Hello, my name is Chris. I'll be your conference operator today. At this time, I'd like to welcome everyone to the Q2 2023 Saia Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star, then the one on your telephone keypad. Thank you. Douglas Col, Executive Vice President and Chief Financial Officer, you may begin. Thanks, Chris. Good morning, everyone. Welcome to Saia's Second Quarter 2023 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 a ctual 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'll now turn the call over to Fritz for some opening comments. Good morning, thank you for joining us to discuss Saia's Q2 results. While continuing to manage through an ongoing softer economic environment, I'm proud to present what I view as very solid results produced by our team in the Q2 of 2023. On a bright note, against easing year-over-year comparisons, the pace of volume declines moderated each month as we moved through the quarter and have actually turned positive so far in July. We believe changing industry dynamics over the last several weeks have played a role in this. Internally, we monitor our customer satisfaction metrics on a daily basis. For the quarter, our trends continued to progress favorably as customers are increasingly satisfied with our service, both in our legacy facilities as well as the new facilities opened in the last couple of years. It is gratifying to see our team's commitment reflected in the financial results. Despite an overall freight environment down compared to the prior year, we saw solid results in the quarter. Total revenue of $694.6 million was down only 6.8% compared to last year's record, record Q2 revenue, despite a 3.8% fewer shipments and the fuel surcharge revenue being down nearly 32%. Our focus on service, pricing, and mix of business has been key to offsetting these factors, and our yield, excluding fuel surcharge revenue, improved by 2.7% compared to last year, even with the headwind created by an increase in weight per shipment and a decline in length of haul. We continue to highlight the importance of business mix and freight selectivity and closely monitor our revenue per shipment, a key metric for our team. In the quarter, revenue per shipment, excluding fuel surcharge, increased by 4.8%, benefiting from a 2.2% increase in average weight per shipment. Industry pricing continues to be resilient in the face of negative tonnage trends, and we saw an average contractual renewal increase of 5.3% in the Q2. Our Q2 operating ratio of 82.7 deteriorated 230 basis points compared to our operating ratio of 80.4, posted in the Q2 last year. Again, that was a record quarter for both revenue and OR, and the industrial economy has changed meaningfully since then. I'll now turn the call over to Doug for more details from our Q2 results. Thanks, Fritz. Second quarter revenue decreased by $50.9 million to $694.6 million. Yield, excluding fuel surcharge, improved by 2.7%, while yield decreased by 4.8%, including the fuel surcharge. Fuel surcharge revenue decreased by 31.7% and was 15.9% of total revenue, compared to 21.7% a year ago. Revenue per shipment ex-fuel surcharge increased 4.8% to $287.9, compared to $274.6 in the Q2 of 2022. Tonnage decreased 1.7%, attributable to a 3.8% shipment decline, slightly offset by a 2.2% increase in our average weight per shipment. Our length of haul decreased 2% to 892 miles. Shifting to the expense side for a few key items in the quarter. Salaries, wages, and benefits increased 5.7% from a combination of our July 2022 wage increase, which averaged 4.3% across our employee base, and also the result of our employee headcount having grown by approximately 1.1% year-over-year to support our network expansion over the last 12 months. Purchased transportation expense decreased by 45.8% compared to the Q2 last year and was 7.2% of total revenue, compared to 12.3% in the Q2 of 2022. Truck and rail purchased transportation miles combined were 11.8% of our total line haul miles in the quarter, compared to 19.3% in the Q2 of 2022. Fuel expense decreased by 25.8% in the quarter, in spite of company miles increasing 6.6% year-over-year. The decrease in fuel expense was primarily the result of national average diesel prices decreasing by over 28% on a year-over-year basis. Claims and insurance expense increased by 19.3% year-over-year in the quarter and was up 20.6% or $2.9 million sequentially from the Q1 of 2023. The increase reflects a combination of premium cost inflation and some expense related to development on older claims. Depreciation expense of $44.7 million in the quarter was 20.9% higher year-over-year, primarily due to the acquisition of terminals, tractors, and trailers. Our total Operating Expenses decreased by 4.2% in the quarter, with the year-over-year revenue decrease of 6.8%, our Operating Ratio deteriorated to an 82.7%, compared to 80.4% a year ago. Our tax rate for the Q2 was 24.7%, compared to 24.4% in the Q2 last year, our diluted earnings per share were $3.42, compared to $4.10 in the Q2 a year ago. I'll now turn the call back over to Fritz for some closing comments. Thanks, Doug. Below last year's first half results, overall, I'm very pleased with our first half financial results. To operate with an OR in the low to mid-80s at this point in the freight cycle is a testament to the improved operating performance of our team over the last few years. Our customer first focus is yielding tangible results across our organization. A singular focus on the customer is a rallying point for our employees, and it's reflected in the record employee engagement survey we completed recently. With a talented and engaged workforce, the value proposition to our customers continues to grow. A key component of our market share opportunity is to get closer to the customer and give them a chance to choose Saia for their LTL needs more often. I'm excited about the 5 new terminals we've managed so far this year, and we're on track to open 3-4 more by the end of the year. At the same time, we continue to develop the markets around the other 20-plus terminals we've opened over the last 2 years. Although we're excited about the early success of these locations, we see considerable runway to continue to penetrate those markets. While our pipeline for terminal openings carries us well into 2025 and beyond, keep in mind that a key benefit of our organic expansion strategy is it allows us to go at the pace that suits us. Our business cycle is subject to cyclicality, and depending on where we are in the cycle, we may see an opportunity to accelerate or even slow down our terminal expansion activity. Importantly, we have positioned the company to execute on our organic expansions quickly as opportunities become available. Finally, before opening the call for questions, I would say there's still a lot of uncertainty around the strength of the economy that we face in the second half and beyond. That uncertainty is heightened for the LTL industry through the current well-documented disruption. At Saia, we've emphasized the importance of the customer and focusing on things that we can control. As our industry adjusts to the current disruption and adapts to the evolving economic environment over the coming months, my conviction about the long-term prospects of Saia remains steadfast. Great employees, great service, and a growing footprint, are all key to securing our position as a long-term share gainer in our industry. With that said, we're now ready to open the line for questions, operator. Thank you. As a reminder, please press star one if you'd like to ask a question. The first question is from Jack Atkins with Stephens. Your line is open. Okay, great. Good morning, and, and thanks for taking my questions, guys. I, I guess, I'm going to ask the obvious one. Would really appreciate maybe if we could get a little update on, on July tonnage and, and shipment trends. You know, Doug, I don't know if you want to take that or Fritz, but, you know, obviously, I would imagine the first half of the month is different than what you've been seeing over the last week to, to 10 days. If you could maybe quantify that a bit, I think that, that'd be helpful as well. Sure, Jack. first of all, congrats, on your summer activities. Thanks. Thanks. glad to be married. Glad to be married. All right, buddy. Happy for you. June, you guys have April and May numbers. We put that out in the early June press release. The June numbers, our shipments were down 1.8% year-over-year, while tonnage was down 2.2%. Weight per shipment dipped in June by 0.4%. You know, kind of mid-June, I'd say, we started seeing some lighter weighted shipments, some of that, you know, some of the activities we were working on over the course of the year, and probably some of that already seeing some, you know, freight flow into the network from newer customers as well. That weight per shipment kind of trend started in June, has continued here in July in terms of lighter weight. For July, you know, month to date, through yesterday, shipments are up about 5% and tonnage is up about 2.5%. Again, you know, that average weight per shipment's trended down, but, you know, it makes sense to us versus, you know, what's going on out there. Got it. Then in terms of just the, you know, what you've been seeing, you know, in the last couple of, couple of weeks, maybe last week, how does that differ versus, versus that, that, you know, the month to date, date trends? I guess, kind of bigger picture, for my follow-up question, you know, Fritz, as you're sort of thinking about maintaining high levels of service, that's critically important to the Saia story and your value proposition, you know, with this disruption in the marketplace broadly, like, you know, can you walk us through how you and the team are really trying to, to make sure that you're protecting the network from any disruption from all this, your own network? Sure. I- y eah, good questions. What I would say is that, you know, first, on July, July third, is sort of the hanging holiday right before the fourth. That was a Monday, if you recall. That was a little bit of a lighter shipment day. That was a bit challenging, you know, from a cost perspective and such. That first week of July was sort of holiday impacted, but, you know, it is every year. I think we've seen the business levels trend more favorably up in the last two weeks. That's been a positive trend. I think the- i t's been a big contributor to what, you know, what we're seeing so far in our results in July. I think the key thing for us is that focus on customer- maintaining the service levels, picking up the freight, managing our freight, or managing our customer base to make sure we understand what it is we're picking up, what the requirements are, what, you know, can we execute on that? Significantly, making sure that the economics work with this. We feel very strongly that we've got a tremendous service offering, so it is critical to us to maintain that service offering, and it's also critical, critical to us to make sure that, you know, we're, we're compensated appropriately for that high level of service. Customers, this is a, a, a unique opportunity, you know, in a disrupted time, that we could show customers, "Hey, this is, this is what you get with Saia." That's differentiated high level of service, and, you know, we think that if we execute on that well, we can hang on to this or this will kind of, the share will come to us over time. It's really been our long-term strategy, and maybe the disruption here in the last couple of weeks has, has helped us accelerate that a bit. You know, we'll see how it plays out. There's a lot that still could change here in the next number of weeks, but our focus on customer first, I think, is going to lead us through this. Okay. Thanks, thanks, guys. I'll, I'll pass it on. The next question is from Amit Mehrotra with Deutsche Bank. Your line is open. Thanks. Hi, Fritz. Hi, Doug. I guess, maybe I'll just ask a quick one on the operating ratio as you move from Q2 to Q3. I know you guys probably have a wage increase in the third quarter that maybe holds the line, but you've obviously got some, some momentum on volume, which, which... Doug, if you could just talk about OR expectations in Q3. Fritz, you know, what is what's happening at Yellow do to, like, the overall price of the book of business? As you guys see contract rate renewals, I know you talked about 5% last quarter, does this give you an opportunity to kind of accelerate the narrowing of that revenue per bill to, to peers that you've been so focused on? Just trying to think what the pricing opportunity is on the existing book of business. Sure. I'll take that first one, Amit. Yeah, you're right, you know, July is kind of annually our time we think about, you know, wage increases and things like that. That's taken place. The average, we'll call it right around 4.5% across the workforce. Historically, I mean, if I'm just thinking about the last 5 years, you, you know, you got to take out, you know, the 2020 COVID year, Q2 to Q3 doesn't make sense. You know, 2021 was a pretty unique year that in the back half as we really, you know, saw an opportunity to work on some things and improve things around accessorials and all. You know, we took a really big step up there, and there's still opportunity there. We're still grinding that out each quarter. But that was a kind of a unique quarter. If I look at the other quarters, it's usually meant something like a mid-100 basis points kind of deterioration. I think, you know, look, we've got one month, and like Fritz said, a lot of uncertainty on the top line, certainly over the next few weeks. With a month under our belt, you know, 100-150 basis points in our view, Q2 to Q3 would be pretty solid work. You know, like I said, with less than 1 month under our belt, that's what we're comfortable with. Yeah, just to, Amit, to answer your question regarding pricing environment. You know, I think that if, you know, under the current sort of disruption, if you have a low-price competitor exit the market, I think that that- y ou know, the first thing is the customers, as that gets shifted around, customers that have service expectations, naturally, I think would gravitate towards Saia, because I think we're doing a great job. For us, it doubles down our, you know, frankly, our responsibility to make sure that we're paid for that high level of service, capturing those charges. I think it, it's because I think the customer gets a lot of value for that, so we, we've got to be very, very diligent around that. I think what will happen over time in the industry, I mean, if you've seen the discipline that across the space, I think that probably continues. I think that, to the extent that the underlying costs in this business remain inflationary, I think those factors are still key to all operators, not just Saia, you got to be paid for those investments. I think that it's, you know, as we look for ways to continue to close the gap to make sure we're getting paid at market or above market because of the service levels, you know, I think that's an opportunity that we've got to continue to push for and drive for. I think the environment with this disruption that's there now, you know, maybe that helps us, that people will have the opportunity to experience what great service is. Yeah, I guess just as a follow-up, kind of very big picture, Fritz, because, you know, over the last 5 years, the performance, the fundamental performance has been so great, and obviously, the equity value of the company has responded accordingly. You know, if there are people that are new to Saia today, new to the stock, new to the company, new to you guys, what would you frame kind of the 3, 4, 5-year opportunity to be from, you know, a revenue perspective, from a margin perspective? You guys have accomplished a lot, but you talk about the runway. Hoping you can kind of like, help us crystallize that a little bit in terms of what you think the opportunity is. Listen, Amit, I think the opportunity for Saia is, is, is significant. I think if somebody studies the industry and you study, you know, what the sort of margin opportunities are, what best-in-class looks like, and you look at our progress over the last couple of years, and you look at our performance through, you know, a bit of a slower part of the freight cycle right now, we're able to operate in the, the sort of low 80s OR, that, that's a significant executional accomplishment for Saia. I think in a market where maybe we see a little bit more economic growth, I think the opportunity for Saia to grow this business well into the 70s OR, is meaningful. I mean, it's, it's something within our reach. What's critical to that, I mean, we talk about this all the time, it's about taking care of the customer. Customer's got to get what they need from Saia, and when those customers get that, they understand what that value is. That helps our pricing story, that helps us close our pricing gap versus the, you know, larger players in the industry. I don't see any impediment to us getting into the mid-seventies OR or better. We're excited about that opportunity. Hey, Amit, I know you know this. Hey, Amit, just to close the loop, I know you know this, I know what you were asking, Just for everybody on the call, to be clear, Q2 to Q3, OR usually deteriorates a little bit because of that, primarily because of that wage increase we discussed. When I said 100 to 150 basis points, Q2 to Q3, that's a degradation in OR. Thanks, Amit. We got to get on to the next one. Yep. Thank you. Bye-bye. The next question is from Chris Wetherbee with Citi. Your line is open. Hey, thanks. Good morning, guys. maybe just want to pick up on the, on the shipment comments that you were making about the month of July. Just, you know, maybe if you could get a little bit more granular. It seems like the, the run rate or the, the acceleration that you saw somewhere in the, you know, 1,000-2,000 shipments per day type of level. Just wanted to get a sense of maybe what the exit rate was here in the month of July, so we can get a sense of what the sort of market inflection might be looking like? You know, like Fritz said, I mean, really, the, you know, the, the last couple of weeks looks a lot different than the first couple of weeks of July. You know, normally, seasonally, we see a little bit of a step down from June and July, and obviously, you know, that, that hasn't been the case this month. You know, it's, it's hard to parse everything out. The last week of the month should be better, you know, and it was. You've got some freight going on out there that, that's coming into us new. It's been a meaningful step up, but we'd probably have to wait till you get the, the full month trends in early September before we can really care to say any more on it. Okay. That's helpful. Then when you think about, facility openings and obviously the potential for some assets maybe to be available, I guess, as you look out into the back half of the year, can you give us a sense of what your plans are? Do you have 3 Q plans that are specific that you can run through, and, you know, maybe what the opportunity could be from a footprint expansion standpoint? Yeah, it's, it's early to, to make the call on what, you know, what the real big opportunity could be. The three to four- I, I will give you a little bit of color. The three to four that we're opening, the balance of the year, two of those were ones that became available to us in the last few months. This is a pretty fluid environment that we're in, where the assets become available. We feel really good about our ability to identify, and purchase facilities, close them, get them into our system. If, you know, if more opportunities were to become available, and I, you know, I think we can move on those pretty quickly. I think we can integrate those opportunities into our network pretty quickly. I would suspect if there were an influx of real estate that became available in the second half of the year, likely wouldn't get into the system, if you will, this year. It probably turns into a next year assets. The other thing I would point out is that, you know, as we look at our pipeline of opportunities going forward, we have, you know, a number of pins on the map, if you will, that we have identified that, you know, maybe it's an opportunity. If new assets become available, we may switch to something else that gets us into the market sooner, or we may have to pause and say, "Well, we want to access to a piece of property or a location that is, you know, kind of going through transition." It may take us longer to get there, just simply because of the, you know, administrative challenges or seller challenges, whatever that might be. I, I think that what's important to take away out of this is that we have the ability to operate pretty quickly around identifying facilities, opening them, getting them in line with Saia culture and service, and pretty well. That's a core competency for us. Okay. That's helpful. Thank you. Appreciate it. The next question is from Tom Wadewitz with UBS. Your line is open. Yeah, good morning. wanted to see if you could, you know, Fritz, if you could offer a little bit of more perspective on how you think this transition and the disruption takes place. Do you think that it's, you know, some of this flows through brokers, and, you know, it's kind of a, we got to get the freight covered quickly, but then, you know, what flows through could shift around again? Do you think it's like it's really important to lock in these shipments, and then they'll kind of be sticky with you, and, and you can maybe, you know, show the service and price up a bit over time? I guess the other piece within that is, you know, if we assume this was less service-sensitive freight, you know, can you get, you know, can you just price it where you want to, or is that, you know, kind of how does that work? I think the assumption is the Yellow freight would have been less service sensitive. I guess that's a couple elements, but just trying to understand how you think about that process of the freight coming in and the quality of freight. Yeah. I, I think what we've mentioned earlier that, you know, there's still, as we're thinking about revenue for the balance of the quarter, you know, there could be a little bit of flux there- that displaced freight or disruption kind of plays out. listen, we're our view of this is certainly there are accounts that we have today that, you know, have approved several LTL providers in that mix. If one of the providers exits, certainly that freight gets distributed around to others. You know, that's an opportunity for us to, you know, show some pickup economies, an opportunity to, you know, provide that service to the customer and, and sell and earn that business and keep that business. I those are certainly possible. There are also a fair amount of that business that has gone through, you know, sort of 3PLs and brokerage opportunities, you know, that to the extent that, those make sense for us, you know, maybe that's something that, that stays with us. It's really important for us in this time, in this sort of, is to find that freight that makes the most sense for Saia. You know, we're not in a, in the market to chase volume. We're in the market to find profitability and, and to drive returns. I think that that will be our focus, and I think what you would see is that as we pick up freight, if we think it makes sense over time, we'll keep it. If we think we need to make adjustments to the rate or make sure that we're, we get all the accessorial charges that are required, we'll do that. If that works, then I think that benefits us over time. Right. Okay. I, I appreciate that. I guess for the, the second question would be, you know, it seems like you're, from a balance sheet perspective, you have very little debt, you got a lot of cash. That's despite having a pretty strong CapEx program this year. I'm wondering if you said, well, okay, that, you know, '24, they're just a bunch of attractive terminals, and we really got to hit the gas on this. Would you consider, you know, kind of ramping up further and issuing debt to kind of go beyond what your strong cash generation allows? Or how aggressive could you be in, in terms of being opportunistic on terminals, you know, maybe in '24, not necessarily '23? You know, Tom, that's a great point you, you bring up. I mean, listen, this balance sheet is positioned to grow, right? We've, we generate a fair amount of cash. We have a cash position right now. The, the idea with that is to provide us the sufficient powder, if you will, to accelerate our growth if we see that opportunity. If the opportunity was attractive enough that it per- perhaps warranted, you know, leverage, we'd certainly consider that. At the same time, we're generating cash. We found that we've been able to fund and find facilities and build facilities, frankly, out of our cash generation. What we have right now is really, an eye to not only the real estate that we'd have to purchase, but also the equipment that we'd have to supplement our fleet to be able to, to, you know, match that with growth. Okay. Yeah, great. Seems like you're really well positioned on this. Thanks for the time. Thanks, Tom. The next question is from James Monigan with Wells Fargo. Your line is open. Hey, guys. Good morning. Just actually wanted to sort of talk about some of the volume trends you'd called out. The idea, sort of how much of that might have been cyclical versus sort of what is sort of like essentially more of the market-driven part of it, with Yellow. As we sort of like think through the sort of reallocation of share from Yellow, it's been a source of share over the past decade and a half. As we think past it, do you sort of think that the LTL environment or will have to slow its growth a little bit, given that there won't be that source of share? Are there still sort of opportunities in modal share or other weaker competitors where sort of volume growth can continue to grow at, an impressive rate? Yeah, I mean, it's, it's I mean- you know, the current environment in terms of the competitive landscape is certainly, you know, fuels this pickup we've seen. There's no question. I mean, we've got some internal Saia-focused opportunities this year that we think were starting to materialize in terms of, you know, new customers, some, some different, you know, verticals, and, and we think we're starting to get a foothold. Remember, we've opened 22 terminals in the last 3 years, and, and some of those in, in middle markets where we've had selling initiatives that we're, we're gaining traction on. You know, we'd like to think some of our initiatives are, are starting to fuel, you know, the, the volume we're seeing and kind of offset some of that cyclicality you mentioned. In terms of green shoots and the economic backdrop we were seeing, you know, over the last couple of months, I mean, we, we haven't been calling out any bright spots on, on the underlying industrial economy. Now, now going forward, you know, in terms of how LTL is positioned, you know, we think, we think LTL stands to benefit really over some of the supply chain trends over the next decade and beyond. As you think about nearshoring and what that might mean, you know, and, and more, you know, cross-border moves with Mexico and, and, and even Canada, and the role LTL will play in smaller, more frequent shipments, we think that bodes well. We think LTL is well positioned to continue to benefit from the growth of, you know, residential deliveries and final mile activities. You know, as consumers have gotten more and more comfortable ordering, you know, things online instead of, you know, visiting bricks and mortar retail, for example, you know, some of those things are heavier weighted and beyond what a parcel carrier can do, LTL ends up playing a role in that. I, I think we're well-positioned secularly to, to, to participate, but, in terms of the immediate kind of economic backdrop, we weren't calling out any, any green shoots. I think to add to Doug's comments, I think if you looked at our relative performance versus the, our peers and, and the rest of the space in the last, you know, quarters or year, you know, you've seen that we've, we've been in a position where our service is differentiated, and our performance, we probably outperformed some of our peers from a, a shipments and tonnage perspective. I think that momentum, I think going forward, is, is a significant part of what will drive our success. So I, I think that that's, that's an important distinction as well. Got it. Thank you. The next question is from Jordan Alliger with Goldman Sachs. Your line is open. Yeah, hi. Sort of, I guess a couple questions. One, I was wondering if you could maybe give some sense for how your yield ex fuel looked as we moved through the quarter, and how it feels in July, maybe even especially with that step up in volume. That would be the first question. Thanks. Yeah, in terms of yield, I mean, you know, as, as the weight per shipment, you know, came down, you know, there was a, you know, a kind of a positive tailwind, call it. Like, later in June, we started seeing that, and, and on here into, into July. Now, that's, you know, the weight per shipment coming down, it's, it's a negative, right, to revenue per shipment, so we have to keep an eye on that and make sure that, you know, we're, we're getting properly concentrated. So much of that yield is, is mix related, and that could be, you know, weight and length of haul, but it can also be, you know, geography and, and direction the freight's moving, and also a lot of things flow into yield. Like Fritz said, I mean, what, what we think about is the pricing environment, and, and that's remained good. You know, is the yield up as much as the GRI or as our contractual renewals are running? No. Pricing is positive, and, and that's what we're bringing to the bottom line. Yeah, I'd say you got to watch that, like, weight per shipment, for example. If that continues to trend negative in the quarter, like we've seen in July, that helps your reported yield. Right. Then sort of the second question is, you, you mentioned sort of the normal degradation on OR Q2 to Q3. Just curious, what could make it- I would think there's a chance for it to do potentially a decent amount better as there's this sudden volume step up, and I imagine at least some floor on price, given potentially uplifting prices, maybe a competitor kind of goes away. Curious your thoughts on the variability around that normal OR trajectory. Thanks. Yeah, that's, that's a fair point. I think one of the things, we're pretty early into this. Certainly there's a path to beat that, right? I mean, if we continue our core execution, continue to manage mix, keep our costs in line, I certainly think there's an opportunity we could beat that. You know, our shipments and tonnage trends, we kinda keep that in perspective in the right place. I, I feel pretty good that we could. On the other hand, it is because it's a period of disruption, you know, we've got to be real careful about what, what the mix of business looks like and what the relative profitability of any freight that we pick up or new customers are. That's pretty significant to our value proposition, is that we match those customers with, you know, they understand what that service level is and, and what that, what that means from a, you know, sort of pricing perspective. Yeah, I think there's a possibility we could beat it and, you know, we still got to go execute it. Thank you. The next question is from Ken Hoexter with Bank of America. Your line is open. Hey, great. Good morning, Fritz and Doug. Congrats on, on great results and, and working through this process here. Do, do you still feel like you have 20% excess capacity? Is that kind of, you know, after adding the 5 service centers and, and looking to add more? Maybe just talk about the, the capacity ability to grow here. Hey, hey, real quick, Ken, apologies on that pronunciation. We all know it's Hoexter, but you weren't in the queue early, so I didn't get a chance to give Chris a heads up. I apologize. I've heard all different shapes... I know, buddy. That's on me. All right. If we, you know, we, we think about it right now, we've probably got around 15% capacity across the entire network. Ken, I think what's important to focus on there, because of where we are in our sort of network maturity, there are some facilities in there that might be, have lower capacity levels, and we've got some that have been open the last two years that, you know, may have 60% capacity. The opportunity right now for us is to continue to fully utilize the facilities that, that we've got in place, that we've invested in. That's a great opportunity for us to differentiate in a market, and find that new customer. That's there for us. Then it's, you know, in the, in the larger areas in the network where we, you know, we're fully utilizing those assets or approaching full utilization, you know, we've got investments in place that, you know, we'll, we'll upgrade some of those facilities even this year. You know, we feel pretty good about where we are. You know, in a disrupted environment like this, the challenge, and this is not unlike what we've experienced over the last several years, which is that you don't always know where the freight's going to come from. If I give you that network capacity number, that's an average across a bunch, and in some places we might say, "You know what? We're going to have to manage the capacity," and other places we'll say, "Let's go get the freight. You know, I guess I want to follow up on an earlier question, right? Which is, is really some business gets assigned right away. And maybe from your experience, then, how long does it really take to, to settle in, right? Because there's this chaos that, that needs to be assigned right away, and then, and then freight, you know, gets distributed. Maybe talk about how much business is on, I don't know, multi-year contracts versus, you know, how quick you can move that pricing in, in, in the base. Yeah. I- y ou know, some of this, there are obviously existing customers. Everybody in our book, I mean, by and large, everybody's on a one-year sort of pricing agreement. I think that, you know, that we've got to make sure that the pricing that's in place, you know, we feel good about it, but as we pick up the revenue on an account, we may not have had the account earlier or larger percentage of the business because we didn't have the pricing that was maybe attractive to the customer. Now they're, you know, they've moved the ship, the freight to us, that's our pricing, and we're satisfied with it. You know, the, the other piece, and that's probably more like the national account type business, but then the new customer or the customer we've done little business with, or maybe we've, you know, opened up new lanes with a customer, those are the ones that you got to keep an eye on to make sure you understand what it is the freight characteristics look like, what, the, the freight you're handling, what that customer looks like. In that case, you might manage that out or try to manage it differently in the short term. I, I think it's, you know, as we go through, the industry goes through a settling process around this disruption, and the freight kind of moves around to, you know, the other competitors or to us, I think you'll see a fair amount of, of, I don't know if I'd say churn, but some movement over the next several weeks. Great. Thanks for those thoughts, guys. Appreciate it. Thanks, Ken. The next question is from Jonathan Chappell with Evercore ISI. Your line is open. Thank you, good morning. Fritz, so your answer for the previous question about capacity being different in different locations, and most of these new terminals that you brought on, there's been a lot of them, haven't been running at the, at the profitability of the entirety of the network, and there was a thought process that over time it would ramp to that. Does this, what's going on in the market today, accelerate, kind of the, the mark in the market of the profitability across the new terminals, or is it completely dependent on the geographic mix of the, of the freight? Listen, it is dependent on both, but it fact of the matter is, is that this the opportunity to grow the business more on an accelerated pace right now, that, that helps us drive that, you know, leveraging those investments, building the density around our line haul network, our pickup economies, all those sorts of things. Yeah, the additional, well-managed growth here is, is a, is a potentially a real adder for us. Okay. Then my second one, kind of mixing the short term with the long term, the, the word disruption's been thrown around a lot. I'd imagine you're going to flex PT as you get this acceleration of shipments, but as you think about more permanent resourcing, whether that be headcount, you know, equipment, et cetera, how are you thinking about, you know, what's been happening over the last couple of weeks and how you're investing above and beyond, you know, just the terminal expansion that's been on the radar for some time? Yeah. This is, this is where I think that our ability to manage our line haul costs is important. It's just, it's an advantage for us. We feel pretty good and very comfortable flexing our PT up and down as we need to to meet the service requirements of our customers. If you followed us over the last couple of quarters, you saw us insource as many miles as we could, as we saw volume declines in the sort of the Q3, Q4, and the Q1 period. Now, as you, as you ramp back out of the, you know, kind of more of the growth mode, you've got to be able to scale that line haul network. That means you've got to fully utilize the drivers that you have. You add drivers in markets, because now if we're at these growth rates, you know, with these new markets, we have the opportunity to scale that and add drivers. That, that, that's good. In the interim, we're going to meet service where we need to, utilizing our purchase transportation partners. The key part of that model is that it's got to make sense to meeting customer expectations, and it's got to be cost effective. Those, we put those two things together, we feel pretty good with our ability to flex up, and then we'll continue to supplement that with adding more of our own drivers. Got it. Thank you, Fritz. The next question is from Eric Morgan with Barclays. Your line is open. Hey, good morning. Thanks for taking my question. I wanted to come back to your comment on closing the pricing gap to the peer group. Just curious, you know, how big of a focus that is for you right now. Can some of this disruption going on be a catalyst to get there, you know, to parity faster than you might have thought otherwise? You know, not saying really near term or anything, more as the dust settles, is that an opportunity or is it going to be kind of a steady approach over time? Well, Listen, we think about the service that we provide to our customers on a daily basis, and as a result, we think about making sure that we get paid for that service on a daily basis. Now, if you're following us closely, we know that we have our organic expansion that's going on. We're adding terminals, providing greater, which is really about providing higher levels of service to our customer. Moving closer to the customer, providing that, hitting those touch points and those pickup and delivery times that are important to the customer and making their transit times. When you do all that, you have the opportunity to get paid for it, and as we continue to grow, we become closer and closer, at closer parity to our larger national peers. We see what their average revenue per bill is, and we look at our service levels. We know what it looks like with the competition. The opportunity for us to continue to drive closing that gap, it is, it's critical. I mean, that's part of the value proposition of what we're doing. If anything, this environment, I would expect that we'll double down on that effort. I would expect our peers would also do that, and I think the environment will continue with what we've seen here in the last number of quarters. Even as things have slowed down, you know, we've seen the discipline around the competitive set around pricing, and I think that's important. Thank you. The next question is from Jason Seidl with TD Cowen. Your line is open. Hey, thank you, operator. Hey, Doug. Hey, Fritz. Doug, I wanted to make sure I understood what you said about the OR on a sequential basis. You're coming up with 100 to 150 basis points of degradation. That is the typical OR that you see, or that's what you guys are assuming? If that's the assumption, does that include more freight from a Yellow bankruptcy? It, it's pretty typical. You know, like I said, I, you know, if you go back and you want an average, you got to start taking a couple things out. Right. That's what I tried to do. I think the math of it says it's been 150-200 worse, if you adjust and take out the COVID year and 2021. You know, just based on what we've seen in July, we have very little clarity on where this goes over the next few weeks, actually. Based on what we've seen, you know, we, we think we can, we can do that. So maybe 100-150 basis points make sense. I mean, we, you know, maybe it's a little better than the historical average, but like I said, that average is kind of our math because we, we take out a couple things. Driven- y ou know, we know the wage increase has been in place. We're starting to use some driver hiring bonuses again, we haven't used in a few quarters. Factoring in what we know now, month to date in July, we think 100 to 150 basis points is, is doable. You know, given what happens on revenue is still, you know, not clear to us. Okay. I appreciate the clarification. And follow up on, on pricing, you know, we were hearing back in June that LTL carriers were, were sort of pushing off some of the negotiations with customers based on the fact that they thought there could be an issue with Yellow. Was this the case, and, and, and, and has that borne any fruits on the, on a pushback? You know, we, I, we weren't pushing anything back. I mean, listen, our, our view of this is that we've got to get the pricing in place. You know, I, I don't know that there may be some anecdotes out there, we haven't seen anything like that. I, I know that there were customers that, you know, maybe saw some of the disruption and were looking to secure their capacity. Certainly, we were a part of that, and making sure that that was all, to the extent that it made sense for us, we were, you know, we negotiated those opportunities. Okay. Makes sense. Appreciate the time as always, gentlemen. See you, Jason. The next question is from Ravi Shanker with Morgan Stanley. Your line is open. Thanks. Good morning, everyone. Doug and Fritz, obviously, this is a potentially fairly large business opportunity for everybody, and maybe kind of jump ball right now. Obviously, you guys are staying pretty disciplined on your price and returns, but are you seeing any other players in the space who are, like, fairly aggressively going after this business, or do you think everyone's sort of waiting for it to settle in? Yeah, I don't have a, a call out there for you. I would tell you that I think it's, we're probably still early innings on, on how things shake out. I, I think the one thing is fundamental for all LTL providers, regardless of, you know, where your position in the market. This is an inflationary business, and volume does not generate incremental return unless you get the appropriate pricing with it. I think we've seen how the industry has played out over the last few quarters as volumes have declined. You see a lot of discipline around that, and I think it's because of the underlying sort of basis of the business. I, I don't anticipate any price-led sort of volume chase, if you will. Got it. Maybe kind of switching gears and talking about the cycle, you guys have been hinted that you're not seeing too much out there in terms of just cyclical improvement. Can you just give us some goalposts, like what are, what are you going to be looking for? What are your customers telling you in terms of inventory levels? Kind of, when do you think, kind of the pure, kind of cycle-driven core business grows as well? Well, you know, I think the underlying growth that we have in our business before kind of this sort of last few weeks, has been on our own competitive differentiation. I think that's been positive. I think that, you know, as we look at the more sort of macro indicators are out there, as you know, I, I think the GDP numbers look, you know, it's probably favorable right now, and I think if we see that develop in the second half of the year, I think that's probably the green shoots that folks are looking for. I think that our customer set, you know, we don't hear anything particularly new, one way or the other. It's more of sort of a tempered environment. I don't think it's a recessionary environment or anything like that. I think it's just a tempered environment versus the prior year, kind of where we were. You know, I don't think we have anything new to report there. You know, I think as the second half develops, I mean, if we keep the recent sort of economic trends, I think it's positive. Understood. Thank you. The next question is from Bascome Majors with Susquehanna. Your line is open. Fritz, Doug, you've probably spoken about Yellow's situation with investors in every meeting since the beginning of June. You've heard what we're asking on conference calls this quarter, both within LTL and outside of it. I'm curious from your perspective, what is the investment community getting right on how this situation could and, and may impact your business? Are there places where we're kind of missing the forest for the trees on short-term, mid-term, long-term impacts from the way you see it? Thank you. Well, I mean, I think at the, at the highest level in the industry, when you, you have a potential top 3 player exiting, potentially, I'm still waiting for the final kind of verdict there. I think that obviously, that freight's gonna go elsewhere in the business, and it's gonna go to. It's gonna find its way, not necessarily evenly to everybody. It's gonna go to, it's gonna match the service requirement of the customer. I think, you know, maybe there's a player that's got a lower service level. They maybe they take an outsized percentage of that business, potentially. Maybe it displaces a customer that, you know, has a bit higher expectation around service, and then that kind of makes its way around to other players in the market. I, I think generally, people understand that, you know, if you disrupt the large player, it's gonna get redistributed in the industry. I think the key thing to understand is that whatever the fundamental value proposition is of the, of the remaining players, I think that, that, that will match to where the freight ends up. I think for Saia, I think the fundamentals for Saia are, are quite straightforward. We have an opportunity to continue to maintain high levels of service, continue to get the pricing and margin structure right in the business. There's a significant growth opportunity for us. In this, in this environment, there's probably an opportunity for us to grow at a bit faster rate than what we have been. You know, you've been so adamant in mentioning service and revenue quality in, in all of your answers to this situation. I mean, is the message that you'd probably rather take less than more of your pro rata share initially and, and, and hope some of that comes back when they're not satisfied with the service they're getting at brand X? Is, is that really what we should take away here? I think that if you followed Saia over time, I think the fundamentals of our business, we have never been one that are in business to chase market share or volume. Our focuses have been on generating returns in this business, and so, you know, we talk a lot about, you know, our internally around how we're managing profitability. So this, this is exactly the same sort of scenario. Maintain that high level of service. Customers expect that, and the customers expect that will be willing to pay for that service, and that, that's the winning proposition for us. So it's not necessarily who can get to be biggest, fastest. It's, it's about generating those returns. We see, and it's pretty apparent, when you look at the other, you know, sort of public peers that are out there, you see what that level of performance looks like, and that there's no reason for us not to try to pursue that. That, that's where we think the big value is in our business. Thank you, Fritz. The next question is from Stephanie Moore with Jefferies. Your line is open. Hi, good morning. Thank you. I wanted to touch on actually the, the OR performance for the Q2. you know, I was hoping that maybe you could give a little bit more color on just the, I think, you know, just given the weak top-line environment, it's, and it, and it seems like you, you know, it certainly exceeded our expectations, but I think a little bit better than you probably called out back in one Q2, with the performance falling more in line with the historical seasonal average. Maybe if you'd touch a little bit on the dynamics or levers that you guys pulled or what happened to, to kind of be more in line with seasonal trends, despite what, you know, kind of continued to be a weak top-line? Thanks. Yeah, I mean, I'd, I'd say, you know, primarily, we were really pleased with, you know, how we, you know, how, to the extent we could, how we controlled mix and revenue per shipment came in real positive. The ex-fuel revenue per shipment number up 4.8% in the quarter was really solid. You know, I think we, you know, we had a solid May, and then, like I said, you know, the back half of June, you know, you normally get that month-end, quarter-end kind of step up, but it was solid, and we might not have baked that into our expectations. To the extent that you got some more of that volume and, you know, from from, you know, more shipments at pickup from customers, things like that, give you some opportunities to be a little more productive, and you get some cost economies in the network when you do things like that. You know, heck, you know, you get some favorability here and there on some things, but, I, I think it primarily was just probably a little bit better, activity and operational success than we might have seen, you know, 4 weeks into the quarter. Great, that's helpful. Then just a quick follow-up. You talked a lot today just about the ability to be opportunistic with terminal expansion here in, in the coming, in the coming months. Any change in strategy or opportunity between your decision to, to lease or buy the- buy additional terminals? Yeah, our, our first priority is if we find a market that we want to be in or, and an opportunity, we, we'd like to own it. If it's strategic, a strategic facility, it's got sort of a, maybe a 10-year life. You know, we think about volume trends over 10 years when we make a decision to buy an asset. If, if for whatever reason we can't buy the asset, you know, if there's an opportunity to get an attractive lease, we're willing to do that. It's not our preference, but if we're willing to do that, and an attractive lease would be something that, you know, we can kind of- we've got a view as to what the longer term costs are, and we can kind of build a business around it. Strategic assets, for sure, we want to buy those. Maybe ones in an end-of-the-line market, maybe it's a little, you know, it's not available for sale, the, the investor would like to hold onto it. In that case, we, you know, we're fine with the lease so long as it, it-- the economics work. Great. Thank you so much. The next question is from Bruce Chan with Stifel. Your line is open. Hey, Fritz, Doug, good morning, and congrats on the result here. Just want to follow up on an earlier comment where you mentioned the national accounts business, and I'm just curious on that topic. Are you seeing, you know, any more, I guess, early activity or, you know, early demand on the national account side, on the field account side, or the 3PL side, or has it all been pretty balanced so far? You know, I, I think that it's, you know, a little bit of color there is, if we're in an account that maybe we share across multiple providers, those maybe we've, we saw, you know, that, that volume come maybe a little bit more, or sooner. If it's a field account, maybe that, those accounts maybe don't have, you know, multiple providers. I think we're probably still seeing where that's going to develop. It's, it's still early on that. We're only 2 weeks or 3 weeks into this. Okay, that makes a lot of sense. When everything kind of settles out and the dust clears, you wouldn't expect any outsized share gain in any one of those categories necessarily? It's way too early for me to make a call on something like that. Okay, fair enough. Then just, you know, a quick follow-up here. You brought up the nearshoring opportunity, and you also talked about, you know, planning for 10-year volume trends. As we think about nearshoring and, you know, potential expansion beyond your current plan, can you talk about, you know, maybe what kind of cross-border presence you have and whether there's any appetite to ramp that up? You know, we, we do have a cross-border presence. It's, it's particularly south. It's, it's smaller than we're we'd like. I think over time, there's an opportunity for us to grow that. You know, that's part of the long-term strategy for sure. Okay, great. Thanks for the time. The next question is from Christopher Kuhn with The Benchmark Company. Your line is open. Yeah. Good morning. Hey, Fritz. Hey, Doug. Thanks for getting me in here. Just, Doug, you and I have talked about your focus on increasing weight revenue per shipment. Some of this newer volume is lower weight and lower revenue per shipment. How do you balance that with sort of your longest term strategy and your ability to manage profitability? Yeah, I mean, our, our weight is still up quite a bit over the last couple of years, and, and, I mean, like you said, I mean, some of that was, you know, really driven by, you know, a focus on that, that good industrial weighted freight, as we call it. But, you know, we've increasingly have, you know, national account customers that may be in, in retail, for example, that, that see the quality and the service we provide, you know, with, with maybe some limited choices on, on folks that can handle, you know, increasing volumes with that kind of service. You know, they're asking us to do more and more from them, and, and sometimes that's lighter weighted shipments. It's not that it's, you know, dramatically lighter weighted in terms of moving the average, but, you know, like Fritz said, I mean, we're, we're going to haul the business for them, but it needs to be, you know, at the appropriate rate. You know, I don't think weight in itself is, is the sole factor in that negotiation. It's, it's the mix of business, it's the volume you get when you show up to pick up a shipment. If, if they're lighter weight, but you can get 2 or 3 of them, that's, that's usually pretty good business. A lot of things factor into it. Okay. Thanks. The next question is from Tyler Brown with Raymond James. Your line is open. Hey, good morning, guys. Hey, Tyler. Hey, Tyler. Hey, Fritz, curious on what the labor markets look like right now, how tight are they? Given all the work that you've done from a cultural perspective over the last couple of years, how do you feel as an employer of choice, and do you think you can add human capital quickly? Yeah, good question, Tyler. You know, I think the, certainly, the labor market around, you know, drivers and such is, is competitive, and, you know, I don't know that that's changed. The demographics aren't necessarily in our favor. I would tell you that I think one of the things that Saia has done a pretty good job of over the last several years is that, you know, the success kind of compounds a little bit, and people see, you know, kind of what the opportunity is and what our trajectory is. Around being able to recruit people, that's been helpful. We've also made a pretty substantial investment in our human resources and recruiting effort, and really sought to professionalize that and to give us the opportunity to scale the business. Those have been important investments. The emphasis, you know, the key thing is that, throughout all this, employees want to be able to see- y ou know, we can talk about values and those sorts of things, but they want to see values in action. That, I think we've done a good job with that, and that's helped us in the recruiting front. People know that what they're going to get when they come here, and I think that that's been positive, and I think that's going to help us through. This will be a challenging time, you know, as we grow, as we grow volume through this disruption. You know, that, being able to replicate that is going to be important. Yeah, absolutely. It's been a good story. Hey, real quick, I wanna- you kinda touched on this, and this is a bit of a technical question, but again, you guys, just you guys have put so much work into the network and linehaul design over the last couple of years. You know, I'm just curious how much flexibility you and Patrick Sugar think there really is if market conditions change quickly. You mentioned excess capacity in some markets, tightness in others. Do you feel like you can tack and maybe add breaks in less less, like, call it traditional markets? Basically, what I'm asking is, can you create additional capacity maybe with what you have if you supplement that with PT, at least in the near term? Oh, absolutely. I mean, we, we absolutely are doing that as we speak. This is where I think this is a little bit of the Saia secret sauce here, is our linehaul team, and we know how to scale this. We know how to place the PT. We know how to schedule this. The data advanced sort of data analytics we've put in place to be able to handle this, hey, this is challenging for that team, but it's well within our tool set to be able to adapt to this. I mean, there was a time, you know, five, six, seven years ago, where if you had something, an event like this happen, I don't think we would be able to operate through it. As you saw during the pandemic, and even all the way through now, our ability to adjust up and down and match what demand patterns is. That's allowed us to be successful and meet those customer expectations. I, I think that that's what's gonna help us get through this. I'm excited about us deploying those skills and kind of adapting our linehaul network to what our customers need. Yep, love it. All right, thank you. Thanks, Tyler. We have no further questions at this time. We'll turn it back to the presenters for any closing remarks. Terrific. Thank you everyone for calling in and taking the opportunity to hear about the Saia story. We're really excited about the next couple of chapters in this story, and look forward to giving everybody an update at the end of the next quarter. Thank you. This concludes today's conference call. You may now disconnect.