Saia Inc. Second Quarter 2026 Earnings Conference Call

Good morning. My name is Gary, and I will be your conference operator today. At this time, I would like to welcome everyone to the second quarter 2026 SIA Incorporated Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I will now turn the call over to Matthew Bette, Executive Vice President and Chief Financial Officer. Please go ahead.

With me for today's forward-looking statement, pricing in Mitch Matt, 4.9% in the quarter of 2026, and improved for the seventh consecutive month. Importantly, our mixed management has been improving 4% from April and about 4% compared to June of last year. And a 480 basis circle seasonality of 200 performance indicators and hours between lost time injuries improved. Reflecting our continued focus on pricing discipline and the value we delivered, 0.1% was implemented with the quality of service we deliver and our expectation that pricing appropriately reflects that. A record-level investment over the last few years reflects our dedication to providing unique solutions to our freight needs, becoming more apparent than ever, as demonstrated by continued investments. More than ever before, customers are choosing SIA, and our expanded footprint is providing more opportunities. Launches SIA REV, a company-wide initiative. REV, or invisible, reflects our commitment to the customer. The customer will see our faster transit times, expanded shipment. At the start of Sirev, we were able to offer our customers faster and more consistent transit times, including updated ETAs, operation enhanced, per workday increased in a 22.14.6% to $303.12, $98.71.

Continued execution on pricing and mix management. The Los Angeles region business continued to take hold throughout the equipment, including fuel surcharge. Yield, excluding fuel surcharge, decreased by 2% by 3.9% increase in weight, while yield, including fuel surcharge, increased by 7.9%. I think for the impact of the 3.9% increase in weight for shipment and the 0.6% decrease in length of haul, as well as the lingering headwinds from declining shipments relative to the total in the Los Angeles region, all of which have negative impacts to yield, core yield, excluding fuel surcharge, was up about 3% compared 23 in 2024, operated in the low 90s, and improved nearly 300 basis five new terminals in the second quarter, and we are excited about the opportunity to provide solutions for customers in these new markets. Nepal decreased 0.6% to 888 miles compared to 893 miles in the second quarter. Expense size for a few key items to note in the quarter. Salaries, wages, and benefits increased 43.4 million, or 11.1% for employee hours in response to increase volume of company performance, in addition to a company-wide wage increase in October, increased $7 million, and workers' companies' percent decrease in 9% of total regulation includes fuel, and higher diesel prices contributed to the year-over-year increase. Truck and rail PT miles represented 15.4% of total line-haul miles in the quarter. The year-over-year increase in miles was largely driven by greater rail utilization as we continued to optimize our national network. Fuel expense for the quarter increased by 49.6% compared to all company line haul miles. The increase in fuel expense was primarily the result of a 50.3% increase in national average diesel prices, 9% year-over-year, primarily driven by the development of open cases and increased $64.2 million in the quarter, was 2.6% higher year-over-year, primarily due to ongoing investments in revenue equipment. Our treatment increased 10.9% primarily due to salaries, wages, and employee benefits also increased on a per-shipment basis, reflecting higher compensations costs associated with improved operating performance, as well as the 3% company-wide wage increase in the implementation basis were also higher, driven by increased usage compared to the prior operating expenses increased by 15.8% in the quarter compared to Q2. to 17.1%. Our operating ratio improved to 86.2% to 25.3% in the second quarter, with $3.54 million of cash during the quarter. Total debt outstanding at period end was $100 million.

Further, we have positioned the company to support customers to the next phase of market recovery by expanding our terminal footprint, modernizing our growing fleet, and maintaining a disciplined focus on driver training and development. We've deployed approximately $1 billion in real estate terminals to our operations. It's increased our operational door count. In addition, since 2022, we've deployed $1 billion in expanding, resulting in a 20% increase. We have carefully managed headcount to align with current volumes. We ended the second quarter of 2026 with 26% more line haul drivers than we had at the end of the second quarter of 2022. In LTL, capacity is created through more than just physical footprint. our investments in our network fleet and most importantly our people about making investments and substantial investments so the organic gross will be able to support these investments with continuing operating cash flow.

We will now begin the question and answer session. To ask a question you may press star then one on your telephone keypad. If you are using a speakerphone please pick up your handset before pressing the keys. To withdraw your question please press star then two. please limit yourselves to one question and one follow-up if you have additional questions you may rejoin the queue at this time we will pause momentarily to assemble our roster our first question today comes from jonathan chapelle with evercore isi please go ahead thank you good morning um let's start with the obvious one uh matt to the extent you can give july shipments and tonnage um how that looks relative to seasonality it sounds like your exit rate in june uh on certain metrics was much improved from april so um just that july trend

and what that pretends for potential seasonality in the or in the current quarter sure john i'll go ahead and give the full quarter for q2 details anytime you do that we've seen with that thanks

matt the next question is from jordan alleger with goldman sachs please go ahead yeah hi uh just sort of curious if you could give a little more color around your your demand comments i mean wage per shipment has been pretty positive i know you're doing a bunch of stuff with mix but can some portion of that be ascribed perhaps to sort of um better economic or volume related uh prospects. Thanks.

Thanks, Jordan. Good question.

Thank you.

The next question is from Tom Wadowitz with UBS. Please go ahead.

Good morning. Nice to see the momentum in the business. You provided some color, I think, on June revenue per shipment year over year. I think you said like 4% ex-fuel. How do you think that progresses? I mean, it sounds like your contractual renewals 10%, GRI, I think he's at seven. So that's a bit stronger. Do you think that if you look out a quarter or two, or I don't know if it's longer, you would see that growth in base revenue per shipment move up from that 4% in June? Would you expect that to move higher and kind of converge with some of the headline pricing numbers that you're talking about? Yes, that would be the first question.

Yeah, thanks. I'm pretty consistent.

We started to get past this and drive the appropriate returns for the significant capital we've deployed.

Okay, yeah, great. And then I guess for the follow-up question, just on labor productivity, I mean, I think, you know, I think you've had some good optimism on the ability to drive labor productivity when you see growth. But I think there's also inflation in that line. So maybe if you just give some thoughts about how should we think about the kind of growth in your comp and benefits line. Just, you know, I guess the two pieces, you know, kind of productivity versus just the inflation impact.

Yeah, Tom, you know, we don't take it, but that's also the more efficient way.

Thank you. The next question is from Ken Hexter with Bank of America. Please go ahead.

Hey, great. Good morning, Fritz and Matt. Maybe can you walk us through the fuel contribution to results in second quarter and then maybe thoughts on impact to the operating ratio and what's built into expectations? So, Matt, you noted kind of seasonal outperformance, 2Q to 3Q. Maybe talk about what is fuel, what's pure pricing.

Well, we don't break out the impact.

Yeah. So, Matt, I guess the stock is down 8%. I guess we've seen this a couple times on earnings days, but maybe it's just an AI transport trade today. But maybe delve into, should we be seeing more in rate from you if you're catching up? I mean, the rep per shipment down 2.2%. I know that's tied to weight per shipment, and then your revenue per shipment up 1.5%. How do you think you're tracking versus peers in kind of catching up, given you're now nationwide coverage and trying to grow into that? Or is it more a focus on still maybe filling the network into some of the new service centers?

Well, I'll start in the quarter.

You may have meant the yield opportunities to use, and that's reflective and supportive.

First, can I just squeeze in one more thought here? I guess if you're targeting 100 basis points deterioration in OR, does that mean you're looking at a worse OR year over year, or am I misreading the performance from last year?

Keep in mind, can we have two weeks? Did our wage increase last year?

Thank you, guys. Appreciate it. The next question is from Brian Osenbeck with JPMorgan. Please go ahead.

Hey, guys. Thanks for taking the question. So maybe just to help understand a little bit more of the incremental margins of their operating leverage with tonnage starting to inflect pretty significantly and maybe putting some of the mixed headwinds behind you. You know, adjusting the yield for all those mixed things you talked about, Matt, you're still tracking fairly behind where the renewals are. Just looking at the leverage in the quarter, is there additional costs that are still not fully absorbed in sort of the new network? Do you have new areas you're trying to still fill in from a density perspective? So I just want to see how to interpret all that for this quarter in particular. Yeah, just the new terminals. So, like, are they still ramping up? Are there still areas in pockets of density you still need to fill in? Are you shifting the mix? Like, I guess why are we seeing better incrementals on this sort of tonnage as you expand here?

Legacy markets as well because we can solve more problems, easier to do business with. That gets us pregnant. We see the continued.

All right, thanks for that. Just sort of a follow-up, just thinking about labor availability in this new network of expanded terminals. Some of you're still adding a few more here and there. How do you think about visibility into the pockets where it might be a little bit tighter or you might have to manage a little bit closer now that you're covering a bigger and broader network? Are you managing that through different sort of tools? Like, do you feel confident that that's not going to be a problem? Maybe you can just walk through managing the network, assuming we get a better upturn here, given it's going to be quite a bit larger and I would assume a bit more complicated than what you've done in prior upcycles. Okay, guys. Thanks very much.

The next question is from Stephanie Moore with Jefferies. Please go ahead.

Thank you. Sorry, maybe considering on the conversation around labor, You know, wanted to touch a bit about where your capacity specifically in the labor stands as volumes work to continue to improve from here. So any incremental hiring activity that I have on our labor line?

I'm sorry. Yes, I'm sorry. This is probably better. Yes, maybe just, yes, incremental capacity on the labor side, particularly if we continue to see volumes improve from here. So any incremental hiring activity we would need to see. you know I think we feel pretty good right and then just one follow-up to the pricing commentary earlier it's a very good GRI and in contract renewals that we can obviously see here but you know maybe just talk a bit about your customer exceptions are they starting to maybe realize your some of your size and the service to benefits that you've made as of late and is it starting to kind of come through on the pricing side or do you think these pricing numbers are more so a reflection of the tightening market. Thanks.

You know, I love tightening up.

All right. Thank you.

The next question is from Scott Group with Wolf Research. Please go ahead.

Hey, thanks. Good morning. So I understand sort of the impact of the double wage, but I guess the other side is we have an early GRI, so arguably we have like a double GRI. I guess I'm struggling a little bit with like we got good tonnage growth fuel tailwind like why is margin flat to down a little bit in q3 and everyone else sort of was guiding you know two to three hundred base points of improvement um you know i i totally get like we had this big network build out in a down cycle like why the margin gap widened but it felt like when the cycle started to turn positive the margin gap would start to narrow and it feels like it's still widening. So I don't, I don't know, just any, any thoughts there. And then maybe just along that, like any thought on like the full year margin, Matt?

What we get from customers.

And then I know that this has been touched on a little bit already, but just wanted to like come back to like the realized price discussion. Like, you know, I, I totally get the mixed things. And so like, if you just look at like revenue per shipment and revenue per hundredweight, just Take an average, try to, like, normalize for some of the mix. Like, it's been flat to down, like, the last four or five quarters. Like, you go back, like, ten years, it was never – you never had a single negative quarter. It was, like, average 5%, 6%. Like, I'm like, what – when do we get back to that? And, like, I don't know. I know you don't like to give, like, yield updates, but, like, I don't know. It feels like maybe it would be really helpful if you start doing that just to help us with our modeling. Just any thoughts there.

You see that from a yield basis, April to June is up one and a half is up. The West region continues to come back inside the quarter.

Thank you, guys.

The next question is from Chris Weatherby with Wells Fargo. Please go ahead.

Hey, thanks. Good morning, guys. I guess maybe just want to touch a bit on that wafer shipment comment that you were making, Matt. i guess as we think forward it seems like every month of uh 2q and then into july we're seeing a bit of an acceleration on wait for shipment i guess can you give us just a sense of of how you may sort of think about that as you go through the third quarter and maybe talk to some of the you know specific mixed dynamics that are pushing that i guess where are you seeing that opportunity coming into the network what specific verticals or just these are company initiatives that'd be great thank you if you get some of that pursue different verticals like we've talked about

in the past, that gives us a better chance to solve it.

That's helpful. And I guess maybe that sort of leads into the next question, which is just, I know there's a lot of focus on 3Q and maybe this year from an OR perspective, but I guess bigger picture, you guys seem to be doing a lot of work on customer mix and network dynamics, making sure you're kind of in a better position. I think it's obviously early to be talking about 2027, but if you can maybe give us a sense of what you think sort of the margin algorithm is, if you will, bigger picture beyond what we're seeing this year as you guys are putting in this work. And it does sound like, you know, some building confidence, maybe cautious confidence that we're going to see, you know, maybe more of a sustained uptrend. So, like, I guess, how do we think about sort of what the network can provide in a normalized growth environment beyond this year? Appreciate it. Thanks for the perspective.

The next question is from Ravi Shanker with Morgan Stanley. Please go ahead.

Thanks. Good morning, guys. Just to piggyback off the previous response, what exactly is the issue in the L.A. region? Forgive me if I missed this, but is that a SAIA-specific issue because of maturity of terminals, or is it a regional issue with customers, or what's going on there? Got it. So just to clarify, did the bulk of that happen this quarter? So that will be a drag that continues for the next three until you left?

No. So as we pointed out…

Okay. Understood. And just maybe as a little bit, there's been a lot of focus on autonomous trucking recently, kind of as we push towards commercialization of this, potentially in 27. You guys are pretty keen on kind of being at the forefront of technology here, especially with EV trucks. I'm wondering kind of what the latest update is on kind of how much you're looking at this. Very good.

The next question is from Eric Morgan with Barclays. Please go ahead.

Hey, good morning. Thanks for taking the question. I wanted to ask one on purchase transportation. I know you have contracts in place there, so you should be insulated from the spot market volatility. And I know fuel is a big driver in the quarter, but I guess just curious if you have a sense for where you're landing or expect to land on core contract renewals with your carriers in that line, just given what's happening in the freight market. And maybe if you could speak to the opportunity to insource more. Fritz, I think you referenced adding more line haul drivers. So I don't know if you have, like, a target that you'd like to see that 15% move towards.

I'll do the rate part, Eric. We've optimized that.

You know, we've pointed to the PT line, obviously, is up right now because we include core dynamic. How we manage that doesn't change. Now, if the rates in the truckload market are such that it makes more sense for us to hire more drivers to do that, we will. Optimization. And the good news is we've got tools and technology. We model that pretty well operated going forward.

The next question is from Bascom Majors with Stevens. Please go ahead.

Thanks for taking my questions. To follow up on part of Chris's question earlier, I mean, it did sound in the prepared remarks that, Brits, you're seeing this quarter in some ways as an inflection point and, you know, the path from investing in the network to earning a return on that investment in the network. Can you walk us through maybe in a little more granular detail, like, what is giving you that feeling? Why is now the time where it feels like that inflection is happening? And just are you of the confidence that longer term we'll see more periods where you're able to get price and volume at the same time to really drive that return and margin higher versus one or the other? Thank you. Thank you.

The next question is from Bruce Chan with Stiefel. Please go ahead.

Hey, morning, guys. Good to see the OR progress in some of the newer terminals. And I know, Fritz, you talked about, you know, leaning a bit more into the local account density is the kind of next leg of improvement there. Maybe you could just talk about any changes that you're making to the Salesforce structure or incentive structure to drive that. And then, you know, lastly, any thoughts around, you know, timeline for those terminals to kind of come up to parity with the rest of the So, Bruce, I think what we're seeing, and it's – Okay, great.

Thank you.

The next question is from Risha Harnain with Deutsche Bank. Please go ahead.

Hey, guys. Thanks for squeezing me in. So, first, just to ease some of the consternation, I guess, around the margin guide on 3Q and the wage increase. Matt, are you willing to say kind of – or have you triangulated just, like, if it wasn't for this wage increase, I guess, in July? What would the OR progression have looked like, i.e., what's like the impact of it? And then just like, you know, July trending up 7.5% on tons, is that in line better than seasonality? And what are you assuming for the remainder of the quarter, like in August and September, more in line with seasonality, better? Just curious on those two items before I ask maybe a more bigger picture, thoughtful one.

We did last year in the seasonality Q2.

Okay, thanks. And then if I could just ask one more. Just, you know, these product upgrades you guys have initiated, Fritz, you talked about, you know, improving transit times on 2,000 lanes, you know, your 10 a.m. guarantee time being somewhat differentiated in the industry, claims ratio, et cetera, that shows service improvement. You know, just like if I look at your yield growth, that is performing better than normal seasonality, I guess, or outperforming what we've seen usually in QQ. Just should we see a continuation of that as I think about Q3 and Q4, or, you know, should the acceleration pick up? Just trying to think through as customer acceptance and all of these good service sort of improvements kind of go into your pricing, what we should expect for that line item.

All right.

The next question is from Jason Seidel with TD Cowan. Please go ahead.

Thanks, Hopper. thanks for squeezing me in here at the end. I want to go back to the GRI. You guys mentioned that there's noise around sort of your tonnage when you guys implement them. So how should we look at this in terms of as a historical basis? Is this sort of at the higher end of noise, at the lower end of noise, which you've seen thus far? And if I can go to like a longstanding theme here about freight coming back from the truckload sector to LTL, sort of maybe you can give us a little bit of color on that and maybe what's the the longer term opportunity in terms of aiding tonnage growth is this like it could add a percent can we get up to like three percent over time how do you guys look at that you know there's certainly that'll be uh it'll range to be seen

how that's going to shape the time guys this concludes our question and answer session i would like to turn the conference back over to fritz holzgrave science president and chief executive officer for closing remarks uh thanks all for calling in and uh hear about uh our record second quarter which we're excited about continued long term the conference is now concluded thank you for attending today's presentation you may now disconnect