you know, when trade really picks up, right? Because, you know, I think it's fairly clear. You should have really strong. How do you think about that? Like, can you can you keep, you know, can you show meaningful or Improvement to kind of mid 80s?

Matthew Batteh: Or is this about a, you know, you're doing what you can, but the big lever is really the market? Yeah, that was a tough one, Tom. I think it, I think there clearly are cost opportunities for us kind of going forward to continue to build density kind of methodical. You know, we are seeing growth in our new facilities, which is important. Those are those are ones at scale. So those are In this environment, so you got to make sure you take advantage of that be able to leverage that line also same time, you've got to manage the hours and sort of the workload.

Tom wits: You know, 100 basis points a year. If you don't get afraid Improvement or is this about a, you know, you're doing what you can, but it's a big lever is really the market.

Tom wits: Yeah, that 1's. A tough 1, Tom. I, I think it, um, I think they're clearly our cost opportunities for us to kind of go, how far to continue to build density, kind of methodically. Uh, you know, we are seeing growth in our new facilities which is important. Those are those are ones that scale, so there's a in this environment. So you got to make sure you you, uh, take advantage of that and be able to leverage that line all Network.

Matthew Batteh: in the market in the markets or maybe aren't growing slightly declining. It's tough to say, you know, kind of where that could go in the environment we're in right now. All I know is that, you know, we're focused on, you know, let's manage the cost, because that's in the four walls that we can handle, right? And let's make sure we manage the service at the same time. So right now, that's about the best guide we can give. So I think we can, we'll continue that focus. So maybe you can do a little better than seasonality without improvement in freight, but it's maybe not a big difference.

Tom wits: At the same time, uh, you've got to manage the hours and sort of the workload in a, in the mark in the markets where maybe aren't growing or, or slightly declining. So, uh, it's tough to say, um, you know, kind of where, uh, where that could go in the environment we're in right now. All I know is that, you know, we're focused on, you know, let's let's manage the costs because that's in the 4.

Matthew Batteh: Is that fair? That's fair. I mean, it, you know, we, I don't know that there's a huge breakthrough for us, but there's a methodical chipping away building density operation.

Tom wits: So maybe you can do a little better than seasonality without Improvement and create but it's it's maybe not a big difference is that fair that's fair I mean it you know we I don't know that there's a huge breakthrough for us but there's a methodical chipping away building density opportunity for us.

Jason Seidl: Yeah, okay, great. Thank you.

Okay, great. Thank you.

Jason Seidl: The next question comes from Jason Seidl with TD Cowan. Please go ahead. Thank you, operator. Hey, Frenchie team. I just want to talk a little bit more about your tonnage numbers. You said you're about flat in July. Just curious, did you guys see any pull forward in July with all the tariff stuff and your consumer business at all? Or has it been relatively stable? It's hard to tell. I'd say relatively stable. It bounces around in a given day, a given week, really. I mean, so I wouldn't call out anything specific in terms of end markets or pull forward or anything like that at all.

The next question comes from Jason Sidell, with TB Cohen, please go ahead.

Jason Sidell: Thank you, Robert. Hey fritzi team. Um, just wanted to talk a little bit more about your your tonnage numbers. You said you're about flat in July, just curious. Did you guys see any pull forward in July with all the the the, the terror stuff and and your consumer business at all? Or has it been relatively stable?

Jason Seidl: It all sounds good to us. But until we see it in the data, there's not much that stands out to us. And you called out that you have tougher comps, I think, on the tonnage side in the back half of the quarter. Can you remind us when they start? Yeah, shipments and tonnage both, tougher comps just as we start to lap the facility. So when we opened Q6 and Q2 last year, and a good chunk of those started in the back half of May and June, so those started to ramp, and then we opened 11 in Q3 with the majority of those happening in August and September.

Uh, it's hard to tell. I'd say, relatively stable, it bounces around in a given day, a given week, really. I mean, so I wouldn't call out anything specific in terms of in markets or pull forward or anything like that at

All it all sounds good to us but until we see it in the data, there's not much that stands out to us.

Jason Sidell: And and, and you called out that you have tougher, uh, comps I think on on the tonnage side and, and, and the back half of the quarter. Can you remind us when they start?

Matthew Batteh: So those, just as those volumes start to come on and those terminals came online, we opened two in July last year, six in August, and three in September that make up the 11 in Q3. So the back half of the quarter, those just started to come online. So the right way to think about it, if nothing else changes on the demand side, if you're flat in July, you'll probably have a negative comp in August. Yeah, that's, that's fair.

Jason Sidell: Yeah, shipments and tonnage both uh tougher comp just as we start to lap the facility. So when we open q 6 and Q2 last year, and a good chunk of those started in the back half of May and June. So those started to ramp and then we opened 11 in Q3 with um the majority of those happening in in August and September. So those uh just as those volumes start to come on and those terminals came online. Uh we opened 2 in July last year 6 in August and 3 in September that make up the 11:00 in Q3. So the backup, the quarter of those just started to come online

Jason Sidell: So it the right way to think about it. If nothing else changes. In the demand side, if you're flat in July, you'll you'll probably have a negative comp in August and September that

Jason Sidell: Yeah, that's that's fair, right? Good.

Fritz Holzgreve: The other thing is, you know, you guys obviously are seeing some nice progress in some in getting those those newer terminals to profitability, you know, I guess, where are you seeing those density gains? Is it more from your existing customer base? Are you adding more new customers to sort of help out that profitability? You know, I don't want to say it's the easiest, because it's always... This is a tough hurdle to always serve as a customer and do it effectively. But the nice thing about the strategy... And just to remind you kind of the basics for us when we open a new facility, we call on our existing customers first.

The the other thing is, you know, you, you you guys obviously are seeing some nice progress and, and some and, and getting those those newer terminals to profitability, you know, I I guess. Where are you seeing? Um, those density gains, is it more from your existing customer base? Are you adding more new customers to sort of help out that profitability?

Fritz Holzgreve: So that raises the bar for us. They have an expectation that we're going to repeat the same high-level service in a new facility. So you kind of penetrate those customers to start. And then what's really interesting over time, and we know this from our Northeast expansion, is that once you're in the market and you establish your foothold with existing legacy customers, that's when you've built some density and then you've got the opportunity to go win some new business with customers that maybe aren't familiar with you. So that's kind of next leg for us, and I think that that's longer term what certainly is part of the opportunity.

Jason Sidell: That's when you've built some density and then you've got the opportunity to go win some new business and, uh, with customers and maybe aren't familiar with you. Um, so that that's kind of next leg for us and I I think that that's longer term, what it certainly is part of the opportunity,

Fritz Holzgreve: Gentlemen, I appreciate the time. Those are my two. Best of luck.

Jason Sidell: Okay gentlemen, I appreciate the time. Those are my 2 best of luck.

Jason Sidell: Thanks.

Ken Hoexter: And our last questioner today will be a follow-up from Ken Hoexter with Bank of America. Please go ahead. Hey, great. I appreciate you coming back to me. Fritz, I guess the stock has moved from up maybe 12% up 2.5%. So I think there's some confusion.

Speaker Change: And our last questioner today will be a follow-up from Ken hexter with Bank of America. Please go ahead.

Fritz Holzgreve: Just want to give you maybe a chance to kind of talk through the message here. So maybe it was on the 100 to 200 basis points normal OR. You said you could do 100. But if you do add wages, whether it's in 3Q or 4Q, it would be another 75 basis point hit. So sounds like you'd still be within your range on the OR normal seasonality.

Fritz Holzgreve: I don't know, maybe if it's on the volumes that Jason just ran over, if giving you started off flat and it's going to get tougher, maybe just hit on the messaging again, because it seems like there's some confusion. Obviously, you don't give give pricing thoughts that Matt highlighted. So I don't know if you just want to dig into that for a minute.

Fritz Holzgreve: Yeah, so what we said, let's be clear, 100 to 200 basis point degradation, Q2 to Q3 has been history, right? We said we would, encompassing all available things, which could be a wage increase, could be, you know, volumes, we said 100 is kind of what we're targeting for the quarter. There are, as we all know and hope we all understand, there are a lot of variables in this business, right? So we're managing all those variables. So when we give that kind of a guide, what we're giving is our best assessment of all those options and what we think all those variables and all the things that we can consider.

Jason Sidell: Hey great. Appreciate you coming back to me. Um, Fritz, I guess the stock has moved from from up maybe, 12% up 2 and a half percent. So I think there's some confusion just want to give you a, maybe a chance to kind of talk through the message here. So it it maybe it was on the 100th to 200 basis points, normal, or you, you said you could do a 100. Um, but if you do add wages, whether it's in 3 Q or 4 q, it would be another 75 basis point hits. So sounds like, you'd still be within your range on on the o, normal seasonality? I don't know, maybe if it's on the volumes that Jason just ran over. If if giving you started off flat and it's going to get tougher, maybe just hit on the messaging again, because it seems like there's some confusion. Obviously, you don't give give pricing thoughts, uh, that Matt highlighted. So I don't know if you just want to dig into that for a minute.

Fritz Holzgreve: And so that, I don't, hopefully that's clear, but that's kind of how we thought about it. Yep, appreciate it. Just want to run it through because I've been getting a lot of pings during the call, just want to make sure I fully understood it. Thank you. Yep, no problem.

Yeah. Um, so what we said, let's be clear 100 to 200 basis point degradation Q2 to Q3 has been history, right? Uh, we said we would in encompassing all available things which could be a wage and could raise could be, um, you know, volumes we said 100, uh, is kind of what we're targeting, uh, for the quarter. Um, there are as, as we all know, and hope we all understand, there are a lot of variables in this business, right? So we're managing all those variables, so we give that kind of a guide. What we're giving is we're our best assessment of all those options and what we think all those variables and all the things that we can consider and um so that I don't I hopefully that's clear but that's kind of how we how we thought about it.

Speaker Change: Yep, appreciate it. Just want to run it through because I I've been getting a lot of things during the culture so I'll make sure I fully understand it. Thank you. Yep, no problem.

Fritz Holzgreve: This concludes our question and answer session.

Fritz Holzgreve: I would like to turn the conference back over to Fritz Holzgreif for any closing remarks. Great, thank you. I appreciate everybody calling in and hearing about Saia's second quarter. We're very, very pleased with the execution that we had in the quarter, particularly on what we did for the customer. We like the operating side of our performance as well around costs. We look at, you know, kind of what the opportunity is from Q2 to Q3, and I think we'll be able to outperform our traditional sort of 100 to 200 basis point degradation from Q2 to Q3 OR.

Speaker Change: This concludes our question and answer session, I would like to turn the conference back over to Fritz holds grief for any closing remarks.

Fritz: Great. Thank you. And appreciate everybody uh, calling in and hearing about Sia's second quarter. We're uh, very, very pleased with the execution that we had in the quarter, uh, uh, particularly on what we did for the customer. Uh, we like the operating side of the V, uh, our performance as well around costs. Uh, we look at, you know, kind of

Fritz Holzgreve: lot of variables in this business. We're going to manage all of them to kind of that sort of range. And, but more importantly, for the long term investor, the Thesis around Saia is very, very strong, and we're excited about what the prospects are for us in this new national network.

Fritz: What the opportunity is from Q2 to Q3. Um, and I think we'll be able to outperform our traditional sort of 100 to 200 basis point degradation from Q2 to Q3 or um,

Fritz: a lot of variables in this business, we're going to manage all of them to kind of that sort of uh, range and uh, but more importantly, for the long-term investor, uh, the

Fritz Holzgreve: Thank you all for taking the opportunity to listen to our results and I look forward to future conversations.

Thesis around, Sai is very, very strong. And we're excited about what the prospects are for us in this new national network. Thank you all for taking the opportunity to listen to our results and look forward to Future conversations.

Operator: The conference has now concluded. Thank you for attending today's presentation.

Operator: You may now disconnect.

Speaker Change: The conference has now concluded, thank you for attending today's presentation. You may now disconnect