Saia Inc Q1 FY2022 Earnings Call

And ladies and gentlemen, please standby. Good day and welcome to the Saia, Inc. First Quarter 2022 Earnings Conference Call. Today's conference is being recorded. And now at this time, I would like to turn the conference over to Mr. Doug Col. Please go ahead, sir.

Thanks, Jake. Good morning, everyone. Welcome to Saia's first quarter 2022 conference call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Holzgrefe. Before we begin, you should note 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. Now, I'll turn the call over to Fritz for some opening comments.

Good morning and thank you for joining us to discuss Saia's record first quarter results. Our first quarter revenue of $661 million surpassed last year's first quarter revenue by 36.6% and is a record for any quarter in our company's history. Shipments per workday grew by 5.7% and our revenue per shipment, excluding fuel surcharge, grew by nearly 20%, driven primarily by a 15.6% improvement in LTL yield. We continue to execute our business plan at a very high level. Operational execution was a highlight in the quarter, and our team did a nice job of managing around winter storm activity to minimize network disruptions. Our ability to quickly bounce back after weather-related closures put us in a position to respond quickly to our customers' needs. Not only do we respond to our customers' capacity needs, but I'm thrilled that we're able to do so with excellent quality, evidenced by our first quarter cargo claims ratio of 0.57% and on-time delivery over 98%. The pricing environment in our industry remains stable, and a recent shipper survey conducted by our marketing group indicates to us that our customers had a positive business outlook over the next several months. They're not expecting to see significant increases in capacity in either truckload or less than truckload over that period. The yield improvement is a result of our business strategy, which has stayed, in its simplest form, to provide a differentiated high-quality service to our customers. This differentiated service requires that we're paid for the ongoing investments in the business. As we build out our coverage network and maintain very high service levels, we're increasingly able to reach a broader geography and provide superior levels of service. Though our revenue per shipping was a record $273 or $329, including fuel surcharge, we still feel like there's a long runway for improvement there to be on par with some of our high service level LTL competitors. Record revenues set the table for record financial results in the quarter as operating income grew by more than 100% from the prior year to $103.4 million. And our 84.4% operating ratio is the first-quarter record. I'm pleased to report that we're off to a good start this year as it relates to our plan for terminal additions. We've opened two new terminals so far this year, one in LaSalle, Illinois, serving customers in the Chicago land markets, and another this past week in Parkersburg, West Virginia, our first in the Mountain state. We have four additional terminals on track to commence operations in the second quarter. With that said, I'll turn the call over to Doug for a review of our first quarter financial results.

Thanks, Fritz. First quarter revenue increased by $177.1 million to $661.2 million. The components of revenue growth in the quarter were as follows. Tonnage grew 11.2%, a combination of 7.4% shipment growth and a 3.5% increase in our average weight per shipment. On a workday basis, tonnage grew 9.5% and shipments increased by 5.7%. Our yield, excluding fuel surcharge, improved by 15.6% and 21.4%, including fuel surcharge. Fuel surcharge revenue increased by 75.7% and was 16.8% of total revenue compared to 12.9% a year ago. Moving now to key expense items in the quarter. Salaries, wages, and benefits increased 18.4%, driven by wage increases across our driver and dock workforce, as well as hiring and referral bonuses paid in the quarter to attract new employees. Our headcount is up approximately 13% year-over-year. Additionally, our August 2021 wage increase of approximately 4.7% contributed to this increase on a year-over-year basis. Purchased transportation costs increased 73.8% compared to the first quarter last year and were 11.8% of total revenue compared to 9.3% a year ago. Truck and rail purchase transportation miles combined were 19% of our total line haul miles in the quarter compared to 15.5% in the first quarter of 2021. Fuel expense increased by 63.1% in the quarter, while company miles increased 10.9% year-over-year. The increase in fuel expense was primarily the result of national average diesel prices rising by over 45% year-over-year in the quarter. Claims and insurance expense decreased by 6.5% in the quarter, reflecting decreased frequency and accident severity in that expense line. Claims and insurance expense was down 36.9% or $6.3 million sequentially from the fourth quarter. Depreciation expense of $40 million in the quarter was 12.9% higher year-over-year, driven by investments in real estate, equipment, and technology. Total operating expenses increased by 28.1% in the quarter and with the year-over-year revenue increase of 36.6%, our operating ratio improved 550 basis points from a year ago to a record 84.4%. Our tax rate for the first quarter was 22.5% compared to 22.3% last year. And our diluted earnings per share were $2.98 compared to $1.40 last year. We anticipate an effective tax rate of approximately 25% for the full year. In 2022, we continue to anticipate capital expenditures will be in excess of $500 million. I will now turn the call over to Fritz for some closing comments before Q&A.

Thanks, Doug. It is always nice to come out of the first quarter with good results, and as we move into our seasonally stronger months of the year. I'm excited about all of the new openings and relocations ahead of us this year and the groundwork so far to keep us on track. The March opening in LaSalle provides coverage for the Chicago and Northern Illinois freight market. We'll supplement this opening with the new location later this quarter in Rockford, Illinois, and hope to add another Chicago area terminal later this year. In late June, we expect to add two facilities to expand our service area in Southern Georgia. Beyond these terminal openings, we have as many as 10 slated to open in the second half of the year, with each new opening our existing customers have confirmed our strategy by asking us to handle the freight needs in the new market. The customer response is a testament to the high quality of service and reliability that we continue to provide. To support our pace of openings, our human resources group is continuously recruiting and onboarding the talent that is required to open and operate these terminals. Along with expanding our driver academy program this year, we have partnered with driver schools and technical colleges in some markets to increase our candidate pipeline and to serve as a feeder program for our driver academy. In total, as Doug mentioned, we expect to invest over $0.5 billion this year in real estate, equipment, and technology. So far, equipment deliveries are generally on schedule. We will monitor deliveries daily and have developed our equipment plan for the year in a way that should allow us to meet the needs of our terminal openings, even if there are some further supply chain woes. There seems to be a new headline out almost every day about an imminent economic or industrial slowdown or a looming recession. But our business levels remain steady. We're in a unique position as a company and that while we are excited about our expansion and reaching new markets for our customers, we are focusing our growth on those segments of the business that provide a fair return for the valuable service we provide. Our business is a capital-intensive one and our network is an asset that requires constant reinvestment to maintain. We can only do this if we bring on new businesses that compensate this fairly and is best achieved by providing great service and presenting our customers with a great value proposition. I don't want to oversimplify it, but our strategy is to continually put our customers first by maintaining our promise to handle their freight with great care and deliver on time. With that said, we're now ready to open the line for questions, operator.

We will begin with Todd Fowler from KeyBanc Capital Markets.

Fritz, maybe to start. So, you made the comment that you guys have started the year strong and we see that in the margins, a little bit better than what you had talked about from a seasonal progression. You do have some terminal openings that are more second half or back-half weighted. You talked previously about margins being at the high end of the 150 to 200 basis points on a full year basis. Sitting here kind of early May, do you have any comments on some of the moving pieces and your expectations for margins on a full year basis at this point?

Yes. I think, I mentioned earlier this year, Todd, that if things worked in our favor, we would expect to beat our range. And I would say that as we are trending right now, I think we'll be above the 200 basis point improvement for the full year. The economic environment will dictate how far. But I think we like where we're executing right now. And I think this is an important time because when you're in a position where you can meet those customer requirements and obligations, you can execute even in a slower period of time. So, I think this is a good time to continue to push our value proposition and I think it will end up leading us to achieving those sort of financial returns.

And Fritz, to that point, it sounds like your team has done some work again on pricing and where you're at in the market. In the past, you've shared about where you think your pricing is relative to some of your peers. I don't know if you've got an updated number on where you think you're priced versus the market and what you think the yield opportunity is? And then, just if you could also comment on contract renewals in the quarter, that would be great.

Yes. Todd, if you review the public data or market insights available, you'll notice that while we had a strong quarter with our pricing strategy and initiatives, we still have some progress to make. We need to close the gap and achieve parity with certain market elements. In this quarter, we achieved a 10.2% contract renewal rate, which is similar to our performance in the fourth quarter, and we are pleased with that result. It reflects our current standing. If you examine our historical contractual renewal percentages alongside our actual yield and shipment rate improvements over several quarters, you'll see that we've been performing above the contractual renewal rates. This demonstrates our effective implementation of the accessorial initiatives.

Got it. Okay. And then, the last one for me. Doug, do you have comments on insurance and claims in the quarter? It came in pretty favorable as a percent of revenue and relative to where it's been trending recently. So, do you have any comments on 1Q and then maybe thoughts for the rest of the year?

No. I mean, like we said in the opening comments, Todd, there's always volatility around that line. The premium renewal was pretty favorable this year versus the last couple just because it wasn't as inflationary, but that's a small part of the number on a quarterly basis. It's primarily driven by your actual experience in the layer in terms of your liability expenses. So, no, I'd just say it's normal volatility. And for looking forward, probably a three or four quarter running average, it's probably your best bet just trying to single point up for the next quarter.

And now we'll take a question from Jon Chappell with Evercore ISI.

Fritz, you expressed optimism based on the recent results, although it seems at odds with some of the headlines you mentioned. I have two questions regarding that sentiment. First, can you provide any updates for April, such as details on shipment tonnage or revenue per hundredweight? I know that information will be revealed in the upcoming queue, but I’m looking for a brief preview. Secondly, in the previous call, you indicated that there was an increase in door count and shipments both in the mid-single digits. I want to confirm whether you are still expecting that same relationship as you proceed with adding terminals, or if there are any macro factors that might affect the correlation between shipments and door counts.

I'll address the first part of your question and also provide the March numbers. In March, shipments increased by 2.2%, and the tonnage rose by 4.2%, both calculated per workday. As for April, last year's shipment figure for the same month was up 27.8%. This month, our shipments have seen a slight increase, while tonnage is up in the low single digits year-over-year. We typically don't share yield information in the middle of the month, but I can say that April's revenue is in the mid-20% range compared to last year. This reflects our focus on mix and freight selectivity, allowing us to achieve that level of revenue growth despite only a modest increase in shipments. The comparisons will become a bit easier in the third and fourth quarters, but we do face challenging comps in the next couple of months. Regarding door count, we anticipate an annual increase of about 4% year-over-year. I expect to see low single-digit shipment growth if the macro economy remains stable for the rest of the year, which aligns with our focus on mix.

Got it. That's helpful. And then, just my second one. On the contract renewals, I think you're about 10.4% in 4Q, 10.2% in 1Q. Where do you stand on the overall portfolio book of business? Is the majority of the recontracting in 4Q and 1Q so you've effectively marked the majority of that to market? Or do you still have a pretty long tail over the next couple of months where you can still potentially get those kind of low double-digit increases?

Yes. I think the way you would look at our book of business, it's sort of ratably renewed during the year. So, we'll have a somewhat similar mix of contracts that come up in Q2 and Q3. The other thing that I'd point out is that others in the business are not standing still either, right? So we got to continue to push our pricing opportunity and I think continue to make sure we charge for all the services that we provide. I've been pleased with how we've performed against that the last couple of quarters has been a real important part of our story. I think in an environment where looking forward, companies that can differentiate on great quality service and keeping the promise for the customer, those are the ones I think can take advantage of this environment and kind of continue to grow, operate and earn the pricing they deserve. So that's why we feel confident about where we are.

And now we'll hear from Amit Mehrotra with Deutsche Bank.

Doug, can you just give us the OR expectations sequentially? I know 2Q, there's a decent gap down in OR but I was also thinking there's maybe a little bit more tailwind on PT cost sequentially off of 1Q. Just wondering if you could just talk about kind of OR expectations sequentially and how maybe PT could impact that as well.

Sure. Historically, Q1 into Q2, we've seen a pretty wide range, typically always improvement coming off of a record Q1 and with the opening pace we've got over the next couple of months. I'd say we'd still hope for about maybe 200 basis points sequentially, Q1 into Q2, I think would be good work. We've seen some seasonality better than that over the last 10 years. But like I said, it's always been volatile and our maps moved around over the years to increase weather exposure and things like that. So, I mean, our best guide would be that we think another couple of hundred basis points from Q1 into Q2 would be a good target. I expect PT miles to continue to run at a similar level for us. I mean, we'd like to get more rail miles if we could. We're still skewed a little bit more PT truck versus rail than we've been historically. So, if we were able to get more rail availability, I think we'd use it. And again, with the openings we've got coming up, I think we'll continue to use PT at a similar rate in terms of the percentage of our miles. Like I said, it stepped down a little bit from Q4 to Q1. But I don't see it necessarily trending down right now with all the openings we've got coming up over the rest of the year.

Yes. Okay. That makes sense. And then, maybe one for Fritz. The margin commentary was helpful, I guess, for this year. But given everybody is thinking about a downturn and really nobody knows ultimately what's going to happen over the next year, I think it would be helpful for us if you could talk about how you think the model performs in a downturn because I think you guys have invested a lot in service, there's obviously a big correlation between service and your ability to kind of price effectively. But just help crystallize that for us in terms of how you think about this business performs in the downturn. And I just wanted to clarify on your service count increase. I think you said two so far, four in the second quarter, and then ten in the back half, that puts you above the 10 to 15. I wasn't sure if I'm misreading that, if you can just clarify that.

Sure. So, yes, full year, we're expecting 10 to 15 openings. So we may have gotten tied up there in the notes but 10 to 15 for the full year. We've got a pretty good pipeline that will lead us into next year as well. Listen, Amit, our strategy right now is really centered around customer first, right, and taking care of the customer, meeting expectations, providing a very high level of service. And I think in an environment, even if it's slowing, those are things that we can control, right? And if we can deliver those and meet or exceed our customers' expectations, we ought to be able to price for that. If I look at the landscape that's out there, I like our quality and service stacked up against any of the national players, right? And I think we do a great job. And we look at the pricing opportunity, the market pricing opportunity, we've got to continue to push that. So I think that the catalyst for us starts with taking care of the customer first and keeping those promises. And as we do that, that gives us our team and our sales team the opportunity to really push the pricing around that because the customer is getting great value even in a slowing economy. And arguably, if their costs are up, differentiated service that meets or exceeds expectations, well, that's a winning argument even in a slowing economy. So, I think the things that we can control over time, our tools, analytics, how we manage, coach our business, we can deliver those results and I think that's what gives us confidence to continue to push that OR expansion through a cycle.

Okay. So just so I understand, so you're saying that in a downturn, the price cost per shipment can still stay positive because of the focus you guys have let up on service? Is that what you're saying?

That's what our intent is and that's our focus.

And now we'll hear from Ken Hoexter with Bank of America.

Can you clarify the difference between being in growth mode and the overall market trend? Are you currently just capturing market share? Can you provide insights on what you're observing in the economy and the status of consumers or manufacturing? Additionally, regarding your growth, which was reported at 13%, could you discuss how you plan to achieve this in the current market conditions?

Sure. We're paying close attention to our customers. As they look towards the rest of this year and next year, they remain optimistic, which spans all sectors. This perspective comes from our ongoing communication and research with our customers. We believe the overall environment continues to be positive. Additionally, we receive feedback affirming that our customers truly value the quality and service we provide. We've successfully upheld that commitment, which has enabled us to broaden our presence and capture market share. Over the past five years, we've significantly increased our market share growth while also expanding. A key factor contributing to this success is our ability to consistently replicate the quality and service associated with Saia as we open new facilities. Our existing customer base, familiar with our offerings, plays a vital role in this process. This strategy allows us to attract customers through service rather than pricing, helping us maintain and potentially enhance our margin structure over time. Looking ahead, as we continue to develop our terminals, we don't foresee any significant risks to this strategy. For instance, in the Atlanta market, we recently opened a second terminal in the fourth quarter, which is already turning a profit. While it's not yet at the company's average, what's more notable is that the entire Atlanta market experienced growth because of our established presence. We have expanded our reach, replicated our service, and improved our operational efficiency, resulting in a mutually beneficial situation. As we look ahead to the remainder of this year and into next, we believe these successes can be repeated as we continue with our openings.

But Fritz, just to clarify, can you tell if you're gaining business from your competitors while continuing to grow with your customers? Is this new growth indicative of a shift in the economy? I understand that you're growing because you're in growth mode, but I want to grasp the broader implications of this growth, whether it's gaining market share from others or how we should interpret it.

Right now, I'd tell you, it's both. It's both share gains from others and it's incremental customers for us. I think, it's tough to decipher a little bit. If I'm in a position that I have an existing customer and I could reach or provide service to a market, I now can. That's incremental. Is that share gain or is that a new market? So, arguably, for us, we consider it to be both. And I think today, as we look across the landscape, we continue to see opportunities to add new customers, and we haven't seen any slowdown with that at all.

And then just a follow-up, if I may, on CapEx. You mentioned reiterating the $500 million and your number of service centers were the same. Was there something in the first quarter? Was it lack of deliveries that you're gaining confidence you'll still get the trucks you need? Or you mentioned there are other things you can do, if you can, maybe just talk through the CapEx side of it.

Yes. The CapEx, the equipment deliveries are behind the original schedule. We still think we will get them this year. That's been a bit delayed. Real estate transactions historically, they're tough to predict closing and things, that's also a little bit of a timing issue there. But we would expect that we'll catch up the equipment deliveries and the real estate will remain on track for the year.

We'll now hear from Allison Poliniak with Wells Fargo.

Building on the Atlanta example you mentioned, there is revenue and shipment growth in that scenario. However, is there a way to consider the operating capabilities it introduces in terms of enhancing the fluidity of your system that might lead to a gradual increase in that operating ratio over time? What are your thoughts on this?

Absolutely. I think the best example is a driver in Atlanta who previously spent an hour servicing the Northwest Atlanta market. Now, he is focusing on building density around the South Atlanta terminal by handling all the pickups and deliveries there. We have also hired a driver in Northwest Atlanta to cover that market and strengthen our presence at that facility. This allows us to make better use of our existing resources to serve our customers more effectively. Additionally, we can develop the Northwest Atlanta market over time to build density. Overall, this approach allows us to utilize our current assets more efficiently, grow the business, and significantly improve our incremental returns over time.

Great. And then, just on leverage, obviously very low here. Just any thoughts, obviously it sounds like the ongoing strength continues here. Just any changes in use of the balance sheet here.

Not really kind of staying the same course. Allison, I mean, we're sitting on cash. We're entering our seasonally stronger period of the year, so generating a lot of cash in the next few months. And like Fritz said, we'll start seeing more and more deliveries as the months of summer roll on in terms of tractors and trailers but plenty of dry powder. If there are dark clouds on the horizon somewhere in terms of the downturn, historically in our industry, those have always presented opportunity for the healthy companies. And we're in a really fortunate position whichever way the things go from here, I think you'd see us be in a position to take advantage of it. I mean, quite frankly, there are some deals historically during downturns that we just couldn't look at because of the leverage we have on the company. But today, we sit with a really clean balance sheet and generating a lot of cash. So, no change from our standpoint other than we intend to put the cash to work that we're generating.

Next up, we have Scott Group with Wolfe Research.

I want to ask on fuel, just your thoughts on the impact in the quarter and diesel prices still moving higher. Do we see maybe potentially a bigger tailwind in the second quarter? And then, just with fuel surcharges up so much, is that in any way impacting your ability to get accessorials and other parts of the business?

I would say that so far, it hasn't affected our ability. Our surcharge table increased significantly in Q1, reflecting a 45% rise in the average diesel price. While our surcharge table is up, it's similarly increased for all of our competitors. Shippers understand they need to absorb that cost with us. It's not for me to assess the overall inflation or its effects on the larger economy. However, at this moment, goods need to be transported, and shippers are managing to cover those costs. The advantage of our size is that as we've worked on closing the gap on our base rates in recent years, we are now adding that fuel surcharge to a higher base rate. Ultimately, our philosophy has always been that the customer needs to pay a level that allows us to earn a reasonable return. The fuel surcharge is just one part of that equation.

Okay. The weight per shipment tailwind that you guys have been seeing over the last year, do you think that that's sustainable as this year plays out? And what trends are you seeing in weight per shipment right now?

Yes. I mean, in the first quarter, it moderated throughout the quarter a little bit. I think that's a reflection of all the work we've been doing on it. But I'd say that we continue to try to push the mix to the direction of heavier-weighted freight. If I think about our GRI in January, the average rate increase across the tariff was 7.5%, but it's a targeted approach that we take to allow us to focus on the types of shipments we want. So it's a short time here since the GRI went into effect on January 24, but we have seen a trend that our shipments, for example, that weigh less than 1,000 pounds are a little bit smaller percent of the mix. And in that short period of time, our shipments that weigh more than 1,000 pounds are a little bit bigger percent of the mix. So we're going to continue to try to work on mix and drive the right kind of freight into the network. But it's come a long way. So, I mean, in terms of modeling, I don't know how aggressive I'd be saying that it's going to continue to increase over the balance of the year.

Okay. And then one last question for the long term, you are aiming for an operating ratio in the low 80s in the second quarter. I understand there’s seasonality involved, but is a full year operating ratio below 80 something that you think could realistically happen in the next few years, Fritz?

Sub-87 in the next few years? Absolutely, right? I mean, I don't see an impediment to us doing that. I think we've got a service offering, a commitment to customers that we can recoup and drive the results in the business. We have to, because we have to maintain a very high level of investment in this business to maintain that quality of service. So I don't see any reason why we can't approach that or get deep into the 70s. It only makes sense to me.

Now moving on to Jordan Alliger with Goldman Sachs.

On your terminal growth plans, just sort of curious, is there scenarios or context where you could dial that back if you needed to or is it something that sort of goes forward regardless? And then, secondly, just out of curiosity, when you open up a new terminal, I know it may depend on geography but about how long does it take, would you say, on average to sort of fully season where it's within company existing operating margins?

Yes. So, the thing we really like about the organic growth strategies, a couple of things. We are in control of regulating it up or down, right? So, if there were a scenario in which we didn't feel comfortable executing an opening, we could certainly slow it down or, if you look back in our history, we also feel quite comfortable if we think there's an opportunity we can accelerate that. It doesn't impact the strategy, timing of that. I mean, it's obviously that we get the 10 to 15 in place and get those operational as quickly as possible. That benefits everybody, the customers first and foremost. Our pipeline of facilities that we look at is several years long. So, we feel like we've got a pretty good runway. I think we've got a pretty good competency around how you execute and opening and get those into the system quickly. The facilities that we opened in the Northeast, both regions and the company that we've added are not all the way, the best operating regions in the company for us but they're certainly giving chase. They're not really a significant drag on earnings. So, we've seen that as we add those regions, we can get them profitable. What's more significant as the openings that we're focused on now are less about opening up regions of the country and more about saturating regions of the country. So, I gave the example a few minutes ago about Atlanta. I would fully expect that facility to be a company or Northwest Atlanta, I fully expect that facility to be at company average in short order, less than a year if not sooner. But more significantly, what's interesting about that is, it really helps drive efficiencies in the legacy Atlanta facility. So, the benefits of it are pretty significant just from that account. So, I think over time, I think it's an important part of our growth strategy. I think as we add these facilities and provide incremental coverage in markets that we're in, the profitability and contribution to these facilities will happen pretty quickly.

Now moving to Bascome Majors with Susquehanna.

Fritz, regarding your earlier comment on the improvement in the Atlanta region, can you discuss whether you can quantify how the profitability of the entire region has changed since you opened the second facility? Additionally, does this reflect the potential outcomes of other future openings?

Yes. The entire region was a significant factor in our overall year-over-year improvement. As we increased density across our network and expanded the company, we now have regions operating below 80. I fully anticipate that all other regions will achieve that as well. If we have a seven handle, some of them may even be in the low seven or six range. As we fill in the map, it creates opportunities for growth. I expect Atlanta to move towards performance similar to our denser western regions, where we are currently operating below 80. These developments are essential steps.

On that note to Bascome, if you think about it, we divide the company into 12 regions. As Fritz mentioned, in the East, on average, the East division operated below 90, and that includes our two Northeastern regions that were both below 90. They have only been open a few years and are below 90, while the West, on average, was actually below 80 in those five Western regions.

And to the earlier conversation on capital allocation, Doug, you talked about being in a position to take advantage of a downturn. Can you clarify if you're talking about individual facilities or if there's parts of the network you really would consider being acquisitive to grow more quickly? And Fritz, if you could add anything about how the Board is considering a buyback now that your earnings continue to go up and your multiple has been cut in half since last year.

In terms of capital allocation, I mean, I was speaking about potential deals that may be available in a downturn from a competitor that struggles or a landlord that owns something that they acquired at the wrong part of the cycle or something. I mean, there were deals, like I said, over the last 10, 15 years that would have been really attractive given what real estate has done since then. In terms of acquisitions, I mean, we'll never say no. There's pockets of the map where if you were able to find us some coverage, we certainly wouldn't be against acquiring terminals in a basket type approach if there was an acquisition.

Yes, regarding capital allocation, we see a significant pipeline of growth opportunities through organic expansion. We are committed to making prudent decisions with shareholders' capital and are focused on executing our organic expansion plan. This year and next, we plan to develop 10 to 15 terminals alongside the necessary equipment, which represents a substantial capital investment and a long-term real estate pipeline. We aim to enhance our ownership of real estate. Currently, there are many opportunities for efficient capital deployment. However, we acknowledge the importance of managing available capital responsibly over time.

There are ample opportunities to deploy capital efficiently. However, we fully understand the importance of managing available capital appropriately over time.

All right. Thank you for everyone's continued interest in Saia. We look forward to executing our growth plan and look forward to giving you an update here in the next quarter. Thank you very much.

And with that, ladies and gentlemen, this does conclude your conference for today. Thank you for your participation, and you may now disconnect.