Good day, and welcome to the Saia, Inc. hosted fourth quarter and full year 2020 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Douglas Col. Please go ahead, sir. Thank you, Lauren. Good morning, everyone. Welcome to Saia's fourth quarter 2020 conference call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Holzgrefe. Before we begin, you should know that during this call we may make some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, and all other statements that might be made on this call that are not historical facts, are subject to a number of risks and uncertainties, and actual results may differ materially. We refer you to our press release and our SEC filings for more information on the risk factors that could cause actual results to differ. Now, I'd like to turn the call over to Fritz for some opening comments. Good morning, everyone. I'm pleased to welcome you to this call to review our fourth quarter and full year results. I'm also pleased to take this moment to say goodbye to 2020. While last year brought all of us plenty of challenges, both professionally and personally, we learned that we are capable of pulling together as a team to deal with the crisis. Not only did we adapt quickly to changing conditions across our network brought on by COVID-19, but we did so while maintaining a high level of service. In 2020, we delivered 98% of our shipments on time, despite experiencing periodic shortages of employees on any given day due to the pandemic. Protecting customers' freight remained a priority for our employees, and our 2020 cargo claims ratio of 0.66% was a record. I'm very proud of our team for providing the type of service for our customers and pleased that we could do our part and deliver essential goods in these difficult times. It is exciting today to be able to discuss our record fourth quarter and full year results. Business volumes really never tracked historical trends after the downturn in mid-March, and the ensuing rebound in April, and that continued into the fourth quarter. In the fourth quarter, daily shipment activity remained steady, and shipments per workday for the full quarter rose 3.6% compared to last year. Weight per shipment rose 2.3% for the full quarter, and tonnage per workday increased 6% year-over-year. Our operations team executed extremely well in 2020, and we were well-positioned to handle better than expected late December shipment volumes. Shipments rose 3.5% this December against a difficult year ago comparison, where December 2019 shipments increased by 10%. The pricing environment remained stable throughout the pandemic, and we continue to focus our pricing strategies on identifying the optimal mix of business while ensuring that we're compensated for our strong service execution. If anything, the continued tightness in the driver market, made worse by the pandemic, and the increased cost of purchased transportation has made carriers even more focused on pricing in the face of these cost pressures. I'm extremely pleased to report that revenue per shipment, excluding fuel surcharge, rose 6.5% in the fourth quarter. Despite fuel surcharge revenue being down 13% year-over-year, we still managed to improve revenue per shipment, including the surcharge, by 3.5%. This improvement in revenue per shipment plays a key role in improving margins, and I'm proud to report that our fourth quarter operating ratio of 89.4% is a record. Our revenue in 2020 was a record $1.8 billion, surpassing last year's record revenue by 2%. Operating income also grew by 18% to a record of $180 million. I'm now going to turn the call over to Doug for a few more detailed comments about the fourth quarter and full year results. Thanks, Fritz. Fourth quarter revenue was $476.5 million, up $33.4 million or 7.5% from last year. The year-over-year revenue increase was the result of 6% growth in tonnage per workday. Our yield, excluding fuel surcharge, improved by 4.1%, and a 6.1% increase in length of haul. Revenue per shipment grew 3.5% to $246.88. Offsetting these tailwinds, fuel surcharge revenue decreased by 12.9% and was 10.5% of total revenue compared to 13% a year ago. Moving now to key expense items in the quarter. Salaries, wages, and benefits increased 3.6%. This was largely driven by our employees' utilization of paid time off in the quarter compared to the prior year. You will remember that we offered our hourly employees an additional five days of paid time off in 2020 to help them deal with the personal and family issues arising from the COVID-19 crisis. Health insurance costs were essentially flat year-over-year, with inflationary costs being offset somewhat by lower usage of benefits by our employees. Purchased transportation costs increased 42.1% compared to last year. As a percent of total revenue, purchased transportation costs were 9.4% compared to 7.1% in the fourth quarter last year. The increase is primarily tied to an approximate 76% increase in purchased truck and rail miles compared to last year. In the quarter, we faced pandemic-related driver shortages in some markets and were able to meet the stepped-up demand with purchased line haul capacity. Purchased transportation miles were 16.3% of total line haul miles in the fourth quarter. Fuel expense fell by 30.7% in the quarter while company miles decreased 2% year-over-year. National average diesel prices were approximately 20% lower throughout the quarter than in the same period a year ago. Claims and insurance expense decreased by 27.3% in the quarter, reflecting decreased frequency and accident severity in that expense line, serving to offset the higher year-over-year premium costs. To put that in perspective, the $3.4 million expense decrease compared to prior year would've been favorable by another $1.5 million, if not for premium increases we experienced. To illustrate the volatility in this expense line, I would note that claims and insurance expense was down 24%, or $2.8 million sequentially from the third quarter. Depreciation expense of $34.2 million in the quarter was 7.2% higher year-over-year. This is a continuation of the trend we have seen over the past few years as we have grown our terminal network, invested in equipment to lower the age of our tractor and trailer fleet, and made meaningful investments in technology. Overall operating expenses increased by 2.5% in the quarter. With the revenue increase of 7.5%, our operating ratio improved by 440 basis points from a year ago. Our tax rate in the fourth quarter was 19.8% compared to 18.1% last year, and our full-year tax rate was 21.5%. Fourth quarter diluted earnings per share were $1.51 compared to $0.81 last year. Moving on to the financial highlights of our full-year results. As Fritz mentioned, revenue was a record $1.8 billion, and operating income of $180.3 million was also an annual record. Our operating ratio for the full year improved 140 basis points to a record 90.1%. For the full year 2020, our diluted earnings per share were a record $5.20 versus $4.30 in 2019. In 2020, we made capital investments totaling $231.1 million. We reduced our net debt position by $90.5 million in 2020, and we entered 2021 with $25.3 million cash on hand. In 2021, we anticipate capital expenditures will be approximately $275 million. Also, at the beginning of 2021, we implemented a wage increase across our workforce, which averaged approximately 3.5%. I would now like to turn the call back to Fritz for some closing comments. Thanks, Doug. Just a couple more comments before we open this up for questions. 2019 was a year of investment across the company, perhaps most notably in the Northeast. For 2020, our team was focused on operational execution with an emphasis on integrating the new operations into the broader network. COVID-19 provided an unexpected challenge, which tested our execution, particularly in Q2. We emerged from the COVID-19 business decline and posted records in both Q3 and Q4. Throughout, our management team stayed focused on the safety of our employees and customers while continuing to deliver differentiated service and satisfying our customers' freight shipping needs. COVID-19 is a continuing daily challenge across our 169 terminals, providing a level of unpredictability for both our customers and our operations. We expect these challenges to continue for the near future. At the same time, our strategy extends into 2021 with a clear focus on execution and delivering the service our customers expect. This focus supports the ongoing effort to optimize our mix of business while being compensated for all the service that we provide. In 2020, we opened a terminal early in the year near Burlington, Vermont, and in the fourth quarter, we moved into our new 200-door cross-dock facility in Memphis, Tennessee. The new Memphis terminal is 60% larger than the facility it replaces and should accommodate significant expansion over time. As we think about growth in 2021, we plan to open a new terminal this quarter to service customers in the Wilmington, Delaware area and plan to open an additional four to six terminals across the course of the year, including our Northeast Atlanta terminal targeted for the fourth quarter. These terminals will enhance our service across the geography while also providing reach into new markets as we seek opportunities to build our long-term pipeline of coverage in 2021 and beyond. As 2020 highlights, despite the operational challenges, Saia is positioned to continue to execute our plan into 2021 and beyond. With that said, we're now ready to open the line for questions, operator. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one to ask a question. Our first question comes from Amit Mehrotra with Deutsche Bank. Thanks, operator. Hi, Fritz, hi, Doug. Congrats on the results. I guess I had one shorter-term question and maybe one longer-term question. Just on the shorter-term side, wondering if you can give us January shipments and weight trends, just how it feels out there from a demand and customer perspective. Also, you provide OR trends sequentially. I know it usually deteriorates fourth quarter to first quarter, if you can give us a little bit of color there as well. Thanks. Sure. Hi, Amit. Everybody should have the October and November trend numbers, December shipments were up 3.5% and tonnage was up 5.2%. In January, shipments were up 1.1% and tonnage up 5.6%. The January numbers are, again, against a pretty healthy comp like December was. January shipments a year ago were up 8%, and we also implemented a GRI on January 18th, averaged approximately 5.9% across our tariffs. We're seeing a little bit of impact of that on the shipment side, but weight per shipment's up nicely, and we're growing tonnage and hopefully improving our mix. The OR comment sequentially. Yeah. Historically, like you say, it's been a pretty tight range historically. It's gone back and forth, sometimes weather dependent. We'd say historically adjusting for the accidents and severe weather we can, it's probably flattish quarter to quarter, and we would hope to be able to do that again this year. We gave the wage increase on January 1st, we're seeing fuel costs trend back up a little bit. We would hope that we can keep it steady with where we operated in Q4. Okay. That's encouraging. Just, I guess more for my longer term question, which I guess is more important anyways. Fritz, if I look at the revenue per shipment, revenue dollars per shipment, it's quite a bit lower than other non-unionized LTLs. It's over 30% below what OD's doing, over 10% below what XPO's doing. Can you just talk about, I know that's a focus of you guys from a pricing and mix perspective and a service perspective, but I was just wondering if you could talk about what the actual opportunity is to narrow that gap and now that you have an expanded or increasing footprint. Then what should be the reasonable expectation there in terms of your ability to continue closing or narrowing that gap over the next couple of years? Sure, Amit. When we look at that, and we highlighted in the call comments, we were very pleased with our service performance in the second half of the year through the pandemic. Claims ratios are record low. Operations team did a phenomenal job taking care of the customers. What that does, though, is that says that when you look at those national carriers that you pointed out where we're at a discount, that sort of level of service, we need to get paid for it, because that is service that is some of the best in the industry. We're doing a great job for the customer, and it's expensive to run this business. It's a lot of cost tied up in this. As we point out, none of this should be free. We've got to charge for it and improve the mix of business to find those customers that really value that outstanding service that we've been able to deliver. As I think about it's not going to happen overnight, but I think we continue to work pretty hard at closing that gap against those larger national carriers. I think you see the performance we had in Q4, and that's the playbook. We've got to keep executing that, focused on getting paid for the service that we're providing. I think we've shown that we can do it, and now we've got to continue to execute that plan. Amit, I would add, too, that you see evidence of our work on mix and also the benefit of the expanded geography if you just compare our yield performance and our revenue per bill performance. Yield ex fuel surcharge in the fourth quarter was up 4.1%. We actually grew revenue per shipment ex fuel 6.5%. Our length of haul was about 6% longer year-over-year, and the mix opportunities that Fritz mentioned, if that continues to help us grow revenue per bill in excess of our yield growth, that'll help, too. Okay. That's helpful, guys. Thanks a lot. Appreciate it. Thanks. Thanks, Amit. Our next question comes from Todd Fowler with KeyBanc Capital Markets. Hey, great. Good morning, Fritz. Good morning, Doug. Fritz, in your prepared comments at the end when you went through the cadence of the last couple of years, the growth and then shifting into execution. We obviously see that in the last couple of quarters. As you think about going into 2021 and 2022, you talked historically about 150-200 basis points of margin improvement on an annualized basis. Is 2021 a year where you're in that range? Is it something better than that range, given the investment that you've made? Just how do you think about the cadence of the OR longer term at this point? Yeah. Thanks, Todd. That's a good question. One of the things that we focused on, as you rightly point out, is execution through the pandemic. We felt like we've executed well in that environment. As we get to 2021 and beyond, it's really about what's the overall freight environment look like that continues to be favorable. I think we can exceed the range that we've talked about historically of 100 to 150. We should be above that. Where that goes, how strong the market is, that's to be determined. I think what's important right now is that we're in a position where we continue to focus on pricing. That's, as we know, a flow through to the bottom line pretty quickly. We're also proving that we can execute. I'm excited about the terminal openings we have. I think that we should be able to absorb that without really being a drag on our profile. Certainly, if we had to accelerate because there were opportunities that were out there, we would do that. Ultimately, I think we're in this nice range where the market's favorable, we see growth opportunities, the pricing initiatives are critical. I think we can continue to improve and likely be above the range that we have historically talked about. Yeah. Okay, that's great. That's really helpful. Then just for my follow-up, can you talk a little bit about your philosophy and your thoughts on using purchase transportation? Structurally, it's a difference between your model and Old Dominion. Obviously, in an environment like we saw in the second half of 2020 with truckload line haul ratio moving up, there can be some impact on the margins there. How do you think about the right mix of purchase transportation in your network and either bringing that down over time or maintaining it at a certain level? Thanks. Thanks, Todd. Doug and I will kind of combine on this answer, but I'm going to start with this leading sort of focus that we have, and we're a margin-driven company. We utilized more purchased transportation in the fourth quarter to meet customer expectations, meet service requirements. We priced it the right way. We found the PT that worked for us and was cost optimal. We built that into an 89.4 OR. Now, over time, certainly you want to look for ways to enhance, leverage our own assets where we can, but ultimately, we're going to make a decision around driving that OR. If we can achieve our OR targets and need to use PT to do that, we will. Certainly, in time, it's important that we find ways to leverage our infrastructure. Yeah. I would add to that, while the PT on the truck side certainly saw a lot of price inflation last year, the way we buy it with some committed carriers, we didn't feel the extreme volatility in our rates. In Q4, our truck pricing year-over-year for truck miles on the PT side was up low single-digit rate. We had some carriers come to us, and we did have to pay higher rate increases with some, but on average, we weren't that exposed in any way to the spot market. Our rail pricing year-over-year is favorable. We couldn't get as many rail miles as we wanted probably, but that's a very cost-effective way to deal with the longer length of haul that we've got these days. Okay, it sounds like if you're flexing up and you have to use more PT, and we saw this in the fourth quarter, you're able to get compensated from your customers as a result of that, at least at this point. Right. Normally you'd see the highest PT usage for us in the strongest part of the year historically, second and third quarter. We're using PT historically in those time periods to meet the seasonal demand, and then you have vacations in the second and third quarter, so some of your own capacity is not available. This year, we saw kind of the opposite. Things dipped and our usage dipped in Q2, but then when business came back strong in Q3, we utilized PT to satisfy the demand, and it didn't really tail off like historically you see in the second part of the fourth quarter. We again had to use PT, but to your point, yes, we were able to price effectively and make it work for us. Our service levels didn't deteriorate because we were using PT. Got it. Okay. Thanks so much for the time this morning, guys. Thanks, Todd. Our next question comes from Scott Group with Wolfe Research. Hey, thanks. Morning, guys. Can you talk about the renewal trends in the quarter? Maybe just help us out, big increase in weight per shipment, how to think about yield trends either in January or first quarter, however you want to think about it. Thank you. For renewals. Thanks, Scott. On the contractual renewal side, we saw a nice bounce back in Q3 and Q4. They were up 6.9% on average in Q3 and 6.6% in Q4. To us, that's a reflection of the shipper's mindset. You saw it, too, in some of your survey work. The shippers' expectations for higher rates really across all modes bounced back in the second half, and we felt that in our renewals. So far in January, I'd say on the yield side, a continuation of what we saw in the latter part of Q4. I'd say low to mid single digit yields are probably a level that we're seeing and a level we need to see and maintain. Our cost inflation is, on a per shipment basis, seems to always be 3% or 4%, so we've got to price to get that and more to improve margin. Scott, I'd add to that around weight per shipment. We're very focused on as we look for the optimal mix of business, we're looking for ways to optimize or take advantage of, drive the weight per shipment into better categories of freight. It's all kind of a combination for us. It's underlying rates, and it's also about driving the mix. Yeah. Just to clarify, when you talk about low to mid, that's on a per- hundredweight basis, so obviously a good amount better on a per shipment basis, right? Yeah, the yield commentary is on price. Our work on mix and the weight we're seeing, we hope to grow revenue per shipment at a better rate than that. Can I just ask, the driver pay increase in January, I think you guys typically do it later in the year. Is it just pulled forward, or do you think that we'll see two driver pay increases this year? Thank you. Scott, we always want to be competitively paid, right? Be a competitive bearer. We put that in place. We did not have a similar one in 2020. However, I would stress that we did add additional sorts of compensation, either in paid time off or a one-time bonus to effectively change the compensation mix for drivers last year. We put it in place this year. We will continue to focus on competitive pay. Could we make a change farther into the year? Yeah, it could happen, but that remains to be seen. Ultimately, we know it's an inflationary environment out there. We know it's a competitive driver environment, we have to pay competitively. We monitor that pretty closely, and we'll make adjustments as we need to into the year. Okay. Thank you guys. Appreciate it. Thanks, Scott. Our next question comes from Jack Atkins with Stephens. Great. Good morning. Thanks for taking my questions. Fritz, I guess kind of going back to your commentary around the plans for the network this year. With the one terminal opening in the first quarter and maybe four to six more over the remainder of the year, how are you thinking about new versus existing markets with those numbers? Is there a way to think about the expansion that you plan to make to the network this year on a terminal door basis? Just trying to get order of magnitude increases in 2021 versus 2020, if that makes sense. Yeah. The way I would think about it, the terminals that we've got on the docket, if you will, they're going to look sort of on average like the rest of Saia's network. Again, an average. Northeast Atlanta will be a larger facility. That will be obviously an existing market to some extent, but we're also splitting up Atlanta a little bit. The idea and why the math makes so much sense for us there is that we actually can probably reach customers in this market that historically we haven't been able to service appropriately. Is it new? Yes, and it's also an existing, it's a little bit of both. Wilmington, Delaware is effectively a new market. We service it a little bit, but not very well. That would be a sort of an incremental opportunity. The other ones that we're considering are going to give us a mix of new markets and ones that we are servicing, but in the outer range of what makes sense. I would think the best way to think about that is as sort of an average terminal size. Northeast Atlanta will be a larger one, and some of the others will likely be smaller. Okay. Got it. Also, Jack, just to frame it up a little bit for you, even though we only had one new opening in 2020, our door count was actually up a little more than 4% for the year. We relocated. There was a press release out a couple of months ago on the Memphis relocation into a bigger facility, but we also had four other relocations in the year. The door count grew a little bit, but it should be in excess of that if we're successful this year. Okay. That's very helpful, Doug. Thank you for that. Then I guess for my follow-up question, as you guys are thinking about the different line items from an expense perspective this year, how are you thinking about inflation with regard to cost per shipment in 2021? Can you maybe help us kind of put some brackets around that as we're sort of thinking about this year, just because there are a lot of moving pieces with PT and labor, obviously, but you're expanding your network too, which should help. Yeah. I can give you a little color on it. The cost per shipment was a little lower than the normal historical trends in 2020. If you go back to 2019, cost per shipment was up about 3.5%. Like I mentioned earlier, that's just kind of the inflation we're seeing out there. You're going to continue to see the claims and insurance line drift up. Like Fritz mentioned, salaries, wages, and benefits. Not only the wage side of it, but you've got benefit inflation pretty consistently year in and year out there. I think something in that 3%-4% range on a per shipment basis is kind of going to be the trend. Okay. That makes sense. Thanks again for the time, guys. Appreciate it. Thanks. Thanks. Our next question comes from Jason Seidl with Cowen. Thank you, operator. Fritz, Doug, good morning. Thanks for taking the time. Wanted to talk about your business mix, sort of how it's breaking out between consumer and industrial, if you expect that to change as we move throughout the year as the industrial economy could come back. Yeah. In terms of changing, we saw a little bit of change really in the middle of the year with the pandemic, and we saw residential deliveries get up into the mid-teen range on a percent of our shipments. That's back down in the high single, low double-digit range now. In terms of the business, industrial to us is still 60%, 65% of the freight if you walk our docks and get a look at the freight we haul. You might see that over time grow a little bit because of the increasing willingness of folks to order heavier weighted goods online, and they need delivery of those items into neighborhoods and such like that. I don't see a big shift in the trends other than that. Okay. Fair enough. I wanted to talk a little bit about TFI and the acquisition of UPS Freight. I would think that it's a good thing for pricing in the LTL market, which has already been favorable over the last decade or so. Wanted to know sort of how often Saia ran into UPS Freight in the marketplace. Just out of curiosity, your agreement, your interline agreement with TST Overland, about how large is that? I would assume it's relatively small. Yeah. Just a general comment. We are familiar with TFI and specifically TST. We've been working with them really well in the last several years. A well-run company. Good, solid performer. Certainly, I wish them the best in their next steps with their acquisition. We would see UPS Freight, kind of in the marketplace, right? You knew that it was a business that maybe didn't have the same level of investment as the rest, or focus that the rest of the LTL carriers had. I think that impacted them over time. We were familiar with them in that sort of regard. We don't think, at least in the short term, that we'll have any meaningful impact on our TST relationship going forward. It remains to be seen what the impact is on the broader marketplace. TFI is a well-run company focused on the right things and we wish them every success. Appreciate the color, gentlemen. Thank you for the time, and be safe out there. Thanks, Jason. Our next question comes from Jordan Alliger with Goldman Sachs. Yeah. Just a follow-up on purchased transportation. As you think about going through the year, especially taking into account the terminal openings plus the elevated demand, is the thought, though, that you'll be able to handle more of your own staffing, whether it be drivers or what have you, as we move through the year and maybe the PT starts to ebb, relative to the rates you're seeing now, or do you think that sort of stays at these levels through the course of the year? Thanks. In terms of the current year, I would expect it to moderate a little bit versus the usage we saw to deal with the ramp-up out of the shutdown period last year during the pandemic. Over time, if you're not buying PT, you're going to pay for it somewhere. It's not like we avoid the cost. It'll shift up into another line if you run it with more of your own equipment, your own drivers, and there's inflation there. Yeah. Naturally, as we build density and with our load average improvement, which we saw a 1% or 2% load average improvement in the year, we'll be able to run more of it with our capacity over time. Okay. From an overall, thinking about the terminals and stuff, the labor market, the ability to access people within your terminal, though, you feel pretty good in the markets that you're in, that you'll have that availability? Yeah, to the extent that you can seek the capacity to bring on. The driver market has been a challenge anyway, then you add the difficulties the pandemic brought. It's a challenge. If we can hire, you'll see us using more of our own power over time. Great. Thanks so much. Our next question comes from Tom Wadewitz with UBS. Yes, good morning. I wanted to see if I could go back to some of your comments on December and January tonnage and just see if you could offer some thoughts of whether you think that's maybe January is representative of what you would expect, or you did refer to the, I guess, the GRI impact and maybe some difficult comps. Do you think that, was January a little bit of a one-off, or do you think that 5%, 6% tonnage growth is a realistic way to look at what you might expect in first quarter or 2021? Yeah, it's hard to say. If I look at it sequentially, November to December, historically, we used to see a 6% or so drop off in shipments per day, and this year it was only a 4% dip. Into January, we were kind of flattish with December trends and that's usually up. That's also, we usually don't do a GRI in January. It's been a little later than that the last few years. In terms of growth, the comparisons obviously get easier. February a year ago, shipments were up 1.5%, and tonnage was essentially flat. After that, when the pandemic hit beginning of March, the comps get easier for a few months. We'll see. There was a little weather late January. There's been some weather so far in February, so it's a little too early to call any, give you a whole lot of guidance on February. Right. Okay. That makes sense. One on other revenue. That looked like a strong number in the fourth quarter. Can you just review what might have driven that and how we would look at other revenue and also, I don't know, does that flow to the bottom line better than LTL, or is that just a similar flow through? Yeah. I'd say it's a similar flow through. We've had some success in cross-selling. Our Saia sales folks cross-selling some of our LinkEx services. Some of the logistics and brokerage services that LinkEx puts together for customers. We've seen some good trends there. You'd be optimistic we should expect that to continue? Yeah, I think we also probably experienced some of it with shipment of some medical supplies and such on the COVID-19 related moves. Outside of that, nothing specific to call out. It's a pretty small piece of our revenue. Yeah. Right. Fair enough. Thank you for your time. Our next question comes from David Ross with Stifel. Yes. Good morning, gentlemen. Hey, David. Most of my questions answered tomorrow at our conference, just one for you here. A newer service I saw that you guys have is the MABD service, the must arrive by date retail delivery assurance for clients. How new is this service? How is it helping the volume growth? Are you able to charge a premium for it? Is this one of the premium products? I think, David, we implemented it through 2020. I think the big thing for us is it's an opportunity to differentiate. We're in a position where we feel like we have good control around our network, and we can execute at operations. If there's an opportunity to provide that incremental level of surety for a customer, we will. There's an opportunity certainly to charge for that. That's something that we've developed over time, and those are some of the suite of services that we'll continue to look to offer into the future. Excellent. Thank you. Our next question comes from Jonathan Chappell with Evercore ISI. Thank you. Good morning. First, I think that Northeast Atlanta example is a great one of getting closer to customers, and I'm thinking that's going to help you both in productivity, and the margin, and also probably in pricing as well. Are there other examples of how you can replicate what you're doing in Northeast Atlanta in some of your legacy markets, maybe Texas for starters, that you can speak to? Absolutely. That's not the first time we've done something like that with Atlanta and North Atlanta. We had two facilities in Dallas sort of Metroplex, which were, if you can imagine, the sort of Dallas centered east part of the geography. We added Fort Worth a couple of years ago. That was an immediate positive impact for us. In the L.A. basin, we added Long Beach. We added a second terminal in Seattle a couple of years ago. Those opportunities, if you look across the geography, we have two facilities in Chicago. Arguably, I think everybody larger than us has three, four, five in that market. That's a great freight market, and it's an opportunity for us to add additional coverage there. Houston, it's long been a great Saia market. We have a single facility there. As we look at our geographic opportunities, it's as much about maybe enhancing the Northeast coverage, but it's also in the legacy markets, finding places that we can move closer to the customer. Usually, the payback, if you will, comes in multiple legs. On the one leg, certainly you're providing a service to customer, moving closer to them. Your cut times are all improved because you can meet the service requirements that the customer is looking for. Maybe in the case of North Atlanta, we actually moved closer to a part of town where we have a better chance of recruiting drivers. In the case of Dallas, Fort Worth, a couple of years ago, it was taking some of the freight out of the two legacy terminals in Dallas and creating some operational efficiency. There are a variety of value drivers that come out of these. I think all those markets are ones that we could continue to add. We're opportunistic around it. We look for existing properties that are great to transition to, but in some markets, you have to make a greenfield investment, much like we did in North Atlanta. Mm-hmm. Yep. That's great. To follow up on that same topic, I know you guys don't give guidance, but there's very few scenarios you can walk through where your cash flow is not going to exceed your CapEx for this year. I know you don't like to keep a ton of cash on hand, and you're definitely underlevered. Do you keep a bit of dry powder for some inorganic growth, if you will? I know you're four to six terminals this year. Is consolidation or M&A a part of your growth strategy going forward? For us, we want to own strategic assets. We've been very focused over time on protecting the balance sheet such that we could make those dry powder investments when they become available. Certainly, we would move quickly if there was something that we could find that would be a nice addition to the Saia footprint. If you go back to 2019, we added facilities that were lease facilities from a competitor that exited the market. We were in a position that we arguably would have preferred to own some of those, but the former market participant elected they want to be industrial real estate investors, so they weren't willing to sell, but we were interested in operating, so we were okay leasing those. If there a similar situation came about and we had the opportunity to buy, absolutely we'd do it if it's obviously in the right location, right price, and all that sort of thing. The balance sheet is set up for that, and that's purposeful. If we can find a way to drive growth beyond four to six terminals this year, we will. It's going to be dependent a bit on what we can find in the marketplace that makes sense to fit into our network. Got it. Understood. Thank you, Fritz. Our next question comes from Ariel Rosa with Bank of America. Great. Good morning, and congratulations on a strong result here. I wanted to talk about the operating ratio. Obviously 2020 was challenging for a number of reasons, but the operating ratio result was obviously very strong. Maybe you could share thoughts on both what aspects of 2020 were maybe unique that allowed the operating ratio improvement to be what it was, and then bigger picture, Fritz, it was encouraging to hear you talk about operating ratio for the next year or two exceeding the target of 100, 150 basis points of improvement. Could you maybe talk about any structural barriers that you see to getting to kind of a low 80s type of operating ratio? Is that something that's doable with the current network, or is there further expansion of the network or further kind of repricing of contracts that's needed to get there over kind of a three to five-year horizon? When we think about what the opportunity is for the business, we don't see an impediment that says we can't get to those sort of solidly into the 80s OR. When we look at the largest competitors in the sort of national footprint, certainly they have some reach that we don't have. That means they can access some customers that we don't have. Perhaps in those cases, expanding our footprint will help us drive the OR because we'll find the mix of business that makes sense. When we think about the biggest value driver, it's always for us is going to be pricing and mix. If we take some of the best-in-class carriers that are out there, and we compare just for weight per shipment and the length of haul, the biggest difference is often pricing. Pricing kind of really takes two forms. It's rate and it's also mix of business. We see the opportunity that's out there. It's a matter of execution, providing that great service to customers. One of the things that is a real highlight of 2020 is what our ops team was able to do in the midst of a pandemic. They did a great job servicing the customer. That puts us in a position that when we go have those conversations with a customer, if it's somebody that's new, we're in a position we can say, "Listen, our key service statistics are as good as anybody's, arguably better than many. This is what it costs to do business with Saia." On the flip side, you're in a position where you've gotten to the place where you're competing on an equal footing. I think that there's really not a structural disadvantage. We just have got to continue to reach new customers, expand the network to support that. It all kind of wraps together. Great. That's really terrific color, and looking forward to seeing you guys get to that level. Just for my second question, one of the things we had heard about from a number of carriers was just about congestion, particularly in the rail network, and maybe service levels not being quite what we would have hoped they might be. Maybe you could talk about what kind of impact that had on results in the fourth quarter and if you're seeing any improvement as we now are in the first quarter. Yeah, no change really yet. Demand's still strong. Like I mentioned earlier, we weren't able to get as much rail capacity as we might have used. Our mix of PT miles was about one-third rail in the fourth quarter and two-thirds truck, and usually it's a little more balanced, maybe 40%-45% rail. That had the effect of raising our PT cost a little bit because we ran more on truck than we would have liked to. Yeah, the service wasn't great, but primarily, I think it's just a factor of the congestion on the rails with all the demand. Okay, sounds good. Thanks for the time. Sure. Our next question comes from Stephanie Benjamin with Truist. Hi, good morning. Hey, good morning. I know that you gave kind of your net CapEx expectations for the year and have obviously walked through your plans from a terminal expansion standpoint. Maybe you could walk through some other investments you may have, anything behind technology or other productivity initiatives that you're expecting to roll out or enhance this year. Thanks. Sure. Just in terms of the mix, we expect to spend more on real estate year over year. Some of that may very likely be in the form of raw land. On the equipment side, you'll see this year weighted more towards trailers than tractors. Our tractor buy will be down this year over year, probably a third to a half of what it was a year ago. The trailer purchase will be ramped up, and part of that's more pups required with our expanding network and our length of haul. We're also seeing some opportunities with national accounts to grow our business and pick up some efficiencies if we're able to put trailers with a customer and then swap them, wait till they're full, and then come pick them up and swap them. We're going to have some more trailer buys to be in a position to offer those to customers. The mix on the equipment side will look a little different, but we continue to see benefits from lowering the age of the fleet and, of course, all the safety enhancements that come with our newest tractors. We think we're Getting the benefit of that in safety and claims expense over time. We'll continue to invest to keep the age of the fleet down and to get all those technologies. I would just add that on the safety equipment side, we're very focused. We're an early adopter of any available technology there, so that's part of our plan. We'll roll out a new ELD device this year for the fleet, a handheld device, all those things. I think they add, not in a position yet to point out the productivity enhancements, but they certainly will improve our driver experience, and our customer experience along with that. We continue to invest internally around data and analytics. The pricing themes that we have are really driven about our ability to capture and understand the costs that we have handling customers' freight, and be in a position that we know what to charge for it. Those investments are ongoing. They take the form, frankly, of both capital and expense. Those are so critical, we'll continue to invest and reinvest in those areas. Great. Well, I really appreciate the time. Thank you. Thanks. Our next question comes from Tyler Brown with Raymond James. Hey, good morning, guys. Hey, Tyler. Hey, I apologize if this is in the 10-K, I just can't remember. Can you refresh us on the tractor and trailer fleet ages? Yeah, we've worked the tractor age actually a little bit below five years now, coming into 2021. On the trailer side, it's probably sub-eight these days. Yeah. likely going lower, like I said, with the expansion on the trailer side this year. Yeah. Doug, you made some interesting comments on that. Are you seeing more drop and hook requests? Does that feel like a trend change, or is that just a market you weren't participating in quite as much in the past? Probably a little bit of both. We certainly gain pickup efficiencies if we have enough equipment to do that for customers. I'd rather go there and pick up a trailer with 10 shipments on it than go and pick up a trailer each day, pick up one or two shipments. I'd say it's probably a little of both. Okay. That's helpful. We're certainly in a position to be able to invest, to take advantage of it. Yeah. Okay, interesting. Fritz, on the terminals that you are adding this year, you talked a little bit about this, but are those going to be greenfield? Are they going to be purchases or leases? Just how does that break down? I know Atlanta's a greenfield. Yeah. Just big picture, what is your long-term philosophy on door ownership? Do you guys have a target there? Tyler, the North Atlanta is greenfield. I would expect the others will be a combination of lease and purchase. They will likely be, because that'll be legacy facilities that are in the market, or available I should say. Ideally, you want to own the strategic assets, right? If you're in a position that you can have ownership in key markets and you've got the key asset with that, we'll do that. Now, unfortunately, in some cases, as we've seen, you can't get control of the asset, but you can kind of get there pretty closely if you get a good effective market-based lease with some tenure to it. It's in a position where we can effectively have a long-term asset. It hasn't changed for us. We prefer to own more, we need to be in the market. Sometimes we're willing to compromise if we can't own. Okay. My last one here. Fritz, you talked a little bit about improved service. Can you give us any color on what on-time percentage is? I had thought that your prior goal was maybe around 97%. Could you maybe even talk just using that as a bogey if you're better than that these days? Yeah. We would say in the fourth quarter we're at 98%. Okay continue to push that. That's critical for the customers. You think about it like this, if you can do what you say you promise to a customer, you have a better opportunity to charge for it. If you take care of their freight, there's an opportunity to charge for it. That's critical. Mastio Survey data came out in Q4, and across the board we saw improvement. That was exciting to see. All those things are points of differentiation, and those are an opportunity for us to charge. Yep, absolutely. I appreciate the time, guys. Thanks. Thanks, Tyler. We'll take our next question from Amit Mehrotra with Deutsche Bank. Hey, thanks for letting me have a couple follow-ups here. Fritz, I was just wondering if you could give us an update on the new Memphis facility. I think that's a pretty big deal for the network from a density and cost perspective. If you could just help us think about the impact to those two things from opening that Memphis facility, I think back in October. Yeah. It's a beautiful facility. Well positioned, got plenty of capacity. Really is ideal for its position, its location, and the ability for us to grow for the foreseeable future in that facility. That's been fantastic. I don't really have a carve-out for that. I would tell you that that's part of the long-term growth of the company, right? That's sort of a foundational break facility for us and it's all part of supporting our longer range growth. Has it allowed you to close smaller break facilities as maybe you guys have been able to build direct loads between major demand centers? Is there a cost melt away that occurs? Yeah. Good point, Amit. There's been some of that. I don't have a number to break out for you, but that's certainly having a well-positioned break facility like that with plenty of capacity. Certainly, our regional sort of next day break operations that we had historically as a regional carrier. As we become a national carrier, we don't need that anymore. Having a Memphis facility position to sort of absorb that's fantastic. That's part of the success that you saw in the fourth quarter, and I think it only gets better going forward. Okay. Just a couple of very quick ones for me for Doug. The yield ex-fuel ticked down a little bit sequentially. We typically don't see that. Length of haul was also up sequentially. I guess weight per shipment was up sequentially. We typically don't see that either, third quarter, fourth quarter. Can you talk about why yield ex-fuel actually ticked down sequentially? Was this just the weight dynamics or was there something else? Yeah. You mentioned all the factors there. Length of haul would help you a little bit, and the weight's been really strong. Sequential down doesn't really bother me, though, with the kind of revenue per shipment ex-fuel we're getting. Yeah, you've got to weigh those factors. D&A, I know you guys are ticking up CapEx a little bit, CapEx intensity. What's the headwind on D&A that we should expect this year? Yeah, I think you should still figure low double-digit percent change year-over-year. As a percent of revenue, it probably tracks about the same as it did in 2020. Got it. Okay. Thank you very much. Appreciate it. Thanks, Amit. That concludes today's question and answer session. At this time, I'd like to turn the conference back to Fritz Holzgrefe for any additional or closing remarks. Thank you to all on the call. We appreciate your interest and long-term support of Saia and look forward to an exciting year in 2021 as we continue to execute on our plan. Thank you and have a good day.