Saia Q4 2025 Saia Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Saia Inc Earnings Call
Operator: Good day and welcome to the Saia, Inc. Fourth Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Matt Batteh, Saia's Executive Vice President, Chief Financial Officer. Please go ahead.
Speaker #2: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone.
Speaker #2: 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 Matt Batteh.
Speaker #2: SAIA's executive vice president, chief financial officer. Please go ahead. Thank you, Betsy. Good morning, everyone. Welcome to conference call. With me for today's SAIA's fourth quarter 2025 call is SAIA's president and chief executive officer, Fritz Holzgrefe.
Operator: Thank you, Betsy. Good morning, everyone. Welcome to Saia's Q4 2025 conference call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Holzgrefe. Before we begin, you should know that during this call, we may make some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and all other statements that might be made on this call that are not historical facts are subject to a number of risks and uncertainties that actual results may differ materially. We refer you to our press release and our SEC filing for more information on the exact risk factors that could cause actual results to differ. Also, in Q3 2025, we recorded $14.5 million in net operating expense impact from a gain on real estate disposal and impairment of real estate.
Speaker #2: 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.
Speaker #2: These forward-looking statements and all other statements that might be made on this call that are not historical facts are subject to a number of risks and uncertainties and actual results may differ materially.
Speaker #2: We refer you to our press release and our SEC filing for more information on the exact risk factors that could cause actual results to differ.
Also, in the third quarter of 2025, we recorded 14.5 million in net operating expense impact from a gain on real estate disposal and impairment of real estate.
Speaker #2: When we discuss adjusted operating expenses, adjusted cost per shipment, adjusted operating ratio, or adjusted diluted earnings per share for the third quarter 2025 or full year 2025 in our comments, it refers to adjusted results that exclude the gain from that sale and impairment on that property.
Operator: When we discuss adjusted operating expenses, adjusted cost per shipment, adjusted operating ratio, or adjusted diluted earnings per share for Q3 2025 or full year 2025 in our comments, it refers to adjusted results that exclude the gain from that sale and impairment on that property. See our press release announcing Q4 results for a reconciliation of non-GAAP financial measures. That press release is available on the financial releases page of Saia's Investor Relations website as well. I will now turn the call over to Fritz for some opening comments.
Speaker #2: See our press release announcing fourth quarter results for a reconciliation of non-gap financial measures. That press release is available on the financial releases page of SAIA's investor relations website as well.
Speaker #2: 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 fourth quarter and full year results.
Operator: Good morning, and thank you for joining us to discuss Saia's fourth quarter and full year results. As we look back on 2025, I am proud of our team's resilience and focus, delivering strong execution for our customers even as volume patterns shifted day to day amid constant change. Having now completed our first full year as a national network, I'm more excited than ever before about the future of Saia. Throughout the year, our now national footprint provided opportunities with both new and existing customers as our expanded reach enabled us to provide our industry-leading service in more markets. Having a national presence provides us with the opportunity to solve more problems for more customers, which we believe has resulted in increased market share.
Speaker #2: As we look back on 2025, I am proud of our team's resilience and focus. Delivering strong execution for our customers, even as volume patterns shifted day to day amid constant change.
Speaker #2: Having now completed our first full year as a national network, I'm more excited than ever before about the future of SAIA. Throughout the year, our now national footprint provided opportunities with both new and existing customers, as our expanded reach enabled us to provide our industry-leading service in more markets.
Speaker #2: Having a national presence provides us with the opportunity to solve more problems for more customers, which we believe has resulted in increased market share.
Speaker #2: Our record capital investments of more than $2 billion over the last three years have allowed us to rapidly expand our footprint in a short period of time and I believe we're still in the early stages of capitalizing on the opportunity that a national network provides.
Operator: Our record capital investments of more than $2 billion over the last three years have allowed us to rapidly expand our footprint in a short period of time, and I believe we're still in the early stages of capitalizing on the opportunity that a national network provides. Of course, our achievements would not be possible without a best-in-class team. While the demand environment remained dynamic throughout the year, our team responded to our customers' needs every day. Our core operations performed as we expected for the fourth quarter. However, reported results were impacted by self-insurance costs late in the quarter. Our fourth quarter operating ratio of 91.9% reflects these increased self-insurance costs. The sequential deterioration from third quarter's adjusted operating ratio was impacted by unexpected adverse developments on a few cases arising from accidents that occurred in prior years, which required reserve increases in the period of approximately $4.7 million.
Speaker #2: Of course, our achievements would not be possible without a best-in-class team. While the demand environment remained dynamic throughout the year, our team responded to our customers' needs every day.
Speaker #2: Our core operations performed as we expected for the fourth quarter. However, reported results were impacted by self-insurance costs late in the quarter. Our fourth quarter operating ratio of 91.9% reflects these increased self-insurance costs.
Speaker #2: The sequential deterioration from third quarter's adjusted operating ratio was impacted by unexpected adverse developments on a few cases arising from accidents that occurred in prior years.
Speaker #2: Which required reserve increases in the approximately in the period of approximately 5.7 million dollars. As we well know, accident-related costs continue to rise due to increased litigation costs and settlement values, as well as general inflation, and can develop sometimes unexpectedly over several years.
Operator: As we well know, accident-related costs continue to rise due to increased litigation costs and settlement values, as well as general inflation, and can develop sometimes unexpectedly over several years. Regrettably, this unexpected need for reserve increases was related to the accidents that happened years ago. However, we continue to invest in industry-leading training and safety technology. We're seeing positive trends in our safety statistics. During 2025, despite having the largest fleet in company history and internal miles increasing by 2.4% year-over-year, we saw a 21% reduction in our preventable accident frequency and a 10% decline in lost time injuries, reflecting the benefits of these ongoing investments in safety. Focusing on the fourth quarter, volumes continue to reflect the muted demand environment the industry experienced throughout the year.
Speaker #2: Regrettably, this unexpected need for reserve increases was related to the accidents that happened years ago. However, we continue to invest in industry-leading training and safety technology we're seeing positive trends in our safety statistics.
Speaker #2: During 2025, despite having the largest fleet in company history and internal miles increasing by 2.4% year over year, we saw a 21% reduction in our preventable accident frequency and a 10% decline in lost time injuries, reflecting the benefits of these ongoing investments in safety.
Speaker #2: Focusing on the fourth quarter, volumes continue to reflect the muted demand environment the industry experienced throughout the year. Shipments per day were down 0.5% compared to the fourth quarter of 2024, while tonnage per day was down 1.5% compared to the same period last year.
Operator: Shipments per day were down 0.5% compared to the fourth quarter of 2024, while tonnage per day was down 1.5% compared to the same period last year. As is typical, we experienced some volume shifts in the weeks after the GRI, which was implemented on 1 October 2024, and we remain extremely focused on ensuring that we are compensated appropriately for the quality and service that we provide to customers. When we analyze the results of the GRI closely, we're pleased to see customer acceptance trends slightly above historic levels. Similarly, contractual renewals remained strong in the quarter, averaging 4.9% of the book of business contracted in the quarter. We continue our efforts to ensure that we are fully compensated for quality and service we provide and have seen a 6.6% contractual renewal increase in the month of January 2026.
Speaker #2: As is typical, we experienced some volume shifts in the weeks after the GRI, which was implemented on October 1st, and we remain extremely focused on ensuring that we are compensated appropriately for the quality and service that we provide to customers.
Speaker #2: When we analyze the results of the GRI closely, we're pleased to see customer acceptance trends slightly above historic levels. Similarly, contractual renewals remain strong in the quarter, averaging 4.9% of the book of business contracted in the quarter.
Speaker #2: We continue our efforts to ensure that we are fully compensated for quality and service we provide, and have seen a 6.6% contractual renewal increase in the month of January 2026.
Speaker #2: Despite the volume decline, our fourth-quarter revenue of $790 million is a record for any quarter in our company's history. Mixed headwinds continue to impact our results, with slight decreases in weight per shipment and length of haul compared to the fourth quarter of 2024.
Operator: Despite the volume decline, our fourth quarter revenue of $790 million is a record for any quarter in our company's history. Mixed headwinds continue to impact our results with slight decreases in weight per shipment and length of haul compared to the fourth quarter of 2024. Additionally, revenue per shipment, excluding fuel surcharge, decreased 0.5% compared to last year. As we've discussed in our prior quarters, the volume decline in our Southern California region continued as volume in the region in the fourth quarter was down about 18% compared to the prior year. This region is typically our highest revenue per bill market, and the volume decline caused an estimated $4 million revenue reduction for the quarter.
Speaker #2: Additionally, revenue per shipment, excluding fuel surcharge, decreased 0.5% compared to last year. As we've discussed in our prior quarters, the volume decline in our South Southern California region continued, as volume in the region in the fourth quarter was down about 18% compared to the prior year.
Speaker #2: This region is typically our highest revenue per bill market, and the volume decline caused an estimated $4 million revenue reduction for the quarter. While the Southern California region continues to play a factor in our mixed dynamics, we're seeing growth with customers in both legacy and ramping markets, as our expanded footprints allows us to get closer to our customers and handle segments of their business that we may not have had access to prior to the network expansion.
Operator: While the Southern California region continues to play a factor in our mixed dynamics, we're seeing growth with customers in both legacy and ramping markets as our expanded footprint allows us to get closer to our customers and handle segments of their business that we may not have had access to prior to the network expansion. Reflecting our ability to provide industry-leading service in more geographies, we're able to drive revenue per shipment, excluding fuel surcharge, up 1.1% sequentially from Q3. Our nationwide network has now been fully operational for one year, giving us clear perspective on the impact of our generational opportunity to expand a network over a very short period of time. Over the past year, we strengthened relationships with existing customers while bringing our high-quality service to many new customers, contributing to what we believe is a record level of market share gain.
Speaker #2: Reflecting our ability to provide industry-leading service in more geographies, we're able to drive revenue per shipment, excluding fuel surcharge, up 1.1% sequentially from the third quarter.
Speaker #2: Our nationwide network has now been fully operational for one year, giving us clear perspective on the impact of our generational opportunity to expand a network over a very short period of time.
Speaker #2: Over the past year, we strengthened relationships with existing customers while bringing our high-quality service to many new customers, contributing to what we believe is a record level of market share gain.
Speaker #2: These customer relationships will continue to develop, reflecting the long-term value of the strategic investments we've made over the past few years. With our network expansion, we're able to achieve cargo claims ratio of 0.47% in the fourth quarter, which is a company record for any quarter.
Operator: These customer relationships will continue to develop, reflecting the long-term value of the strategic investments we've made over the past few years. With our network expansion, we're able to achieve Cargo Claims Ratio of 0.47% in the fourth quarter, which is a company record for any quarter. Considering the size and scope of our national network, with newer locations still in early stages of their lifecycle and employing newer Saia employees, this customer-centric metric is a testament to the culture instilled at each location in our organic expansion, and our team's ability to perform at the highest level. This level of service reflects our team's consistent effort and attention to detail, core strengths that have helped establish Saia as a leading national LTL carrier. I'll now turn the call over to Matt for more details from our fourth quarter results.
Speaker #2: Considering the size and scope of our national network, with newer locations still in early stages of their lifecycle, and employing newer SAIA employees, this customer-centric metric is a testament to the culture instilled at each location in our organic expansion and our team's ability to perform at the highest level.
Speaker #2: This level of service reflects our team's consistent effort and attention to detail. Core strengths that have helped establish SAIA as a leading national LTL carrier.
Speaker #2: I'll now turn the call over to Matt for more details from our fourth quarter results. Thanks, Fritz. Fourth quarter revenue was largely flat compared to the prior year, increasing by 0.1% to $790 million.
Matthew J. Batteh: Thanks, Fritz. Fourth quarter revenue was largely flat compared to the prior year, increasing by 0.1% to $790 million, while revenue per shipment, excluding fuel surcharge, decreased 0.5% to $297.57 compared to $299.17 in the fourth quarter of 2024. Fuel surcharge revenue increased by 6.1% and was 15% of total revenue compared to 14.1% a year ago. Yield, excluding fuel surcharge, increased by 0.5%, while yield increased by 1.6%, including fuel surcharge. Tonnage decreased 1.5%, attributable to a 0.5% shipment decline, in addition to a 1% decrease in our average weight per shipment. Our length of haul decreased 0.1% to 897 miles. Shifting to the expense side for a few key items to note in the quarter. Salaries, wages, and benefits increased 6.1% compared to the fourth quarter of 2024.
Speaker #2: While revenue per shipment, excluding fuel surcharge, decreased 0.5% to $297.57 compared to $299.17 in the fourth quarter of 2024. Fuel surcharge revenue increased by 6.1% and was 15% of total revenue compared to 14.1% a year ago.
Speaker #2: Yield, excluding fuel surcharge, increased by 0.5%, while yield increased by 1.6%, including fuel surcharge. Tonnage decreased 1.5% attributable to a 0.5% shipment decline, in addition to a 1% decrease in our average weight per shipment.
Speaker #2: of haul decreased 0.1% to Our length 897 miles. Shifting to the expense side for a few key items to note in the quarter. Salaries, wages, and benefits increased 6.1% compared to the fourth quarter of 2024.
Speaker #2: This increase was primarily driven by increased employee-related costs, which include a company-wide wage increase of approximately 3% on October 1st, partially offset by a 5.1% reduction in headcount compared to prior year, as we continue to improve efficiency and match hours to volume.
Matthew J. Batteh: This increase was primarily driven by increased employee-related costs, which include a company-wide wage increase of approximately 3% on 1 October, partially offset by a 5.1% reduction in headcount compared to prior year as we continue to improve efficiency and match hours to volume. Excluding line haul drivers, headcount decreased 6.4% compared to the prior year. The year-over-year increase in salaries, wages, and benefits also reflects the rising costs of self-insurance, which continues to be inflationary. Our network expansion and continued investments in technology have positioned us to insource miles, a trend that has continued over the past few years. As a result, purchased transportation expense, including both non-asset truckload volume and LTL purchased transportation miles, decreased by 0.8% compared to the fourth quarter last year and was 7.3% of total revenue compared to 7.4% in the fourth quarter of 2024.
Speaker #2: Excluding line haul drivers, headcount decreased 6.4% compared to the prior year. The year-over-year increase in salaries, wages, and benefits also reflects the rising costs of self-insurance, which continues to be inflationary.
Speaker #2: Our network expansion and continued investments in technology have positioned us to insource miles, a trend that has continued over the past few years. As a result, purchased transportation expense, including both non-asset truckload volume and LTL purchased transportation miles, decreased by 0.8% compared to the fourth quarter last year, and was 7.3% of total revenue compared to 7.4% in the fourth quarter of 2024.
Speaker #2: Truck and rail PT miles combined were 12% of our total line hauls in the quarter, down from 13.1% in the fourth quarter of 2024.
Matthew J. Batteh: Truck and rail PT miles combined were 12% of our total line hauls in the quarter, down from 13.1% in the fourth quarter of 2024. Fuel expense for the quarter increased by 0.2% compared to the prior year, while company line haul miles decreased 2%. The increase in fuel expense was primarily the result of a 4.8% increase in national average diesel prices on a year-over-year basis. Claims and insurance expense for the quarter increased by 12.3% year-over-year. As Fritz noted, this increase was primarily due to adverse claim development on a few accident cases late in the fourth quarter of 2025 related to accidents that happened in prior years. In 2025, we were pleased to see a decrease in the number of preventable accidents year-over-year. However, the cost per claim continued to rise due to increased cost of litigation, and increases in settlement values.
Speaker #2: Fuel expense for the quarter increased by 0.2% compared to the prior year, while company line haul miles decreased 2%. The increase in fuel expense was primarily the result of a 4.8% increase in national average diesel prices on a year-over-year basis.
Speaker #2: Claims and insurance expense for the quarter increased by 12.3% year-over-year, as Fritz noted. This increase was primarily due to adverse claim development on a few accident cases late in the fourth quarter of 2025, related to accidents that happened in prior years.
Speaker #2: In 2025, we are pleased to see a decrease in the number of preventable accidents year-over-year. However, the cost per claim continued to rise due to increased cost of litigation and values.
Speaker #2: Depreciation and amortization expense of $62.9 million in the quarter was 16.4% higher year-over-year, primarily due to ongoing investments in revenue equipment, real estate, and technology.
Matthew J. Batteh: Depreciation and amortization expense of $62.9 million in the quarter was 16.4% higher year over year, primarily due to ongoing investments in revenue equipment, real estate, and technology. Compared to Q4 2024, cost per shipment increased 6.1%, largely due to increases in self-insurance-related costs and depreciation. Group health insurance alone accounts for more than 30% of the year-over-year cost per shipment increase due to continued inflation and healthcare-related costs. We continue to believe that we provide best-in-class benefits to support our employees, who drive increased customer satisfaction, and while a headwind, we have absorbed the majority of the market rate increases that we have seen over time. Total operating expenses increased by 5.6% in the quarter, and with a year-over-year revenue increase of 0.1%, our operating ratio increased to 91.9% compared to 87.1% a year ago.
Speaker #2: Compared to the fourth quarter of 2024, cost per shipment increased 6.1%, largely due to increases in self-insurance-related costs and depreciation. Group health insurance alone accounts for more than 30% of the year-over-year cost per shipment increase due to continued inflation in healthcare-related costs.
Speaker #2: We continue to believe that we provide best-in-class benefits to support our employees, who drive increased customer satisfaction and, while a headwind, we have absorbed the majority of the market rate increases that we have seen over time.
Speaker #2: Total operating expenses increased by 5.6% in the quarter, and with the year-over-year revenue increase of 0.1%, our operating ratio increased to 91.9% compared to 87.1% a year ago.
Speaker #2: Our tax rate for the fourth quarter was 22.7% compared to 23% in the fourth quarter last year, and our diluted earnings per share were $1.77 compared to $2.84 in the fourth quarter a year ago.
Matthew J. Batteh: Our tax rate for the fourth quarter was 22.7% compared to 23% in the fourth quarter last year, and our diluted earnings per share were $1.77 compared to $2.84 in the fourth quarter a year ago. Moving on to our full year 2025 results. Revenue was a record for Saia, increasing 0.8% compared to 2024, while operating income was $352.2 million. Adjusting for one-time real estate transactions, our operating income was $337.7 million for 2025. Our operating ratio for the year deteriorated by 410 basis points to 89.1%, while our adjusted operating ratio was 89.6% for 2025.
Speaker #2: Moving on to our full year 2025 results. Revenue was a record for Saia, increasing 0.8% compared to 2024, while operating income was $352.2 million.
Speaker #2: Adjusting for one-time real estate transactions, our operating income was $337.7 million for 2025. Our operating ratio for the year deteriorated by 410 basis points to 89.1%, while our adjusted operating ratio was 89.6% for 2025.
Speaker #2: Focusing on the balance sheet, we finished the year with just under $20 million of cash on hand and $63 million drawn on the revolving credit facility, to bring us to approximately $164 million in total debt outstanding at the end of the year, which is down from $200 million at the end of 2024.
Matthew J. Batteh: Focusing on the balance sheet, we finished the year with just under $20 million of cash on hand and $63 million drawn on the revolving credit facility to bring us to approximately $164 million in total debt outstanding at the end of the year, which is down from $200 million at the end of 2024. Looking back on 2025, I was pleased with our team's core execution despite a challenging macroeconomic environment. We insourced more miles compared to the prior year, cost-optimally scaling and leveraging our fleet's national network and technology investments, driving our optimization efforts. Further evidence of our network optimization efforts shows in our handling metrics, which improved sequentially every quarter through the year and exited the year 1.5% below their first quarter peak.
Speaker #2: Looking back on 2025, I was pleased with our team's core execution despite a challenging macroeconomic environment. We insourced more miles compared to the prior year, cost optimally scaling and leveraging our fleet's national network and technology investments, driving our optimization efforts.
Speaker #2: Further evidence of our network optimization efforts shows in our handling metrics, which improved sequentially every quarter through the year and exited the year 1.5% below their first-quarter peak.
Speaker #2: From a quality standpoint, our cargo claims ratio of 0.5% for the full year was a company record and improved year-over-year in every quarter compared to 2024.
Matthew J. Batteh: From a quality standpoint, our cargo claims ratio of 0.5% for the full year was a company record and improved year-over-year in every quarter compared to 2024. We continue to see the benefit of our investments in safety, training, and technology. Lost time injuries in 2025 declined 10% year-over-year, and preventable accident frequency declined 21% year-over-year. While the underlying nature of self-insurance remains inflationary, our reduced incidences help mitigate the rising costs. Importantly, our record investments have enabled us to drive increased customer satisfaction in more markets. Our ramping terminals, or those open since 2022, operated profitably for the year despite the relative inefficiencies that come with opening 39 terminals in such a short period of time.
Speaker #2: We continue to see the benefit of our investments in safety, training, and technology. Lost time injuries in 2025 declined 10% year-over-year, and preventable accident frequency declined 21% year-over-year.
Speaker #2: While the underlying nature of self-insurance remains inflationary, our reduced incidences helped mitigate the rising costs. Importantly, our record investments have enabled us to drive increased customer satisfaction and more markets.
Speaker #2: Our ramping terminals, or those opened since 2022, operated profitably for the year, despite the relative inefficiencies that come with opening 39 terminals in such a short period of time.
Speaker #2: The 21 terminals that we opened throughout 2024 continue to mature, and we estimate that those terminals increased revenue market share by approximately 80 basis points in 2025.
Matthew J. Batteh: The 21 terminals that we opened throughout 2024 continue to mature, and we estimate that those terminals increased revenue market share by approximately 80 basis points in 2025. In aggregate, our ramping terminals, while weighing on the company's operating ratio, contributed incremental operating income for the year. We are seeing tangible results with our customers through our expanded service offerings, and I believe we are just beginning to unlock the full potential of our national network and technology investments. I will now turn the call back over to Fritz for some closing comments.
Speaker #2: In aggregate, our ramping terminals, while weighing on the company's operating ratio, contributed incremental operating income for the year. We are seeing tangible results with our customers through our expanded service offerings and I believe we are just beginning to unlock the full potential of our national network and technology investments.
Speaker #2: I will now turn the call back over to Fritz for some closing comments. Thanks, Matt. Despite uncertainty surrounding volumes in the broader macroeconomic environment in 2025, I'm proud of how our team adapted to each day to meet our customers' needs, everyday
Frederick J. Holzgrefe: Thanks, Matt. Despite uncertainty surrounding volumes in the broader macroeconomic environment in 2025, I'm proud of how our team adapted each day to meet our customers' needs. Every day represents new variables that our ability to consistently deliver strong service and quality metrics reflects the strength of our Saia culture across both our legacy and ramping terminals. While the inflationary costs associated with our industry continue to be more pronounced in certain areas, we're actively working to manage these costs through the use of network optimization technology. We accelerate our network optimization efforts that began in Q1 2025 and are already seeing cost savings as a result. Fueled by our ongoing investments in technology, these initiatives improve density and efficiency across our national footprint, which handles declining steadily from the first quarter peak.
Speaker #1: New variables and our ability to deliver consistently strong service and quality metrics reflect the strength of our culture across both our legacy and ramping terminals.
Speaker #1: While the inflationary costs associated with our industry continue to be more pronounced across both our legacy and ramping terminals , while the inflationary costs associated with our industry continue to be more pronounced in areas , certain we're actively working to manage these costs through the use of network optimization technology .
Speaker #1: We accelerate our network optimization efforts that began in the first quarter of seeing cost 2025 and are already savings as a result , fueled by our ongoing investments in technology .
Speaker #1: These initiatives improved density and efficiency across our national footprint , which declining handles steadily from the first quarter peak as our network continues to scale .
Frederick J. Holzgrefe: As our network continues to scale, adding density and enhancing our ability to service customers, our value proposition continues to become increasingly clear. These investments we have made over the past three years, more than $2 billion, have strategically allocated capital toward real estate, revenue equipment, and technology to support our long-term profitable growth. In addition to the investments we've made in our network expansion, investments in revenue equipment and fleet modernization have improved operating efficiency and safety while also positioning us to improve the customer experience. We've also invested heavily in technology to optimize network performance and drive operating leverage, including advanced analytics for operational and profitability insights, customer-facing capabilities, employee training, and process automation. We believe that the combination of these investments strengthens our competitive position and supports sustainable value creation for shareholders.
Speaker #1: Adding density , enhancing and customers . Our value ability continues to enhancing our to proposition increasingly service clear become . These investments we have made over the past three years , more than $2 billion , have strategically allocated capital toward estate real revenue , and equipment technology to support our long term profitable growth .
Speaker #1: In addition to the investments we've made in our network , expansion investments in revenue , equipment and fleet modernization have improved operating efficiency and safety , while also positioning us to improve the customer experience .
Speaker #1: We've also heavily in invested technology to optimize network performance and drive operating leverage , including advanced analytics for operational and profitability insights , customer facing capabilities , employee training , and process automation .
Speaker #1: We believe that the combination of these investments strengthen our position competitive and supports sustainable value creation for shareholders . As we look to 2026 , our focus remains on strengthening core continuing execution by to invest in both technology and our people .
Frederick J. Holzgrefe: As we look to 2026, our focus remains on strengthening core execution by continuing to invest in both technology and our people. Our national network provides a complete LTL solution for our customers, and our success is defined by consistently meeting and exceeding customer expectations while generating an appropriate return for these significant investments. We believe strongly that our national network is poised to scale as macroeconomic conditions improve. By leveraging these investments combined with our team's commitment to excellence, we expect to drive incremental improvements to our performance in 2026, even if the macro environment remains soft as it was in 2025. The network investment over the past few years reflects a considerable deployment of capital, which requires a return. Our emphasis through 2026 will be on an intense focus on ensuring that we see a return in these investments.
Speaker #1: Our national network provides a complete LTL solution for our customers , and our success is defined by consistently meeting and exceeding customer expectations while generating an appropriate return for these significant investments .
Speaker #1: We believe strongly that our is national network poised to scale as macroeconomics conditions improve . By leveraging these investments , combined with our team's commitment to excellence , we expect to drive incremental improvements to our performance in 2026 .
Speaker #1: Even if the macro environment remains soft, as it was in 2025, the network investment over the past few years reflects the considerable deployment of capital, which requires a return.
Frederick J. Holzgrefe: We expect to be fairly compensated for these investments as our customers benefit from the increasing scale and quality that we provide. Over time, we'll need to continue to reinvest in the inflationary and capital-intensive network and find ways to continue to deploy technology to operate more efficiently. Ongoing investment will require that we are appropriately compensated to provide a return to our shareholders. With that said, we feel very strongly that our business has never been in a better position to drive value for our customers and return to our shareholders. With that said, we're now ready to open the line for questions, operator.
Speaker #1: Our emphasis emphasis through 2026 will be on intense focus on ensuring on these investments . We expect to be fairly from the increasing these our scale and customers benefit quality compensated for that we provide .
Speaker #1: Over time , we'll need to continue to reinvest in the inflationary and capital network intensive and find ways to continue to deploy technology to operate more efficiently .
Speaker #1: Ongoing investment will that we are require appropriately compensated to provide a return to our shareholders . With that said , we feel very strongly that our business has never been in a better position to drive value for our customers and returns for our shareholders .
Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are 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 two. In the interest of time, we ask that you please limit yourself to one question. At this time, we will pause momentarily to assemble our roster. The first question comes from Jordan Alliger with Goldman Sachs. Please go ahead.
Speaker #1: With that said, we're now ready to open the line for questions. Operator.
Speaker #1: .
Speaker #2: We will the begin now question and answer session . a To ask question , you may press star , then tone one on your touch phone .
Speaker #2: If you are using a speakerphone , please pick up your handset before keys . at any If time your question has been addressed and you would like to withdraw your question , please press star then two .
Speaker #2: In the interest of time , we ask that you please limit yourself to one question at this time . We will pause momentarily to assemble our roster .
Jordan Robert Alliger: Yeah, hi, morning. I was just wondering, can you perhaps, in the context of how your monthly tonnage data has been going through the quarter and then October, sorry, and then January, how that may tie into your thoughts around sequential margin seasonality Q4 to Q1? Thank you.
Speaker #2: The first question comes from Jordan Alger with Goldman Sachs . Please go ahead .
Speaker #3: Hi . Yeah . Morning . I was just wondering , you know , can you perhaps in the context of how you're , you know , monthly tonnage data has been going through the quarter and then October .
Speaker #3: Sorry. And then January, how that may tie into your thoughts around sequential margin for seasonality quarter-to-quarter. Thank you.
Matthew J. Batteh: Sure. Hey, Jordan. I'll give the monthlies just so that everyone has that. So October shipments per day were down 3.4%, tonnage per day down 3.3%. November shipments per day up 2.6%, tonnage up 1.8%. December shipments up 0.6%, tonnage down 2.2%. And then when I look at January, obviously, we had some of the weather impacts that passed through, so shipments per day down 2.1%, tonnage per day down 7%. But keep in mind, we've seen consistent weight per shipment for the past five or six months now, which is good to see that stability. We're comping some pretty heavyweighted shipment periods in Q1 last year. So keep that in mind from a weight per shipment standpoint.
Speaker #3: one q . Sure .
Speaker #4: Jordan , Hey . I'll give the monthly so that just everyone has that . So October shipments per day were 3.4% . down Tonnage per day down 3.3% .
Speaker #4: November shipments per day up 2.6% . Tonnage up 1.8% . December shipments 0.6% . up Tonnage down 2.2% . And then when I look at January , obviously we had some of the weather impacts that passed through .
Speaker #4: So shipments per day down 2.1% . Tonnage per day down 7% . But keep in mind we've seen consistent weight per shipment for the past 5 or 6 months now , which is good to see that stability .
Matthew J. Batteh: If you remove the impacts of the storm or normalize them, shipments in January would have been slightly positive, which continues the trends that we've been seeing, so relatively in line there. From the margin standpoint, look, if you look at history, Q4 to Q1 sequentially is typically a degradation of about 30 to 50 basis points worse. If we get a normal February, normal March, we think we can outperform that and beat that. If we get a stronger than normal March and see some of that come to fruition, we think we can even further outperform that and get below where we were last year, which really feels like we set up for a pretty good backdrop from that point.
Speaker #4: We're comping some pretty heavy weighted shipment periods in the first quarter last year . So keep that in mind from a weight per shipment standpoint .
Speaker #4: If you remove the impacts of the storm or normalize them , shipments in January would have been slightly positive , which continues the trends that we've been seeing .
Speaker #4: So relatively in line . There . And from the margin standpoint , look , if you look at history Q4 to Q1 sequentially is typically a degradation of about 30 to 50 basis points .
Speaker #4: Worse , if we get a normal February , normal March , we think we can outperform that and beat that . And if we get a stronger than normal march and see some of that come to fruition , we think we can even further outperform that and get below where we were last year , which really feels like we set up for a pretty good backdrop from that point .
Frederick J. Holzgrefe: Yeah, and I think that's a really important point, is that we get through Q1. We've seen the macro data that's out there that has come up and has been positive. There are trends out there that would appear to be positive. I mean, I think this is our time, right? So this is the time where we've invested and positioned ourselves for this opportunity. And I think that you build off of what we could see in the first quarter as Matt outlined. And I think you're looking at a full year kind of OR improvement, 100 to 200 basis points. And if the market, if macro is kind of at the upper end of kind of the trends, then I think that's only better for us, right? So this is the scaling point.
Speaker #1: Yeah , and I think that's that's a really important point is that , you know , we get through Q1 , you know , we've seen the macro data that's out there that has come up and has been positive trends out there that that would appear to be positive .
Speaker #1: I think this is our time . Right . This is the time where where we've invested and positioned ourselves for this opportunity . And I think that you build off of what we could see in the first quarter , as Matt outlined .
Speaker #1: And I think you're looking at a year full kind of improvement , 100 to 200 basis points . And if the market if macro is , you know , kind of at the upper end of the think then I kind of the trends , that's only better for us , right ?
Frederick J. Holzgrefe: This is why we did this. This is the time why we made the investments we have over the last number of years.
Speaker #1: So this is the scaling point . This is why we did this is the time why we made the investments we have over the last number of years .
Matthew J. Batteh: Just one point, Jordan, to clarify, the sequential margin, we're viewing that off of a normalized Q4, right? If you remove the one-off impacts that we call that. Just want to make that clear.
Speaker #4: And just one point Jordan , to clarify the sequential viewing that off of a normalized Q4 , right . If you remove the one off impacts that we called out , just want to make that clear , right ?
Jordan Robert Alliger: And so that excludes that $4.7 million of insurance?
Matthew J. Batteh: That's right.
Jordan Robert Alliger: Yeah. Okay. Thanks very much.
Speaker #3: So, that excludes that $4.7 million of insurance.
Operator: The next question comes from Jonathan Chappell with Evercore ISI. Please go ahead.
Speaker #4: That's right .
Speaker #3: Yeah . Okay . Thanks very much .
Jonathan B. Chappell: Thank you. One super quick clarification, Fritz, that 100 to 200 that you just mentioned, just what's the tonnage backdrop behind that? I know it's like the macro's not getting better, but is it positive? Is it flat, etc.? And then go ahead.
Speaker #2: next The comes from Jonathan Chappell with Evercore ISI . ahead Please go .
Speaker #5: you . Thank One super quick clarification , Fritz , that 100 to 200 that you just mentioned , just what's the tonnage backdrop behind that ?
Frederick J. Holzgrefe: Yeah, I would just say that I'm looking at the ISM data, so I'm expecting that there'll be some positive backdrop there, right? So in a positive backdrop, that's good for Saia. I think that if we've seen some other macro data out there that would be positive, I think that would lead to a market in which we'd see some potential tonnage growth. And if that's the case, then I think that's an opportunity for us. So I think it's more about if those things come together, this is why this is such a compelling opportunity for us. If those things don't come together, then I think we're in a position where we could still improve OR, but clearly would be at the lower end of the range I described. But in a favorable backdrop, I like the opportunity.
Speaker #5: I know it's like the macros not getting better , but is it positive ? Is it slack , etc. . And then go ahead .
Speaker #1: Yeah I would that I'm I'm looking at the ISM data . The so I'm expecting that there'll be some positive backdrop there . Right .
Speaker #1: So in a positive backdrop that's good for Siah . I think that if you know , we've seen some other macro data out there , that would be positive .
Speaker #1: I think that would lead to a market in which , you know , we'd see some potential tonnage growth . And if that's the case , then I think that's that's an opportunity for us .
Speaker #1: So I think it's more about , you know , if those things come together , I this is this is why this is such a compelling opportunity for us .
Speaker #1: If those things don't come together , then I think we're in a position where we could still improve or but clearly would be at the lower end of the range of described .
Jonathan B. Chappell: All right. And you said several times, getting compensated appropriately. You mentioned the GRI, or maybe Matt said the GRI acceptance was a little better than usual. Is this a year where if you get a little bit of volume tailwind and the weight seems to be relatively consistent, what type of range are we looking at for pricing yield? How do we want to measure revenue per shipment type of growth this year?
Speaker #1: But in a favorable backdrop, I like the opportunity.
Speaker #5: All right . And you said several times , you know , getting compensated appropriately , you GRI or the maybe Matt mentioned said the acceptance was a little better Is than this the year usual .
Speaker #5: where if you get a little bit of volume , tailwind and the weight seems to be relatively consistent , what type of range are we looking at for pricing yield ?
Matthew J. Batteh: Well, I mean, look, obviously, we haven't been netting the renewals that we've been taking. Part of that's just volume shift in the period. But core inflation in this business is going up. We've got to be able to push and take rate. And part of that's been the ability to close the network gap and to provide more equal service in these markets with the national scale. So that's how we think about it. The weight per shipment, obviously, is a headwind year-over-year in Q1. But after that, you start to normalize it a little bit more. Revenue per shipment improved 1.1% sequentially from Q3 to Q4. So you see it in the renewal number. We're focused on it. And we're not taking a day off from that, even though the environment's a little bit light. We've got to get paid for it.
Speaker #5: want to How do we measure rev per shipment type of growth this year ?
Speaker #4: Well, look, obviously we haven't been netting the renewals that we've been taking part of. That's just volume shift in the period.
Speaker #4: But we . Core inflation in this business is going up . We've got to be able to push and take rate . And part of that's been the ability to close the network gap and to provide more equal service in these markets with with the national scale .
Speaker #4: So that's how we think about it . The wafer shipment obviously is a headwind to year over year in Q1 . But after that you start to normalize it a little bit more revenue per shipment improved 1.1% sequentially from Q3 to Q4 .
Speaker #4: So we're you see it in the renewal number . We're focused on it . And we'll we're not we're not taking a day off from that , even though environment's the a little bit light .
Frederick J. Holzgrefe: I mean, this is year two of a national network, and we should expect to price ahead of inflation and develop a margin on that. $2 billion of investments over the last three years deserves a return. And we're focused on getting that return and being in a position to reinvest in the business over time.
Speaker #4: get paid for it .
Speaker #1: I mean , it's a year or two of a national network and we would should expect to price ahead of inflation and , and develop a margin on that 2 billion of investments over the last three years .
Speaker #1: Last three years deserves a return . And we're getting that focused on return . And being in a position to reinvest in the business over time .
Jonathan B. Chappell: Got it. Thanks, Matt and Fritz.
Operator: The next question comes from Chris Wetherby with Wells Fargo. Please go ahead.
Speaker #5: Got it . Thanks , Matt . Fritz .
Christian F. Wetherbee: Yeah, hey, thanks. Good morning, guys. I guess I wanted to ask about the new terminals open and kind of relative profitability. It sounds like they did contribute positively to operating profit for the year. Can you give us a sense of where maybe the OR for those are? And then, Fritz, in the context of the 100 to 200 basis points, how do we think about the contribution of the new terminals? Is that where if you can get some incremental volume, you could see much more material improvement in the OR there to drive towards the top end of that 1 to 200?
Speaker #2: The next question comes from Chris Wetherbee with Wells Fargo. Please go ahead.
Speaker #6: Yeah . Hey , thanks . Good morning guys . I guess I wanted to ask about the new terminals open and kind of relative profitability .
Speaker #6: It sounds like they did contribute positively to operating profit for the year . Can you give us a sense of where maybe the or for those are and then Fritz , in the context of the 100 to 200 basis points , how do we think about the contribution of the new terminals ?
Speaker #6: Is that where, if you can get some incremental volume, you could see improvement in much more material there to drive towards the top end of that 100 to 200?
Matthew J. Batteh: Yeah, from the first part, Chris, obviously, they're a drag on the company-wide. So they range, right? We've got some that are sub-95. We've got some that are higher than that. In aggregate, they're sort of mid to upper 90s. But a lot of these, if you think about it, they're still within, and when we opened them in 2024 for the biggest batch, those weren't all opened early in the year. So throughout the course of last year, we just eclipsed a year of these operationally, which is really something that we're pleased with and proud of. We've got room to go and, obviously, work to do. But they're in that range.
Speaker #4: Yeah . From the first part , Chris there , you know , obviously there a drag on on the company wide there . So they range right .
Speaker #4: We've got some that are above 95 . We've got some that are higher than that in aggregate . They're sort of mid to upper 90s .
Speaker #4: But a lot of these if you think about it , they're still within when we open them in 24 for the biggest batch .
Speaker #4: Those weren’t all opened early in the year. So throughout the course of last year, we just eclipsed a year of these operationally, which is really something that we’re pleased with and proud of.
Frederick J. Holzgrefe: And I would add that the margin improvement's going to come from the new; they're not going to be a drag over time. I point you back to when we did the Northeast expansion, right? We saw that as those developed sort of maturity, we can drive incrementals in those. I think what's different this go around in the Northeast is that the incremental opportunities across the business. If you study our network cost stats that we described earlier, where we're able to insource and scale more of our linehaul network, that's all about building densities across, say, national network. Part of that is the contributions to the new facility. So I think that this is why this was such a compelling investment to make. And if we get the environment, we can accelerate that sort of performance.
Speaker #4: We've got room to go and obviously work to do , but they're in that range .
Speaker #1: And I would add that the margin improvement is going to come from the new . They're not going to be a drag over time .
Speaker #1: And I'd point you back to when we did the Northeast expansion, right? We saw that those developed sort of maturity. We can drive incrementals in those.
Speaker #1: I think what's different this go around than the northeast is that the incremental across opportunities the business , if you study our , you know , network costs , stats that we described earlier , where we're able to in-source and scale more of our linehaul network , that's all about building densities across a national network .
Speaker #1: Part of that is the contributions of the new facility . So I think that this is this is the this is why such was such a compelling investment to make .
Frederick J. Holzgrefe: But I think it's great because it's going to come from both new and old, but it's going to benefit the national network.
Speaker #1: if we And get the environment , we can accelerate that sort of performance . But I think it's it's it's great because it's going to come from both new and old , but it's going to benefit the national .
Christian F. Wetherbee: Okay. Helpful. Thank you.
Matthew J. Batteh: And we're seeing real opportunities with that, Chris, just in customer conversations. You know how we get turned on overnight to some of that business, but the level of discussions that we can have with customers or even, frankly, customers that we didn't have the opportunity to get in the door with because they want simplicity. They want ease of doing business. When you've got a full national network, you get that opportunity. So to Fritz's point, it's not just the scale and the new ones. But even though we covered some of these markets before, we're getting new opportunities because we can have those discussions at a better level of detail and do more for customers.
Speaker #6: Okay .
Speaker #4: Seeing you. We're thankful for real opportunities with that. Chris, with customers, just in conversations, you don't always get turned on overnight to some of that business.
Speaker #4: But the level of discussions that we can have with customers or even , frankly , customers that we didn't have the opportunity to get in the door with because they want simplicity , they want ease of doing business .
Speaker #4: got a When you've national network , you that get opportunity . So to Fritz's point , it's not just the scale in the new ones , but even though we covered some of these markets before , we're opportunities because we can have getting new those discussions at a better level of detail and do more for customers .
Christian F. Wetherbee: Helpful caller. Thanks, guys. Appreciate it.
Operator: The next question comes from Stephanie Moore with Jefferies. Please go ahead. Great. Thank you so much. Maybe returning to the pricing commentary, maybe you could discuss a little bit on what you're seeing in the overall pricing environment. And also, as you think about your higher pricing capture, would you say this is more so customers starting to recognize the investments that you've made? Or maybe it's both. Are you being a bit more tactful with your own pricing actions? Thanks.
Speaker #6: Helpful color . Thanks , guys . Appreciate it .
Speaker #2: The next question comes from Stephanie Moore with Jefferies . Please go ahead .
Speaker #7: Great . Thank you so much . Maybe returning to the pricing commentary . Maybe you could discuss a little bit on what you're seeing in the overall pricing environment .
Speaker #7: And also , as you think about your higher pricing capture , would you say this is more so customers starting to recognize the investments that you've made or or maybe it's both .
Matthew J. Batteh: From the environment, I'd say we continue our own initiatives. We don't ever take a day off from that as a business. It's inflationary. We have to go get rates. So we're continuing those efforts and really pushing the envelope harder in a lot of instances. So no change from us there. Obviously, with capacity, with where it is for everybody, shippers have options. And they maybe were willing to move to a more regional carrier or something for a time being. But that's just a product of where we are. I wouldn't say that's new. We've been seeing that for the past couple of years at this point with the capacity environment the way it is.
Speaker #7: Are you being a bit more tactical, tactful with your pricing actions? Thanks.
Speaker #4: From an environment standpoint, I'd say we continue our own initiatives. Don't ever take a day off from that. The business is inflationary.
Speaker #4: We have to go get rates . we're So continuing those efforts and and really pushing the envelope harder . And a lot of instances .
Speaker #4: So no change from us . There . Obviously with capacity with where it is for everybody . Shippers have options and they maybe were willing to move to a more regional carrier or something for a time being .
Matthew J. Batteh: But our view is that if you look at history, when the environment gets a little bit tighter from a capacity standpoint, there's a flight back to quality and a flight back to national carriers. So we're not taking a day off from the pricing aspect of it. In terms of our higher capture rate, we track that very closely. We study the results of the GRI and all pricing actions really closely. I think it's a combination of two things. We're getting more granular than we have before, and we're using our analytical tools to focus on key opportunity areas for us. But I think, importantly, the opening of these terminals that's given us national scale has made it harder for customers to change out.
Speaker #4: But that's just a product of where we are . I wouldn't say that's new . We've been seeing that for the past couple of years at this point , with the capacity , environment , the way it is .
Speaker #4: But our view is that if you look at history , when the environment gets a little bit tighter from a capacity standpoint , there's a flight back to quality and a flight back to national carriers .
Speaker #4: So we're not taking a day off from from the pricing aspect of it in terms of our higher capture rate , we track that very closely .
Speaker #4: We study the results of the GR and all pricing actions really closely . I think it's a combination of two things . We're getting more granular than than we have before , and we're using our analytical tools to focus on on key opportunity areas for us .
Speaker #4: But I think, importantly, the opening of these terminals that's given us national scale has made it harder for customers to change to out.
Matthew J. Batteh: And when you've got a better value proposition and you've got the opportunity to go and talk to them about what you can do for them in every market, which we haven't always had the ability to do, you get more conversation points. So I think it's a combination of both.
Speaker #4: And when you've better got a value proposition and you've got the opportunity to go and talk to them about what you can do for them in every market , which we haven't always had the ability to do , you get more conversation points .
Frederick J. Holzgrefe: Yeah, I would just add, and I would emphasize Matt's last point, national network, high-level, consistent service, that makes that pricing discussion more palatable, right? If you're doing a great job, you come and say, "Look, this is the value I'm creating for your supply chain. And this is what we need to do to be able to continue to support our customer's success and continue to invest in our business." That is an opportunity, continued opportunity for us, and only heightens now because of the success of the national network.
Speaker #4: So I think it's a combination of both .
Speaker #1: Yeah , I would just add and I would emphasize Matt's last point , National network , high level of consistent service that makes that pricing discussion more palatable .
Speaker #1: Right . If you're doing a great job , you come and say , look , this is the value of creating for your supply chain .
Speaker #1: And this is what we need to do to be able to continue to support our customers success . And then continue in our business that that is a an opportunity for continued opportunity for us .
Operator: Thank you. No, that's important context. Maybe just to follow up on the volume trends and the sequential improvement we've seen for the last couple of months, as you kind of look at what your customers are telling you or what you're seeing, do you think that it's generally more optimism, kind of like what we've seen maybe in some of the macro data points? Or is this truckload capacity? How does this compare to maybe what we saw at the start of 2025? Any context on the overall demand environment would be helpful. Thanks.
Speaker #1: And it only heightens now because of the success of the national network .
Speaker #7: Thank you know , that's important context . Maybe just to follow up on the volume trends and the sequential improvement we've seen for the last couple months , as you kind of look at what are your you customers telling or what you're seeing , do you think that it's generally more optimism , kind of like what we've seen maybe in some of the macro data points ?
Speaker #7: Or is this truckload capacity ? How does this compare to maybe what we saw at the start of 2025 ? Any context on the overall demand environment would be helpful ?
Frederick J. Holzgrefe: I think it's a little bit of everything. I think it's a little bit of maybe a little bit more positive end of the year, which is good. I think there's maybe some structural market sort of influences here. But I think, in total, the tenor might be just a bit more positive, right? And I think that's good. Now, I will caution just by saying, "Look, we're seeing it and hearing it a bit in customer conversations. I'd like to see it more in volumes too," right? So some of that will develop through the quarter. We think it will, but that's still until we actually see it in the results. There is a potential that things could change. But overall, I would say year-over-year, the factors would appear to be more positive.
Speaker #7: Thanks .
Speaker #1: think it's a I little bit of everything . I think it's a little bit of maybe a little bit more positive into the year , which is good .
Speaker #1: I think there's maybe some structural market sort of influences here , but I think that I think total in the tenor might be just a bit more positive .
Speaker #1: Right . And I think that's good . Now I will caution just by saying , look , we're seeing it . And hearing it in in a bit customer conversations .
Speaker #1: I'd like to see it more in volumes too . Right . So that that's some of that will develop through the quarter . We think it it will , but it's you know , that's still , you know , until we actually see it in the results .
Speaker #1: There is a , you know , potential that things could change . But year over overall I would that year the factors are would appear to be more positive .
Operator: Thank you. The next question comes from Scott Group with Wolfe Research. Please go ahead.
Speaker #7: Thank you .
Scott Group: Hey, thanks. Good morning. So, can you just, Matt, you were going pretty quick. What was the comment about Q1? Maybe it's going to improve. Maybe it's not going to improve on a year-over-year basis. I just wasn't sure the two different sort of environments you were talking about. Just, if you can just add a little bit more color. And then I have a follow-up. Yeah.
Speaker #2: The next question comes from Scott Group with Wolfe Research . Please go ahead .
Speaker #8: Hey , thanks morning . So can you just . Matt , you were going pretty quick . What was the comment about ? Q1 it ?
Speaker #8: Maybe it's going to improve . Maybe it's not going to improve on a year over year basis . I just wasn't sure . Like the the two different sort of you environments were talking about .
Matthew J. Batteh: Yeah. So if you normalize for the Q4 item that we called out and use that as the anchor point, history says that Q4 to Q1 typically deteriorates 30 to 50 bps in that range. There's different years, obviously. We think we can beat that, just thinking about if we get a normal rest of the February, a normal March. But if March comes in a little bit more strong, and we're starting to see some of this ISM data come through, whatever it may be, we think we can further outperform that and potentially get it below where Q1 operated last year. Obviously, a long way to go between here and there, but that's the distinction between the two. It would be more about March coming in a little bit stronger than what we would typically see in history.
Speaker #8: Just if you can just add a little bit more color, and then I have a follow-up. Yeah, yeah.
Speaker #4: So if you normalize for the Q4 item that we called out and as the anchor point , history Q4 says that to Q1 typically deteriorates 30 to 50 Bips , you know , in that range , different years .
Speaker #4: Obviously think we can , we beat that . Just thinking about if we get a normal rest of the normal March . But if March strong a little more bit see some of this starting to ISM data come through , whatever it be , may we think we can further outperform that and potentially get it below where Q1 operated last year .
Speaker #4: Obviously a long way to go between here and there , but that's the distinction between the two would be more about March coming in a little bit stronger than what we would typically see in history .
Scott Group: Okay. And then just a couple of other just things. When do you think we start to see the yields or revenue per shipment trends catch up to the renewal trends? And then it sounds like you're talking a little bit more about insourcing linehaul. When do you think we start to see that purchased transportation line start to more meaningfully decline as a percentage of revenue? Thanks.
Speaker #8: Okay . And just then just a couple of other just things , the when do you think we start to see like the yield or revenue per shipment trends catch up to the renewal trends and then it sounds like you're talking a little bit more about insourcing Linehaul .
Speaker #8: Like when do you think we should start to see like that purchase transportation line start to more meaningfully decline as a percentage of revenue ?
Matthew J. Batteh: On the revenue per shipment side, I mean, keep in mind how weight per shipment impacts yield. Weight per shipment, you get a read from how that looks just with January numbers. So a headwind there from a revenue per shipment standpoint, that helps yield. But then it starts to normalize a little bit more in Q2, Q3. Weight per shipment's been relatively steady for us over the past 5 or 6 months, which has been good to see. So once you start lapping some of the Q1 weight per shipment headwinds, I think we start to see that in the Q2, Q3 period. And obviously, if the environment tightens up a little bit more, we're going to see that run further, and we're going to press the gas even harder on that.
Speaker #8: Thanks .
Speaker #4: On the revenue per shipment side , I mean , keep in mind how weight per shipment impacts yield weight per shipment . You get a read from how that looks just with January January numbers .
Speaker #4: So a headwind there from a shipment revenue per standpoint that helps yield . But then it starts to normalize a little bit more in Q2 , Q3 weight per shipment has been relatively steady for us over the past 5 or 6 months , which has been good to see .
Speaker #4: So once you start lapping some of the Q1 weight per shipment , headwinds , I think we start to see that . And in the Q2 three period , and obviously if if the environment tightens up a little bit more , we're going to see that run further and we're going to we're going to press the gas even harder on that .
Matthew J. Batteh: If you look at it from a PT standpoint, I mean, one of the things that we've talked about for a long time is just the ability to run more balance when you've got a full nationwide network, sell in and out of more geographies, all of that. PT, as a percent of total miles for the full year of 2025, was 12.1%. If you go back to 2021 period, that number was over 18% of miles. So we've reduced it pretty dramatically over time. Cost optimally, we still feel really good about how we use PT. But when you have a nationwide network, you're able to balance the network more, run more efficiently as you get more balance between your terminals. So it's come down a good bit over the years, but we still feel really good about how we use it.
Speaker #4: If you look at from a PT standpoint , I mean , one of the things that we've talked about for a long time is just the ability to run more balanced when you've got a full nationwide and out of more geographies , all of that .
Speaker #4: PT as a percent of total miles, over for the full year of 2025, was 12.1%. If you go back to the '21 period, that number was over 18% of miles.
Speaker #4: So, we've reduced it pretty dramatically over time. Costs still feel optimal. We feel really good about how we use PT, but when you have a nationwide network, you're able to balance the network more and run more efficiently as you get more balance between your terminals.
Matthew J. Batteh: As the network continues to scale and certainly as volume comes back, we're going to have further opportunities around that. But we feel good about how we use it.
Speaker #4: So it's come down a good bit over the years , but we still feel really good about how we use it as a network continues to scale , and certainly as volume comes back , we're going to have further opportunities around that .
Frederick J. Holzgrefe: Yeah, I think, Scott, too, just to add, we look at that. Kind of, we study more cost per shipment in total or network cost per shipment. So the PT line in and of itself, that certainly is one line, but our salary and wages and benefits also has internal costs in there. So we kind of look at those two combined. And so over time, we like that trend. And I think as the business scales, I think we'll continue to see that improve meaningfully.
Speaker #4: But we feel good about how we use it. Yeah.
Speaker #1: I think Scott too , just to add , we look at that kind of we more study cost per shipment and total or network cost per shipment .
Speaker #1: So there the PT align unto itself . You know , that certainly is one line . But our salary , wages and benefits also has an internal cost in there .
Speaker #1: So that we kind of look at those two combined . And so over time we like trend . And I think as the business scales , I think we'll continue to see that improve .
Scott Group: Appreciate the time, guys. Thank you.
Speaker #1: You know , meaningfully . .
Operator: The next question comes from Risha Harning with Deutsche Bank. Please go ahead.
Speaker #8: Appreciate the time, guys. Thank you.
Amit Mehrotra: Thanks, operator. Hello. Good morning, gentlemen. So yeah, just quick clarification on the January information, Matt. You said that ex-weather shipments were up a little bit. Could you tell us what tonnage was doing ex-weather? Sorry if I missed that. And then my main question is oh, go ahead. You can go first, and then I'll ask the second one.
Speaker #2: question next The comes from Richard Deutsche Harding with Bank . Please go ahead .
Speaker #9: Hello . Good morning , quick just clarification the on January information that you said that X whether shipments were up a little bit .
Speaker #9: Could you tell us what tonnage was doing X whether sorry if I missed that . And then my main question is oh go ahead .
Matthew J. Batteh: Yeah. Shipments would have been up a little bit and tonnage down about 4 to 4.5%.
Amit Mehrotra: Got it. Okay. Thank you. And then you both have been talking about how the network is very poised to scale. I wanted to ask about trends in cost per shipment. X, those self-insurance costs bumping higher. It still felt like it was higher than what we usually see sequentially per your 10-year average. I think cost per shipment was up 5.7%. Usually, we see a 4% increase Q3 to Q4. I know Q3 was a very solid cost-out quarter for you, and that's part of it, the base being lower. But how should we think about cost going forward? Are you carrying just extra costs as a result of your network expansion, and it's going to take a more pronounced upturn to absorb all that? Maybe just talk about that.
Speaker #9: You can go first and then I'll ask the second one .
Speaker #4: Yeah . Shipments would have been up a little bit and tonnage down about four 4.5% .
Speaker #9: Got it . Okay . Thank . And then you both have been talking about how the network is very poised to scale . I wanted to ask about trends in cost per .
Speaker #9: You know , X those self-insurance costs bumping higher . You know , it still felt like it was it was higher than what we usually see sequentially per year , ten year average .
Speaker #9: I think cost per shipment was up 5.7% . Usually we see a 4% increase Q3 to Q4 . I know Q3 was a very solid cost out quarter for you , and that's part of it .
Speaker #9: the base about but lower , You know , how should we think cost going you carrying forward ? Are just costs extra result as a of your network expansion ?
Amit Mehrotra: And along those lines, you can mention how much excess capacity or slack you feel like you have in your system today to absorb extra volume should it come in. Thanks.
Speaker #9: And it's going to take a more pronounced upturn to absorb all that . Maybe just talk about that . And along those lines , you can mention how much excess capacity you feel like you have or slack in your system today to absorb extra volume .
Matthew J. Batteh: Yeah. So if I look at the cost side of it, so we don't typically look 10 years back. Our business has changed so much over that period. So if you look at a little bit more of a shorter period of time, Q3 to Q4, cost per shipment generally is up in a sort of 5-ish, 5% to 5.5% range. And keep in mind too, that includes historically where you have a wage increase impact both in Q3 and Q4. We didn't have the wage increase in Q3 this year. We had it on 1 October. So that's an automatic headwind of an increase in cost compared to what you would see in a historical number. So that's one piece of it. You've got volume that's down 4.3% Q3 to Q4 on just a calendar period. And you've got 2 fewer workdays in the period.
Speaker #9: come in . Thanks .
Speaker #4: Yeah . So if I look at the cost side of it , so we don't typically look ten years back , our business has changed so much over that period .
Speaker #4: So if you look at it a little bit more of a shorter period of time , Q3 to Q4 cost per shipment generally up in a is sort of five ish , 5 to 5.5% range .
Speaker #4: And keep in mind , too , that includes historically , where you have a wage increase impact both in Q3 and Q4 . We didn't have the wage increase in Q3 this year .
Speaker #4: We had it on October 1st, so that's an automatic headwind of an increase in cost compared to what you would see in a historical number.
Speaker #4: So that's one piece of it . You've got volume that's down 4.3% Q3 to Q4 just a on calendar period . And you've got two fewer workdays period .
Matthew J. Batteh: So you've got fixed costs that are just over a shorter amount of days. And I would say even all those workdays aren't real revenue days. A day after Christmas is a workday, but it's not a full-volume day. So you just don't get that leverage. But if you think about that, that piece is important on the wage increase where it wouldn't have been in that historical number. So obviously, we're going to always work on that. We've got room to improve. But we feel like we managed it pretty effectively if you look in line with some of those historical trends. And we called out the headcount portion too. Headcount year-over-year in Q4, excluding linehaul drivers, is down 6.4%. If you look at that sequentially from Q3, that's down about 2%.
Speaker #4: So you've got fixed costs that are just over a shorter amount of days . And I would say even all those those workdays aren't real revenue days of day after Christmas is a work day , but it's not a full volume day .
Speaker #4: So you just don't get that leverage . But if you think about that , there's just that piece is important . On the wage increase where it wouldn't have been in that historical number .
Speaker #4: So, obviously, we are going to always work on that. We've got room to improve, but we feel like we managed it pretty effectively.
Speaker #4: If you look in line with some of those historical trends , and we called out the headcount portion to headcount year over year in Q4 , excluding Linehaul drivers is down 6.4% .
Matthew J. Batteh: So we continue to match hours with volume and feel good about how we're managing it. But we can't take a day off from that. We have to work through that all the time. And on the network standpoint, obviously, we've got excess capacity. Like Fritz said, we opened all these terminals for a reason. It was a generational opportunity for us to expand the network. It's going to vary by market, but I'd say on a broad base, 20 to 25 percent excess capacity. We're prepared for an inflection. But important to note, capacity and LTL comes in a lot of different ways. It's terminals, certainly, but it's also doors. It's yard space. It's people. You're really the lowest common denominator of all of those pieces when you think about capacity. But this is why we did this. We expanded in what's turned out to be a prolonged freight cycle.
Speaker #4: If you look at that sequentially from from Q3 , that's down about 2% . So we continue to match ours with volume and and feel good about how we're managing it .
Speaker #4: But we can't take a day off from that . We have to work through that all the time . And on the network standpoint , obviously we've got excess capacity .
Speaker #4: Like Fritz said , we opened all these terminals for a reason . It was a generational opportunity for us to expand the network .
Speaker #4: have , you know , it's going to vary by market , but I'd say on a broad base , 20 , 25% excess capacity , we're prepared for an inflection .
Speaker #4: But important to note , capacity in LTL comes in a different lot of ways . It's terminal , certainly , but it's also doors .
Speaker #4: It's yard space . It's people . You're really the lowest common denominator of of all of those pieces . When you think about capacity .
Matthew J. Batteh: But if we had it to do all over again, we'd do the same thing because we feel really good about what the opportunity is for us over the long term of the business. But we feel really poised to scale when the environment gives a little bit of an uplift.
Speaker #4: But this is why we did this . We expanded in what's turned out to be a prolonged freight cycle . But we if we had it to do all over again , we'd do the same thing because we feel really good about what the opportunity is for us over the long term of the business .
Amit Mehrotra: Thank you.
Speaker #4: feel But we really poised to scale when the environment gets a little bit of an uplift .
Operator: The next question comes from Ken Hoexter with Bank of America. Please go ahead.
Speaker #9: you Thank .
Kenneth Scott Hoexter: Hey, great. Good morning. Just want to clarify. You were down 7% in tons in January. One of your peers was flat. So I just want to understand what's going on in the market maybe a little bit. Were you more impacted by weather as a national carrier as they are? Is there a difference in end markets, SMBs? Just want to understand if somebody's being more aggressive in pricing versus that differential. And then in the past, I just want to take this another level. You've noted revenue per shipment, ex-fuel, is a good indicator for price. So a lot of discussion here on rev per shipment given that it was down year-over-year. And I get the weight, Matt. But you noted contracts were up 6.5% in January, accelerating from just shy of 5% in the fourth quarter.
Speaker #2: The next question comes from Ken Hoexter of with Bank America . Please go ahead .
Speaker #10: Good Hey , great . morning . to I just want clarify , you were down 7% in tons in January . One of your peers was was flat .
Speaker #10: So I just want to understand what's going on in the market . Maybe a little bit . Were you more impacted by weather as a national carrier as they are , or is it there a difference in end markets ?
Speaker #10: SMB ads just want to understand if somebody is being more aggressive in pricing versus that , that that differential . And then in the past , I just want to take this another level .
Speaker #10: You've noted revenue per shipment X fuel is a good indicator for price . So a lot of discussion here on on rev per shipment , given that it was down year over year and I get the weight Matt .
Kenneth Scott Hoexter: So, is that demand picking up? And so, thoughts on pricing is accelerating? Just maybe one on tonnage, one on pricing, if you can.
Speaker #10: But you noted contracts were up 6.5% in January, accelerating from just shy of 5% in the fourth quarter. So is that demand picking up?
Matthew J. Batteh: Yeah. I encourage you to look through. I mean, first of all, we're not seeing anybody on the pricing side act differently. So the environment continues to remain rational, nothing different from what we've continued to see there. The tonnage comp for us, if you look at just where weight per shipment was the first three or four months of last year, that's the biggest component of this. Weight per shipment's been relatively steady, call it sort of May, June of 2025 to where we are now. We're just lapping some weight per shipment comps that are much higher than that. So that's why the tonnage number is what it is for us. I would say from the peer set that you're talking about, I think weight per shipment's relatively consistent. I have to go back and look.
Speaker #10: And so thoughts on pricing is accelerating . Just maybe one on tonnage , one on pricing , if you can .
Speaker #4: Yeah . Encourage you to look through I mean the first of all , we're not seeing anybody on the pricing side act So differently .
Speaker #4: environment continues to remain rational . Nothing different from what we've continued to see there . The tonnage comp for us , if you look at just where weight per shipment was , the first 3 or 4 months of last year , that's the biggest component of this wafer shipment has been relatively steady .
Speaker #4: Call it sort of May , June of 2025 to where we are now . We're just lapping some weight per shipment comps that are much higher than that .
Speaker #4: So that's the tonnage why number is what it is for us . I would say from the the peer set that you're talking about .
Matthew J. Batteh: But that's really what the driver of that is, the higher weight per shipment comp, which continues to be a headwind through March, April timeframe, and then it starts to flatten out compared to where we are now.
Speaker #4: I think wait for shipments relatively consistent . I have to go back and look . But that's really what the driver of that is , is the higher weight per shipment comp , which we continue to be a headwind in the , you know , through March , April time frame .
Frederick J. Holzgrefe: I think the only thing I would add just on January discrete; we've incorporated the impact of this in Matt's discussion around what we think about Q1 in total. But that weather system, and listen, this is outdoor sport. You got to deal with weather every year. But when Dallas gets shut down or Texas market is impacted, that's from a relative that's the biggest portion of our company. So that's going to have a relatively large impact on us versus maybe some of our peers. But our guys did a heck of a job rallying and getting us back in position. But when Dallas through Memphis is frozen and Texas is frozen and we're not operating, and you track that on our website, that's tough for us. But because of the great work by those teams, we recovered from that. We're back full-scale operation now.
Speaker #4: And then it starts to flatten out compared to where we are now .
Speaker #1: I think the only thing I would add , just on January discrete . We've incorporated the impact of this in our in Matt's discussion around what we think about Q1 and you that know total , system and weather but I listen , this is an outdoor sport .
Speaker #1: You’ve got to deal with weather every year. But when Dallas gets shut down or the Dallas, Texas market is impacted, that’s more from a relative standpoint.
Speaker #1: That's the biggest portion of our company . So that's going to have a relative large impact versus on us maybe some of our peers .
Speaker #1: But our guys did a heck of a job rallying, getting us back in position. But what Dallas through Memphis is frozen, and Texas is frozen.
Speaker #1: And we're not operating . And we track that on our website . That that is that's tough for us because of . But the great work by those teams , we recovered from that .
Frederick J. Holzgrefe: So feel good about what the trends are for the full quarter. But January, there were a few days there. That was pretty tough.
Speaker #1: We're back to full-scale operation now, so we feel good about what the trends are for the full quarter. But in January, there were a few days there that were pretty tough.
Kenneth Scott Hoexter: And Fritz, if I could just get one clarification just because I've gotten some questions on the assumption for Q1, the OR commentary. I know you tried to answer this before, but I just want to get clarification. The tonnage that you're now assuming, I know you said it could get better. What's the base case for that 100, 200, maybe midpoint in your tonnage assumption?
Speaker #1: .
Speaker #10: And if I could just get one clarification , just because I've gotten some questions on the assumption for the first quarter , the Or commentary , I know you tried to answer this just want to before , but I get clarification .
Speaker #10: now tonnage that The you're know you said assuming . I it could get better . What's the base case for that 100 to 200 ?
Matthew J. Batteh: I mean, obviously, the Q1 headwind from a weight per shipment standpoint, then it flattens out. But I think for the top end of that range, like Fritz talked about for the full year, a little bit of a shipments and tonnage lift would be embedded in that. But importantly, we still feel like we can drive improvements even if the macro environment doesn't give a lot of uplift and just stays similar to what it was last year.
Speaker #10: Maybe midpoint in in your tonnage assumption ?
Speaker #4: I mean , obviously the Q1 headwind from a weight per shipment standpoint , then it flattens out . But think I for the top end of that range , like Fritz talked about for the full year , we a little bit of a shipments in tonnage lift would be embedded in that .
Speaker #4: But importantly , we still feel like we can drive improvements even if the macro environment doesn't give a lot of uplift and it just stays similar to what it was last year .
Frederick J. Holzgrefe: We look at historic seasonality through the quarter from here, right? January's tough. We have the weather. February and March would look like our normal, typical seasonality.
Speaker #1: And we look at historic seasonality through the quarter from here , right . So January is tough . We have the weather , but Feb and March would be looked like our , you know , normal typical seasonality .
Kenneth Scott Hoexter: All right. Thanks, guys.
Operator: The next question comes from Thomas Wadewitz with UBS. Please go ahead.
Speaker #10: All right. Thanks, guys.
Thomas Richard Wadewitz: Yeah. Good morning. So I wanted to understand a little bit more your thoughts about flat market, flat freight market, just how you would think Saia will perform if that's the case. Be great if ISM is right and you see a better backdrop. But what if you don't see that cyclical improvement? So in particular, do you think you'll transition to shipment growth if that's the backdrop? Or would you say you just kind of because it kind of seems like the December and January, it's hard to see outperformance versus the market, or it's not as clear maybe versus what you've been going at. So how do you think about when you get beyond the tonnage headwind in Q1, when you get beyond weather, what does shipment growth look like for Saia against a flat freight market?
Speaker #2: The next question comes from Tom Wadewitz with UBS . Please go ahead
Speaker #11: Yeah .
Speaker #11: morning . . Good So wanted to understand a little bit more . Your thoughts about you know , flat market flat freight market .
Speaker #11: Just how you would think Saia will perform if that's the case. Like, it'd be great if ISM is right and you see a better backdrop.
Speaker #11: But you know what ? If you don't see that cyclical improvement . So in particular , do you think you'll transition to shipment growth if that's the backdrop , or would you say you just kind of because it kind of seems like the December and January , it's hard to see outperformance versus the market , or it's not as clear .
Speaker #11: Maybe versus what you've been going at. So how do you think about, you know, when you get beyond the tonnage headwind in Q1?
Speaker #11: Q when you get beyond weather , what is shipment growth look like for Siah against a , you know , a flat freight market ?
Frederick J. Holzgrefe: Well, I think I'd look back to last year and how we performed in the market, however you want to describe it, flat, soft, recessionary, whatever. The growth for us came in our developing new markets, ramping markets. I think that's going to continue into the year, into this year. I don't see any reason why that sort of level of customer acceptance wouldn't continue. I think in our legacy markets, I think what you'd see that is sort of normalized, flattened out there compared to what we saw in 2025. And then it's a focus on core execution. Probably see in a flat market from here, you probably would see kind of us grinding out some share primarily because customers look at us and say, "Hey, that's a great product. This is a national network. This is working." We take share in that way.
Speaker #1: Well , I think I'd look back to last year . And you know , how we performed in the market . You know , however you want to describe it , flat , soft , recessionary , whatever for us growth came in our developing new markets , ramping markets .
Speaker #1: Would I—that's going—I think that to continue into the year, into this year. I don't see any reason why that sort of level of customer acceptance wouldn't continue.
Speaker #1: I think in our legacy markets , I think what you'd see that is sort of normalized , flatten out there compared to what we saw in 25 .
Speaker #1: And then it's a focus on core execution , probably see in a flat market from here , you'd probably would see us , you know , kind of us grinding out some share primarily because customers look at us and hey , say , that's a great product .
Frederick J. Holzgrefe: We price accordingly to try to continue to get those returns. So I think it's the 2025 playbook in a flat market into 2026. But if the ISM develops like it would sort of indicate, I mean, I think that's what's exciting, right? That's where I think you could accelerate that. Do I look at December and January volume trends? I always comment or note that in the course of the year. I don't know if February, January, or December are the 9, 10, or 10, 11, 12 most important months of the year. I don't know. I don't know that there's a huge trend in there. But I think the underlying execution for us has been good despite sort of the macro conditions.
Speaker #1: This is a national network . This is working . And we take share in that way . And , you know , we price accordingly to try to continue to to get those returns .
Speaker #1: So I think it's , you know , it's the last it's the 2025 playbook in a flat market into 26 . But you know , if the ISM develops like it would sort of indicate I mean I that's I think you exciting , right ?
Speaker #1: think that's what's That's where accelerate that , you know , do I look at December and January volume trends , you know , I always comment or note that in over the course of the year , I don't know if Feb , January or December are the , you know , nine , ten or 11 or 10 , 11 , 12 most important months of the year .
Speaker #1: I don't know , I don't know . There's a huge trend in there I think it's , you know , I think the underlying execution for been us has good , despite sort of the macro conditions .
Thomas Richard Wadewitz: So okay. Well, I appreciate that. So how do we think about the low end of that 100 to 200 basis points? Do you think that does that assume some growth in revenue per hundredweight? Do you kind of get, I know you've had questions on it, but does that assume you get to two points of growth in revenue per hundredweight, something like that, and then also a little bit of shipment growth? Or what kind of revenue growth backdrop do you need to get that low end of your OR comment?
Speaker #11: okay . So Well I appreciate that . how do we So think about the low end of that 100 to 200 basis points .
Speaker #11: Do you think that does that assume some growth in revenue per hundredweight that you kind of get ? know you've had questions on it , but does that assume you get to , you know , two points of growth in revenue per hundredweight , something like that .
Speaker #11: And then also a little bit of shipment growth or what kind of revenue growth backdrop do you need to get that low end of your or comment ?
Frederick J. Holzgrefe: Listen, I think that if we get sort of a macro freight market that is growing a bit, I don't know, 1-2%, yeah, that'd be great. But at the end of the day, we're not interested in leading the league in shipment growth. This is more about focusing on generating a return. So if the market were stronger than that, you might see more of us, more of our return coming from evolving or developing revenue per shipment. That probably accelerates in that kind of an environment. And then we'll get some growth, and our new markets will continue to grow. So the combination of that would take us up. And that revenue piece is really going to drive the incremental.
Speaker #1: I think that Listen , if we get sort of a macro freight market that is , you know , growing a bit , you know , I don't know , one , 2% .
Speaker #1: Yeah , that'd be great . But at the end of the day , I'm not necessarily interested in we're not interested in leading the league in , shipment growth .
Speaker #1: This is more about focusing on generating a return . So if the if the market were stronger than that , you might see more of us , more of our return coming from or evolving developing revenue per shipment .
Speaker #1: That that probably accelerates in that kind of environment . And then we will get some growth in our new markets , will continue to grow .
Frederick J. Holzgrefe: So I would say that in that range that we've given, we've assumed that when we talked last back in the last quarter, we said 50 basis points of improvement into this year just in a steady state grind environment. If we get a little bit of growth into the year, can we get to 100? Absolutely. And if you get more of growth and a little bit more pricing as well, then you're going to go to the upper end of that range. And if you're investing and looking at Saia, what you're focused on is you say, "Wow, when these guys know how to monetize the capital that they've deployed in the business, that's where the incrementals really look good." And I'd encourage you to consider that over time. And we can point to history. We know we've done it before.
Speaker #1: So the combination of that would take us up and , you know , that revenue piece is drive the incrementals . So , you know , I would say that in that range that we've given , we've assumed that , you know , when we talked last back in the in last quarter , we know , 50 basis points of improvement this year , into just in a steady state grind environment .
Speaker #1: If we get a little bit of growth into the year , can we get to 100 ? Absolutely . And if you get more growth a little bit more as pricing well , then you're going to go to the upper end of that range .
Speaker #1: And if you're if you're investing and looking at Sia , what you're focused on , as you say , wow , when these guys know how to monetize the capital that they've deployed in the business , that's where the incrementals really look good .
Thomas Richard Wadewitz: Okay. You probably get some revenue to get to the low end of that 100 to 200. Obviously, if the market's stronger, you can do a lot more. It sounds like that's the point.
Speaker #1: And I, you know, I'd encourage you to consider that over time. And we can point to history. We know we've done it before.
Frederick J. Holzgrefe: Oh, absolutely. Absolutely.
Speaker #11: Okay. So you probably get some revenue to get to the low end of that $100 to $200. And obviously, if the market's stronger, you can do a lot more.
Thomas Richard Wadewitz: Yeah. Okay. Thank you. Appreciate it.
Speaker #11: Is that sounds like that's .
Speaker #1: Absolutely absolutely .
Operator: The next question comes from Brian Ossenbeck with J.P. Morgan. Please go ahead.
Speaker #11: Yeah okay . Thank you . Appreciate it .
Brian Patrick Ossenbeck: Hey, good morning. Thanks for taking the question. First, just to follow up on the insourcing linehaul. It sounds like the network is helping with that from a density perspective. But I thought you also mentioned some technology. So is there more of a structural benefit you're getting here from an investment? And then maybe I just wanted to hear an update on the mix of the portfolio. You mentioned the weight per shipment, rather headwind, West Coast exposure. You had 1 to 2-lane growth previously. So maybe just an update in terms of where we are in that. Is that still going to be part of a tougher comp from a mixed perspective here maybe in the first couple of quarters?
Speaker #2: The next question comes from Brian Ossenbeck with JP Morgan . Please go ahead .
Speaker #12: Hey good morning . Thanks for taking the question . First . Just a follow up on the insourcing Linehaul . It the network sounds like that from a density perspective , but you also mentioned some technology .
Speaker #12: So is there more of a structural benefit you're getting here from an investment? And then maybe just wanted to hear an update on—
Speaker #12: The mix of the portfolio . You mentioned the weight per wait for shipment rather headwind . West coast exposure . You had 1 to 2 lane growth previously , so maybe just an update in terms of where we are in that , is that still going to be part of a tougher comp from a mix perspective here ?
Frederick J. Holzgrefe: Yeah, Brian. So what I would point to, and I think one of the things that's always important when you consider our cost structure, is kind of reference us or compare us to our competitors. All the public guys are all larger than we are. And by and large, I think that if on an apples-to-apples basis, we've got a pretty good cost structure. And that is largely dependent on the deployment of technologies over the last few years around how we plan, schedule, and run our linehaul network. So we have never been necessarily concerned with using PT if it's cost-optimal, right? So as we have modeled the network over time, we have used PT freely when it made sense to match our cost structure and, most importantly, match customer expectations. So we deploy that technology, that optimization technology, on a larger scale as we grow the business.
Speaker #12: And maybe in the first couple of quarters?
Speaker #1: Yeah, Brian. So what I would point to, and I think one of the things that's important when you always consider our cost structure, is to kind of reference us or compare us to our competitors.
Speaker #1: All the public guys are all larger than we are . And , you know , by and large , I think that if you know , an apples to apples basis , we've got a pretty good cost structure .
Speaker #1: And that is largely dependent on the deployment technologies of over the few years around how we plan , schedule and run our linehaul network .
Speaker #1: So we have never been necessarily concerned with using PT if it's cost optimal . Right . So as we have modeled the network over time , we have used PT freely when it made sense to to match our cost structure and most importantly , match customer expectations .
Frederick J. Holzgrefe: And as you add 39 ramping points across the network, which you can do that as you take that same technology and you figure out, "All right. So what's the better way to schedule and manage our sort of network cost, which is our linehaul and PT?" And that's why the cost structure is, we feel like, pretty competitive. And although it's challenged in a seasonally soft Q4, it's still pretty good overall compared to much larger competitors. So that's kind of a key skill set, technology-based solution that we deploy. We'll continue to like any technology, you continue to invest in it because over time, you want to continue to improve whatever it is, the logic or algorithm that's driving those sort of decision points. You want to continue to refine and improve that. So that's something we'll continue to focus on going forward.
Speaker #1: So that same we deploy that technology that optimization technology on a larger scale as we grow the business and as you add 39 ramping points across the the network , which you can do that as you take that same technology and you figure out , all right , so what's the better way to schedule and manage that ?
Speaker #1: Our sort of network costs, which is our linehaul and PT, and that's why the cost structure is, we feel like, pretty competitive.
Speaker #1: And you know, although it's a challenge in a seasonally soft fourth quarter overall, it's still pretty good compared to much larger competitors.
Speaker #1: So that's a kind of a key skill set . Technology based solution that we deploy . We'll continue to , you know , like any technology , you continue to invest in it because over time you want to continue to improve whatever it is .
Speaker #1: The logic or algorithm that's driving those sort of decision points—you want to continue to refine and improve that. So that's something we'll continue to focus on going forward.
Frederick J. Holzgrefe: I think it's a competitive skill set that we have in that.
Matthew J. Batteh: From a mixed standpoint, Brian, I mean, the LA headwind, weight per shipment headwind, those late April, excuse me, late March, April-ish timeframe are when those start to lap. Obviously, shipments were down, but in the areas that are growing, it is typically a little bit more in those shorter haul segments right now. But I think part of that is just the expansion of the network. You get opportunities with customers to solve more problems. But from a larger standpoint, really, that LA weight per shipment part, that recedes a little bit after the late Q1, early Q2 time period. But importantly, we're focused on driving returns on the investments and focusing on price. We've got to get paid for the service that we provide. And we've got more conversation points than we ever have with a wider network.
Speaker #1: know , I think And , it's a competitive skill set that we have .
Speaker #4: From a mix standpoint , Brian , I mean , the LA , wait headwind for shipment headwinds , those late April . Excuse me , late March , April ish time frame or when those those start to lap in the obviously shipments were down .
Speaker #4: But in the in the areas that are growing , it is typically a little bit more in those those shorter haul segments right now .
Speaker #4: But I think part of that is just expansion of the network . You get opportunities with customers solve problems , more to but from a larger standpoint , really , that La wafer shipment part that recedes a little bit after the late Q1 , early Q2 time period , but importantly , we're focused on driving returns on the investments and focusing on price .
Matthew J. Batteh: But those are the key points on the mixed portion of it.
Speaker #4: We've got to get paid for the service that we provide , and we've got more conversation points than we ever have with a wider network .
Brian Patrick Ossenbeck: All right. Thanks. So just to clarify, Fritz, the optimization, is it just doing more with the same technology, nothing really new incremental, just a broader base with better density? Is that correct?
Speaker #4: But those are those are the key points on the on the mix portion of it . .
Speaker #12: All right . Thanks . So just to clarify for the optimization , is just more doing more with the same technology . Nothing really new incremental , just a broader base with better density .
Frederick J. Holzgrefe: Yeah. I mean, that is. But I think, Brian, what's important to underscore here is that we continue to invest in that technology, right, so further refine the algorithms we use for that and the tools that we deploy with that around how we plan the network going forward. So it's not a static investment where we say, "Hey, two years ago, we deployed this technology. We're not making changes to it." We continue to invest in it. But that's really key for us.
Speaker #12: Is that is that correct ?
Speaker #1: Yeah . mean I that that but I think , Brian , is what's important to underscore here is that we continue to invest in that technology .
Speaker #1: Right ? So further refine the algorithms we use for that and the tools that are that we deploy with that around how we plan the going network forward .
Speaker #1: So it's a it's not a static investment where we say , hey , you know , last , you know , two years ago deployed this we technology .
Brian Patrick Ossenbeck: Right. Okay. Thanks for your time.
Speaker #1: not We're changes to it . We continue to making in . But that that's really key for us .
Operator: The next question comes from Ravi Shanker with Morgan Stanley. Please go ahead.
Speaker #12: Right . Okay . Thanks for your time .
Ravi Shanker: Great. Thanks. Morning, guys. Just one follow-up to start. Just to confirm on this insurance, should we treat this as a one-time item, what happened in Q4, or is this the new baseline going forward? And also, kind of, you mentioned you've seen some volume shifts after you pushed through the GRI. Can you unpack that a little bit more? Kind of, who did that go to? Was that entirely price-driven? Kind of, was that a new customer, an old one? Kind of, any further detail there would be great. Thank you.
Speaker #2: The next question comes from Ravi Shanker with Morgan Stanley . Please go ahead .
Speaker #13: Great . Thanks , guys . Just one follow up to start . Just to confirm on this insurance . Like is this like should we treat this as a one time item .
Speaker #13: What happened in the fourth quarter or is this the new baseline forward ? And also you mentioned you've seen some volume shifts after you pushed through the GRI .
Speaker #13: Can you unpack that a little more ? bit Kind of who did that go to . Was that entirely price driven kind of was that a new customer or an old one ?
Frederick J. Holzgrefe: Yeah. I'll take the self-insurance or the accident expense. That's from a few years ago. Unfortunately, it was an unexpected, adverse development. So it's appropriate to record a reserve for that. I don't expect that to be the new run rate. Certainly, you don't want things coming from prior periods like that. But the reality of it is that underlying this business, accident expense is part of the business, right? So you've got to make sure further explanation of why you're going to focus on pricing and make sure you understand those things. But I wouldn't consider that number as a run rate item. We highlighted it simply because it was unexpected, adverse from prior periods.
Speaker #13: Any further detail there would be great . Thank you .
Speaker #1: Yeah . On the I'll take the the self-insurance or the accident expense . a from That's few years ago . Unfortunately , that is it was an unexpected adverse development .
Speaker #1: So , you know , it's appropriate to recorded reserve for that . don't I I don't expect that to be the new run rate .
Speaker #1: Certainly you don't want things coming from prior periods like that . But the reality of it is , is that underlying this business , you know , accident expense as part of the business .
Speaker #1: Right ? So you've got to make sure further explanation of why you're going to focus on and make sure you understand those things .
Speaker #1: But I wouldn't consider that number as a run rate item. We highlighted it simply because it was unexpected and adverse compared to prior periods.
Matthew J. Batteh: On the GRI aspect of it, you always see a little bit of volume move when you take the GRI. And part of that's temporary where customers are trying to shift things around, try to save some dollars. We did it in what's typically a seasonally weaker period of the year. But there's always a little bit of movement around that. We feel pretty strongly that we're really well-positioned as that starts to flow back. But that's not out of the norm. Typically, we talk about sort of keeping 80% to 85% of that. On that segment of business, we're seeing a flow-through rate just in excess of 90%. So we feel like we're getting a better hang on to that. And we feel like it's partly the network.
Speaker #4: On the GRI aspect of it . You always see a little bit of volume move when you take the GRI , and part of that's temporary , where customers are trying to shift things around , save some try to dollars .
Speaker #4: That's why we did it in what's typically a seasonally weaker period year . of the But there's always a little bit of of movement that around .
Speaker #4: We feel pretty strongly that we're really well positioned as that starts to flow back , but that's not out of the norm . We're typically we talk about sort of keeping 80 to 85% of that .
Speaker #4: We're on that segment of business. We're seeing a flow-through rate just in excess of 90%, so we feel like we're getting a better hang on to that.
Matthew J. Batteh: We've got more opportunities where customers are saying, "Hey, SAIA is doing a great job for me in more locations than they ever have." You always see a little bit of volume trend. But importantly, the acceptance rates where we're focused and where we're going to continue to press on.
Speaker #4: And we feel like it's partly the network . We've got more opportunities where customers are saying , hey , is doing a great job for me and more locations ever have , but you always see a little bit of volume trend .
Ravi Shanker: Sounds good. Thank you.
Speaker #4: But importantly , the acceptance rates where we're focused and we're going to continue to press on . .
Operator: The next question comes from Ariel Rosa with Citigroup. Please go ahead.
Speaker #13: Sounds good . Thank you
Ariel Luis Rosa: Hi. Good morning. This is Ben Moore at Citigroup for Ari. Hey, Fritz, Matt. Good to hear from you. Thanks for taking our question. You've previously noted not seeing meaningful restocking at retailers. Curious to hear, as you're having your conversations with customers, what's the sense on restocking? Is it starting to happen? If not, what's your sense on kind of throughout the year when that might inflect?
Speaker #2: The next question from comes Ariel Rosa with Citigroup . Please go ahead .
Speaker #14: Hi . Good is morning . This Ben Moore at City Ferrari . Hey , Fritz . Matt , good to hear from you .
Speaker #14: And thanks our question . You previously noted not seeing meaningful restocking at retailers . And to hear as you're having your conversations with customers , what's the sense on restocking ?
Speaker #14: Is it starting to happen if not , what's your kind of . sense on Throughout the throughout the year when that might inflect ?
Frederick J. Holzgrefe: Yeah. I don't know that we've got a specific callout for that, Ben. I think that it's what we would expect from here based on at least what the sentiment you say is kind of maybe more normal, if you will. So I don't know that it's accelerated level of restocking or just more of a normalized supply chain management. So I don't know that we're in the, how would I say, the sort of up-and-down time with that. I think it seems to be stabilizing a bit. So we don't see quite the volatility that we might have seen even six months ago as people were addressing changes in their supply chain. We don't see as much of that now as we did then.
Speaker #1: Yeah , I don't know that we've got a specific call out that . for Ben . I think that it's you know what we would expect from here based on at least when the say is sentiment you that kind of maybe more , more normal , if you will .
Speaker #1: So I don't know that it's accelerated level of restocking or just more of a normal normalized supply chain management . So I know that don't we're in the how would I say the sort of up and down time with that ?
Speaker #1: think it I seems to be stabilizing a bit . So we don't see quite the volatility that we might have seen . Even , you know , six months ago , because people were addressing changes in their supply chain .
Ariel Luis Rosa: Great. Really appreciate that. And maybe just as an add-on or a clarification on your 20% to 25% excess capacity you mentioned earlier, you've in the past talked about maybe anticipating as much as 35% to 40% incremental margins on the excess capacity on an inflection and kind of reaching gradually your sub-80 OR long-term target. What's your sense on that right now? Are those numbers still kind of what you have in mind targeting, perhaps maybe not 26 but 27 beyond?
Speaker #1: We don't see as
Speaker #1: We don't see as we did
Speaker #1: much as
Speaker #1: much as
Speaker #14: Really appreciate And . Great . as an add
Speaker #14: maybe just now as
Speaker #14: on or on clarification your 20 to 25% excess capacity , you mentioned earlier , you in the past talked about maybe anticipating as much as 35 to 40% incremental margins on the excess on an capacity inflection and kind of reaching gradually your sub80 or long term target .
Speaker #14: What's your sense on that right now? Are those numbers still kind of what you have in mind, targeting perhaps maybe not '26, but '27 and beyond?
Frederick J. Holzgrefe: Listen, a $2 billion capital investment on a business like what we've deployed in this business, the returns that we're expecting are sub-80 OR, right? So now, when does that happen? I think the market is going to influence that. But I don't see any reason why we don't drive the performance of the business in the low 80s and into the 70s. Parts of the network, even today, that have some level of maturity, we actually operate in the upper 70s now. We use that as a guidepost. We say, "Look, we ought to be able to do that everywhere." And that's why we made the investment. So I don't think there's any hesitation on our side to say that that can't be achieved.
Speaker #1: Listen , a $2 billion capital investment , a a like what we've this deployed in business . The returns that we're expecting are sub80 or .
Speaker #1: Right. So now, when does that happen? I think the market is going to influence that. But I don't see any reason why we can’t drive the performance of the business in the low 80s.
Speaker #1: And the 70s . Parts of the network , even today that have some level of into we actually operate in the upper 70s now .
Speaker #1: We use that as a, we say, guidepost. Look, we ought to be able to do that everywhere; that's why we made the investments.
Speaker #1: So, I think there's not any hesitation on our side to say that that can't be achieved.
Ariel Luis Rosa: Great. Thanks so much.
Operator: The next question comes from Reed CA with Stephens. Please go ahead.
Speaker #14: Great. Thanks so much.
Daniel Robert Imbro: Hey, guys. Thanks for taking my question. I wanted to touch on salaries, wages, and benefits here in Q4. You talked about headcount being down, I think, above 5% year-over-year. Obviously, you had the wage increase here in October. But you would think that maybe the headcount coming out and the wage increase on a year-over-year basis would offset each other. Can you talk about maybe or just dig into the expenses in that salaries, wages, and benefits line a little more? Is there anything in Q4 that maybe won't repeat going forward, or is there any reason that that could potentially be elevated? Or just more color there would be helpful.
Speaker #2: The next question comes from Reed , CA with Stephens . Please go ahead .
Speaker #15: Hey guys . Thanks for taking my question . I wanted to touch on salaries , wages and benefits here in the fourth quarter .
Speaker #15: talked You about headcount being down . I think above 5% year over year . Obviously you had the wage increase here in October , but you would think that maybe like the headcount coming out in the wage increase on a year over year basis would offset each other .
Speaker #15: Can you talk about maybe or just dig into the expenses in salaries , wages and benefits line a little more ? Is there anything in the fourth quarter that maybe won't repeat going forward , or is there any reason that that could potentially be elevated or just more color ?
Matthew J. Batteh: Yeah. I mean, you've always got, we talked about the health insurance inflationary environment. We talked a little bit about that in the pre-scripted comments. If I look at headcount excluding linehaul drivers, it's down 6.4% compared to Q4 last year and down about 2% sequentially from Q3 to Q4. But on a cost-per-shipment basis, which I think is where you're getting at, Reed, if you look sequentially, you've got 2 fewer workdays. So your fixed costs are spread out over fewer days, fewer shipments. You've got a shipment deterioration that you see in the sequential Q3 to Q4 numbers. And then the days that you have shipments, they're not all full revenue days, but the fixed costs of headcount, of salaries, of, in a way, some of the insurance items, those are all embedded in there.
Speaker #15: There would be helpful ?
Speaker #4: Yeah , I mean , you've always got you know , we talked about the the health insurance inflationary environment . We talked a little bit about that in the pre scripted comments .
Speaker #4: If I look at headcount excluding Linehaul, it's drivers down 6.4% compared to Q4 last year and down about 2% sequentially from Q3 to Q4.
Speaker #4: But in a cost per shipment basis , which I think is where you're getting at . Reed . If you look sequentially and you've got two fewer workdays , so your fixed costs are spread out over fewer days , fewer shipments , you've got a shipment deterioration that you see in the sequential Q3 to Q4 numbers .
Speaker #4: And then the days that you have shipments , they're not all full revenue days , but the fixed costs of of headcount , of salaries of , you know , in a way , some of the insurance items , those are all embedded in there .
Matthew J. Batteh: But we're pleased with the pace that we continue to match hours with volume. We're never going to be; that's just part of our business. You've got to match hours with volume. So I think more than anything, it's just you didn't have the wage increase in Q3, so we did it in Q4. So that's an automatic increase compared to you were just kind of looking and modeling historically. But we feel like we manage it pretty effectively in what's a challenging period of the year, plus with a more challenging environment. We knew what October shipments were on the last call, and that was a 23-workday month, which is the most important month. November was 18 days. So just some of those nuances and headwinds on how the calendar lines up.
Speaker #4: But we're pleased with the pace to match that we continue volume . We're with never going to be . That's just part of our business .
Speaker #4: got to You've match ours with volume . I So more than anything , think it's just you didn't have the wage increase in Q3 , so we did it in Q4 .
Speaker #4: So that's an automatic increase compared to you were just kind of looking and modeling historically . But we feel like we manage it pretty effectively .
Speaker #4: And challenging period of the year . Plus with a more challenging environment we knew what October shipments were on the last call , and that was a 23 workday month , which is the most important month .
Matthew J. Batteh: But we feel like we manage costs, what we typically do, on a headwind from a wage increase that was only in one period versus the combination of the two.
Speaker #4: November was 18 days, so just some of those nuances and headwinds on how the calendar lines up. But we feel like we managed costs as we typically do on a headwind from a wage increase.
Speaker #4: That was only in one period versus the combination of the two .
Daniel Robert Imbro: If I could just follow up on the previous question on capacity, can you talk about the capacity difference in your new markets versus your legacy markets? I would assume you have a little more access in your new markets as you try to build density in those, but just kind of get a feel for where the legacy markets are as well.
Speaker #15: And if I could just follow up on the previous question on capacity, can you talk about the capacity difference in your new markets versus your legacy markets?
Speaker #15: I would assume you have a little excess , a little more in your new markets as you try to build density in those , but just kind of get a feel for the where legacy markets are as well .
Frederick J. Holzgrefe: Yeah. I think Matt walked through this pretty well earlier. But I think you got to remember that capacity is measured by not only door count, it's yard space, it's drivers, it's equipment. In the new markets, we can continue to have and would expect to at this stage, ample capacity. We can if things grew in those markets at a rate faster, you could easily add drivers, or we could recruit drivers, add equipment, that sort of thing. In the legacy markets, we feel pretty well-positioned there. When we say 20, 25 percent, we're taking a whole range of assumptions and locations. Unlike maybe some of our larger, more established, mature peers, our number is a whole range of variations. So there's not a lot of insight there that I can give you beyond to say, "Look, new markets, plenty of capacity, probably upwards of 50 percent, newer market.
Speaker #1: Yeah , I think Matt walked through this pretty well but I think you got to remember that capacity is measured by not only door count .
Speaker #1: It's yard space . It's drivers . It's equipment . You know , in the new markets , we can continue to have and would expect to at this stage , ample capacity .
Speaker #1: You know we can you know if things grew in those markets at a rate faster you could easily add drivers or we could recruit drivers , add equipment , that sort of thing .
Speaker #1: And the legacy markets , we feel pretty well positioned there when we say 20 , 25% , we're taking a whole range of assumptions and locations .
Speaker #1: Unlike maybe some of our larger , more established , mature peers , our number is a whole range of variations . So it there's not a lot of that I insight there can give you beyond to say , look , new markets , plenty of capacity probably , you know , upwards of 50% and newer , more legacy a little bit less , you know , probably around 20 ish .
Frederick J. Holzgrefe: Legacy, a little bit less, probably around 20-ish. You got to weigh how big are the new versus old. I don't spend a lot of time worrying about it, to be honest.
Speaker #1: You know , you got to wait . You know , how big are the new versus old ? I don't spend a lot of time about it , to be honest worrying .
Daniel Robert Imbro: Got it. Well, thanks for squeezing me in, guys.
Operator: The next question comes from Jason Seidl with TD Cowen. Please go ahead.
Speaker #15: Got it . Well , thanks for squeezing me in , guys .
Jason H. Seidl: Thank you, Operator Hayford. Hey, Matt. If we look at these 39 terminals - and by the way, it's great to see them turning profit now - how should we think about the walk to sort of an average legacy profitability? So if we assume normalized economic environment and a rational LTL pricing environment, how many years till these terminals walk up to the average?
Speaker #2: Next question comes from Jason Seidl with TD Cowen . Please go ahead .
Speaker #16: Thank you . Operator . Hey . Hey , Matt . If we look at these 39 terminals and by the way , it's great to see them turning a profit .
Speaker #16: Now , how should we think about the walk to sort of an average legacy profitability . So if we assume normalized economic environment and a rational LTL pricing environment , you know , how many years until these terminals walk the up to average ?
Matthew J. Batteh: Well, there's a wide range in these. Obviously, in that 39, you've got a Garland, Texas, facility that's more meaningful than some of the smaller ones just in terms of freight environment and magnitude. Historically, we think about these on sort of a three-ish-year time horizon to get towards company average. Now, the comment that you made was on a better macro. In a better macro backdrop, we're going to get there faster. Yeah. Normal, we think about it in a three-year time horizon. We've got some of these that are already operating below the company number. I mean, it's not all of them. It's a minority, certainly, only a couple of them. But that's good to see in the scale impacts of it. But typically, we think about them on a three-year time horizon.
Speaker #4: there's a wide Well , range . And obviously in you've that 39 , got a Garland , Texas facility that's more meaningful than than some of the smaller ones that just in terms of freight environment and and magnitude , historically , we think about these on sort of a three ish year time horizon to get towards company average .
Speaker #4: Now , the comment that you made was on a better a better macro and a better macro backdrop . We're going to get faster .
Speaker #4: Yeah . Normally we think about it in a three year time horizon . We've got some of these that are already operating below the company number .
Speaker #4: And it's not all of them . It's it's the minority . Certainly only a couple of them . But that's good to see in the scale impacts of it .
Matthew J. Batteh: And if the macro gives us a little bit of an uplift and it's a bit of a recovery scenario, you think about that, what Fritz just said in the previous question around excess capacity. Well, you have fixed costs that are just associated with running these terminals. And obviously, you've got variable costs in there as well. But the fixed costs are going to scale even more so in an uplift environment. That's what gets us so excited about this. In a volume uplift environment, you're not having to add costs at a one-for-one level. We can scale. The investments that we've made are not for the results in these terminals in the next 3 months or 6. It's a 3, 5, 10-year investment that we're making these in.
Speaker #4: But typically we think about them on a on a three year time horizon . And if the macro gives us a little bit of an uplift and it's a bit of a recovery scenario , you think about that .
Speaker #4: What Fritz just said in the previous question around excess Well , you have fixed costs that are capacity . just associated with running these terminals .
Speaker #4: And you've got obviously costs in variable there as well . But the fixed costs scale to are going even more so in an environment .
Speaker #4: uplift That's what gets us so excited about this in a volume uplift environment , you're not having to add costs at a one for We can one level .
Speaker #4: scale with the investments that we've made are not for the results in these terminals . In the next three months or six . It's a three , five , ten year investments that we're making these in .
Matthew J. Batteh: But that means that there are fixed costs embedded in those and inefficiencies that aren't in some of the markets that have been open for much longer. So we get really excited about the opportunity to scale just because we're the only one that's opened this many new terminals in a short period of time. It's a right long-term move, but it really sets us up to take advantage in a bit of a better macro.
Speaker #4: But that means that there are fixed costs embedded in those, and then that aren't in some of the markets that have been open for much longer.
Speaker #4: So we get really excited about the opportunity to scale just because we're the only one that's opened this many new terminals in a short period of time .
Jason H. Seidl: Right. No, that makes sense. Just a quick follow-up on the insurance side. Given sort of the rise that we've seen in sort of the mini-nuclear verdicts that's been more recently, any thought given to maybe upping your self-insurance level going forward?
Speaker #4: It's the right long term move , but it really sets us up to take advantage in a in a bit of a better macro .
Speaker #16: Right now . That makes sense . Just a quick follow up on the insurance side . You know , given sort of the rise that we've seen in sort of the mini nuclear verdicts that's been recently .
Speaker #16: Any thought given to maybe upping your self-insurance level , going forward ?
Matthew J. Batteh: We're always looking at unique ways and conversations around our insurance tower. We factor in a lot of different things as we're going through those negotiations and the renewals. I think very important we invest in. We've said this for a long period of time. We invest and we'll continue to invest in every piece of safety technology, best-in-class equipment with all safety technology on it. So we're never going to take a break from that. But the environment is inflationary. I mean, you hear everybody talk about that. So the best way to prevent that is to have fewer incidences. And we are pleased with the progress we've made this year. So we have a pretty wide-ranging discussion every time on the insurance renewal side. So there's no stone unturned when we're talking about those things.
Speaker #4: We're always looking at unique ways and conversations around our insurance tower. We factor in a lot of different things as we're going through those negotiations and renewals.
Speaker #4: I think very important . We invest and we've said this for a long period of time . We invest and will continue to invest in every piece of safety , technology , best in class equipment , with all , all safety technology on it .
Speaker #4: So we're never going to take a break from that. But the environment is inflationary. I mean, you hear everybody talk about that.
Speaker #4: So the best way to prevent that is to have fewer incidences . And we are pleased with the progress we've made this year .
Speaker #4: So we have a pretty wide-ranging discussion every insurance renewal side. So we take it there's unturned no stone when we're talking about those items.
Frederick J. Holzgrefe: And I would challenge that we would. Saia likely has, if not the top, from a safety feature set fleet as anybody in the business. I mean, we have never cut corners on that, driver-facing, forward-facing cameras, all the accident mitigation technology on board, training to support that. That's important to us. The most important thing we can do around safety is keep our drivers safe, get them home safely. That's how you save on insurance, get people back home safe, back to work tomorrow safe.
Speaker #1: And I would challenge that . We would say it likely has if not the top from a safety feature set fleet . Is anybody in the business ?
Speaker #1: I mean , we have never cut corners on that driver facing forward , facing cameras all the board accident technology mitigation on training support to that .
Speaker #1: important to us . We and the most important thing we can do around safety is keep our drivers safe , get them home safely , that , you know , that that's how you save on insurance , get people back home safe .
Jason H. Seidl: Appreciate it. The time is always gas.
Speaker #1: Back to work tomorrow . Safe .
Operator: The next question comes from Eric Morgan with Barclays. Please go ahead.
Speaker #16: Appreciate the time as always, guys.
Eric Thomas Morgan: Hey. Good morning. Thanks for taking my question. I just wanted to follow up on the last one on insurance. I know you said you don't think we should be including the prior period developments in the run rate. So just want to clarify if we, I mean, if we back out the $4.7 from the quarter, I think insurance costs would have come down sequentially a healthy amount to like $20 million. So just want to double-check if that $20 million or so is the run rate you're thinking going forward. And if so, what's kind of driving that sequential improvement? I know you mentioned claims ratio improved there. So not sure if that's a factor as well. Thanks.
Speaker #2: The next question comes from Eric Morgan with Barclays. Please go ahead.
Speaker #17: . Good morning . Hey Thanks for taking my question . I just wanted to follow up on the last one on insurance . I know you said you don't think we should be including the prior period developments in the run rate , so just want to clarify if , I mean , if we back out the 4.7 from the quarter , I think insurance costs would have come down sequentially .
Speaker #17: A healthy amount to like $20 million. So just want to double check if that $20 million or so is the run rate.
Speaker #17: You're thinking going forward . And if so , of what's kind improvement ? driving that sequential I know you mentioned claims ratio improved there .
Matthew J. Batteh: Yeah. The math you did, Eric, is right on the impact of that. So that would point to us. We're having, and what was embedded in our guide, obviously, a pretty good quarter from an experience standpoint. No, I think you've got to use a longer-term average, certainly, when you're thinking about it from a modeling standpoint. You'll look in our history, and you'll see pluses, minuses, and just how that moves throughout the year. Environment's going to continue to be inflationary. But I think importantly, as Fritz noted a second ago, we've spent a lot of time and will continue to on the training. And we were seeing it in our results, and we continue to. Preventable accidents down 21% compared to the prior year. And that was embedded in some of that Q4 look. But I think you've got to use a longer-term average.
Speaker #17: So not sure if that's a factor as well . Thanks .
Speaker #4: Yeah the Eric is right on the math you did on the impact of that . So that would point to us . We're having and what was embedded in our guide .
Speaker #4: Obviously pretty good quarter from an experience standpoint . You know , I think you've got to use a longer term average , certainly when you're thinking about it from a modeling standpoint , you it's you'll look in our history and you'll see pluses and minuses and just how that moves throughout the year .
Speaker #4: Environment is going to continue to be inflationary . But I think importantly , as Fritz noted , a second ago , we've spent a lot of time and will continue to on the training .
Speaker #4: The and we were seeing it in our results and we continue to preventable accidents . Down 21% compared to the prior year . And that was , you know , embedded in some of that Q4 look , but I think you've got to use a longer term average , these discrete ones aren't part of the the run rate moving forward , but that line continues to be inflationary .
Matthew J. Batteh: These discrete ones aren't part of the run rate moving forward. But that line continues to be inflationary. I think it's fair to use more of a longer-term average with some inflation on top of it.
Frederick J. Holzgrefe: And then when we build in our guides, we think about what OR improvements are. That's assuming what we understand to be about sort of a normal case development, right? The handful that we described, we called out here were extraordinary in the sense that the tail on them. But when we think about the guide, we appreciate that that is an inflationary line. So we try to include that in that analysis. And that would include some development of cases that have happened over time. So Matt's description around looking at that over time is important.
Speaker #4: I think it's fair to use more of a longer term average with with some inflation on top of
Speaker #1: then when And in our we build guides , you know , we think about our improvements are . what That's assuming what we understand to be about sort of normal case development .
Speaker #1: Right . These the handful that we described , we called out were here extraordinary in the sense that , you know , the tail on them .
Speaker #1: But when we think about the guide, we appreciate that that is an inflationary line. So we try to include that in that analysis.
Speaker #1: that And would include some development of , you know , cases that have happened over time . So Matt's description around , you know , looking at that over time is important .
Eric Thomas Morgan: Thanks for the time.
Operator: The next question comes from Harrison Bauer with Susquehanna. Please go ahead.
Speaker #17: Thanks for the time .
Bascome Majors: Great. Thanks for taking my question and squeezing me in here. Matt, building off some of your thoughts on fixed versus variable costs, some of your peers have offered what their view is on incremental margins in the early stages of a growing tonnage environment, considering you've similarly invested heavily into your network with ample capacity. As you get this network running, can you share what your views are for incremental margins in your business before you'd have to invest materially in more capacity, and if that's drastically different from the 40%+ that your peers have described? Thank you.
Speaker #2: The next question comes from Harrison Bauer with Susquehanna. Please go ahead.
Speaker #18: Great . Thanks for taking my question and squeezing me in here , Matt . Building off your some of your thoughts on fixed versus favorable cost , some of your peers have offered their view what is on incremental margins in the early stages of a growing tonnage environment , considering you similarly invested heavily into your network with ample capacity , as you get this network running , can you share with your views ?
Speaker #18: Are for incremental margins in your business ? Before you'd have to invest materially in more capacity ? And if that's drastically different from the 40% plus that your peers have described , thank you .
Matthew J. Batteh: No. I mean, look, to Fritz's earlier point, this is why we did this. We do have these costs that are associated with opening 39 terminals over the past three or so years. But we feel really poised to scale out of that. There is no reason. I mean, we think about those same types of numbers in a slight uptick environment. And then certainly, if it escalates further, a 30% to 40% incremental margin number. And you'll see that probably in excess of that in some of these markets that are relatively new because you're not adding costs at the same pace as what the volume and the revenue is coming in, which is part of having a national network and part of why we scaled. And history proves that point.
Speaker #4: No , I mean , look , this is to your point . This is why we did this . And we do have these costs that are associated with opening 39 terminals over the past three or so years .
Speaker #4: But we feel really poised to scale out of that . There's no reason . I mean , we think about those of numbers in a slight uptick environment .
Speaker #4: And then certainly if it escalates further , 30 , margin number , and you'll see that probably in excess of that in some of these markets that are relatively new , because you're not you're not adding costs at the same pace as what the volume and the revenue is coming in , which is part of having a national network .
Matthew J. Batteh: If you go look at the execution and the incremental margins post the Northeast expansion, that's exactly what we saw. And there's nothing that stops us from getting to that point. So that's exactly how we think about it. And if the environment runs a little bit further or faster and the capacity environment tightens, we feel like we can outperform that. But that's absolutely the types of numbers that we think about.
Speaker #4: And part of why we scaled and history proves that point . If you go look at the execution and the incremental the northeast expansion , that's exactly what we saw .
Speaker #4: And there's nothing that that stops us from getting to that point . So that's exactly how we think about it . And if the environment runs a little bit further or faster and the capacity environment tightens , we feel like we can we can outperform that .
Bascome Majors: Thanks.
Speaker #4: But that's—that's absolutely the types of numbers that we think about.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Fritz Holzgrefe, Saia's President and Chief Executive Officer, for any closing remarks.
Speaker #18: Next .
Speaker #2: concludes our This question and answer session . I would like to turn the conference back over to Fritz Holzgrabe , size President and Chief Executive any Officer , for closing remarks .
Matthew J. Batteh: Betsy, it looks like one more person popped in the queue. Could we answer? Can we get Tyler?
Operator: My apologies. The next question comes from Tyler Brown with Raymond James. Please go ahead.
Speaker #4: Betsy , can we it looks like one more person popped in the queue . Could we could we answer , can we get Tyler ?
Patrick Tyler Brown: Hey. Thanks, guys. Thanks for squeezing me in. I just had a couple of quick ones. So Fritz, I think you talked about your $2 billion investment. That was obviously largely on real estate. I think you just gave CapEx guide of $350 to 400. But Matt, where would you peg maintenance CapEx? And is this year's CapEx largely just fleet and fleet catch-up?
Speaker #2: My apologies . The next question comes from Tyler Brown with Raymond James . Please go ahead .
Speaker #19: Hey . Thanks , guys . Thanks for squeezing me in . I just had a couple quick ones , so , Fritz , I think you talked about your $2 billion investment .
Speaker #19: That was largely on obviously real estate . I gave think you just of 350 to 400 . But , Matt , where would peg maintenance CapEx ?
Matthew J. Batteh: There was a lot, obviously, in real estate over that past period. But there's also a big investment in equipment over the past couple of years. If you look at past couple of years, the biggest tractor investment in company history, the biggest trailer investment in company history, a lot of that was to catch up with all the volume growth over the past several years. So it is a lot of real estate, but it's also a lot of equipment as well in that period. From a maintenance CapEx standpoint, I mean, that's really what this year is from an equipment standpoint, is maintenance CapEx. Obviously, volumes are a little bit down compared to where we expected them to be when we walked into 2025. So we feel really good about the equipment pool. That is inflationary, just like every other line of our business.
Speaker #19: Is this year's and CapEx largely just fleet and fleet catch-up?
Speaker #4: There was a lot, obviously, in real estate over the past period. But there's also been a big investment in equipment over the past couple of years.
Speaker #4: If you look at past couple of years , the biggest tractor investment in company history , the biggest investment in company history , a lot of that was to catch up with all the volume growth over the past several years .
Speaker #4: So it is a lot real estate , but it's also a lot of equipment as well in that that period from a maintenance CapEx standpoint , I mean , that's that's really what this year is from a equipment standpoint is maintenance , CapEx .
Speaker #4: Obviously, volumes are a little bit down compared to where we expected them to be when we walked into 2025. So we feel really good about the equipment pool; that is inflationary, just like every other line of our business.
Matthew J. Batteh: But from an equipment side, it's really a maintenance-ish buy this year, for sure.
Patrick Tyler Brown: Okay. So it feels that you guys will be still cash-generative. You should have solid free cash. Your leverage is very manageable. M&A probably isn't a story. And clearly, Fritz, you see a ton of upside. So does there come a point that you guys will contemplate additional shareholder returns, I mean, maybe through a buyback? Or will you guys hold capital back for another CapEx cycle down the road? But how do you guys think about that over the next couple of years? Thanks.
Speaker #4: But from that's an equipment side . It's really maintenance ish . By this year for sure .
Speaker #19: Okay , so it feels that you will be still cash generative . You should you should have solid cash . Your leverage is very manageable .
Speaker #19: M&A probably isn't a story . And clearly , Fritz , you see a ton of upside . So does there come a point that you guys will contemplate shareholder additional returns ?
Speaker #19: I mean, maybe through a buyback, or will you guys hold capital back for another CapEx cycle down the road? But how do you guys think about that over the next couple of years?
Frederick J. Holzgrefe: So I would say all those things are in play, right? So first of all, we understand and respect the fact we are stewards of the shareholders' capital. So as this business generates returns, we'll consider buybacks, dividend, whatever that might be. But that's important, right, because this is a business that we expect to generate a return. At the same time, I think that we're going to have to balance that with opportunities that will be presented to us as the market adjusts, as terminals become available in markets that we don't necessarily service as well as we would like to. We've got 212, 213 facilities right now nationwide. And I think that that potentially goes to 230. And I think that potentially, there's some markets where we may have to build.
Speaker #19: Thanks .
Speaker #1: So I would say all those things are in play , right ? So first of all , we understand and respect the fact that we are stewards of shareholders capital .
Speaker #1: So yeah , as this business generates returns , you know , we'll consider buybacks , dividend whatever that might be . But that's important , right .
Speaker #1: Because this is a business that we expect to generate a return at the same time , I think that we're going to have balance that to with opportunities will present be presented us as the to market adjusts as as terminals become available and markets don't necessarily service as well as we that we would like to .
Speaker #1: we've got You know , 212 , 213 facilities right now nationwide . And I think that that potentially goes to 230 . And I think that potentially there's some markets where we may have to build .
Frederick J. Holzgrefe: There can be other markets where I think we're going to be able to find available real estate. So we're going to have to balance the deployment of capital in that way. I think the way to think about that, though, is obviously, we're going to be stewards first, first and foremost, to the extent the investment opportunities present themselves, those are going to be accretive from a return on invested capital as well. So that would further fund shareholder returns in future years because I think there's a lot of growth potential in this business still. So we're excited about that opportunity.
Speaker #1: There could be other markets where I think we're going to be able to , you know , available real estate . So we're going to have to balance the , the , the deployment of capital in that way .
Speaker #1: I think the way to think about that , though , is obviously we're going to be stewards first , first and foremost , to the extent the investment opportunities present themselves , those are going to be accretive from a return on invested capital as well .
Speaker #1: So that would , you know , further fund shareholder returns in future years , because I think there's a lot of growth in this business .
Speaker #1: So that would, you know, further fund shareholder returns in future years, because I think there's a lot of growth in this potential still.
Matthew J. Batteh: I think important to add to that, Tyler, too, the point you made at the beginning of being free cash flow generative this year is a big deal. That's what we'd expect to be.
Speaker #1: So we're excited opportunity . about That that .
Speaker #4: I think it's important to add to that, Tyler. To the point you made at the beginning, being free cash flow generative this year is a big deal.
Patrick Tyler Brown: Yep. Perfect. Okay. Thanks, guys.
Speaker #4: That's what we expect to be.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Fritz Holzgrefe, Saia's President and Chief Executive Officer, for any closing remarks.
Speaker #2: This concludes our question and answer session. I would like to turn the conference back over to Frederick Holzgrefe, Vice President and Chief Executive Officer, for any closing remarks.
Frederick J. Holzgrefe: Thank you, operator. Thanks to all that have called in. At Saia, we believe that our value proposition of the customer continues to be significant. We look forward to talking about the success we will achieve in the quarters and years to come. Thanks all for the time.
Speaker #1: Thank you, operator, and thanks to all that have called in at PSI. We believe that our value proposition to the customer continues to be significant, and we look forward to talking about success.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker #1: We will achieve in the quarters and years to come. Thanks, all, for the time.
