Saia, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Saia provides primarily less-than-truckload (LTL) transportation services across 45 states, alongside related transportation and logistics services. Financial statements are unaudited.
Financial performance and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Operating revenue | $694.6 million | $745.6 million | $1,355.2 million | $1,406.8 million |
| Operating income | $120.3 million | $146.0 million | $219.4 million | $249.4 million |
| Operating ratio | 82.7% | 80.4% | Not stated | Not stated |
| Net income | $91.3 million | $109.2 million | $167.4 million | $188.7 million |
| Diluted EPS | $3.42 | $4.10 | $6.27 | $7.08 |
| Cash provided by operations | Not stated separately | Not stated separately | $291.4 million | $207.9 million |
- Q2 revenue fell 6.8%, operating income 17.6%, and diluted EPS 16.6% year over year. Lower fuel surcharge revenue and reduced shipments and tonnage weighed on revenue; improved pricing and business mix partly offset the declines.
- Q2 LTL shipments decreased 3.8% and tonnage 1.7%. Revenue per shipment excluding fuel surcharge rose 4.8% to $287.90. Fuel surcharge revenue was 15.9% of revenue versus 21.7% a year earlier.
- Six-month revenue decreased 3.7% and operating income decreased 12.0%. Net income and diluted EPS also declined year over year.
- At June 30, cash was $235.0 million; working capital was $311.6 million, versus $197.2 million at June 30, 2022. Operating cash flow increased primarily due to working-capital changes.
- Six-month net cash used for property and equipment was $226.5 million, versus $155.3 million in 2022, reflecting investment in equipment and network expansion. Cash increased $47.6 million during the period.
- Total debt was $21.4 million, consisting of finance leases; there were no revolving-credit borrowings. The company reported $266.9 million available under its $300 million revolving facility, with $33.1 million of letters of credit outstanding under the credit agreement. It was in compliance with debt covenants.
- Q2 operating expenses included higher wages and benefits, claims and insurance, and depreciation; lower purchased transportation and fuel-related expenses partly offset these increases.
Outlook, risks and notable items
- Management expects 2023 net capital expenditures to exceed $400 million, subject to ongoing evaluation of market conditions; $226.5 million had been spent in the first half, and approximately $157.1 million of remaining capital budget was committed at June 30.
- A market-competitive wage increase of approximately 4.1% took effect in July 2023. Management expects productivity and efficiency gains to partly offset the cost.
- Management cited economic conditions, inflation, labor and fuel availability, competitive pricing, insurance costs, and supply-chain constraints as uncertain factors affecting the remainder of 2023. It provided no specific earnings or revenue forecast.
- Management discussed concerns about the long-term viability of a large LTL competitor. Any cessation could increase Saia’s volume, but the volume’s distribution, profitability, expense impact, and potential labor effects were uncertain.
- Legal proceedings arise in the ordinary course. Management believes probable and estimable losses are adequately provided for and does not expect a material adverse effect on financial condition, though results in a particular period could be materially affected. Claims and insurance liabilities totaled $94.0 million; the filing also reported $4.3 million accrued for uncertain tax positions and $0.5 million for related interest and penalties.
- Other identified risks include economic and industry downturns, pricing pressure, employee availability and labor relations, fuel and insurance costs, technology and cyber disruptions, equipment and capacity constraints, and regulatory or litigation exposure. The filing reported no material changes to the risk factors in the 2022 Form 10-K.
Important facts for investors to verify
- Whether shipment and tonnage trends, pricing, and business mix support revenue and operating-ratio improvement.
- Whether the planned capital spending and network expansion generate sufficient utilization and returns, and how spending compares with the greater-than-$400 million full-year plan.
- How wage increases, insurance and claims costs, and facility expansion affect operating expenses and margins.
- The actual availability and terms of revolving credit, covenant headroom, and liquidity needs as capital spending continues.
- Any developments involving the large LTL competitor and their effects on freight volumes, profitability, and labor relations.