Saia, Inc. 2026 Q3 Earnings Call

Good morning, everyone. Welcome to Saia's third quarter 2026 conference call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Holzgrefe, and Saia's Executive Vice President and Chief Financial Officer, Matt Batteh. Before we begin, you should know that during this call, we may make some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, and all other statements that might be made on this call that are not historical facts, are subject to a number of risks and uncertainties, and actual results may differ materially. We refer you to our press release and our SEC filings for more information on the exact risk factors that could cause actual results to differ.

Also, in the third quarter of 2025, we recorded $14.5 million in net operating expense reduction from a gain on real estate disposal and impairment of real estate. When we discuss adjusted operating expenses, adjusted operating income, adjusted operating ratio or adjusted diluted earnings per share for the third quarter of 2025 in our comments, we are referring to our adjusted results that exclude the gain from that real estate sale and impairment on that property. See our press release announcing third quarter results for a reconciliation of these and other non-GAAP financial measures. That press release is available on the Financial Releases page of Saia's Investors Relations website. I will turn the call over to Fritz for some opening comments.

Thanks, Bill. Good morning, everyone, thank you for joining us. We're pleased with our solid third quarter performance, which included record top-line revenue and tonnage. Our results demonstrate that prudent investments in our network, people, equipment, and technology are strengthening our customer value proposition and further positioning Saia to deliver sustained profitable growth and long-term value for stockholders. Third quarter revenue increased 17% to a record of approximately $982 million, supported by 8.9% tonnage growth, 0.8% shipment growth, and a 5.8% increase in revenue per shipment, excluding fuel surcharge. These results reflect broad-based business momentum and the continued execution of our pricing and mix optimization strategy. Operating income increased to $122.3 million, or 17.5% from Q3 2025 adjusted operating income. From a profitability perspective, we've delivered strong operating discipline through execution in both our legacy and ramping terminals.

Our operating ratio was 87.6%, consistent with the prior year adjusted result, and significantly better than the typical seasonal trends. Notably, we maintained a sequential operating ratio within 70 basis points of the second quarter, despite the historical pattern of approximately 150-200 basis points of deterioration from the second quarter to the third quarter, reflecting our continued focus on pricing, productivity, cost management, and operational execution. These results reflect continued execution of our long-term strategy to build a leading national LTL carrier by expanding network reach and density, scaling the fleet, and increasing our addressable market, leveraging technology and optimizing efficiency, all while delivering superior service and converting scale and customer value into profitable growth and higher returns. As part of that strategy, we've made continuous investments across our network to strengthen the business.

Since the beginning of 2022, we've added 45 terminals and relocated or expanded more than 25 others. Those investments have increased our operational door count by approximately 32%, and tractor and trailer capacity by more than 35%. As our network continues to mature and density builds, we are better positioned to create more solutions for existing customers, attract new customers, and further improve network efficiency. Today, Saia is serving customers with a national solution. Our expanded footprint, combined with technology investments and network optimization, has improved efficiency, reduced freight handling, and enhanced service levels across the network. In June, we introduced our REV initiative, which marked another step toward improving the customer experience through faster transit times, expanded capabilities, and greater shipment visibility. Among other improvements, REV improved transit times in more than 2,000 lanes across our network.

While implementation remains in an early stage, the results of the initial phase of the REV initiative are encouraging, with lanes benefiting from improved transit times experiencing outsized volume growth. As we continue to gain traction with both new and existing customers, density continues to build across our national network. In Q3, handling or touches improved 1.3% compared to the second quarter, and improved over 2% compared to the third quarter last year. Our operational improvements continue to be supported by our investments in optimization technology, which help drive efficiencies as our network scales. Our pricing and mix management efforts continue to gain traction as our broader network strengthens the value we provide to customers. In a changing freight environment, shippers value reliable service, and our expanded network allows us to serve more of their needs. We continue to see improvements across several key service metrics.

Our cargo claims ratio is a company record, 0.3% in the quarter, improving more than 40% from the third quarter of last year. Consistent execution on service and claims supported a 10.8% contractual renewal rate in the third quarter. Our network investments have continued to move us closer to the customer, with over 60% of zip codes now within a 50-mile radius of a Saia terminal, which compares to about 35% in 2017. Our proximity to customers supports our ability to exceed their expectations, which is represented by our internal Net Promoter Score improving 15% compared to the third quarter of 2025. Those improvements reflect better scheduling, pickup reliability, delivery quality, and effective problem resolution. Our network investments are translating into tangible results, helping us meet customers' evolving needs while supporting market share gains and improved service.

The operating benefits of these investments, together with the scale of our network, are contributing to strong free cash flow generation. We believe we are just beginning to see the benefits of our investments as the network matures and density builds. Year-to-date, we have generated more than $240 million in free cash flow and ended the quarter with over $200 million of cash on hand. With a stronger network and operating platform in place, we are well-positioned to continue strengthening Saia's position as a leading national LTL carrier while improving profitability and delivering returns on our investments. As part of our ongoing capital allocation strategy, we are pleased to announce that our board has authorized the repurchase of up to $250 million of Saia common stock.

This new authorization provides an additional means of returning capital to stockholders when repurchases represent an attractive use of capital, subject to market conditions and our other investment priorities. With the majority of the foundational network build-out behind us, capital expenditures are beginning to moderate relative to the recent investment cycle. That transition, together with stronger free cash flow and low leverage, provides flexibility to continue funding high-return growth investments while repurchasing shares when valuation and market conditions make doing so attractive. Reinvesting in the business to support long-term growth and maintaining a strong balance sheet remain our priorities. Through disciplined execution through the past several years, we have created significant financial flexibility. That flexibility allows us to continue to invest in the opportunities ahead while returning excess capital to stockholders when appropriate.

As part of our long-term strategy to support sustained performance for stockholders, we continue to strengthen the board's composition and oversight. Earlier today, we announced the appointment of Todd Fowler as an independent director. Todd brings extensive expertise to transportation, logistics, supply chain technology, and capital markets, and we are pleased to welcome him to our board. Before I hand it over to Matt for more details on the quarter, I would like to highlight that we remain focused on disciplined execution while navigating a mixed freight environment. We are improving service, deepening customer relationships, and converting the scale of our network into greater density, utilization, and profitability. These actions position us to deliver profitable growth and stronger returns over time while preserving additional operating leverage as freight conditions improve.

Matt? Thanks, Fritz. Third quarter revenue increased 17% to $982.5 million.

Shipments per workday increased 0.8%, tonnage per workday increased 8.9%, and average length of haul decreased 1% to 885 miles, all compared to the third quarter of 2025. Revenue per shipment, excluding fuel surcharge, increased 5.8% year over year and 2.7% sequentially from the second quarter. Fuel surcharge revenue represented 22.5% of total revenue, compared with 15.2% a year ago. Including fuel surcharge, revenue per shipment increased 16.1%. Weight per shipment increased 8.1% year over year and 1.2% sequentially from the second quarter, reflecting our continued efforts around mix optimization. As a reminder, higher weight per shipment typically reduces yield. As a result, yield, excluding fuel surcharge, declined 2.2% compared with the third quarter of 2025, while yield including fuel surcharge increased 7.4%.

Importantly, yield excluding fuel surcharge increased 1.5% sequentially from the second quarter, despite the increase in weight per shipment. We continue to see progress across recently opened terminals. Compared to the third quarter of 2025, the operating ratio in terminals opened in 2023 and 2024 improved by 40 basis points, while operating income from these terminals improved 22%. Notably, these terminals' revenue per shipment, excluding fuel surcharge, improved year-over-year at a higher pace than our legacy terminals. We are pleased with the continued improvement across these facilities. While they remain early in their ramp towards greater scale and density, they are already delivering tangible results, including enhancing our ability to provide better service to customers. Turning to expenses. Salaries, wages, and benefits increased $46.7 million, or 11.6% compared to the third quarter of 2025. The increase primarily reflected wage increases and higher compensation associated with improved company performance.