Saia, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Saia provides primarily less-than-truckload (LTL) transportation services across 45 states, with additional truckload, expedited and logistics offerings. Financial statements are unaudited.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Change |
|---|---|---|---|
| Operating revenue | $729.6 million | $616.2 million | +18.4% |
| Operating income | $128.4 million | $106.1 million | +21.0% |
| Operating ratio | 82.4% | 82.8% | Improved 0.4 percentage points |
| Net income | $97.9 million | $79.7 million | +22.8% |
| Diluted EPS | $3.67 | $2.98 | +$0.69 |
- For the first nine months, revenue was $2.136 billion (+27.8%), operating income $377.8 million (+58.9%), net income $286.6 million (+59.7%), and diluted EPS $10.75 versus $6.72.
- Q3 operating margin was approximately 17.6% versus 17.2% a year earlier. Q3 net margin was approximately 13.4% versus 12.9%.
- Q3 LTL shipments per workday declined 2.5% and tonnage per workday declined 0.4%; revenue per shipment rose 20.1% to $359.04. Fuel surcharge revenue was 20.5% of revenue versus 13.9%.
- Nine-month operating cash flow was $344.1 million versus $267.7 million. Investing cash outflow was $278.0 million, principally for equipment and real estate; financing cash outflow was $22.8 million. Cash ended at $149.8 million.
- At September 30, total assets were $2.140 billion and working capital was $212.9 million. Debt was $34.9 million, entirely finance leases; there were no revolver borrowings. The $300 million revolver had $268.8 million available, and the company reported compliance with its covenants.
Changes, outlook and material considerations
- Revenue growth reflected higher revenue per shipment, pricing and fuel surcharge revenue. Management cited pricing actions, business-mix management, cost controls and operating efficiencies as drivers of improved operating income.
- Fuel, operating expenses and supplies rose 42.2% in Q3, primarily due to higher diesel costs. Wages and benefits rose 7.3%, including higher headcount and a July wage increase of approximately 4.3%. Purchased transportation rose 18.4%. These cost increases were partly offset by pricing and fuel surcharges.
- The prior-year Q3 operating ratio benefited by 70 basis points from a real estate gain; the 2022 quarter recorded a small net loss on property disposals instead. The company also attributed a lower Q3 effective tax rate (23.3% versus 24.3%) mainly to alternative-fuel tax credits.
- Management expected 2022 net capital expenditures of approximately $500 million; $278.0 million had been spent through September, with approximately $189.0 million of the remaining capital budget committed. The filing gives no earnings or revenue forecast and describes the broader outlook as uncertain.
- Risks highlighted include economic weakness, inflation, fuel and labor costs and availability, competitive pricing, supply-chain and equipment delays, customer demand, and claims and insurance costs. The company self-insures substantial layers of claims and warns that severe or uncovered claims, insurer availability, premiums, or required collateral could adversely affect earnings, liquidity and cash flow. Claims and insurance liabilities accrued were $127.8 million.
- Purchase obligations totaled $198.7 million, including $196.5 million for capital expenditures. Operating lease obligations were $120.7 million; a previously committed terminal lease expected to commence in 2023, estimated at approximately $57 million over 15 years, was not included in that total. Ordinary-course litigation was not expected by management to materially affect financial condition, though results in a given period could be affected.
Key facts for investors to verify
- Whether shipment and tonnage trends, pricing, and fuel surcharge revenue remain supportive if demand or fuel prices change.
- Execution and funding of the approximately $500 million 2022 net capital expenditure plan, and the resulting effects on cash and capacity.
- Claims development, insurance limits and premiums, and any additional liability under the company’s auto policies.
- The filing reports $31.2 million of letters of credit outstanding under the revolving agreement in one section and $33.0 million of total outstanding letters of credit in another; confirm the scope and reconciliation.
- Whether working-capital needs, particularly accounts receivable, affect operating cash generation; management attributed part of the year-to-date cash-flow increase being offset to working-capital changes.