Saia, Inc. — Q1 2022 Form 10-Q
Business context and reporting period. Unaudited results for the quarter ended March 31, 2022, compared with Q1 2021. Saia provides less-than-truckload (LTL) transportation services, principally across 45 states, plus truckload, expedited and logistics services.
Financial and operating performance
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Operating revenue | $661.2 million | $484.1 million | +36.6% |
| Operating income | $103.4 million | $48.7 million | +112.4% |
| Operating ratio | 84.4% | 89.9% | Improved 5.5 percentage points |
| Net income | $79.4 million | $37.3 million | More than doubled |
| Diluted EPS | $2.98 | $1.40 | More than doubled |
| Cash from operations | $96.0 million | $61.0 million | +$35.0 million |
| Net cash used in investing | $45.4 million | $25.4 million | Higher spending, mainly real estate acquisitions |
- LTL tonnage per workday rose 9.5%; shipments per workday rose 5.7%. LTL revenue per shipment increased 25.7% to $329.30, reflecting pricing and business mix.
- Fuel surcharge revenue was 16.8% of operating revenue, versus 12.9% in Q1 2021, as fuel costs increased. The surcharge program reduces, but may not fully offset, fuel-price exposure.
- Operating expenses increased 28.1% to $557.8 million. Key increases included purchased transportation (+73.8%), salaries and benefits (+18.4%), and fuel and other operating expenses (+35.8%). Claims and insurance expense declined.
- The effective tax rate was 22.5%, versus 22.3%; management cited reduced alternative-fuel tax credits.
- At March 31, cash was $141.3 million and working capital was $171.5 million. Total debt was $44.9 million, consisting of finance leases; there were no revolver borrowings. The revolving facility provided $268.0 million of availability, and the company reported covenant compliance.
Material changes versus Q1 2021
Revenue and profitability increased substantially, supported by higher shipment volumes, pricing actions, fuel surcharges and business-mix management. The operating ratio improved to 84.4% from 89.9%, with management also citing cost controls and operating efficiencies. Operating cash flow rose with profitability, partly offset by working-capital changes, including higher receivables. Capital spending increased, particularly for real estate and network expansion.
Outlook, risks and unusual items
- Saia expected 2022 net capital expenditures to exceed $500 million; about $271.3 million of the remaining capital budget was committed at March 31. No specific earnings or revenue forecast was provided.
- Management’s outlook remains subject to economic conditions, inflation, fuel prices, labor and purchased-transportation availability, supply-chain constraints, geopolitical developments and pandemic-related impacts. The company plans to continue customer-service, pricing, business-mix and productivity initiatives.
- Insurance arrangements expose the company to retained losses and possible additional premiums: up to $11.0 million under an existing auto-liability policy and up to $7.5 million under a new policy, depending on claims. Neither additional premium was accrued at quarter-end.
- The company recognized a $0.3 million return of insurance premium as a reduction in Q1 2022 insurance expense. It reported $110.7 million of accrued claims and insurance liabilities.
- Management said ordinary-course legal proceedings were provided for when losses were probable and estimable; outcomes could materially affect results in a particular quarter or year, though not expected to materially affect financial condition. COVID-19 had no material adverse impact on financial position identified at quarter-end, but future effects remain uncertain.
- Management reported effective disclosure controls and no material change in internal control over financial reporting. The filing reported no material changes to the risk factors in the 2021 Form 10-K.
Important facts for investors to verify
- Reconcile the filing’s differing reported letters-of-credit amounts at March 31: $32.0 million in the credit-agreement discussion versus $33.8 million in other sections.
- Monitor whether pricing and surcharge revenue can be retained as fuel costs, competition, customer mix and rate negotiations change.
- Assess execution and funding of the planned 2022 capital program exceeding $500 million, including committed spending and network-expansion returns.
- Track labor, purchased-transportation and equipment availability and cost, which drove significant expense increases and may constrain growth.
- Review claims experience, self-insured exposure, insurance coverage limits and potential additional premiums.
- Monitor operating cash conversion and working capital, particularly receivables, alongside finance-lease obligations and revolver availability.