Good day, and welcome to the Saia, Inc. First Quarter 2026 Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Matt Batteh, Saia's Executive Vice President and Chief Financial Officer. Please go ahead.

Thank you, Chad. Good morning, everyone. Welcome to Saia's First Quarter 2026 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 of the 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. I will now turn the call over to Fritz for some opening comments.

Good morning, and thank you for joining us to discuss Saia's first quarter results. As we moved into 2026, we remain focused on serving our customers, enhancing operational efficiency and integrating our newer terminals into our national network. Q1 2026 was no different than prior years with weather impacting operational results. This year was pronounced as we saw weather patterns impacting our core and profitable Texas and Mid-South regions. However, much like prior years, we saw seasonality increase in March and particularly in the second half of the month as our customers began to tap our national network. Our teams, fleet and footprint are well positioned to take advantage of this opportunity to support our customers' seasonal demands. Service metrics continue to improve through the quarter. During the quarter, our team remained focused on what matters most, serving the customer. We achieved a cargo claims ratio of 0.5%, which is our sixth straight quarter of claims ratio below 0.6%, a record of consecutive quarters achieving this milestone. Customers also value our ability to reliably pick up and deliver freight in the time frames that meet their requirements and expectations. Across our KPIs, we continue to meet and exceed expectations throughout the network. Despite the dynamic environment this quarter, we improved operationally. Most notably, we saw a significant increase in miles between preventable accidents and a significant improvement in hours between lost time injuries. Miles between preventable accidents were a first quarter record, while hours between lost time injuries were at the highest first quarter level since 2020. Both metrics are a testament to our ongoing commitment to safety, training and technology. Our operational execution is driven by our continued investments in our network and optimization technology. Although we're still in the early stages of realizing the full long-term benefits of a national network, execution remains strong across the organization, improving upon trends seen in the back half of last year. Increasingly, customers value consistency and reliability and our performance in these areas is enabled by the longer-term investments that are core to our strategy. As a result, productivity continued to improve in the quarter, with productivity showing its strongest performance since the third quarter of 2024, improving more than 2.5% compared to the first quarter of 2025 and improving approximately 1% sequentially from the fourth quarter. These metrics demonstrate the impact of our ongoing investments in optimization technology. As the freight backdrop improves and we continue to build density on our national network, we anticipate additional network leverage and asset utilization. With service levels among the best in the industry and our increasing value proposition to our customers, we continue to make progress on pricing and mix management. Revenue per shipment excluding fuel ramped throughout the quarter in part due to our efforts around contractual renewals, which were 6.7% for the quarter. While there's still movement among shipments with an ever-changing backdrop, our renewal rates reflect our value proposition to the customers and our ability to provide solutions that meet their needs. First quarter results were largely in line with our expectations as volumes in late March were strong, offsetting, to some extent, a weather impact to January and February. Revenue for the quarter was $806 million, a record for the first quarter and a 2.4% improvement over prior year. While trends in the first couple of months of the year can always be volatile, I was pleased to see the volume acceleration in the back half of March, resulting in a shipment increase of 1% for the quarter. As customers continue to value our expanded presence in our now national network, we saw shipment growth in both our legacy and ramping markets. Weight per shipment, while still down compared to prior year, improved sequentially each month of the quarter, a result of our targeted actions around mix management and improving shipper sentiment throughout the quarter. Now I'll provide additional detail as it relates to cost. However, it's important to note, we were negatively impacted in March by the 30% increase in diesel costs in a matter of a few days. This rapid increase in cost created a meaningful short-term impact on profitability, given the timing difference of our surcharge program, which is based on weekly national average diesel prices. I'll now turn the call over to Matt for more details from our first quarter results.

Thanks, Fritz. Revenue was a record for any first quarter, increasing by 2.4% to $806.2 million, partially as a result of an increase in fuel surcharge revenue as well as a 1% increase in shipments on a workday basis. Revenue per shipment, excluding fuel surcharge, decreased 1.2% to $297.11 compared to $300.76 in the first quarter of 2025, largely as a result of lower weight per shipment and shorter length of haul compared to the prior year. However, I was pleased to see revenue per shipment, excluding fuel surcharge, increased throughout the quarter. Revenue per shipment, including fuel, increased 0.7% compared to the first quarter of 2025. Fuel surcharge revenue increased by 12.3% and was 16.5% of total revenue compared to 15.1% a year ago. Tonnage decreased 2.1% compared to the prior year, attributable to a 3.1% decrease in our average weight per shipment. Our average length of haul decreased 1.7% to 890 miles compared to 905 miles in the first quarter of 2025. Yield, excluding fuel, increased by 1.9%, while yield increased by 3.8%, including fuel surcharge compared to the first quarter of 2025. Shifting to the expense side for a few key items to note in the quarter. Salaries, wages and benefits increased $4 million or 1% compared to the first quarter of 2025. This increase was primarily driven by a $7.9 million increase in health insurance costs as well as a $1.4 million increase in workers' compensation costs, both of which are primarily the result of escalating cost of claims. These increases were partially offset by a $5.1 million or 1.8% decrease in salaries and wages combined compared to the first quarter of 2025, as head count at the end of the quarter was 6.3% lower than the first quarter of '25 and was 0.7% lower than the fourth quarter of 2025. Excluding linehaul drivers, head count decreased 7.9% compared to the first quarter of 2025. These reductions were a result of our continued focus on operational efficiency and network cost management. Purchase transportation expense, including both non-asset truckload volume and LTL purchased transportation miles increased by 7.5% compared to the first quarter last year, and was 8% of total revenue compared to 7.6% in the first quarter of 2025. Truck and rail PT miles combined were 13.4% of our total linehaul miles in the quarter compared to 12.4% in the prior year. The increase in purchased transportation usage was driven entirely by rail to match customer service expectations, as we leverage the most cost-effective mode. Fuel expense for the quarter increased by 3.6% compared to the prior year, while company linehaul miles decreased 4%. The increase in fuel expense was primarily the result of a 13.6% increase in national average diesel prices on a year-over-year basis, as national average price per gallon increased more than 30% from February to March. Due to the rapid rise in diesel cost in March, our costs were elevated in real time while the fuel surcharge table updates the following week. This period of quickly rising diesel costs resulted in an approximately $3.5 million margin headwind. Claims and insurance expense increased by 6.3% year-over-year. This increase was primarily due to rising insurance premium costs in addition to inflationary costs associated with the claims expense. While claims costs continue to escalate at a rapid pace, our efforts to remain focused around safety and training resulted in a significant decrease in preventable accidents compared to the first quarter of 2025. Depreciation expense of $62.2 million in the quarter was 5.3% higher year-over-year primarily due to ongoing investments in revenue equipment, real estate and technology. Moving to costs on a per shipment basis. Cost per shipment increased 2% compared to the first quarter of 2025, largely due to increases in self-insurance related costs. Health insurance alone accounted for more than 50% of the year-over-year cost per shipment increase due to cost inflation and claims mix trending more towards higher-cost claims. Compared to the first quarter of 2025, salaries, wages and purchase transportation combined were down 1.2% on a per shipment basis as a result of our actions around cost control and network optimization. Meanwhile, higher fuel costs contributed to the increase in cost per shipment compared to the prior year, as fuel prices surged during March due to external factors. As a reminder, while our fuel surcharge program helps mitigate rising fuel costs, our fuel surcharge table updates weekly, whereas fuel costs are incurred in real time. The impact of this timing is more pronounced in a rapidly increasing fuel environment. Total operating expenses increased by 3.1% in the quarter and with the year-over-year revenue increase of 2.4%, our operating ratio increased to 91.7% compared to 91.1% a year ago. Our tax rate for the first quarter was 23.3% compared to 24% in the first quarter last year, and our diluted earnings per share were $1.86, which is flat compared to the first quarter a year ago. Focusing on the balance sheet. We finished the quarter with $39 million of cash on hand, $12 million drawn on the revolving credit facility and $113 million in total debt outstanding. I'll now turn the call back over to Fritz for some closing comments.

Thanks, Matt. While 2026 has shown some positive demand signals, the ever-changing macroeconomic environment continues to create uncertainty from a customer perspective. One constant, however, is our team's ability to adapt to change and deliver solutions for our customers. As we remain focused on serving our customers while driving efficiency across our operations, I'm increasingly excited about the opportunity ahead. Our disciplined approach to cost management is reflected in our cost structure. We remain vigilant about managing cost. We noted in Q1 that employee-related costs associated with running the business continue to be inflationary. It's critically important that we invest in what we feel is the best team in the freight business. At the same time, we continue to invest in the technologies that allow us to best manage and deploy the industry-leading team. Dating back to 2017 since we began our journey to becoming a national network, we've opened 70 facilities. Throughout, we've maintained a competitive cost structure through deployment of data analytics and optimization tools that have served us well. We'll continue to invest in those capabilities and expand the use of those tools, which remains core to our strategy. Looking forward, we remain committed to executing our long-term strategy of getting closer to the customer, providing a high level of service and being appropriately compensated for the quality and service provided. As the industry is perhaps emerging from a 4-year freight recession, we see size upside as significant. We've invested with keen focus on supporting success, which has required a best-in-class team, a national terminal network, a flexible modern fleet and a technology stack to bring all these elements together. Over the last 36 months, we've invested approximately $1.8 billion in our network and fleet alone, representing more than 19% of total revenue during that time. This investment is a clear signal of our commitment to customers, and we believe we're still in the early stages of fully realizing the benefits of these investments, which we expect will generate substantial long-term value for our shareholders. With that said, we're now ready to open the line for questions, operator.

And the first question will be from Jordan Alliger from Goldman Sachs.

Great. So maybe, I guess, in the context of perhaps underlying demand feeling maybe a bit better. Can you talk or give your thoughts on margin progression as we go Q1 to Q2 and perhaps some of the specific levers that underpin that, whether it be volume, yield, cost?

Jordan, sure. So I'll go ahead and give the shipments and tonnage stats monthly just so everyone has those and then get into the margin commentary. So obviously, January and February, we're already out there, but just to reaffirm those and reiterate January shipments per day were down 2.1%, tonnage per day was down 7%. February shipments per day up 0.3% and tonnage per day down 2.7%. March shipments per day up 4.3%, tonnage per day up 2.8%. And April to date, shipments are tracking up about 5.5%, tonnage up about 6.5%. And as we think about what the Q1 looked like, I mean, we saw some nice acceleration in the back half of March, which was good to see that didn't come to fruition last year, so it was good to see that back around this year. But strong back half of March. And obviously, you see the April-to-date number. So when we think about what margin progression looks like, if I look back in history, Q1 to Q2, typically about 250 to 300 basis points of improvement sequentially from Q1 to Q2. This year, we think with what we've got going, the momentum we see, we think we can do about 400 to 450 basis points of improvement, which would be obviously a significant step-up from where we are. Now with that, obviously, there's a lot going on in the backdrop. We're projecting, as we stand now, May and June to be seasonal. A lot of factors out there with demand and what the diesel environment looks like and everything like that. But where we sit right now, if we see May and June come together as normal seasonality, we feel like we can hit that. And if things really get better and the environment is really improving dramatically that we can outperform that, but that's where we stand right now.

And the next question will be from Ken Hoexter from Bank of America.

So if you dig into the revenue per shipment ex fuel down 1.2%, Matt, you mentioned lower weight, shorter length of haul, but it also decreased sequentially. But then you noted an acceleration in the quarter. Maybe, I don't know if you want to do that by month over month? Or how do you see that accelerating? I don't know if you want to talk about maybe core pricing or contract pricing within that, so we can kind of understand what is really going on there? And I guess with that, the weight per shipment, you're going to lap the Southern Cal issues in April, and I don't know if you get in the truckload spillover maybe in that same thing, how does it work with weight per shipment shifting as well?

So, obviously, from a year-over-year standpoint the Los Angeles region headwinds we've talked about are still there. They have eased a touch, but shipments in that region were still down about 14.5% year over year. That's typically our highest-revenue-per-bill region with a longer length of haul. Also, on a year-over-year basis, we're still winning in these 1- and 2-day land markets, and that's not a bad business. Generally, those shipments don't travel as far, and the price is a bit less compared with shipments at our company average length of haul. That's not a bad business. What we're seeing is more and more opportunities with customers as we put dots on the map. We're getting that business back with them, and they're routing different freight to us that we may not have had access to before. So that's a good business for us. That mix shifts around a little bit from Q4 to Q1 as it becomes more seasonal. We're pleased to see weight per shipment improve throughout the quarter, along with our revenue per shipment month by month. Part of that reflects our actions on contractual renewals. You heard Fritz report 6.7%. That was the highest number we've seen in quite a while, and it was capped by a March number north of 7%. We feel good about that. But shippers are still moving around, and the environment remains a bit dynamic, so we continue to manage the mix. Nothing has changed in our efforts and focus on pricing, but we're getting more of that pricing improvement in some of these shorter-haul markets.

And the next question will come from Jonathan Chappell from Evercore ISI.

I understand there's a lot going on, and we don't want to get ahead of our skis here, but those numbers that you just noted for 2Q, especially, Matt, as we think about the rest of the year, the full year OR improvement guide from February of 100 to 200 basis points with the high end assuming some volume tailwinds, with what you think you have line of sight on with 1Q being done, the acceleration of tonnage through April and that 2Q bogey you just laid out there, does the high end become the low end? Or are we still I don't know, kind of questioning the pace of demand in the back half?

I think it's, John, you bring up good points. I'll start with what we're hearing from customers. As you might expect, we spend a fair amount of time connected to customers; we survey, we communicate, and try to understand where their business is. The one thing I would say we like to hear right now is twofold. Number one, they track and give us feedback on our performance all the time via our Net Promoter Scores, and our customer scores have never been higher. They continue to improve, and we're excited about that. The second part, which I think is more tied to your question, is their sentiment is more positive — they see a better second half. Matt and I, as I've mentioned before, tend to be a little more, show me, right? So those are positive tones. We like that, but I'd like to see it in the results. Right now, we're excited about what's in front of us for Q2. The ranges we've talked about earlier in the year, the 100 to 200 basis points, are certainly within range, but there's still a lot to go on. The macro is still uncertain; diesel costs are at high levels, and overall transportation structure costs are high. Does that have an impact on demand down the road? I don't know yet. But in the short term, customers think we're doing a great job. It's showing up in the April results and in the second half of March. The feedback from customers is great, so we feel good about what we've talked about for Q2. I think the trends would indicate the second half of the year could be pretty good.

And the next question is from Tom Wadewitz from UBS.

Yes. Let's see, I wanted to see if you could talk a little bit about the, I guess, weight per shipment, what that's doing and what it kind of did in March to April? I guess also if you could just kind of help us understand, you're assuming normal seasonality in May, June. What does that mean in terms of like what your year-over-year tons per day, shipments per day look like? So I think just some more about kind of both how you see shipments developing and also what doing and how much that kind of matters to how you're looking at things?

Sure, Tom. Yes. I mean, we saw weight per shipment increase throughout Q1, which was good to see. As Fritz noted in the prepared comments, that's what we feel is partly driven by our actions around core pricing increases and how we're targeting business and mix management. We also feel like it's a little bit to do with the backdrop improving and we've seen some positive signals, customer conversations, as you talked about. But you get into some of the spring periods and that you have some rollout at times or different mix with customers, but it increased pretty steadily throughout Q1, which was good to see. As we go into April, it's up a touch. You saw that in the tonnage numbers that we've talked about from a shipments and tonnage standpoint in April. Remains to be seen what that does in the back half of the quarter. Obviously, there's a lot going on. Shippers are still trying to figure everything out. So we feel good about where the trends are now. But we've got a couple of important months to go through and what is generally the peak quarter of freight. In terms of what seasonality does, typically, you'd see a step up of 1% to 2% or so in the March to April time frame. Somewhere in the middle is generally where that lands. And then what you'd also see is a step up April to May and May to June as well. So typically, what you're getting through Q2, which again is the most seasonal period in the quarter, you're getting step-ups throughout the quarter. So that's what we're assuming right now as we stand. And as we're talking to our customers and getting demand signals from them, that's how we're forecasting right now.

What about the growth in the newer terminals versus growth in the legacy terminals? Is that kind of similar? Or are you seeing meaningfully higher shipment growth in the terminals from the last 2 years?

I'll give the number, Tom, and then Fritz will comment on it. One of the things we were really excited about this quarter is that we saw shipment growth in both the legacy and the ramping facilities. We've seen growth for a while in the ramping facilities, obviously, but this was the first time in about five quarters that we saw it in the legacy facilities. So that was good. The ramping facilities are still outperforming the legacy ones, but the legacy facilities grew for the first time in a while.

Yes. I think it's what's exciting about this is having the legacy facilities grow at the same time the new facilities are growing at a faster rate as we'd expect. And what's fantastic about that is that customers are considering us more for their complete solution. And they said, look, you can do a great job for us in markets you've always been in and now you've got these new points. So this is kind of the plan coming together. We're getting to the point where growth in a legacy market is often tied to the fact that we can provide service in a ramping market at the same time. So you're now becoming a more important part of the customer's supply chain. So the percentages matter perhaps a little bit less now because the customer is looking at us as a solution rather than in the legacy market.

The next question is from Scott Group from Wolfe Research.

So the pricing renewal numbers sound good, but if I just look at like a blended average of the pricing metrics you're actually reporting in the quarter, they're basically flat. So I guess, when do you think we should start to see sort of those yields and rev per shipment numbers actually improve and get closer to some of the renewal numbers? Or do we start to see some of that in Q2? And just I don't know, any thoughts there?

I think we'll start to see some of that in the back half of Q2. Obviously, we're right now just lapping some of that big change in the Los Angeles region business from last year. And there's still volume moving around with shippers and you don't always know what you take, and they move around a bit. But as the environment hopefully continues to tighten, we should see some of that come. I think we'll get closer to that as we get into the back half of the year. But I'd also expect us to see some of that improve in the back half of this quarter as well.

Yes. I think the top part of the SoCal market for us, I think we start exiting out of that kind of in May, where it's more kind of we start lapping that we're past those tough months.

Maybe just to that point, like we've got some moving parts there are obviously, like fuel is a big factor right now on yield trends, like within that margin guide that you gave us, like any way to like sort of like bracket, what sort of the revenue assumptions are?

We don't give that level of detail, Scott. But I mean, from a volume perspective, we talked about seasonality. Fuel plays a factor in that. But as we talked about, I mean, we're paying fuel costs in real time during that run up in March, they've stabilized a little bit. I think anyone's guess is as good as ours in terms of what that market is going to do. It doesn't seem like it's changing real time right now. So I would say that it's more just about the guide that we gave is underpinned by seasonal May and June is what I would say.

And we're not assuming a change in fuel. It's like whatever it is presently, it could go up or down, diesel can go up or down from here through the end of the quarter.

The next question will come from Ravi Shanker from Morgan Stanley.

If you can just unpack what you're seeing in terms of end markets, particularly retail versus industrial? And what's the typical lag between retail kind of end markets picking up versus industrial going into a cycle?

Yes. I don't necessarily have a call out for retail and industrial. What I would tell you is that what we see in the feedback we're getting from customers is kind of across the board. So it's across all the markets. So there is not necessarily one that's outpacing another for us presently. So overall it's probably positive and more broad-based. I think that in some of the end markets we participate in and have pretty good line of sight to markets that are attractive would be grocery, data center businesses, all those sorts of things, we represent pretty well in there. And I think that those are pretty consistent feedback both that we're doing a good job, and they feel maybe a little bit positive about the balance of the year.

Got it. And maybe I can squeeze in a quick follow-up here. Just on the tech side, kind of you mentioned a number of new investments on productivity. Are there any kind of big tech products or packages that you're dropping in that you think should see like a step function improvement in your optimization efforts here?

I don't think that there is a single step-function change we're quite ready to talk about. But what we continuously have been investing in are the core optimization tools that are really critical to the cost structure that we have. If you benchmark us against the other public national carriers, not only are we the smallest of the public national carriers, but our cost structure is very, very competitive. And what I would point to specifically is how we run our linehaul network and how we plan our city operations. Those are all large models or early-stage AI models that we've been working on for a number of years, and there'll be continued enhancements around that. Now certainly, from here, how we interact with customers, we can deploy AI around customer service things, around track and trace as an example. Customers really value that. It's a cost-effective way for us to provide data to customers. Those are kind of things that we've launched, but they don't necessarily change the cost structure. If you got down the road and looked at things like Vision AI or things in that area, we're investing; those are things that are potentially operationally significant. I think the big thing for us is that as we continue to focus on this national network, technology deployed and where we can optimize and continue to optimize our pricing will be the real opportunity over time. So that is where our technology investment and focus is across the board. The cost things you have to do to stay ahead of inflation. And certainly, there are opportunities to continue to improve that. But I don't know that there's a step function out there yet for that. We'll continue to focus our investments around optimization tools.

And you see that in our numbers, Ravi. If you look at the commentary around our productivity improving — our best since the third quarter of '24 — you see it in the per-shipment cost of salaries, wages and PT, that's how we always think about it in terms of what it takes to run a network. To run an operation that on a per shipment basis is down is a product of optimization, technology and cost management. And keep in mind, over that period, there's 20-plus new terminals in our network. So those are by no means mature yet or fully efficient. We're going to continue improving that. But that's been the root of where our focus has been for a long period of time. And then to Fritz's point, the opportunity around pricing for us — the customer conversations that we now have are more equal on a footprint than they've ever been. We've got a national network. We can do more for them, and we're seeing more of that in these 1- and 2-day wins, but that's just a product of us being able to say yes to more things.

The next question will be from Eric Morgan from Barclays.

I was wondering if you could give us your thoughts on the truckload market. Is any of this tightness driving incremental volume onto your network? Could that be a reason, or one reason, for the upward trend in weight per shipment? My follow-up: regarding your answer to the Q2 touch question, you said you usually see improvement from April to May and May to June. Can you translate that into what it would equate to on a year-over-year basis for the quarter?

We don't give the year-over-year base, Eric, and that was in shipments that I was referring to just for clarity on shipment type.

On your market question, I think what I would say is that over time now, you're starting to see freight moving through its more historic moats and customers in a supply chain that is seeing increasing costs. What you're seeing is it may be a flight to quality. You're in an environment where you need to move freight and inventory through your supply chain. It's expensive. You want to make sure it's delivered on time because you can't afford delays in a higher cost environment. So I think you're starting to see the reliability of our network starting to shine. More broadly across all modes of transport, as you see the truckload market tighten up a bit, you see LTL freight returning to the LTL market. That's probably a help in there somewhere, but specifically as it relates to us, I think it's reflective of our performance for our customers.

And the next question is from Chris Wetherbee from Wells Fargo.

I guess, I wanted to ask about sort of the density or the building density in the more newly opened parts of the network. And I think in the past, you guys have given us sort of operating ratio for facilities that have been open a couple of years. Just maybe get a sense of how that's progressing, particularly in March and April where it seems like the volume performance is looking a little stronger.

Yes. We're pleased with this. I mean they're still above company average, there is a group of facilities still relatively immature. We saw them improve. If I look at just those batch facilities compared to where they were in the prior year, those facilities year-over-year improved margins by over 2 points on the OR side, which is good. I mean they're still in the upper 90s, and they are a drag on the overall. But we're going to continue working those down. They're still relatively new, but good performance from those on a year-over-year basis.

Chris, I think part of the OR guide into Q2 is reflective of growth not only in our legacy markets, which we like, but it's continued leverage in the ramping new markets, which is really key to the whole value story here. And I think that's what we're excited about.

And then just on sort of that, the legacy versus the new, I guess, I'm just getting a sense of how you're feeling about the improvement in demand potential. I don't know if you can measure that by looking at how much growth is coming from legacy versus new in terms of core demand, and maybe how Saia initiatives are affecting this, for example whether you're getting the opportunity freight for existing customers in the new network or vice versa. I just want to get a sense if there's anything you can tell from that broadening of this demand dynamic.

Well, I think the big thing that I would point out is we've highlighted that our legacy facilities are back — the first quarter reflected the first time in a number of quarters we actually saw growth in those markets. And I think what that is indicative of is that we're now a bigger part of the customer supply chain in these new facilities. We're doing a great job for those customers in the facilities. And now when you're in that footprint there's a little bit of a synergy that's coming out of this; it simply says when you're a national player and you could do more for a customer, it's easier to do business with. So now it's like, all right, well, let's give them more freight from Dallas to Atlanta because that makes sense because I know that they can cover. When they do the pickups for everything that's going into Montana, that matters too. So the combination of all that, I think we're starting to see the building of value of having that footprint because you're able to solve markets where we haven't covered well historically. Now you're able to do that. So now the customer can say, look, let's lean into it in businesses that we've long done business with you, but now you're moving up to the top of the stack in our supply chain. So I think that's exciting for us. And that's really what I think is going to drive the growth in Q2. I don't see an impediment short of a broader economic slowdown that would say that we can't continue to drive margin performance in this business and in the long-term real value-creating goals that I think we have, which are sub-80 operating ratio is out there for us, and I think we can get there. I don't see an impediment to that.

And then just one follow-up on my end. Free cash flow, no one touched on it yet, but it was very strong in the quarter. Could this market inflection here? Or is there some other considerations we need to be thinking about?

Well, we've long talked about our plan this year was to be free cash flow positive. Obviously, we understand our duties to the shareholder, and we feel good about how we've returned the investments in the business, but a lot of that build-out is done now. We still have some terminal opportunities here and there. So we understand that we're stewards of the shareholders' capital. But absolutely, if this market continues to tighten our plans around that could escalate further. I think there's still some of the unknown out there in the near term. But based on the indicators that we're seeing from the demand side from customer conversations, we feel like this could be a really great inflection point for us.

And the next question will be from Jason Seidl with TD Cowen.

This is Jason Seidl. Maybe just one for me on circling back on pricing. So on your last call, I think you spoke to some better-than-expected capture on GI since then freight markets generally have tightened up, your core pricing is sounding robust. Have you seen any changes or improvements on the capture side there as the year has progressed? And does that telegraph anything further for momentum on core pricing as you move through those annual renewals?

I would say that it's been relatively steady. No major difference there. Some of the movement we see is generally around the national accounts or the larger customers a bit more who typically are using more carriers or they've got a more sophisticated TMS, things like that. So there's always some movement with that. But I would say it's been relatively similar to what we've been seeing on the capture side. And I think a big component of that is our ability to do more for our customer. It's harder to make a change when we can do everything before. You're thinking about it twice when you have to make that decision now. And now that we've got 214 facilities in the national network, we feel like our value proposition to our customer is better than it's ever been. So relatively in line with where it's been, but I think every time that we can say yes to a customer and do more, then we get that chance to hold on to that at a higher price.

And the next question is from Richa Harnain from Deutsche Bank.

It's Richa here. Yes, maybe I can revisit how you manage purchase transportation. I know you look at it holistically with size, wages and benefits and optimize that in totality. Matt, you said it a couple of times your salaries, wages plus PT per shipment was impressively down in Q1. But just as truck rates rise, do you plan to use more PT or do you think your pass-through mechanisms with purchase transportation give you enough protection? And then just to clarify, I know Fritz, we talked about like the upside scenario. It seems like the macro is providing some help right now, which is nice. But if that doesn't materialize, given all the uncertainty out there, do you still think you can improve operating ratio by at least 50 basis points this year? Or could it actually be higher than that with all the momentum and productivity initiatives that we're hearing about in earnest today?

No problem. Good question. On the PT side, when we go through our decision-making process around PT, we always focus on, number one, how does that match what customers need? What's the service schedule? Does it meet the quality standard that we need? What we found in Q1, particularly in the second half of March, we saw opportunities to really lean into rail. And the rail—the entire increase of our PT year-over-year—there's certainly some rate underneath, but the real piece is we really leaned into using rail, which on a cost per shipment or cost per mile basis is substantially cheaper than our internal model. So in that case, because we could meet the customer need, the cost decision became straightforward and we made that call. Over time, as we build density in this network and scale, the opportunity for us to run more balanced schedules across the network allows us to potentially use a Saia driver for more linehaul moves; in that case, we've got freight for them to go from, and when he comes back west, you'll have a full load — and that's cost optimal and that makes a lot of sense. As the maturity of the network grows, there'll be opportunities to do that. But at the same time, we're going to take advantage of when PT works for us, starting with service, then we'll get to dealing with the cost side. If the cost side is better, where it makes sense for us to better utilize our resources maybe on another part of the network, we'll do that. With respect to the momentum we're seeing in the business, in a flattish macro environment, can we get operating ratio improvement in the business? I think we can. I think we've got some underlying efficiency goals that we have in place that we're achieving. I think that as we get new volume in those facilities that are ramping that automatically gets us a bit of cost leverage there. So in a tough flattish market, I think we can achieve that 50 basis points. All in, I think what's exciting about this is because of where we are, we've got line of sight to things that we can improve on and are improving and optimizing as we go.

Okay. And can I just ask one quick follow-up? The good demand that you're seeing, I think legacy facilities are seeing growth after like five quarters. Any sense of that being pulled forward or any concern around that based on your customer feedback?

I don't think so. I think what we see is it's more of a broader sentiment in the marketplace. I don't see anybody making the decision to move freight quickly now before things become more inflationary. The diesel cost jumped up pretty rapidly, and as a result of that, I don't think someone could necessarily have foreseen those cost increases that might move things forward. So I conclude that I don't think we see any real pull forward there.

The next question is from Brian Ossenbeck from JPMorgan.

Just wanted to ask about the capacity and ability to make service if you do have a more significant inflection in demand and volume. I don't know if you're ramping up for that probability already? Or if you have more productivity you think you can leverage in that scenario? Maybe you can talk through how you are planning for it right now? And if it were to actually materialize, how you would handle that — would you maybe trim down some of the volume coming in to ensure service is met in that type of scenario?

It's a good question, Brian. We feel like because of our ability to manage PT efficiently and effectively, that will be a natural lever for us. If we had unexpected short-term volume variation, we've got that safety valve and we know how to manage it. As we scale the business, we have continued efficiency opportunities, so that's within our framework. Also, these are scarce assets — our fleet, our real estate terminal network, and the technology — and all are inflationary. So in an environment that strengthens and firms up, we're going to expect to not only provide great service to our customer, but also to be compensated for the significant investment we've made. So that may help manage volume inflections — in a stronger backdrop we probably focus more on making sure we're compensated for all of the investment that we've made. When you do business with Saia, you get best-in-class service, so we expect to get paid for that investment. That probably becomes more of our focus in a stronger backdrop.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Fritz Holzgrefe, Saia's President and Chief Executive Officer, for closing remarks.

Thank you, operator, and thanks to all that have called in. At Saia, we believe that our value proposition to the customer continues to be significant and we look forward to talking about the success we will achieve in the quarters and years to come. Thank you, everybody.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.