Saia, Inc. — Q1 2021 Form 10-Q
Business and period: Unaudited results for the quarter ended March 31, 2021, compared with Q1 2020. Saia provides regional and interregional less-than-truckload (LTL) transportation, alongside truckload, expedited and logistics services.
Financial performance
| Metric | Q1 2021 | Q1 2020 | Change |
|---|---|---|---|
| Operating revenue | $484.1 million | $446.4 million | +8.4% |
| Operating income | $48.7 million | $38.8 million | +25.6% |
| Net income | $37.3 million | $28.1 million | +32.7% |
| Diluted EPS | $1.40 | $1.06 | +32.1% |
| Operating ratio | 89.9% | 91.3% | Improved 1.4 percentage points |
| Cash from operating activities | $61.0 million | $51.3 million | +$9.7 million |
| Net cash used in investing | $25.4 million | $102.7 million | Lower spending, primarily from equipment-manufacturing delays |
Revenue growth reflected higher yield and tonnage. LTL revenue per hundredweight increased 5.6% to $19.18. LTL tonnage rose 5.3% per workday and shipments rose 2.6% per workday. Purchased transportation expense increased 49.8%, mainly due to demand surges and internal network capacity constraints.
Liquidity, debt and capital
- Cash and cash equivalents were $53.3 million at March 31, 2021, versus $25.3 million at December 31, 2020. Working capital was $41.1 million.
- Total debt was $66.0 million, all finance lease obligations; there were no revolver borrowings. The company reported $271.2 million of revolver availability and was in compliance with its covenants.
- The revolving facility provides $300 million of capacity through February 2024, with a conditional $100 million accordion feature. The filing gives differing letters-of-credit figures: $28.8 million in the debt note and $30.6 million in MD&A.
- Net capital expenditures were $25.4 million in Q1. Management expected approximately $275 million of net capital expenditures for 2021; $171.8 million of the remaining budget was committed at quarter-end.
Outlook, commentary and risks
Management described pricing initiatives, cost control and operational efficiency as supporting improved profitability. It continued to prioritize yield, productivity, service, safety and geographic expansion, while planning to adjust resources and capacity to changing volumes. The filing provides no earnings or revenue forecast; the stated 2021 capital expenditure estimate is approximately $275 million.
- COVID-19 had not caused significant LTL network disruption through the filing date, but its future business and financial effects remained uncertain.
- Management cited economic conditions, pricing competition, driver and purchased-transportation availability, fuel, claims and insurance costs, capacity constraints, regulation and technology/cyber risks among factors that could affect results.
- Insurance renewal was expected to increase 2021 costs by $3.3 million. The company recognized a $0.5 million reduction in Q1 insurance expense from a premium return; up to $11 million of additional premium could be payable if specified policy loss thresholds are exceeded. No such additional premium was accrued at March 31.
- Claims and insurance liabilities were $91.9 million. Ordinary-course legal proceedings were not expected by management to materially affect financial condition, though quarterly or annual results could be affected.
- After quarter-end, the company committed to an additional lease estimated at approximately $57 million, expected to commence in 2023 with a 15-year term.
Investor verification points
- Reconcile the filing’s $28.8 million and $30.6 million letters-of-credit disclosures.
- Track whether capacity constraints and purchased-transportation costs persist, and whether pricing and volume gains continue to improve the operating ratio.
- Compare actual 2021 capital spending with the approximately $275 million estimate, including the impact of equipment-delivery delays.
- Monitor claims development and insurance exposure, including the conditional additional premium of up to $11 million.
- Assess the impact of the new lease commitment and ongoing COVID-19 and economic uncertainty on liquidity and operating plans.