Less-than-truckload carrier Saia is leaning on cost controls and efficiency initiatives across an expanded terminal network to close the gap toward an eventual recovery.
The Johns Creek, Georgia-based company on Thursday reported third-quarter adjusted earnings per share of $2.81, 25 cents above the consensus estimate but down 65 cents year over year. The adjusted figure excluded a one-time real estate gain of $14.5 million.
(Higher interest expense on debt incurred to finance handset purchases and a slightly higher tax rate combined for a drag of 6 cents in the period.)
Saia’s (NASDAQ:SAIA) revenue decreased slightly year over year to $840 million, but was $11 million better than the consensus estimate. Tonnage was down 1.5% year-on-year and revenue per quintal, or yield, was stable, excluding fuel surcharges.
In a year-on-year comparison, Saia’s tonnage deteriorated throughout the quarter. After registering a 0.9% increase in July, tonnage fell 2.2% and 3.3% in August and September, respectively.
October tonnage is down 4% year over year, and management noted in a call with analysts that the first few weeks of the month were a little weaker than normal. Knight-Swift Transportation (NYSE: KNX) expressed similar comments about the first half of October when it reported results last week.
Saia’s monthly tonnage declines came in comparison to tough comparisons a year earlier, which ranged from plus-5% to plus-10%.
Daily shipments decreased 2% year-over-year, but increased 3% compared to the second quarter. Both its new and legacy terminals saw sequential improvements.
Shipments per day increased 4.2% sequentially at the 39 terminals it opened since the beginning of 2022. Legacy terminals saw a 3% sequential increase in shipments. Approximately 70% of the volume growth occurred in its most profitable 1- and 2-day lanes, and two-thirds of the profits came from existing customers.
Management responded to questions about flat returns on the call, saying the pricing environment “remains very rational.” It noted contractual rate increases that averaged 5.1% in the quarter and a new overall rate increase of 5.9% that was implemented on October 1.
SONAR: Monthly long distance LTL cost per quintal, Class 125+ index. Monthly LTL rates are based on the average cost per hundredweight for four National Freight Classification groups and five different mileage bands.. For more information about SONAR, click here.
The company reported an adjusted operating ratio of 87.6% (inverse of operating margin), which was 250 bps worse year-over-year but 20 bps better than the second quarter. The result was above management’s forecasts (100 bp of sequential deterioration) and normal seasonality (100 to 200 bp of degradation).
Adjusted cost per shipment increased 4.6% year over year and was slightly offset by a 0.9% increase in revenue per shipment (a negative differential of 370 bps).
The new terminals reported 100 basis points of sequential OR improvement in the quarter and are now operating below 95% OR on average.