Saia, Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing; the supplied text does not provide a separate Q4 income statement. Saia is primarily a less-than-truckload (LTL) carrier operating in 45 states; more than 96% of revenue comes from LTL services.
Financial results and liquidity
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Operating revenue | $2.792 billion | $2.289 billion | +22.0% |
| Operating income | $470.5 million | $335.1 million | +40.4% |
| Operating ratio | 83.1% | 85.4% | Improved 2.3 percentage points |
| Net income | $357.4 million | $253.2 million | +41.1% |
| Diluted EPS | $13.40 | $9.48 | +41.4% |
| Operating cash flow | $473.0 million | $382.6 million | +23.6% |
| Net capital expenditures | $365.5 million | $277.3 million | Higher investment |
Revenue growth reflected pricing actions, higher fuel surcharge revenue and improved business mix. LTL revenue per hundredweight rose 19.4% to $24.70 and revenue per shipment increased 21.5% to $351.27. Annual LTL tonnage increased 1.3% while shipments decreased 0.4%; management reported tonnage up 0.9% and shipments down 0.8% per workday. Fuel surcharges were 19.9% of revenue, versus 14.0% in 2021.
Costs grew unevenly: salaries, wages and benefits increased 9.9%; purchased transportation 26.5%; fuel and other operating expenses 36.2%; and depreciation and amortization 10.9%. Management attributed improved operating income chiefly to pricing and fuel margin, partly offset by wages, purchased transportation, maintenance and depreciation. Claims and insurance expense declined $4.7 million, largely due to favorable claims development and settlements.
At year-end, cash and cash equivalents were $187.4 million and working capital was $256.8 million. Saia had no revolving-credit borrowings, $268.8 million of availability and $33.0 million of outstanding letters of credit. Finance-lease debt was $31.0 million; total debt on the balance sheet consisted of finance leases. The company reported compliance with debt covenants. On February 3, 2023, it replaced its secured $300 million revolver with an unsecured $300 million facility maturing in February 2028, with an accordion option for up to $150 million of additional capacity.
Material changes and operating developments
- Operating ratio improved to 83.1% from 85.4%, as operating income grew faster than revenue.
- Average LTL shipment weight rose 1.8% to 1,422 pounds; average length of haul declined 1.0% to 904 miles.
- Saia opened 11 terminals in 2022 and 18 over the prior two years. Its network comprised 191 facilities at year-end; the company reported more than $1 billion of capital investment over five years.
- Cash increased from $106.6 million to $187.4 million. Operating cash flow rose, while investing cash use increased to $365.5 million, primarily due to capital spending.
- Employee wage increases of approximately 4.3% took effect in July 2022. The filing estimates their annual cost at approximately $32.2 million.
Outlook, risks and contingencies
Management planned 2023 net capital expenditures in excess of $400 million, subject to market conditions, to replace and add equipment and support terminal, real estate and technology investments. A 6.5% general rate increase took effect January 30, 2023 for customers representing approximately 25% of revenue. Management also planned five new terminals in early 2023. It expects to pursue density, geographic expansion, pricing and yield management, while adjusting resources to volume if the economy softens. Management cautioned that results depend on economic conditions, competitive pricing, labor availability, fuel prices and supply-chain constraints; it provided no specific earnings or revenue guidance.
- Key operating risks include economic downturns, inflation, pricing pressure, driver and other labor shortages, fuel volatility, purchased-transportation availability, equipment and real-estate costs, and supply-chain delays.
- Insurance and claims exposure is material: the company self-insures portions of workers’ compensation, bodily injury, auto liability, cargo and health claims. The balance sheet included $45.5 million of current claims and insurance accruals and $60.4 million of non-current claims, insurance and other liabilities. KPMG identified estimation of self-insured workers’ compensation and bodily injury liabilities as a critical audit matter.
- Expansion requires substantial spending and may reduce profitability until new facilities and markets mature. Management noted that new markets or terminals may not prove profitable.
- Environmental regulation is an emerging cost and execution risk, including stricter heavy-duty emissions rules and California zero-emission truck requirements. The filing notes limited availability of suitable zero-emission vehicles and supporting infrastructure for LTL operations.
- Other disclosed risks include cybersecurity and technology disruptions, severe weather and climate impacts, customer credit losses, litigation, and potential changes to labor and data-privacy regulations. Ordinary-course legal proceedings were not expected to materially affect financial condition, though they could materially affect results in a particular period.
- The company has not paid cash dividends; dividends remain restricted under its credit agreement. Its financial statements received an unqualified audit opinion, and KPMG and management reported effective internal control over financial reporting.
Important facts for investors to verify
- Whether pricing and fuel surcharge recovery can sustain yield and margins if freight volumes weaken or fuel prices decline.
- Whether shipment and tonnage trends, particularly the difference between annual totals and per-workday measures, support continued network growth.
- Actual 2023 capital expenditures and the returns, utilization and profitability of new terminals and expanded markets.
- Development of self-insured claims reserves, insurance costs and the potential effect of adverse claims experience.
- Progress on hiring, equipment deliveries and compliance with emissions requirements, and the resulting impact on capacity and costs.