Saia Targets Further Expansion Via $1 Billion in 2024 Capex

As a result of the Yellow-related expansion, Saia brought on board nearly 1,500 additional employees in the second half of 2023. (Saia LTL Freight via Facebook)

[Stay on top of transportation news: Get TTNews in your inbox.]

Saia Inc. expects 2024 to be another year of significant expansion after picking up business and terminals following the implosion of less-than-truckload rival Yellow Corp., executives said.

Johns Creek, Ga.-based Saia expects its 2024 capital expenditure to total $1 billion, executives told analysts Feb. 2, compared with $437.2 million in 2023.

That spending will include the purchase of Yellow terminals, said CEO Fritz Holzgrefe, plus buying new tractors and trailers to transport the shipment business won following Nashville, Tenn.-based Yellow’s demise.

Saia reported net income of $89.2 million, or $3.33 per diluted share, in the final three months of 2023, an increase of 25.8% compared with a $70.9 million profit, or $2.65 per diluted share, in the fourth quarter of 2022.

Saia reported revenue of $751.1 million in Q4, a 14.5% increase from $655.7 million a year earlier, it said.

“Our market share gains have been meaningful since last summer’s industry disruption, and it has been very satisfying for our organization to step up and provide excellent service to both new and existing customers,” Holzgrefe said in a statement.

As a result of the Yellow-related expansion, Saia brought on board nearly 1,500 additional employees in the second half of 2023 and ended the year with just under 14,000 employees.

Saia ranks No. 21 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 9 on the less-than-truckload list.

Alongside the expansion, Holzgrefe said he was impressed by discipline at the LTL specialist, which posted an operating ratio of 85.0 in the most recent quarter, compared with 85.9 in the same period a year earlier.

The company’s operating ratio for the full-year 2023 was 84.0, compared with 83.1 in 2022.

Operating ratio provides insight on how a company is doing in balancing its costs and revenue generation. The lower the ratio, the better a company’s performance.

Saia’s LTL shipments increased 18.1% to 2.047 million in Q4 from 1.734 million in the same period a year earlier. The company’s LTL tonnage increased 8.2% to 1.345 million tons in Q4 from 1.243 million tons a year earlier.

The company’s LTL revenue per hundredweight, excluding fuel surcharge revenue, increased 11.7% year-over-year to $22.47 from $20.11. Saia’s LTL pounds per shipment fell 8.3% compared with the year-ago period to 1,314 from 1,433.

Beyond winning business that previously resided with Yellow, Saia wholeheartedly participated in the sale of the one-time rival’s terminals.

Some 128 of Yellow’s 169 owned terminals were sold off in the first round of the auction, with Saia the winning bidder for 17 facilities, agreeing to pay a combined $235.7 million for the properties. The sales were approved Dec. 12.

Saia then won the most properties on offer in the second round of the auction toward the end of December, agreeing to pay a combined $7.92 million for 11 properties across seven Western states.

Holzgrefe said the company closed the purchase of the properties in mid-January, adding that they will allow Saia “to provide direct coverage in new markets, add density in existing markets and serve as replacement terminals for some of our existing leased and owned facilities.”

Yellow’s collapse was, Holzgrefe told analysts, “a generational type of movement” that saw Saia volumes increase by as much as 10% to 20% compared with a month earlier.

Acquiring the terminals on top of the new business will see Saia spend some $400 million to $450 million on new tractors and trailers in 2024, Chief Financial Officer Douglas Col said during the call.

Of the nearly 1,500 additional employees, an increase of around 14% year-over-year, 90% were drivers, dock workers and frontline leadership, executives said. Saia’s Q4 salaries, wages and benefits increased 20.2% year-over-year, said Col.

Saia ended 2023 with about 8,700 operating doors, which could increase another 8% or 9% in 2024 as a result of the Yellow purchases, said Col.

“And then there’s probably — I think we’ve got another 10 like relocations planned during the year and a couple of terminals that we’re expanding. And the aggregate door additions from those efforts too could be another 4% or 5% of the door count,” he told analysts.

Saia expects to end 2024 with around 212-215 terminals, said Holzgrefe, but will be expanding further in the coming years.

“I think there’s probably 10-plus per year for a couple of years after [year-end 2024] potentially,” he said on the call.