SAIA INC — Call Transcript 2025

Good morning. My name is Drew, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter twenty twenty five Saia Inc. Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Matthew Bate, Executive Vice President and Chief Financial Officer. Please go ahead. Thank you, Drew. Good morning, everyone. Welcome to Saia's second quarter twenty twenty five conference call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Hulscrief. 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 exact risk factors that could cause actual results to differ. I will now turn the call over to Fritz for some opening comments. Good morning and thank you for joining us to discuss Saia's second quarter results. Our second quarter operating ratio was 87.8% compared to our operating ratio of 83.3% in the second quarter of last year and the results represent a three thirty basis point improvement from the first quarter of this year. The sequential operating ratio improvement outperformed the historical average of two fifty basis to 300 basis points despite the lack of typical volume ramp that is usually seen throughout the second quarter. We operate our business with a focus on the customer and managing the things that are within our control. Our efforts to optimize our variable cost and improve our network efficiency contributed to this outperformance and these results reflect our ongoing efforts to manage the business in the short term with an intense focus on executing our long term strategy. I'm pleased with the team's ability to focus on the things that we can control during this quarter, taking care of the customer, mix management, core execution and operational efficiency. Throughout the quarter, we were able to adjust our cost structure to align with volumes that trended below historical seasonality. We typically see significant monthly volume increases throughout the second quarter and while June trended more in the line of historical seasonality on a per workday basis, tonnage for the quarter was only up 0.4% from the first quarter. Our second quarter revenue of $817,000,000 decreased slightly from last year's second quarter by 0.7% due to continued muted volume trends as a result of the macroeconomic landscape. Overall shipments for Workday were down 2.8% year over year. Customer acceptance in our newer markets remained strong, which continues to demonstrate the value of our long term strategy of getting closer to the customer and providing unique solutions to meet their needs. Terminals opened less than three years saw sequential about a 4% sequential improvement in shipments per workday in the 2025 compared to the first quarter. In aggregate, these facilities operated in the mid-90s in the second quarter improving from breakeven in the first quarter. In our legacy facilities, with those open longer than three years, shipments were up about 2% sequentially in the '25 compared to the first or down about 3.5% compared to the second quarter of twenty twenty four. While we continue to see strong results in our newer markets, the overall shipment trends reflect the continued cautious approach from customers amidst an ever changing economic landscape. That said, we remain pleased with the opportunities we're seeing with both new and existing customers, which is reinforced by the volume trends seen in our newer facilities. Revenue per shipment excluding fuel surcharge increased 2.7% compared to the second quarter of last year, while revenue per shipment including fuel surcharge increased 1.8% in the quarter. For the second quarter, we saw tons per workday increased 1.1% compared to the second quarter of twenty twenty four, weight per shipment increased 4% and length of haul increased slightly compared to the second quarter last year. However, both of these components of mix decreased sequentially from the first quarter, creating a revenue headwind of approximately 4,500,000.0 to $5,500,000 compared to the first quarter. Our pricing and mix optimization initiatives remain an intense focus. Sequentially, our mix of business shifted to handling slightly more national and retail customers, which partially led to lower weight per shipment compared to the first quarter. Additionally, we saw muted trends out of our Los Angeles region partially contributed to shorter length of haul compared to the first quarter, which is a headwind to sequential revenue per shipment. Throughout the quarter, we were able to continue to provide unique solutions for our customers in both new and existing markets, which further validates our value proposition. Contractual renewals averaged 5.1% in the quarter, reflecting our customers' confidence in the high quality service that we continue to provide. We remain steadfast in our approach to providing industry leading service levels, while also managing controllable costs and productivity. While we cannot control the external factors, our focus remains intently on what we can control and taking care of our customers is at the forefront. Customers value certainty and reliability in their supply chain. We believe that we're well positioned to provide that service in every market. This hyper focus on the customer remained on display in Q2 as we achieved a cargo claims ratio of 0.5 this quarter. From an operating expense standpoint, we drove a 4% sequential decrease in cost per shipment compared to the first quarter despite headwinds as a result of investments in our fleet and network expansion. We continue to focus on adjusting our resources to the shifting volume levels and reduced headcount by about 4.2% from March to the June. We continued our focus on optimizing our maturing network as the 2024 network investments and related growth, while beneficial for the long term, created unique short term challenges and inefficiencies in our network, particularly in the slower Q1 operating environment. We accelerated our network optimization efforts in Q1 and saw the benefit emerging in Q2 as we leveraged density in our larger network and our efforts to drive greater efficiencies began to materialize. These results reinforce our commitment to expanded geography and nationwide footprint, which increasingly allows us to compete on a more even playing field with peers. As we look forward, we'll continue to execute our long term strategy and keep an eye on the macro environment, maintaining discipline around our cost structure and adapting the changing landscape across our network. I'll now turn the call over to Matt for more details from our second quarter results. Thanks, Fritz. Second quarter revenue decreased year over year by 0.7% to $817,100,000 while revenue per shipment excluding fuel surcharge increased 2.7 to $298.71 compared to $290.72 in the second quarter of twenty twenty four. Revenue per shipment including fuel surcharge increased 1.8% to 3 and $51.36 compared to $345.07 last year. Fuel surcharge revenue declined by 5.8% and was 14.6% of total revenue compared to 15.4% a year ago. Yield excluding fuel surcharge decreased by 1.2 while yield including fuel surcharge decreased by 2.1% compared to the second quarter of last year. Tonnage increased 1.1% compared to the second quarter last year, attributable to a 4% increase in our average weight per shipment, partially offset by a 2.8 shipment decline. Our length of haul increased year over year by 0.6% to eight ninety three miles. Shifting to the expense side for a few items to note in the quarter. Total operating expenses increased by 4.7% in the quarter compared to the second quarter last year. Salaries, wages and benefits increased 5%, which is primarily driven by our July 2024 wage increase, which averaged approximately 4.1% for all employees, excluding executives as well as increased employee costs, including group insurance as the inflationary pressures continue to drive this line items elevated level. Purchased transportation expense including both non asset truckload volume and LTL purchased transportation miles decreased by 5.5% compared to the second quarter last year and was 7.1% of total revenue compared to 7.4% in the 2024 and seven point six percent in the first quarter of twenty twenty five. Truck and rail PT miles combined were 12% of our total line haul miles in the quarter. Fuel expense decreased by 4.3% in the quarter compared to the second quarter last year, while company line haul miles increased 2.1%. The decrease in fuel expense was primarily the result of a decrease in national average diesel prices by over 7.8% on a year over year basis, partially offset by the increase in line haul miles run. Claims and insurance expense increased by 21.2% year over year. The increase compared to the 2024 was primarily due to the development of open claims, increased claim activity and increased cost per claim. Depreciation expense of $62,500,000 in the quarter was 19.1% higher year over year primarily due to ongoing investments in revenue equipment, real estate and technology. We believe the investments we have made and continue to make in our network, technology and our people during this down cycle position us well for the future. We are constantly evaluating investments to ensure they meet the return profile we expect and we plan to spend approximately 600,000,000 to $650,000,000 in capital expenditures this year. Consistently investing in our network expansion, equipment and our people aligns with our long term strategy. Compared to the second quarter of twenty twenty four, cost per shipment increased 7.7% primarily due to increased salaries, wages and benefits to support a broader network of terminals and increased depreciation expense associated with the record investments made in the network in 2024. As Fritz mentioned, our cost per shipment decreased 4% sequentially from the first quarter in spite of the lack of typical volume uplift that would allow us to better leverage our fixed costs. Decreased headcount of 4.2% compared to the 2025 was a contributing factor to the sequential improvement. Additionally, we were able to manage our costs in the second quarter while maintaining a claims ratio that was largely flat sequentially, reflecting our ability to make these adjustments while preserving core execution and customer service. Our tax rate for the second quarter was 25.3% compared to 24.4% in the second quarter of last year and our diluted earnings per share were $2.67 compared to $3.83 in the second quarter a year ago. I'll now turn the call back over to Fritz for some closing comments. Thanks, Matt. As I mentioned in the opening, I'm pleased with our team's focus on things that we can control. The operating performance of our team continues to be among the best in the industry and we remain focused on our customers' needs. While volume did not step up as traditionally seen in the second quarter, margins outperformed the normal sequential progression, representing our team's ability to adapt to a dynamic environment. In Q2, we relocated our centralized customer service function to our field locations. We reduced our overhead costs in this process, but more significantly moved our customer service capabilities closer to the customer. Our customer first focus is yielding tangible results, especially in our new markets as our facilities opened for less than three years continue to lead the charge in volume and revenue growth, performing in line with seasonality in these markets. We're excited about the early success of these locations and we see considerable runway as we continue to penetrate those markets. With our talented and engaged workforce, the value proposition to our customers continues to expand to match our network national network of facilities. A key component of our long term strategy is to get closer to the customer and give them a chance to choose Saia for their LTL needs more often. At Saia, we've emphasized the importance of the customer and focusing on things that we can control As our industry adapts to the evolving economic landscape over the coming months, my conviction about the long term prospects of Saia remains steadfast. Great employees, great service and a national footprint are all key to securing our position as a long term leader in the industry. Our network planning tools continually refined and honed from our original deployment several years ago are foundational to our resilience and our ability to operate and monetize in our complex national network. At the same time, these tools are key catalysts to continue to find cost optimal solution to meet customer expectations. Over the coming quarters, we'll be further investing to continue and enhance these robust capabilities, which we believe will continue to generate returns in the business. Although these network planning tools provide a framework for the company to operate fundamentally, core execution remains in the hands of a highly engaged team focused on supporting our customer success and delivering returns in the substantial investment in creating a national network. We remain in the early innings of tapping the potential of this business. With that said, we're now ready to open the line for questions, operator. We will now begin the question and answer session. The first question comes from Ken Hoexter with Bank of America. Please go ahead. Hey, great. Good morning, Fritz and Matt. Great job on the pricing. I think that's really a nice flow through. But given normal seasonality, should we see volumes will they stay can they turn positive or will they stay negative in third quarter just if you think about seasonality? And given the strong pricing and mid single digit renewals, should pricing continue to climb? I guess that's leading me to the OR thoughts, Normal seasonality I think is flattish from 2Q to 3Q. Just want to maybe your thoughts on an outlook. Yes. Just on the tonnage piece, well keep in mind that we opened six terminals in Q2 last year, many of those in the back part of the quarter and then we opened 11 terminals in Q3. So the comps get tougher on the shipments and tonnage line as we start to lap those new openings. And then on the pricing side, we're focused on what we've been focused on. We're making sure that the business meets the returns that we expect and that we're evaluating what we're handling for customers throughout each bid, each renewal that's core to what we do over the years and it continues to be a focus. If you look at history on the OR line, typically Q2 to Q3 OR degradates between 100 to 200 basis points sequentially. And we think we can keep it around 100 basis points of degradation sequentially from Q2 to Q3 this year. I think that just to add to that, Ken, I think the important part is that we have made significant you know, the quarter optimization efforts in Q2 to kind of better match our national line haul network network overall to meet kind of what a now national network looks like, right. So I think that part of the efficiencies that we drove through Q2 will continue into Q3. So that's part of that how we can get to the bottom end of that range that Matt described. So Fred, don't mean to do another follow-up, but is that just because of the optimization on a national network or was that because you were talking about seeing a slowing volume, so you move to pull costs and cut employees? No, it's both, right. You got to in this business, you always have to match costs to what the available business is. But this at this time last year, we didn't have 21 facilities. We have 21 facilities maturing from last year that we opened last year. And the opportunity that we have, part of that opportunity is that as you build densities across that network now, we described for you in the first quarter some of the challenges we had managing through facilities that hadn't been opened that long. And now we're starting to see some of the benefits of that. We continue to look for opportunities to redesign our line haul network. As you know, that's the biggest cost bucket in this business. And that's an area that as you develop maturity that becomes sustainable cost advantage over time. Great. Thanks for the time guys. Appreciate it. The next question comes from Risha Harnane with Deutsche Bank. Please go ahead. Hey, thanks guys for the time. So I wanted to ask a little bit about the labor reductions that you've done and sort of what you did with wages this year. I just wanted to clarify, was there a wage increase this year? And then in terms of the labor force, what type of cuts were made? And as we look out going forward, as you try to balance your customer centric focus and building out the network with sort of where we are in the cycle and trying to manage costs like what's further runway for that which we expect? Thank you. Yes. So just to kind of our sort of wage increase program, typically we do that in the second half of the year. So we haven't done anything with that yet. The as far as the headcount, it's real important in an environment like this where you see volume changes, you've got to you actually have to match the hours that are available hours to what the volume levels are. So that's really about how we manage headcount by location or hours by location, I think is a better sort of picture that because somebody that maybe a year ago was working a lot of overtime at this point, we're maybe not working overtime. So it's a cut in hours, built some efficiency that way or productivity that way. The line haul network is a really important story for Saia though. One of the things that you do when you have a now national network, some of those facilities that we have added, places like Youngstown, Ohio, part of the reason why we bought that facility was to be able to drive line haul cost savings across the eastern part of the country. And we have a facility now that allows us to run triples across Ohio. Well, that's a 30% reduction in cost compared to a traditional two pups connected, right. So that those are important cost savings that you can start deploying across the network and that's sort of agnostic to what's going on in the environment, right. This is just taking advantage of having a now national network and there are people that are certainly impacted by that. You optimize to more of internal drivers, maybe you reposition your line haul drivers into different locations to better match where volume movements are, where customers are, and that all creates efficiencies. You use a little bit less PT in some markets. And if you look at our cost structure Q1 to Q2, I think that shows up there for sure. Okay, great. So as we think about Q3 then, should we continue to see that momentum in the cost per shipment line, the better than seasonal I think it's we'll have to see what the market has in store for us. But I think we've got some additional sort of opportunities through the quarter that I think we'll see materialize. We're still not 100% certain around what the top line looks like, but I do know that we have we'll continue to look for cost optimization opportunities and deploy our tools to do that. And that's built in that why we think we're going to beat our sort of historical trend from Q2 to Q3. Awesome. Thank you. The next question comes from Jordan Alliger with Goldman Sachs. Please go ahead. Yes. Hi, morning. So there's been a lot of there's been talk of course of industry capacity. Just sort of curious your take on it. Would you say going into the next up cycle that overall LTL capacity should look less actually than pre yellow bankruptcy levels due to the various unsold terminals, even some of the larger players out there do have excess stores today? And what could this mean for pricing on a recovery? Thanks. Yes, I think that if you look at the I don't think the long term trend around LTL capacity is going to change. In other words, it's been shrinking over time. And I think that there are yes, certainly there is available capacity today with a number of the competitors. I think what is really significant is that this remains an inflationary business. I think that people expect to get a return on a substantial capital investment in this business. We're no different than anybody else. So I think that that will keep the industry healthy. I think that the for us and what we look at is that we're really excited about the opportunity to leverage what we have, right. The market returns, Saia is poised to take advantage of this. We know how we can we know how to operate in an up market, so that this is the time we've been waiting for. So we think for us it's a unique opportunity. And keep in mind too, Jordan, terminals and doors are absolutely important, but capacity also comes in equipment and it comes in drivers. And the next up cycle, it's drivers that are critically important. You need the terminals, the doors, but if you don't have drivers and equipment, that's a capacity constraint. Like Fritz said, we feel great about the investments that we've made. We've never been better positioned, but capacity comes in all three of those. Thank you. The next question comes from Chris Wetherbee with Wells Fargo. Please go ahead. Hey, good morning guys. Maybe can you give us a sense of how things are going from a volume perspective, maybe some insight into what July tonnage looks like and maybe your sort of overall view on what you're seeing from your customers in the end markets? Chris, could you repeat? I think you got garbled there a little bit on the question. Apologies. Hopefully, you can hear me a little bit poker now. There we go. Thank you. Sorry about that. Just curious if you can give us an update on what you're seeing from a tonnage perspective in July and sort of how the third quarter is starting, what you're hearing from customers in the market from the end markets that you're serving? Sure. I'll go ahead and give the monthly Q2 as well. So April shipments per day were down 1.9%, tonnage per day up 4.4%, May shipments per day down 3.2%, tonnage per day down 0.4%, June shipments per day down 3.4%, tonnage per day down down 0.8%. And if we look at July month to date obviously still have a week or so to go, but shipments per day are down about 2.25%, tonnage is trending around flat. As mentioned earlier, there's we're lapping comps in the back half of Q3 with terminal adds. But from an end market standpoint and customers, I don't know that we'd really call anything out differently than what we've been seeing. And we continue to stay really close to our customers understanding their business and their trends more and more. But I don't know that there's anything specific for us to call out that we've seen differently over the past few weeks than what we were seeing in June. Yeah, I think we pointed out that the our sort of LA region was a little bit stood out as a little bit softer. Some of that is our own action around making sure that we're compensated appropriately. Part of that, I think there's a little has been at least for us a little bit of softness in that area, but other markets have been pretty good. Okay. That's helpful. And just a follow-up on the comment about normal wage increases I was just kind of curious, are you suggesting that you haven't done it yet or that it may not happen in the third quarter? Just want to get a sense of how you're thinking about that normal process? Yes. And if you look at it over time is that we would typically do that in the third or fourth quarter. We haven't made a formal call on that yet. So it could still happen this quarter or it could be in the fourth quarter. But we'll let you know as we kind of figure out where the market is and what we need to do. Got it. Thanks for the time. Appreciate it. The next question comes from John Chappell with Evercore ISI. Please go ahead. Thank you. Good morning. I know contract renewals are just a small piece of the portfolio. The 5.1% that you mentioned is much lower than a lot of the 8s and 9s we've seen recently. Is that just a function of more difficult comparisons or should we read that into more competitive pricing overall? John, could we heard you clearly the first half, but then it broke up a little bit. Would you mind repeating? Yes, sorry. 5.1% contractual renewals in the quarter, a lot a little bit lower than the 8%, 9% that we've seen recently. Is this representative of just more difficult comparisons or is this speaking more to the competitive nature of the market right now? Well, and just to provide a little clarity on the first part of that, about 60% to 70% of our business is subject to a contract. Those renew pretty ratably throughout the year. So it's a majority of our business. The renewal number, we it gives us an indication of how the customers are viewing our service and what they're willing to pay for the quality and service that we provide. But what's most important that we track very diligently is what happens after that goes into place. Are we handling the volume that we expect? Are we growing in the lanes that we expect? That's where we look really closely to understand what's happening afterwards and be able to talk with our customers to better understand their freight flows and where we should be handling business and making sure that it's at our rates. So the pricing environment remains rational. We haven't seen anything different in that. We remain really focused on making sure that we get compensated fairly for what we do and provide for customers. So no change from that perspective and where we get really excited as we continue to see great opportunities with both new and existing customers throughout the network. We've never had two thirteen facilities like we do right now to sell to our customers and getting more and more of that than we have in prior periods. Gives us more opportunities. I think it's important to note too, Jonathan, is that the that our renewal number is reflected of the book of business that actually got renewed in the quarter. And it's so that can change quarter to quarter. So it's reflective of those that set of customers only. Yes, that makes sense. And Fritz, just a quick follow-up. The move in the new terminal OR from breakeven to mid-90s, you're doing that in an environment where freight demand is still somewhat compressed. Is that strictly a function of just getting experience, repetitions, a little bit of scale there? Are you making some of the big cost changes in the new terminals that you're doing in the legacy? Well, the first thing that has to happen in the new terminal is you better be doing a good job, right. So claims are going to be good, on time has got to be good, customers care about that, right. So if you do that, you get a shot at more business. And the great thing about those facilities is because they are well positioned, we've got a good team in place, the opportunity to scale those, meaning the incrementals on them can be pretty good. And that's kind of what you saw Q1 to Q2. So good execution, actually some great execution, customer satisfaction and that leads to profitability improvement because you're basically leveraging your investment at that point. Thank you. The next question comes from Ravi Shankar with Morgan Stanley. Please go ahead. Great. Nice morning, everyone. Hopefully, you can hear me okay. Just one from me on the cost side. How you said that you're taking these cost actions in response to the volume environment, which is completely understandable. But how much of these cost actions do you think would be classified as short term tactical given the downturn versus longer term structural gains? And also kind of if you are taking cost actions now particularly in headcount, is there a risk that might limit the operating leverage a little bit when the up cycle does come? Thank you. Ravi, that's a fair question. You've been around it long enough to know. I mean the core tenet of this business is that as volume goes up and down, the variable nature of your short term labor costs that tends to move with it as well. So that there's certainly a fair number of the headcount that were impacted or the hours that were impacted would come back if the volume scales. But I think what is really significant for us that might be different than a traditional model is that as we optimize our line haul network, we're building density as we grow from here. The density plays is really significant. So the incrementals have potentially can be pretty good. And they don't require a lot of headcount add backs. So to the extent that in our legacy facilities, which is where most of the impacted hours are, they would naturally some of those would come back, but I would not expect the line haul hours or the network cost to ratably increase simply because I think there's a scale opportunity for us. That's why we made those changes and those investments. Very good. Thank you. The next question comes from Stephanie Moore with Jefferies. Please go ahead. Hi, good morning. Thank you. I wanted to maybe touch on the pricing environment a little bit. You talked about making progress on kind of I guess, you could talk about the progress you've made on repricing some legacy freight as well as freight in new terminals. Clearly, is always a factor, but maybe any opportunity that you've seen in terms of winning heavier freight and the like? Thanks. Well, I think it's important, Stephanie, just in general, that the pricing actions are a bit of a journey sometimes, right? Is it over time as you win new customers, you come in, want to be at market, sometimes you find out maybe you're not, sometimes you find out the customer freight is a little bit more complex than you expected. So you got to make some adjustments there. I think what we are internal measurements, we simply look at public data that's out there, revenue per shipment versus our peers, our now peers, national footprint peers, and we continue to see opportunity there. So to the extent that we're pleased with progress in the quarter, in the last quarters for that matter, I think there's still a fair amount of runway there. And as I look around and I look at sort of public data, and I look at the national footprint, which more it looks more and more like others, we got to continue to press to market. We can only do that if we continue to sort of high level of service that we're providing. So that's kind of how it is we're early innings. So opportunity remains for sure, but pleased with progress. And just a follow-up to some comments you made previously in terms about optimizing your business or your network given now being a national carrier and making pretty swift actions in the second quarter. Could you just give us a couple of maybe the key areas that changed in the second quarter? What specific actions were put into place that really optimized your network for the national footprint? Thanks. Sure. I mean, think the real center of this is that when you have a network that was established over a number of years and it didn't have sort of full national coverage, a lot of our your freight goes through different sort of routings in our network. If we were probably the easiest example is that historically we haven't had that corridor across North Dakota, Montana all the way to the West Coast. Now we can actually run direct line haul from say Minnesota to Seattle. And having that ability to build density along that, we'll introduce triples of those lanes in the coming months. That'll be important. That's a density play. I mentioned earlier, the Ohio example around line haul about building the triple sort of operation in a recently purchased facility. That's all about line haul optimization. And that's in the first quarter, we talked about the challenges we had with new facilities having to route freight through our big break operations. Well, now if you build a little bit of density in the originating market, now you can build a direct that maybe bypass es a break operation. Well, it's one less handle in the network. That's important. So we realigned where some of our hub and sort of where we routed freight in the second quarter. That allowed us to build some density in some key lanes. And doing that, you see cost leverage at surfaces in our line haul network. That I would encourage you to study the not only the salary and wages line, but the PT line together. Those two together are really kind of what how we measure kind of our wage structure. That was that performance is driven largely, I mean, some of it at the terminal levels as well, but big part of that came through the line haul cost savings. Thank you. The next question comes from Brian Ossenbeck with JPMorgan. Please go ahead. Hey, guys. Good morning. Thanks for taking the question. First, just a clarification. I got a couple of questions, if I'm right, but just clear. Is the quarter to quarter guidance you're talking about, is that assuming you put the wages increase through in the third quarter or not, just to be clear? And then one thing I thought was pretty interesting, we've seen this NMSE shift coming for a little while now, but largest carrier earlier this week pushed it out for, I guess, one hundred and fifty days or so to early December. Just wanted to see if that had any implications for your business, for the broader industry, that say that shippers are having a hard time getting there with the new codes. So just some thoughts on those two. Thanks. Yes. In terms of the guide and the wage increase, like Fritz mentioned, we are evaluating our timeline. Our guide includes what our forecast is on that. So it's inclusive of where we stand right now and we'll provide some information on that as time moves on. But in terms of the NMFTA changes, look, we're not backing down on the implementation of that. It's good for the industry long term. We feel like this is a trend in the right direction. We sell space on our trailers and this aligns more of the book to be density based, which we feel is important for us, important for our shippers. So, from our standpoint, we dimension 75 percentage of our freight every day. We get a view of what that looks like. We've invested heavily in Dimensioners over the years for that exact reason. We leverage that technology. So we're working closely with our shippers and we feel like we had a good opportunity to get in front of that and get ahead with them and talk about what the impact could look like. That's all about the partnership with our customers. So we don't have any plans to back that off. I guess it remains to be seen what that does for others. But in our view, it's a good these changes from the NMFDA are good for the industry and we're here to support it. Just to be clear, it's been a long week. So the current guide for the sequential is based on what you think right now, which is to be determined. So I guess we'll have to stay tuned for an update. Is that right? Yes. All right. Okay. Thanks very much. The next question comes from Eric Morgan with Barclays. Please go ahead. Hey, good morning. Thanks for taking my question. I wanted to ask about the mix management initiatives you referenced. Just looking at second quarter shipments, I think you have the smallest sequential improvement in maybe at least twenty years outside the pandemic. So just curious how much of that is action you took to manage the book relative to underlying demand softness? And looking ahead, is there more work to do on that? Or should we be thinking about sequentials from here as more reflective of underlying demand you're seeing? Just to confirm, Eric, you're talking about the sequential change Q1 to Q2? Correct. Well, keep in mind, we're starting to lap terminals that we opened last year. We opened six in Q2 last year. Those were some of the larger facilities that we opened. But we've been bucking the trend because we've been growing, but the freight environment has been negative for three years now. Industrial production hasn't been great. Our legacy markets are looking a little bit more like what others are, but less because we're getting more and more opportunities with customers. So I think that's really just a component of what the industrial backdrop looks like, what the landscape looks like. But we're again, we've never had two thirteen facilities like we do now to sell to our customers, which we feel like really positions us well. So I mean, I think just to add to that, Eric, our focus is on what we can control, right? So we've got to perform for the customer. We got to do that in a cost optimal way. That was a big part of what we achieved in this in the second quarter. But at the same time, we spent $1,000,000,000 in capital last year, and we're providing a very high level of service. So there is a we have an expectation that we'll get a return on that. So we are going to continue to focus finding the customers that value that sort of strategic and long term investment in them. And so the pricing is part of that as well and mix management is part of that. In an environment we're in right now, maybe it's a little bit muted. Certainly, as you look at our trends through the quarter, I mean, it's we're off, have not been on seasonality, the historical seasonality. That, to be quite honest, in the business, that's a little bit of life in the big city. So, you've got to focus then what can we handle inside our four walls, and that's what we do. Appreciate that. And maybe just a quick one on the balance sheet, if I could. I think your CapEx should be coming down in the back half. Do you think you'll be able to start reducing your leverage and interest costs in the back half? Or how should we be thinking about how to manage our expectations for cash on the balance sheet? Yes. We'll still be into the line. We've got some spend in the back half of the year, dollars 600,000,000 to $650,000,000 is probably where we land in terms of the full year on the CapEx line. But I'd expect it to start to taper down on line usage in the back part of the year in Q4. But a lot of that depends on timing with some of the real estate opportunities that are in our pipeline. But we'll still be into the line, but I expect that will start to trend down in the back quarter of the year. Thanks a lot. The next question comes from Tyler Brown with Raymond James. Please go ahead. Hey, good morning guys. Can you all hear me? Can. Loud and clear. Hey, Fritz. You've given some really good operational color. But I just kind of want to hammer this home. So what are you guys seeing from a network balance perspective? So have you guys started to see that those new markets have built on the outbound side? Just any color maybe on that inbound outbound ratio in those newer terminals, because I would assume that if that balance has started to improve, that's been maybe a driver to that mid-90s outcome? Tyler, it's a good read. Yes, the answer is it's improving. Is it where it needs to be? No. And I think that the opportunity is that's the opportunity for us not only this year, but into next year as we continue to mature those facilities. We're not in the game of trying to fill them up though in the sense of let's go see how much volume we can get in there. It's we've got to be very strategic around that, make sure we're picking up freight that works. But I think the opportunity absolutely to build scale in those facilities and it really shows up in the line haul network costs, as we move freight through our operation, not only building a direct from Trenton West, surely drive some efficiency versus building a pump that goes through Harrisburg somewhere else, right. So that we know those are efficiencies that we're gaining as we build maturity in these markets. And that's we're really excited to see that trend. Think you see that in the cost per shipment Tyler too, it's down 4% sequentially. And usually if you're on seasonality, Q2 typically is the best volume ramp and volume quarter for us. So you'd get even more leverage on those fixed cost lines like depreciation that we got a little bit of, but not all of. So that balance and that execution you see in our cost per shipment line despite that lack typical ramp that helps you leverage the fixed cost. And that's where when this thing ramps back up, great incremental margin opportunity for us because you're able to leverage that even more over a network that's becoming more balanced that you've got more in and out opportunities. These terminals have really been opened less than a year that we opened last year. So each month that passes, we continue to work on that. Right. So the message is it's improved, but there's still plenty of work to do. Yes. Business, we don't see a reason why it shouldn't operate in the 70s and part of getting there is building densities in those markets. Right. And then this kind of goes hand in hand with that last question. But one of the key side effects of a greenfield strategy in LTL is that you need more breaks. You just can't run a lot of directs without that outbound density, right? So I don't know how you measure it. But if you looked at something like breaks per bill or your direct percentage, do you feel like you've seen peak pain on those metrics at this point and basically on the downward slope? Well, freight flows change, but if we look at our productivity metrics very closely and one of the things that we monitor is handling handling or touches. And touches improved sequentially from Q1 to Q2 and we saw that continue into June. So it's you always have to continue that work because freight flows change and customer patterns change, but we were really pleased with the execution. We saw that come through in the productivity metrics and the handles. We gave that example before about how things have to route differently and Fritz talked about it. When you can route direct and you eliminate a handle that's a big deal, not only is it service to a customer that could be different, but you eliminate a cost that's associated with a handle and we saw that improvement. But we are always working on that because every day is a little bit different in the business. Right. I mean, you run more directs, you run more triples, I would assume that would have a profound impact on line haul. Listen, like for like triples versus a set is 30% reduction, right. So that's a big deal. Right. Okay. Thanks for the time guys. The next question comes from Ari Rosa with Citigroup. Please go ahead. Hey, good morning. Fritz, you mentioned in your prepared comments just conviction around the long term prospects remain intact. I was hoping you could speak a bit more to that. Just what's the progression to getting to a sub-eighty percent OR and really growing the revenue in a meaningful way from here? Well, I think that there's one of the things that would help broadly, right, I think that if we saw a little bit stronger macro backdrop, I think you'd see more conviction from our customers and there's probably a little bit more growth. We've been dealing with this sort of freight economy for a number of couple of years now. But with that said, I think that there is an opportunity for us to continue to methodically grow our business winning in the marketplace, taking share frankly because we're performing at a high level. And we not get the outsized growth that you might see in a more stronger backdrop, but I think we have an opportunity to continue to drive improvements. Now, do I know what that's going to look like into next year? I to be fair, I think we all need to figure out what exactly that macro looks like. But what I would say though is if I look across our operation and we look at our reference benchmark facilities where we have the most maturity, the most sort of long established well known brand efficiencies, all those things, this business operates in the 70s, so in those markets. We don't see a potential that says the newer markets or newer regions of the country for us couldn't approach those sort of levels. So the long term opportunity is certainly there. I think I'm still open as to what the timing of that would be. I think we need to get a little more clarity around what that looks like. But I think the fundamentals for us are good. And as we're pointing out in the last question is that this the ability to develop maturity in a national network is an important scaling opportunity for the overall cost structure of the business. That's encouraging to hear. Thanks for that. And then I just wanted to clarify, I think you mentioned that there was a shift in mix towards more national customers, more retail accounts. I'm a little surprised by that because when we hear from some of your peers, it seems like there's a big focus on moving the other way with kind of regional accounts being more profitable. So I was hoping you could just kind of address what's driving that strategy and what's really driving the revenue mix? Thanks. Yeah. And just to clarify that a little bit Ari, it's not necessarily new customers that are coming in that are more national retailers, more business with customers that we already work with and have worked with for a long time. If you look back in our history, that's not uncommon. In Q2, maybe late Q1, but more so Q2, that trend to a little bit more seasonal retail type freight is not uncommon for us. And we when you get an opportunity to serve more markets for customers that you already work with and have with for a long time, you get more opportunities at freight in some of these newer markets and even legacy markets because you can just do more for them. So that shift is not something that's uncommon for us in our history. And it's not necessarily a bad thing. Right. I mean, it's you certainly have things like pickup economies. If you further penetrate a national account, meaning you get more business there, you have the opportunity, you have some density, you build on your pickups or frankly even on your deliveries. So part of what may be driving that is some of those national accounts are tapping a national network and that's part of the opportunity for us. Now you could argue that part of our opportunity in some of these new markets, regional accounts or field accounts that haven't gotten to know SI yet, that's opportunity for us, that's runway. So, I look at this as kind of a maybe a win win problem, if that makes sense. Geez, we're growing some of the business that we've done had good partnerships with historically, that's good. And we still have opportunities in new markets that may drive that mix of business a little bit different in the future. Got it. Okay. Thanks for the time. Good luck with that. The next question comes from Daniel Imbro with Stephens. Please go ahead. Hey, good morning guys. Thanks for taking our questions. Fritz, maybe a follow-up just on the service. I think you mentioned claims ratio was flat at 0.5% from the first quarter. I guess what about other service metrics, on time deliveries, missed pickups and then continuing that discussion on legacy versus new markets. I mean how different are the service metrics that you're getting from the field between the legacy and the new markets? Well, the good on time and we're pleased with the results there. On time as well as pickup completion, those are all trending at high levels, which are key service metrics for our team. Very, very competitive. We think probably as good as anybody in the industry. What's really exciting is that the service metrics generally between the new facilities and the old facilities are pretty consistent. And that matters to those national account customers because they know they can count on the same service everywhere they go. That's how you win share in new markets. Okay. That's helpful. And then Matt, maybe as a follow-up, I'll ask the wage increase question a different way. Understanding we don't know what happens this year, but historically how much of the normal degradation of 100 to 200 basis points is from the wage increase, so we can understand how impactful this either will or won't be for the third quarter? Yes. And like Chris said, we're evaluating our timeline on that. So if you look back in history, it ranges, but depending on the volume levels and the hours worked and things like that in the period. But I'd say probably in the 75 ish bps range on that number in the past. Again, varies with some of the volume and seasonal patterns and trends like that, but that's probably a pretty good long term average. Okay, super helpful. I appreciate the color. The next question comes from Bruce Chan with Stifel. Please go ahead. Hey, good morning, gents. A lot of helpful commentary around the line haul density so far. And maybe just related to that, Matt, I think you mentioned that you're at 12% outsourced PT now. How are you thinking about that number as you go forward, especially with the maturing network and the planning tools that you have in place and some of the changes like Youngtown that Fritz mentioned? Is there sort of a target number that you're thinking about over the next year or so? So, Bruce, I'll jump in on this one. Our target number is to get whatever we have to do to provide great service to our customer that gets to 75 70s OR, right. So there could be times where it makes the most sense for us to use PT. As long as we meet, we do not in any way disappoint the customer. That's kind of the critical decision making. So when we think about what it takes to run our line haul network, it's sort of a network cost sort of perspective. The decision tree starts with what's the customer need and in any way do we impact the customer, answer no, or we meet their expectations, that's critical. And then the second step is what's the most cost optimal way to do that. So what that could mean is in some markets we use more PT, because it may be a market that is not in balance and we don't have outbound freight from the market. It could be in other markets like when you build the triples operation, you say, well, we got a lot of efficiency we could drive here, because we're in balance. So it's that's kind of how the decision works for us. So we figure out we're focused more on sort of the financial return and meeting customer expectation than we are specifically around a target around what percentage of PT. Okay. That's fair enough. And then maybe just a quick follow-up on a comment that you made for it. Appreciate what you said about moving the customer service to field locations. It sounds like a wise investment in service. Just curious if there's any cost impact to call out as a result of that whether one time or ongoing? Yes. No, over time that will we think that will actually be a lower investment, because what we're we took out a duplicative sort of resource. So both groups were focused on touching the customer. We think that having the frontline engage with the customer is the best, easiest, most efficient, transparent way to help that customer get what they need. So yes, there's a bit of a cost savings in there. But we'll also invest in some areas we may add back resources and field locations to meet that. So it's kind of a transition right now. Pleased with the early results with it though. Okay, great. Appreciate the time. The next question comes from Bascome Majors with Susquehanna. Please go ahead. Thanks for taking my questions. Matt, just sort of a housekeeping item. I think last year you said normal margin seasonality in the fourth quarter was about two fifty bps of degradation. Without commenting on where you might come in versus that, is that still a decent measure of a seasonal bogey? Yes. We're really focused on Q3 for now, but that's probably the right long term average. Q4 always varies depending on where the holidays fall and calendar and things like that, especially now where holidays tend to be a little bit more stretched out in some of the business environment demand and things like that, but that's where we're staying right now. But I'd be I'd caution you a little bit of that, Bascome, because this will be the first time that we've had 21 facilities that we didn't have before. So I don't know, we don't know exactly what that what history looks like there yet. We're intently focused on Q3 and we'll have a better view picture of what we think Q4 will be down the road. Understood. And thank you for clarifying that with the color about the new facilities. And I think certainly with just kind of following seasonality out, it does feel that volume is going to be under pressure through the back half of this year, maybe even the 1Q with the comp and I think analysts and investors are coming to terms and understand that. But rather than talking about when it gets better and how quickly it gets better just from a macro perspective, if we were to enter a world where we're back to kind of low to mid single digit tonnage growth in the Saia network, do you have a sense of how we should think about that financially? I don't know if it's an incremental margin framework. Just any way to kind of tops down think about without necessarily putting a date on it, what the recovery looks like for Saia, so we can kind of run your thoughts into our models? Thank you. Yes, no problem. That's a fair question. I think the first thing I would do, I would go back and look at what Saia did through our Northeast expansion and see the incrementals that we were generating per quarter as we mature those parts of our network. I think we returned to that and arguably because this is a national scale, we might be able to do even better than that. So it's the network, the benefits of having a national network certainly provide all kinds of benefits to customers, but it also allows us to build scale. So the opportunity for us to drive incrementals, I think there would be some of the incrementals you saw in the highest, the best periods as we grew out of the Northeast expansion. And I think you'd see that going forward from here. Just I don't know where that when that starts. Certainly, a little volume will help that, but I think the incremental volumes in the facility that's running at 30% capacity today, boy, those are pretty good. Adding a third line haul trailer, that's all incremental, right, in terms of efficiency for our line haul network. So all those things could contribute to some very, very long term nice performance and returns to shareholders. Thank you for that. The next question comes from Christopher Kuhn with Benchmark. Please go ahead. Yes. Hey, thanks for the questions. So Matt, Fritz, I'm just wondering on the pricing maybe out of the new markets or from the newer freight you've taken on, how that's been progressing? Well, it's I mean, we're just starting to lap some of these. And what we really try to do when we enter a new market is find what the market rate is and work with our customers and find that. One of the great things about entering into these new markets is our lead list every single time is our existing book of customers. We get to go to them and say, hey, we're doing a great job for you in these markets. We're now in these, we can provide national service. So we get to have conversations about the freight mix and the characteristics. Now we can't necessarily go turn around and raise the rate the next day because we are growing and building density and inefficient in some of these markets. But we're trying to find the market rate and the big opportunity for us is that when we do more for customers and we improve our share of wallet, we're able to provide service in more markets, we become stickier with them. We are harder to change out because we're doing a great job for them in a lot of markets over time that gets us priced. So we continue to see that and we see those opportunities and it often opens us up to a larger mix of that customer's business that we may not have had access to before because we weren't able to cover that directly or at the level that they wanted us to. So that's an ongoing initiative for us. And number one, first and foremost, like Fred said before, you have to do a great job for the customer in that market. None of the rest of it happens without doing a good job for them. So we get that opportunity every day and more at best than we've ever had. So you still you see opportunity to price those as you continue to serve the customers? Very simply, we look at the publicly available data and it tells us that we are cheaper than our peers that are national coverage. That's what we look at. That's our benchmark. So absolutely. Got it. Thanks guys. Appreciate it. The next question comes from Tom Wadewitz with UBS. Please go ahead. Yes, good morning. So I wanted to I know you had a good amount of discussion on, I guess, price and a bit on mix. But can you give any thoughts on how we might model revenue per 100 weight ex fuel or revenue per shipment in 3Q versus 2Q? Do you think that keeps going up sequentially or I guess I think revenue per hundredweight was up sequentially, but per shipment down sequentially. Just trying to think about how that potentially moves and whether it's reasonable to model that up sequentially? Well, we don't give a guide on that, but mix plays a big component of that. We saw some muted trends out of the Los Angeles region that maybe is an indicator of what some of the port activity was, but mix plays a role in that. So we don't give a guide on that, but we're critically focused on making sure that we get compensated appropriately for the service that we provide. We don't take a day off from that, but we're focused on ensuring that margins meet our expectations with each individual customer. But mix plays a role in that. When weight per shipment moves around a little bit and length of haul does that, those are components of mix, but direction also matters. Freight flows, balance of the network. So no guide from us there, but we're focused on price and the environment remains rational for that. That's where we remain intently focused. Okay. And I guess in terms of the impact and kind of runway on idiosyncratic initiatives that help the OR in the current freight environment, which is continues to be pretty muted, right? Relative to just showing tons of operating leverage when freight really picks up, right? Because I think it's fairly clear you should have really strong ethanol. How do you think about that? Like can you keep can you show meaningful OR improvement to kind of mid-80s, 100 basis points a year if you don't get a freight improvement? Or is this about, a, you're doing what you can, but the big lever is really the market? Yes, that one's a tough one, Tom. I there clearly are cost opportunities for us kind of going forward to continue to build density kind of methodically. We are seeing growth in our new facilities, which is important. Those are ones at scale. So those are in this environment, so you got to make sure you take advantage of that, be able to leverage that line haul network. Same time, you've got to manage the hours and sort of the workload in the markets where maybe aren't growing or slightly declining. So it's tough to say kind of where that could go in the environment we're in right now. All I know is that we're focused on let's manage the cost because that's in the four walls that we can handle, right? And let's make sure we manage the service at the same time. So right now that's about the best guide we can give. So I think we can we'll continue that focus. So maybe you can do a little better than seasonality without improvement in freight, but it's maybe not a big difference. Is that fair? That's fair. I mean, I don't know that there's a huge breakthrough for us, but there's a methodical chipping away building density opportunity for us. Yes. Okay, great. Thank you. The next question comes from Jason Seidl with TD Cowen. Please go ahead. Thank you, operator. Hey, Fritz, team. Just wanted to talk a little bit more about your tonnage numbers. You said you're about flat in July. Just curious, did you guys see any pull forward in July with all the tariff stuff in your consumer business at all? Or has it been relatively stable? It's hard to tell. I'd say relatively stable. It bounces around in a given day, given week really. I mean, so I wouldn't call out anything specific in terms of end markets or pull forward or anything like that at all. It all sounds good to us, but until we see it in the data, there's not much that stands out to us. And you called out that you have tougher comps, I think on the tonnage side in the back half of the quarter. Can you remind us when they start? Yes, shipments and tonnage both tougher comps just as we start to lap the facility. So when we opened six in Q2 last year and a good chunk of those started in the back half of May and June. So those started to ramp and then we opened 11 in Q3 with the majority of those happening in August and September. So those just as those volumes start to come on and those terminals came online, we opened two in July, six in August and three in September that make up the 11 in Q3. The back half of the quarter, those just started to come online. So the right way to think about it, if nothing else changes in the demand side, if you're flat in July, probably have a negative comp in August and September then? Yes, that's fair. Okay. The other thing is you guys obviously are seeing some nice progress in some in getting those newer terminals to profitability. I guess where are you seeing those density gains? Is it more from your existing customer base? Are you adding more new customers to sort of help out that profitability? I don't want to say it's the easiest because it's a tough hurdle to always service the customer and do it effectively. But the nice thing about the strategy and just to remind you kind of the basics for us when we open a new facility, we call on our existing customers first. So that raises the bar for us. They have an expectation that we're going to repeat the same level of service in a new facility. So you kind of penetrate those customers to start. And then what's really interesting over time, and we know this from our Northeast expansion is that once you're in the market and you establish your foothold with existing legacy customers, that's when you've built some density and then you've got the opportunity to go win some new business and with customers that maybe aren't familiar with you. So that's kind of next leg for us and I think that that's longer term what certainly is part of the opportunity. And our last questioner today will be a follow-up from Ken Hoexter with Bank of America. Please go ahead. Hey, great. Appreciate you coming back to me. Fritz, I guess the stock has moved from up maybe 12% to up 2.5%. So I think there's some confusion. Just want to give you maybe a chance to kind of talk through the message here. So maybe it was on the 100 to 200 basis points normal OR. You said you could do 100, but if you do add wages, whether it's in 3Q or 4Q, it would be another 75 basis point hit. So it sounds like you'd still be within your range on the OR normal seasonality. I don't know maybe if it's on the volumes that Jason just ran over, if given you started off flat and it's going to get tougher, maybe just hit on the messaging again because it seems like there's some confusion. Obviously, you don't give pricing thoughts that Matt highlighted. So I don't know if you just want to dig into that for a minute. Yes. So what we said, let's be clear, 100 to 200 basis point degradation Q2 to Q3 has been history, right? We said we would encompassing all available things, which could be a wage increase, could be volumes, we said 100 is kind of what we're targeting for the quarter. There are as we all know, I hope we all understand, there are a lot of variables in this business, right? So we're managing all those variables. So we give that kind of a guide. What we're giving is our best assessment of all those options and what we think all those variables and all the things that we can consider. So that I don't hopefully that's clear, but that's kind of how we thought about it. Appreciate it. Just want to run it through because I've been getting a lot of things during the call. Just want make sure I fully understood it. Thank you. Yes. No problem. Concludes our question and answer session. I would like to turn the conference back over to Fritz Holzgraf for any closing remarks. Great. Thank you. I appreciate everybody calling in and hearing about Saia's second quarter. We're very, very pleased with the execution that we had in the quarter, particularly on what we did for the customer. We like the operating side of our performance as well around costs. We look at kind of what the opportunity is from Q2 to Q3. And I think we'll be able to outperform our traditional sort of 100 to 200 basis point degradation from Q2 to Q3 OR. A lot of variables in this business, we're going to manage all of them to kind of that sort of range. And but more importantly for the long term investor, the thesis around SAIA is very, very strong and we're excited about what the prospects are for us in this new national network. Thank you all for taking the opportunity to listen to our results and look forward to future conversations. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker 1: Good morning. My name is Drew, and I will be your conference operator today. At this time, I would like to welcome everyone to the Second Quarter twenty twenty five Saia Inc. Earnings Conference Call. All participants will be in listen only mode. Good morning. good morning My name is Drew, and I will be your conference operator today. my name is drew and i will be your conference operator today At this time, I would like to welcome everyone to the Second Quarter twenty twenty five Saia Inc. at this time i would like to welcome everyone to the second quarter twenty twenty five saia inc Earnings Conference Call. earnings conference call All participants will be in listen only mode. all participants will be in listen only mode Please note this event is being recorded. I would now like to turn the conference over to Matthew Bate, Executive Vice President and Chief Financial Officer. Please go ahead. Please note this event is being recorded. please note this event is being recorded I would now like to turn the conference over to Matthew Bate, Executive Vice President and Chief Financial Officer. i would now like to turn the conference over to matthew bate executive vice president and chief financial officer Please go ahead. please go ahead

Speaker 2: Thank you, Drew. Good morning, everyone. Welcome to Saia's second quarter twenty twenty five conference call. With me for today's call is Saia's President and Chief Executive Officer, Fritz Hulscrief. 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. Thank you, Drew. thank you drew Good morning, everyone. good morning everyone Welcome to Saia's second quarter twenty twenty five conference call. welcome to saia's second quarter twenty twenty five conference call With me for today's call is Saia's President and Chief Executive Officer, Fritz Hulscrief. with me for today's call is saia's president and chief executive officer fritz hulscrief 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. 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 exact risk factors that could cause actual results to differ. I will now turn the call over to Fritz for some opening comments. 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. 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 exact risk factors that could cause actual results to differ. we refer you to our press release and our sec filings for more information on the exact risk factors that could cause actual results to differ I will now turn the call over to Fritz for some opening comments. i will now turn the call over to fritz for some opening comments

Speaker 3: Good morning and thank you for joining us to discuss Saia's second quarter results. Our second quarter operating ratio was 87.8% compared to our operating ratio of 83.3% in the second quarter of last year and the results represent a three thirty basis point improvement from the first quarter of this year. The sequential operating ratio improvement outperformed the historical average of two fifty basis to 300 basis points despite the lack of typical volume ramp that is usually seen throughout the second quarter. We operate our business with a focus on the customer and managing the things that are within our control. Our efforts to optimize our variable cost and improve our network efficiency contributed to this outperformance and these results reflect our ongoing efforts to manage the business in the short term with an intense focus on executing our long term strategy. Good morning and thank you for joining us to discuss Saia's second quarter results. good morning and thank you for joining us to discuss saia's second quarter results Our second quarter operating ratio was 87.8% compared to our operating ratio of 83.3% in the second quarter of last year and the results represent a three thirty basis point improvement from the first quarter of this year. our second quarter operating ratio was 87.8% compared to our operating ratio of 83.3% in the second quarter of last year and the results represent a three thirty basis point improvement from the first quarter of this year The sequential operating ratio improvement outperformed the historical average of two fifty basis to 300 basis points despite the lack of typical volume ramp that is usually seen throughout the second quarter. the sequential operating ratio improvement outperformed the historical average of two fifty basis to 300 basis points despite the lack of typical volume ramp that is usually seen throughout the second quarter We operate our business with a focus on the customer and managing the things that are within our control. we operate our business with a focus on the customer and managing the things that are within our control Our efforts to optimize our variable cost and improve our network efficiency contributed to this outperformance and these results reflect our ongoing efforts to manage the business in the short term with an intense focus on executing our long term strategy. our efforts to optimize our variable cost and improve our network efficiency contributed to this outperformance and these results reflect our ongoing efforts to manage the business in the short term with an intense focus on executing our long term strategy I'm pleased with the team's ability to focus on the things that we can control during this quarter, taking care of the customer, mix management, core execution and operational efficiency. Throughout the quarter, we were able to adjust our cost structure to align with volumes that trended below historical seasonality. We typically see significant monthly volume increases throughout the second quarter and while June trended more in the line of historical seasonality on a per workday basis, tonnage for the quarter was only up 0.4% from the first quarter. Our second quarter revenue of $817,000,000 decreased slightly from last year's second quarter by 0.7% due to continued muted volume trends as a result of the macroeconomic landscape. Overall shipments for Workday were down 2.8% year over year. I'm pleased with the team's ability to focus on the things that we can control during this quarter, taking care of the customer, mix management, core execution and operational efficiency. i'm pleased with the team's ability to focus on the things that we can control during this quarter taking care of the customer mix management core execution and operational efficiency Throughout the quarter, we were able to adjust our cost structure to align with volumes that trended below historical seasonality. throughout the quarter we were able to adjust our cost structure to align with volumes that trended below historical seasonality We typically see significant monthly volume increases throughout the second quarter and while June trended more in the line of historical seasonality on a per workday basis, tonnage for the quarter was only up 0.4% from the first quarter. we typically see significant monthly volume increases throughout the second quarter and while june trended more in the line of historical seasonality on a per workday basis tonnage for the quarter was only up 0.4% from the first quarter Our second quarter revenue of $817,000,000 decreased slightly from last year's second quarter by 0.7% due to continued muted volume trends as a result of the macroeconomic landscape. our second quarter revenue of $817,000,000 decreased slightly from last year's second quarter by 0.7% due to continued muted volume trends as a result of the macroeconomic landscape Overall shipments for Workday were down 2.8% year over year. overall shipments for workday were down 2.8% year over year Customer acceptance in our newer markets remained strong, which continues to demonstrate the value of our long term strategy of getting closer to the customer and providing unique solutions to meet their needs. Terminals opened less than three years saw sequential about a 4% sequential improvement in shipments per workday in the 2025 compared to the first quarter. In aggregate, these facilities operated in the mid-90s in the second quarter improving from breakeven in the first quarter. In our legacy facilities, with those open longer than three years, shipments were up about 2% sequentially in the '25 compared to the first or down about 3.5% compared to the second quarter of twenty twenty four. While we continue to see strong results in our newer markets, the overall shipment trends reflect the continued cautious approach from customers amidst an ever changing economic landscape. Customer acceptance in our newer markets remained strong, which continues to demonstrate the value of our long term strategy of getting closer to the customer and providing unique solutions to meet their needs. customer acceptance in our newer markets remained strong which continues to demonstrate the value of our long term strategy of getting closer to the customer and providing unique solutions to meet their needs Terminals opened less than three years saw sequential about a 4% sequential improvement in shipments per workday in the 2025 compared to the first quarter. terminals opened less than three years saw sequential about a 4% sequential improvement in shipments per workday in the 2025 compared to the first quarter In aggregate, these facilities operated in the mid-90s in the second quarter improving from breakeven in the first quarter. in aggregate these facilities operated in the mid-90s in the second quarter improving from breakeven in the first quarter In our legacy facilities, with those open longer than three years, shipments were up about 2% sequentially in the '25 compared to the first or down about 3.5% compared to the second quarter of twenty twenty four. in our legacy facilities with those open longer than three years shipments were up about 2% sequentially in the '25 compared to the first or down about 3.5% compared to the second quarter of twenty twenty four While we continue to see strong results in our newer markets, the overall shipment trends reflect the continued cautious approach from customers amidst an ever changing economic landscape. while we continue to see strong results in our newer markets the overall shipment trends reflect the continued cautious approach from customers amidst an ever changing economic landscape That said, we remain pleased with the opportunities we're seeing with both new and existing customers, which is reinforced by the volume trends seen in our newer facilities. Revenue per shipment excluding fuel surcharge increased 2.7% compared to the second quarter of last year, while revenue per shipment including fuel surcharge increased 1.8% in the quarter. For the second quarter, we saw tons per workday increased 1.1% compared to the second quarter of twenty twenty four, weight per shipment increased 4% and length of haul increased slightly compared to the second quarter last year. However, both of these components of mix decreased sequentially from the first quarter, creating a revenue headwind of approximately 4,500,000.0 to $5,500,000 compared to the first quarter. Our pricing and mix optimization initiatives remain an intense focus. That said, we remain pleased with the opportunities we're seeing with both new and existing customers, which is reinforced by the volume trends seen in our newer facilities. that said we remain pleased with the opportunities we're seeing with both new and existing customers which is reinforced by the volume trends seen in our newer facilities Revenue per shipment excluding fuel surcharge increased 2.7% compared to the second quarter of last year, while revenue per shipment including fuel surcharge increased 1.8% in the quarter. revenue per shipment excluding fuel surcharge increased 2.7% compared to the second quarter of last year while revenue per shipment including fuel surcharge increased 1.8% in the quarter For the second quarter, we saw tons per workday increased 1.1% compared to the second quarter of twenty twenty four, weight per shipment increased 4% and length of haul increased slightly compared to the second quarter last year. for the second quarter we saw tons per workday increased 1.1% compared to the second quarter of twenty twenty four weight per shipment increased 4% and length of haul increased slightly compared to the second quarter last year However, both of these components of mix decreased sequentially from the first quarter, creating a revenue headwind of approximately 4,500,000.0 to $5,500,000 compared to the first quarter. however both of these components of mix decreased sequentially from the first quarter creating a revenue headwind of approximately 4,500,000.0 to $5,500,000 compared to the first quarter Our pricing and mix optimization initiatives remain an intense focus. our pricing and mix optimization initiatives remain an intense focus Sequentially, our mix of business shifted to handling slightly more national and retail customers, which partially led to lower weight per shipment compared to the first quarter. Additionally, we saw muted trends out of our Los Angeles region partially contributed to shorter length of haul compared to the first quarter, which is a headwind to sequential revenue per shipment. Throughout the quarter, we were able to continue to provide unique solutions for our customers in both new and existing markets, which further validates our value proposition. Contractual renewals averaged 5.1% in the quarter, reflecting our customers' confidence in the high quality service that we continue to provide. We remain steadfast in our approach to providing industry leading service levels, while also managing controllable costs and productivity. Sequentially, our mix of business shifted to handling slightly more national and retail customers, which partially led to lower weight per shipment compared to the first quarter. sequentially our mix of business shifted to handling slightly more national and retail customers which partially led to lower weight per shipment compared to the first quarter Additionally, we saw muted trends out of our Los Angeles region partially contributed to shorter length of haul compared to the first quarter, which is a headwind to sequential revenue per shipment. additionally we saw muted trends out of our los angeles region partially contributed to shorter length of haul compared to the first quarter which is a headwind to sequential revenue per shipment Throughout the quarter, we were able to continue to provide unique solutions for our customers in both new and existing markets, which further validates our value proposition. throughout the quarter we were able to continue to provide unique solutions for our customers in both new and existing markets which further validates our value proposition Contractual renewals averaged 5.1% in the quarter, reflecting our customers' confidence in the high quality service that we continue to provide. contractual renewals averaged 5.1% in the quarter reflecting our customers' confidence in the high quality service that we continue to provide We remain steadfast in our approach to providing industry leading service levels, while also managing controllable costs and productivity. we remain steadfast in our approach to providing industry leading service levels while also managing controllable costs and productivity While we cannot control the external factors, our focus remains intently on what we can control and taking care of our customers is at the forefront. Customers value certainty and reliability in their supply chain. We believe that we're well positioned to provide that service in every market. This hyper focus on the customer remained on display in Q2 as we achieved a cargo claims ratio of 0.5 this quarter. From an operating expense standpoint, we drove a 4% sequential decrease in cost per shipment compared to the first quarter despite headwinds as a result of investments in our fleet and network expansion. While we cannot control the external factors, our focus remains intently on what we can control and taking care of our customers is at the forefront. while we cannot control the external factors our focus remains intently on what we can control and taking care of our customers is at the forefront Customers value certainty and reliability in their supply chain. customers value certainty and reliability in their supply chain We believe that we're well positioned to provide that service in every market. we believe that we're well positioned to provide that service in every market This hyper focus on the customer remained on display in Q2 as we achieved a cargo claims ratio of 0.5 this quarter. this hyper focus on the customer remained on display in q2 as we achieved a cargo claims ratio of 0.5 this quarter From an operating expense standpoint, we drove a 4% sequential decrease in cost per shipment compared to the first quarter despite headwinds as a result of investments in our fleet and network expansion. from an operating expense standpoint we drove a 4% sequential decrease in cost per shipment compared to the first quarter despite headwinds as a result of investments in our fleet and network expansion We continue to focus on adjusting our resources to the shifting volume levels and reduced headcount by about 4.2% from March to the June. We continued our focus on optimizing our maturing network as the 2024 network investments and related growth, while beneficial for the long term, created unique short term challenges and inefficiencies in our network, particularly in the slower Q1 operating environment. We accelerated our network optimization efforts in Q1 and saw the benefit emerging in Q2 as we leveraged density in our larger network and our efforts to drive greater efficiencies began to materialize. These results reinforce our commitment to expanded geography and nationwide footprint, which increasingly allows us to compete on a more even playing field with peers. As we look forward, we'll continue to execute our long term strategy and keep an eye on the macro environment, maintaining discipline around our cost structure and adapting the changing landscape across our network. We continue to focus on adjusting our resources to the shifting volume levels and reduced headcount by about 4.2% from March to the June. we continue to focus on adjusting our resources to the shifting volume levels and reduced headcount by about 4.2% from march to the june We continued our focus on optimizing our maturing network as the 2024 network investments and related growth, while beneficial for the long term, created unique short term challenges and inefficiencies in our network, particularly in the slower Q1 operating environment. we continued our focus on optimizing our maturing network as the 2024 network investments and related growth while beneficial for the long term created unique short term challenges and inefficiencies in our network particularly in the slower q1 operating environment We accelerated our network optimization efforts in Q1 and saw the benefit emerging in Q2 as we leveraged density in our larger network and our efforts to drive greater efficiencies began to materialize. we accelerated our network optimization efforts in q1 and saw the benefit emerging in q2 as we leveraged density in our larger network and our efforts to drive greater efficiencies began to materialize These results reinforce our commitment to expanded geography and nationwide footprint, which increasingly allows us to compete on a more even playing field with peers. these results reinforce our commitment to expanded geography and nationwide footprint which increasingly allows us to compete on a more even playing field with peers As we look forward, we'll continue to execute our long term strategy and keep an eye on the macro environment, maintaining discipline around our cost structure and adapting the changing landscape across our network. as we look forward we'll continue to execute our long term strategy and keep an eye on the macro environment maintaining discipline around our cost structure and adapting the changing landscape across our network I'll now turn the call over to Matt for more details from our second quarter results. I'll now turn the call over to Matt for more details from our second quarter results. i'll now turn the call over to matt for more details from our second quarter results

Speaker 2: Thanks, Fritz. Second quarter revenue decreased year over year by 0.7% to $817,100,000 while revenue per shipment excluding fuel surcharge increased 2.7 to $298.71 compared to $290.72 in the second quarter of twenty twenty four. Revenue per shipment including fuel surcharge increased 1.8% to 3 and $51.36 compared to $345.07 last year. Fuel surcharge revenue declined by 5.8% and was 14.6% of total revenue compared to 15.4% a year ago. Yield excluding fuel surcharge decreased by 1.2 while yield including fuel surcharge decreased by 2.1% compared to the second quarter of last year. Thanks, Fritz. thanks fritz Second quarter revenue decreased year over year by 0.7% to $817,100,000 while revenue per shipment excluding fuel surcharge increased 2.7 to $298.71 compared to $290.72 in the second quarter of twenty twenty four. second quarter revenue decreased year over year by 0.7% to $817,100,000 while revenue per shipment excluding fuel surcharge increased 2.7 to $298.71 compared to $290.72 in the second quarter of twenty twenty four Revenue per shipment including fuel surcharge increased 1.8% to 3 and $51.36 compared to $345.07 last year. revenue per shipment including fuel surcharge increased 1.8% to 3 and $51.36 compared to $345.07 last year Fuel surcharge revenue declined by 5.8% and was 14.6% of total revenue compared to 15.4% a year ago. fuel surcharge revenue declined by 5.8% and was 14.6% of total revenue compared to 15.4% a year ago Yield excluding fuel surcharge decreased by 1.2 while yield including fuel surcharge decreased by 2.1% compared to the second quarter of last year. yield excluding fuel surcharge decreased by 1.2 while yield including fuel surcharge decreased by 2.1% compared to the second quarter of last year Tonnage increased 1.1% compared to the second quarter last year, attributable to a 4% increase in our average weight per shipment, partially offset by a 2.8 shipment decline. Our length of haul increased year over year by 0.6% to eight ninety three miles. Shifting to the expense side for a few items to note in the quarter. Total operating expenses increased by 4.7% in the quarter compared to the second quarter last year. Salaries, wages and benefits increased 5%, which is primarily driven by our July 2024 wage increase, which averaged approximately 4.1% for all employees, excluding executives as well as increased employee costs, including group insurance as the inflationary pressures continue to drive this line items elevated level. Tonnage increased 1.1% compared to the second quarter last year, attributable to a 4% increase in our average weight per shipment, partially offset by a 2.8 shipment decline. tonnage increased 1.1% compared to the second quarter last year attributable to a 4% increase in our average weight per shipment partially offset by a 2.8 shipment decline Our length of haul increased year over year by 0.6% to eight ninety three miles. our length of haul increased year over year by 0.6% to eight ninety three miles Shifting to the expense side for a few items to note in the quarter. shifting to the expense side for a few items to note in the quarter Total operating expenses increased by 4.7% in the quarter compared to the second quarter last year. total operating expenses increased by 4.7% in the quarter compared to the second quarter last year Salaries, wages and benefits increased 5%, which is primarily driven by our July 2024 wage increase, which averaged approximately 4.1% for all employees, excluding executives as well as increased employee costs, including group insurance as the inflationary pressures continue to drive this line items elevated level. salaries wages and benefits increased 5% which is primarily driven by our july 2024 wage increase which averaged approximately 4.1% for all employees excluding executives as well as increased employee costs including group insurance as the inflationary pressures continue to drive this line items elevated level Purchased transportation expense including both non asset truckload volume and LTL purchased transportation miles decreased by 5.5% compared to the second quarter last year and was 7.1% of total revenue compared to 7.4% in the 2024 and seven point six percent in the first quarter of twenty twenty five. Truck and rail PT miles combined were 12% of our total line haul miles in the quarter. Fuel expense decreased by 4.3% in the quarter compared to the second quarter last year, while company line haul miles increased 2.1%. The decrease in fuel expense was primarily the result of a decrease in national average diesel prices by over 7.8% on a year over year basis, partially offset by the increase in line haul miles run. Claims and insurance expense increased by 21.2% year over year. Purchased transportation expense including both non asset truckload volume and LTL purchased transportation miles decreased by 5.5% compared to the second quarter last year and was 7.1% of total revenue compared to 7.4% in the 2024 and seven point six percent in the first quarter of twenty twenty five. purchased transportation expense including both non asset truckload volume and ltl purchased transportation miles decreased by 5.5% compared to the second quarter last year and was 7.1% of total revenue compared to 7.4% in the 2024 and seven point six percent in the first quarter of twenty twenty five Truck and rail PT miles combined were 12% of our total line haul miles in the quarter. truck and rail pt miles combined were 12% of our total line haul miles in the quarter Fuel expense decreased by 4.3% in the quarter compared to the second quarter last year, while company line haul miles increased 2.1%. fuel expense decreased by 4.3% in the quarter compared to the second quarter last year while company line haul miles increased 2.1% The decrease in fuel expense was primarily the result of a decrease in national average diesel prices by over 7.8% on a year over year basis, partially offset by the increase in line haul miles run. the decrease in fuel expense was primarily the result of a decrease in national average diesel prices by over 7.8% on a year over year basis partially offset by the increase in line haul miles run Claims and insurance expense increased by 21.2% year over year. claims and insurance expense increased by 21.2% year over year The increase compared to the 2024 was primarily due to the development of open claims, increased claim activity and increased cost per claim. Depreciation expense of $62,500,000 in the quarter was 19.1% higher year over year primarily due to ongoing investments in revenue equipment, real estate and technology. We believe the investments we have made and continue to make in our network, technology and our people during this down cycle position us well for the future. We are constantly evaluating investments to ensure they meet the return profile we expect and we plan to spend approximately 600,000,000 to $650,000,000 in capital expenditures this year. Consistently investing in our network expansion, equipment and our people aligns with our long term strategy. The increase compared to the 2024 was primarily due to the development of open claims, increased claim activity and increased cost per claim. the increase compared to the 2024 was primarily due to the development of open claims increased claim activity and increased cost per claim Depreciation expense of $62,500,000 in the quarter was 19.1% higher year over year primarily due to ongoing investments in revenue equipment, real estate and technology. depreciation expense of $62,500,000 in the quarter was 19.1% higher year over year primarily due to ongoing investments in revenue equipment real estate and technology We believe the investments we have made and continue to make in our network, technology and our people during this down cycle position us well for the future. we believe the investments we have made and continue to make in our network technology and our people during this down cycle position us well for the future We are constantly evaluating investments to ensure they meet the return profile we expect and we plan to spend approximately 600,000,000 to $650,000,000 in capital expenditures this year. we are constantly evaluating investments to ensure they meet the return profile we expect and we plan to spend approximately 600,000,000 to $650,000,000 in capital expenditures this year Consistently investing in our network expansion, equipment and our people aligns with our long term strategy. consistently investing in our network expansion equipment and our people aligns with our long term strategy Compared to the second quarter of twenty twenty four, cost per shipment increased 7.7% primarily due to increased salaries, wages and benefits to support a broader network of terminals and increased depreciation expense associated with the record investments made in the network in 2024. As Fritz mentioned, our cost per shipment decreased 4% sequentially from the first quarter in spite of the lack of typical volume uplift that would allow us to better leverage our fixed costs. Decreased headcount of 4.2% compared to the 2025 was a contributing factor to the sequential improvement. Additionally, we were able to manage our costs in the second quarter while maintaining a claims ratio that was largely flat sequentially, reflecting our ability to make these adjustments while preserving core execution and customer service. Our tax rate for the second quarter was 25.3% compared to 24.4% in the second quarter of last year and our diluted earnings per share were $2.67 compared to $3.83 in the second quarter a year ago. Compared to the second quarter of twenty twenty four, cost per shipment increased 7.7% primarily due to increased salaries, wages and benefits to support a broader network of terminals and increased depreciation expense associated with the record investments made in the network in 2024. compared to the second quarter of twenty twenty four cost per shipment increased 7.7% primarily due to increased salaries wages and benefits to support a broader network of terminals and increased depreciation expense associated with the record investments made in the network in 2024 As Fritz mentioned, our cost per shipment decreased 4% sequentially from the first quarter in spite of the lack of typical volume uplift that would allow us to better leverage our fixed costs. as fritz mentioned our cost per shipment decreased 4% sequentially from the first quarter in spite of the lack of typical volume uplift that would allow us to better leverage our fixed costs Decreased headcount of 4.2% compared to the 2025 was a contributing factor to the sequential improvement. decreased headcount of 4.2% compared to the 2025 was a contributing factor to the sequential improvement Additionally, we were able to manage our costs in the second quarter while maintaining a claims ratio that was largely flat sequentially, reflecting our ability to make these adjustments while preserving core execution and customer service. additionally we were able to manage our costs in the second quarter while maintaining a claims ratio that was largely flat sequentially reflecting our ability to make these adjustments while preserving core execution and customer service Our tax rate for the second quarter was 25.3% compared to 24.4% in the second quarter of last year and our diluted earnings per share were $2.67 compared to $3.83 in the second quarter a year ago. our tax rate for the second quarter was 25.3% compared to 24.4% in the second quarter of last year and our diluted earnings per share were $2.67 compared to $3.83 in the second quarter a year ago I'll now turn the call back over to Fritz for some closing comments. I'll now turn the call back over to Fritz for some closing comments. i'll now turn the call back over to fritz for some closing comments

Speaker 3: Thanks, Matt. As I mentioned in the opening, I'm pleased with our team's focus on things that we can control. The operating performance of our team continues to be among the best in the industry and we remain focused on our customers' needs. While volume did not step up as traditionally seen in the second quarter, margins outperformed the normal sequential progression, representing our team's ability to adapt to a dynamic environment. In Q2, we relocated our centralized customer service function to our field locations. Thanks, Matt. thanks matt As I mentioned in the opening, I'm pleased with our team's focus on things that we can control. as i mentioned in the opening i'm pleased with our team's focus on things that we can control The operating performance of our team continues to be among the best in the industry and we remain focused on our customers' needs. the operating performance of our team continues to be among the best in the industry and we remain focused on our customers' needs While volume did not step up as traditionally seen in the second quarter, margins outperformed the normal sequential progression, representing our team's ability to adapt to a dynamic environment. while volume did not step up as traditionally seen in the second quarter margins outperformed the normal sequential progression representing our team's ability to adapt to a dynamic environment In Q2, we relocated our centralized customer service function to our field locations. in q2 we relocated our centralized customer service function to our field locations We reduced our overhead costs in this process, but more significantly moved our customer service capabilities closer to the customer. Our customer first focus is yielding tangible results, especially in our new markets as our facilities opened for less than three years continue to lead the charge in volume and revenue growth, performing in line with seasonality in these markets. We're excited about the early success of these locations and we see considerable runway as we continue to penetrate those markets. With our talented and engaged workforce, the value proposition to our customers continues to expand to match our network national network of facilities. A key component of our long term strategy is to get closer to the customer and give them a chance to choose Saia for their LTL needs more often. We reduced our overhead costs in this process, but more significantly moved our customer service capabilities closer to the customer. we reduced our overhead costs in this process but more significantly moved our customer service capabilities closer to the customer Our customer first focus is yielding tangible results, especially in our new markets as our facilities opened for less than three years continue to lead the charge in volume and revenue growth, performing in line with seasonality in these markets. our customer first focus is yielding tangible results especially in our new markets as our facilities opened for less than three years continue to lead the charge in volume and revenue growth performing in line with seasonality in these markets We're excited about the early success of these locations and we see considerable runway as we continue to penetrate those markets. we're excited about the early success of these locations and we see considerable runway as we continue to penetrate those markets With our talented and engaged workforce, the value proposition to our customers continues to expand to match our network national network of facilities. with our talented and engaged workforce the value proposition to our customers continues to expand to match our network national network of facilities A key component of our long term strategy is to get closer to the customer and give them a chance to choose Saia for their LTL needs more often. a key component of our long term strategy is to get closer to the customer and give them a chance to choose saia for their ltl needs more often At Saia, we've emphasized the importance of the customer and focusing on things that we can control As our industry adapts to the evolving economic landscape over the coming months, my conviction about the long term prospects of Saia remains steadfast. Great employees, great service and a national footprint are all key to securing our position as a long term leader in the industry. Our network planning tools continually refined and honed from our original deployment several years ago are foundational to our resilience and our ability to operate and monetize in our complex national network. At the same time, these tools are key catalysts to continue to find cost optimal solution to meet customer expectations. Over the coming quarters, we'll be further investing to continue and enhance these robust capabilities, which we believe will continue to generate returns in the business. At Saia, we've emphasized the importance of the customer and focusing on things that we can control As our industry adapts to the evolving economic landscape over the coming months, my conviction about the long term prospects of Saia remains steadfast. at saia we've emphasized the importance of the customer and focusing on things that we can control as our industry adapts to the evolving economic landscape over the coming months my conviction about the long term prospects of saia remains steadfast Great employees, great service and a national footprint are all key to securing our position as a long term leader in the industry. great employees great service and a national footprint are all key to securing our position as a long term leader in the industry Our network planning tools continually refined and honed from our original deployment several years ago are foundational to our resilience and our ability to operate and monetize in our complex national network. our network planning tools continually refined and honed from our original deployment several years ago are foundational to our resilience and our ability to operate and monetize in our complex national network At the same time, these tools are key catalysts to continue to find cost optimal solution to meet customer expectations. at the same time these tools are key catalysts to continue to find cost optimal solution to meet customer expectations Over the coming quarters, we'll be further investing to continue and enhance these robust capabilities, which we believe will continue to generate returns in the business. over the coming quarters we'll be further investing to continue and enhance these robust capabilities which we believe will continue to generate returns in the business Although these network planning tools provide a framework for the company to operate fundamentally, core execution remains in the hands of a highly engaged team focused on supporting our customer success and delivering returns in the substantial investment in creating a national network. We remain in the early innings of tapping the potential of this business. With that said, we're now ready to open the line for questions, operator. Although these network planning tools provide a framework for the company to operate fundamentally, core execution remains in the hands of a highly engaged team focused on supporting our customer success and delivering returns in the substantial investment in creating a national network. although these network planning tools provide a framework for the company to operate fundamentally core execution remains in the hands of a highly engaged team focused on supporting our customer success and delivering returns in the substantial investment in creating a national network We remain in the early innings of tapping the potential of this business. we remain in the early innings of tapping the potential of this business With that said, we're now ready to open the line for questions, operator. with that said we're now ready to open the line for questions operator

Speaker 1: We will now begin the question and answer session. The first question comes from Ken Hoexter with Bank of America. Please go ahead. We will now begin the question and answer session. we will now begin the question and answer session The first question comes from Ken Hoexter with Bank of America. the first question comes from ken hoexter with bank of america Please go ahead. please go ahead

Speaker 4: Hey, great. Good morning, Fritz and Matt. Great job on the pricing. I think that's really a nice flow through. But given normal seasonality, should we see volumes will they stay can they turn positive or will they stay negative in third quarter just if you think about seasonality? Hey, great. hey great Good morning, Fritz and Matt. good morning fritz and matt Great job on the pricing. great job on the pricing I think that's really a nice flow through. i think that's really a nice flow through But given normal seasonality, should we see volumes will they stay can they turn positive or will they stay negative in third quarter just if you think about seasonality? but given normal seasonality should we see volumes will they stay can they turn positive or will they stay negative in third quarter just if you think about seasonality And given the strong pricing and mid single digit renewals, should pricing continue to climb? I guess that's leading me to the OR thoughts, Normal seasonality I think is flattish from 2Q to 3Q. Just want to maybe your thoughts on an outlook. And given the strong pricing and mid single digit renewals, should pricing continue to climb? and given the strong pricing and mid single digit renewals should pricing continue to climb I guess that's leading me to the OR thoughts, Normal seasonality I think is flattish from 2Q to 3Q. i guess that's leading me to the or thoughts normal seasonality i think is flattish from 2q to 3q Just want to maybe your thoughts on an outlook. just want to maybe your thoughts on an outlook

Speaker 2: Yes. Just on the tonnage piece, well keep in mind that we opened six terminals in Q2 last year, many of those in the back part of the quarter and then we opened 11 terminals in Q3. So the comps get tougher on the shipments and tonnage line as we start to lap those new openings. And then on the pricing side, we're focused on what we've been focused on. We're making sure that the business meets the returns that we expect and that we're evaluating what we're handling for customers throughout each bid, each renewal that's core to what we do over the years and it continues to be a focus. Yes. yes Just on the tonnage piece, well keep in mind that we opened six terminals in Q2 last year, many of those in the back part of the quarter and then we opened 11 terminals in Q3. just on the tonnage piece well keep in mind that we opened six terminals in q2 last year many of those in the back part of the quarter and then we opened 11 terminals in q3 So the comps get tougher on the shipments and tonnage line as we start to lap those new openings. so the comps get tougher on the shipments and tonnage line as we start to lap those new openings And then on the pricing side, we're focused on what we've been focused on. and then on the pricing side we're focused on what we've been focused on We're making sure that the business meets the returns that we expect and that we're evaluating what we're handling for customers throughout each bid, each renewal that's core to what we do over the years and it continues to be a focus. we're making sure that the business meets the returns that we expect and that we're evaluating what we're handling for customers throughout each bid each renewal that's core to what we do over the years and it continues to be a focus If you look at history on the OR line, typically Q2 to Q3 OR degradates between 100 to 200 basis points sequentially. And we think we can keep it around 100 basis points of degradation sequentially from Q2 to Q3 this year. If you look at history on the OR line, typically Q2 to Q3 OR degradates between 100 to 200 basis points sequentially. if you look at history on the or line typically q2 to q3 or degradates between 100 to 200 basis points sequentially And we think we can keep it around 100 basis points of degradation sequentially from Q2 to Q3 this year. and we think we can keep it around 100 basis points of degradation sequentially from q2 to q3 this year

Speaker 3: I think that just to add to that, Ken, I think the important part is that we have made significant you know, the quarter optimization efforts in Q2 to kind of better match our national line haul network network overall to meet kind of what a now national network looks like, right. So I think that part of the efficiencies that we drove through Q2 will continue into Q3. So that's part of that how we can get to the bottom end of that range that Matt described. I think that just to add to that, Ken, I think the important part is that we have made significant you know, the quarter optimization efforts in Q2 to kind of better match our national line haul network network overall to meet kind of what a now national network looks like, right. i think that just to add to that ken i think the important part is that we have made significant you know the quarter optimization efforts in q2 to kind of better match our national line haul network network overall to meet kind of what a now national network looks like right So I think that part of the efficiencies that we drove through Q2 will continue into Q3. so i think that part of the efficiencies that we drove through q2 will continue into q3 So that's part of that how we can get to the bottom end of that range that Matt described. so that's part of that how we can get to the bottom end of that range that matt described

Speaker 4: So Fred, don't mean to do another follow-up, but is that just because of the optimization on a national network or was that because you were talking about seeing a slowing volume, so you move to pull costs and cut employees? So Fred, don't mean to do another follow-up, but is that just because of the optimization on a national network or was that because you were talking about seeing a slowing volume, so you move to pull costs and cut employees? so fred don't mean to do another follow-up but is that just because of the optimization on a national network or was that because you were talking about seeing a slowing volume so you move to pull costs and cut employees

Speaker 3: No, it's both, right. You got to in this business, you always have to match costs to what the available business is. But this at this time last year, we didn't have 21 facilities. We have 21 facilities maturing from last year that we opened last year. And the opportunity that we have, part of that opportunity is that as you build densities across that network now, we described for you in the first quarter some of the challenges we had managing through facilities that hadn't been opened that long. No, it's both, right. no it's both right You got to in this business, you always have to match costs to what the available business is. you got to in this business you always have to match costs to what the available business is But this at this time last year, we didn't have 21 facilities. but this at this time last year we didn't have 21 facilities We have 21 facilities maturing from last year that we opened last year. we have 21 facilities maturing from last year that we opened last year And the opportunity that we have, part of that opportunity is that as you build densities across that network now, we described for you in the first quarter some of the challenges we had managing through facilities that hadn't been opened that long. and the opportunity that we have part of that opportunity is that as you build densities across that network now we described for you in the first quarter some of the challenges we had managing through facilities that hadn't been opened that long And now we're starting to see some of the benefits of that. We continue to look for opportunities to redesign our line haul network. As you know, that's the biggest cost bucket in this business. And that's an area that as you develop maturity that becomes sustainable cost advantage over time. And now we're starting to see some of the benefits of that. and now we're starting to see some of the benefits of that We continue to look for opportunities to redesign our line haul network. we continue to look for opportunities to redesign our line haul network As you know, that's the biggest cost bucket in this business. as you know that's the biggest cost bucket in this business And that's an area that as you develop maturity that becomes sustainable cost advantage over time. and that's an area that as you develop maturity that becomes sustainable cost advantage over time

Speaker 4: Great. Thanks for the time guys. Appreciate it. Great. great Thanks for the time guys. thanks for the time guys Appreciate it. appreciate it

Speaker 1: The next question comes from Risha Harnane with Deutsche Bank. Please go ahead. The next question comes from Risha Harnane with Deutsche Bank. the next question comes from risha harnane with deutsche bank Please go ahead. please go ahead

Speaker 5: Hey, thanks guys for the time. So I wanted to ask a little bit about the labor reductions that you've done and sort of what you did with wages this year. I just wanted to clarify, was there a wage increase this year? And then in terms of the labor force, what type of cuts were made? And as we look out going forward, as you try to balance your customer centric focus and building out the network with sort of where we are in the cycle and trying to manage costs like what's further runway for that which we expect? Thank you. Hey, thanks guys for the time. hey thanks guys for the time So I wanted to ask a little bit about the labor reductions that you've done and sort of what you did with wages this year. so i wanted to ask a little bit about the labor reductions that you've done and sort of what you did with wages this year I just wanted to clarify, was there a wage increase this year? i just wanted to clarify was there a wage increase this year And then in terms of the labor force, what type of cuts were made? and then in terms of the labor force what type of cuts were made And as we look out going forward, as you try to balance your customer centric focus and building out the network with sort of where we are in the cycle and trying to manage costs like what's further runway for that which we expect? and as we look out going forward as you try to balance your customer centric focus and building out the network with sort of where we are in the cycle and trying to manage costs like what's further runway for that which we expect Thank you. thank you

Speaker 3: Yes. So just to kind of our sort of wage increase program, typically we do that in the second half of the year. So we haven't done anything with that yet. The as far as the headcount, it's real important in an environment like this where you see volume changes, you've got to you actually have to match the hours that are available hours to what the volume levels are. So that's really about how we manage headcount by location or hours by location, I think is a better sort of picture that because somebody that maybe a year ago was working a lot of overtime at this point, we're maybe not working overtime. Yes. yes So just to kind of our sort of wage increase program, typically we do that in the second half of the year. so just to kind of our sort of wage increase program typically we do that in the second half of the year So we haven't done anything with that yet. so we haven't done anything with that yet The as far as the headcount, it's real important in an environment like this where you see volume changes, you've got to you actually have to match the hours that are available hours to what the volume levels are. the as far as the headcount it's real important in an environment like this where you see volume changes you've got to you actually have to match the hours that are available hours to what the volume levels are So that's really about how we manage headcount by location or hours by location, I think is a better sort of picture that because somebody that maybe a year ago was working a lot of overtime at this point, we're maybe not working overtime. so that's really about how we manage headcount by location or hours by location i think is a better sort of picture that because somebody that maybe a year ago was working a lot of overtime at this point we're maybe not working overtime So it's a cut in hours, built some efficiency that way or productivity that way. The line haul network is a really important story for Saia though. One of the things that you do when you have a now national network, some of those facilities that we have added, places like Youngstown, Ohio, part of the reason why we bought that facility was to be able to drive line haul cost savings across the eastern part of the country. And we have a facility now that allows us to run triples across Ohio. Well, that's a 30% reduction in cost compared to a traditional two pups connected, right. So it's a cut in hours, built some efficiency that way or productivity that way. so it's a cut in hours built some efficiency that way or productivity that way The line haul network is a really important story for Saia though. the line haul network is a really important story for saia though One of the things that you do when you have a now national network, some of those facilities that we have added, places like Youngstown, Ohio, part of the reason why we bought that facility was to be able to drive line haul cost savings across the eastern part of the country. one of the things that you do when you have a now national network some of those facilities that we have added places like youngstown ohio part of the reason why we bought that facility was to be able to drive line haul cost savings across the eastern part of the country And we have a facility now that allows us to run triples across Ohio. and we have a facility now that allows us to run triples across ohio Well, that's a 30% reduction in cost compared to a traditional two pups connected, right. well that's a 30% reduction in cost compared to a traditional two pups connected right So that those are important cost savings that you can start deploying across the network and that's sort of agnostic to what's going on in the environment, right. This is just taking advantage of having a now national network and there are people that are certainly impacted by that. You optimize to more of internal drivers, maybe you reposition your line haul drivers into different locations to better match where volume movements are, where customers are, and that all creates efficiencies. You use a little bit less PT in some markets. And if you look at our cost structure Q1 to Q2, I think that shows up there for sure. So that those are important cost savings that you can start deploying across the network and that's sort of agnostic to what's going on in the environment, right. so that those are important cost savings that you can start deploying across the network and that's sort of agnostic to what's going on in the environment right This is just taking advantage of having a now national network and there are people that are certainly impacted by that. this is just taking advantage of having a now national network and there are people that are certainly impacted by that You optimize to more of internal drivers, maybe you reposition your line haul drivers into different locations to better match where volume movements are, where customers are, and that all creates efficiencies. you optimize to more of internal drivers maybe you reposition your line haul drivers into different locations to better match where volume movements are where customers are and that all creates efficiencies You use a little bit less PT in some markets. you use a little bit less pt in some markets And if you look at our cost structure Q1 to Q2, I think that shows up there for sure. and if you look at our cost structure q1 to q2 i think that shows up there for sure

Speaker 5: Okay, great. So as we think about Q3 then, should we continue to see that momentum in the cost per shipment line, the better than seasonal I Okay, great. okay great So as we think about Q3 then, should we continue to see that momentum in the cost per shipment line, the better than seasonal I so as we think about q3 then should we continue to see that momentum in the cost per shipment line the better than seasonal i

Speaker 3: think it's we'll have to see what the market has in store for us. But I think we've got some additional sort of opportunities through the quarter that I think we'll see materialize. We're still not 100% certain around what the top line looks like, but I do know that we have we'll continue to look for cost optimization opportunities and deploy our tools to do that. And that's built in that why we think we're going to beat our sort of historical trend from Q2 to Q3. think it's we'll have to see what the market has in store for us. think it's we'll have to see what the market has in store for us But I think we've got some additional sort of opportunities through the quarter that I think we'll see materialize. but i think we've got some additional sort of opportunities through the quarter that i think we'll see materialize We're still not 100% certain around what the top line looks like, but I do know that we have we'll continue to look for cost optimization opportunities and deploy our tools to do that. we're still not 100% certain around what the top line looks like but i do know that we have we'll continue to look for cost optimization opportunities and deploy our tools to do that And that's built in that why we think we're going to beat our sort of historical trend from Q2 to Q3. and that's built in that why we think we're going to beat our sort of historical trend from q2 to q3

Speaker 5: Awesome. Thank you. Awesome. awesome Thank you. thank you

Speaker 1: The next question comes from Jordan Alliger with Goldman Sachs. Please go ahead. The next question comes from Jordan Alliger with Goldman Sachs. the next question comes from jordan alliger with goldman sachs Please go ahead. please go ahead

Speaker 6: Yes. Hi, morning. So there's been a lot of there's been talk of course of industry capacity. Just sort of curious your take on it. Would you say going into the next up cycle that overall LTL capacity should look less actually than pre yellow bankruptcy levels due to the various unsold terminals, even some of the larger players out there do have excess stores today? And what could this mean for pricing on a recovery? Thanks. Yes. yes Hi, morning. hi morning So there's been a lot of there's been talk of course of industry capacity. so there's been a lot of there's been talk of course of industry capacity Just sort of curious your take on it. just sort of curious your take on it Would you say going into the next up cycle that overall LTL capacity should look less actually than pre yellow bankruptcy levels due to the various unsold terminals, even some of the larger players out there do have excess stores today? would you say going into the next up cycle that overall ltl capacity should look less actually than pre yellow bankruptcy levels due to the various unsold terminals even some of the larger players out there do have excess stores today And what could this mean for pricing on a recovery? and what could this mean for pricing on a recovery Thanks. thanks

Speaker 3: Yes, I think that if you look at the I don't think the long term trend around LTL capacity is going to change. In other words, it's been shrinking over time. And I think that there are yes, certainly there is available capacity today with a number of the competitors. I think what is really significant is that this remains an inflationary business. I think that people expect to get a return on a substantial capital investment in this business. Yes, I think that if you look at the I don't think the long term trend around LTL capacity is going to change. yes i think that if you look at the i don't think the long term trend around ltl capacity is going to change In other words, it's been shrinking over time. in other words it's been shrinking over time And I think that there are yes, certainly there is available capacity today with a number of the competitors. and i think that there are yes certainly there is available capacity today with a number of the competitors I think what is really significant is that this remains an inflationary business. i think what is really significant is that this remains an inflationary business I think that people expect to get a return on a substantial capital investment in this business. i think that people expect to get a return on a substantial capital investment in this business We're no different than anybody else. So I think that that will keep the industry healthy. I think that the for us and what we look at is that we're really excited about the opportunity to leverage what we have, right. The market returns, Saia is poised to take advantage of this. We know how we can we know how to operate in an up market, so that this is the time we've been waiting for. So we think for us it's a unique opportunity. We're no different than anybody else. we're no different than anybody else So I think that that will keep the industry healthy. so i think that that will keep the industry healthy I think that the for us and what we look at is that we're really excited about the opportunity to leverage what we have, right. i think that the for us and what we look at is that we're really excited about the opportunity to leverage what we have right The market returns, Saia is poised to take advantage of this. the market returns saia is poised to take advantage of this We know how we can we know how to operate in an up market, so that this is the time we've been waiting for. we know how we can we know how to operate in an up market so that this is the time we've been waiting for So we think for us it's a unique opportunity. so we think for us it's a unique opportunity

Speaker 2: And keep in mind too, Jordan, terminals and doors are absolutely important, but capacity also comes in equipment and it comes in drivers. And the next up cycle, it's drivers that are critically important. You need the terminals, the doors, but if you don't have drivers and equipment, that's a capacity constraint. Like Fritz said, we feel great about the investments that we've made. We've never been better positioned, but capacity comes in all three of those. And keep in mind too, Jordan, terminals and doors are absolutely important, but capacity also comes in equipment and it comes in drivers. and keep in mind too jordan terminals and doors are absolutely important but capacity also comes in equipment and it comes in drivers And the next up cycle, it's drivers that are critically important. and the next up cycle it's drivers that are critically important You need the terminals, the doors, but if you don't have drivers and equipment, that's a capacity constraint. you need the terminals the doors but if you don't have drivers and equipment that's a capacity constraint Like Fritz said, we feel great about the investments that we've made. like fritz said we feel great about the investments that we've made We've never been better positioned, but capacity comes in all three of those. we've never been better positioned but capacity comes in all three of those

Speaker 6: Thank you. Thank you. thank you

Speaker 1: The next question comes from Chris Wetherbee with Wells Fargo. Please go ahead. The next question comes from Chris Wetherbee with Wells Fargo. the next question comes from chris wetherbee with wells fargo Please go ahead. please go ahead

Speaker 7: Hey, good morning guys. Maybe can you give us a sense of how things are going from a volume perspective, maybe some insight into what July tonnage looks like and maybe your sort of overall view on what you're seeing from your customers in the end markets? Hey, good morning guys. hey good morning guys Maybe can you give us a sense of how things are going from a volume perspective, maybe some insight into what July tonnage looks like and maybe your sort of overall view on what you're seeing from your customers in the end markets? maybe can you give us a sense of how things are going from a volume perspective maybe some insight into what july tonnage looks like and maybe your sort of overall view on what you're seeing from your customers in the end markets

Speaker 3: Chris, could you repeat? I think you got garbled there a little bit on the question. Chris, could you repeat? chris could you repeat I think you got garbled there a little bit on the question. i think you got garbled there a little bit on the question

Speaker 7: Apologies. Hopefully, you can hear me a little bit poker now. There we go. Thank you. Sorry about that. Apologies. apologies Hopefully, you can hear me a little bit poker now. hopefully you can hear me a little bit poker now There we go. there we go Thank you. thank you Sorry about that. sorry about that Just curious if you can give us an update on what you're seeing from a tonnage perspective in July and sort of how the third quarter is starting, what you're hearing from customers in the market from the end markets that you're serving? Just curious if you can give us an update on what you're seeing from a tonnage perspective in July and sort of how the third quarter is starting, what you're hearing from customers in the market from the end markets that you're serving? just curious if you can give us an update on what you're seeing from a tonnage perspective in july and sort of how the third quarter is starting what you're hearing from customers in the market from the end markets that you're serving

Speaker 2: Sure. I'll go ahead and give the monthly Q2 as well. So April shipments per day were down 1.9%, tonnage per day up 4.4%, May shipments per day down 3.2%, tonnage per day down 0.4%, June shipments per day down 3.4%, tonnage per day down down 0.8%. And if we look at July month to date obviously still have a week or so to go, but shipments per day are down about 2.25%, tonnage is trending around flat. As mentioned earlier, there's we're lapping comps in the back half of Q3 with terminal adds. Sure. sure I'll go ahead and give the monthly Q2 as well. i'll go ahead and give the monthly q2 as well So April shipments per day were down 1.9%, tonnage per day up 4.4%, May shipments per day down 3.2%, tonnage per day down 0.4%, June shipments per day down 3.4%, tonnage per day down down 0.8%. so april shipments per day were down 1.9% tonnage per day up 4.4% may shipments per day down 3.2% tonnage per day down 0.4% june shipments per day down 3.4% tonnage per day down down 0.8% And if we look at July month to date obviously still have a week or so to go, but shipments per day are down about 2.25%, tonnage is trending around flat. and if we look at july month to date obviously still have a week or so to go but shipments per day are down about 2.25% tonnage is trending around flat As mentioned earlier, there's we're lapping comps in the back half of Q3 with terminal adds. as mentioned earlier there's we're lapping comps in the back half of q3 with terminal adds But from an end market standpoint and customers, I don't know that we'd really call anything out differently than what we've been seeing. And we continue to stay really close to our customers understanding their business and their trends more and more. But I don't know that there's anything specific for us to call out that we've seen differently over the past few weeks than what But from an end market standpoint and customers, I don't know that we'd really call anything out differently than what we've been seeing. but from an end market standpoint and customers i don't know that we'd really call anything out differently than what we've been seeing And we continue to stay really close to our customers understanding their business and their trends more and more. and we continue to stay really close to our customers understanding their business and their trends more and more But I don't know that there's anything specific for us to call out that we've seen differently over the past few weeks than what but i don't know that there's anything specific for us to call out that we've seen differently over the past few weeks than what

Speaker 3: we were seeing in June. Yeah, I think we pointed out that the our sort of LA region was a little bit stood out as a little bit softer. Some of that is our own action around making sure that we're compensated appropriately. Part of that, I think there's a little has been at least for us a little bit of softness in that area, but other markets have been pretty good. we were seeing in June. we were seeing in june Yeah, I think we pointed out that the our sort of LA region was a little bit stood out as a little bit softer. yeah i think we pointed out that the our sort of la region was a little bit stood out as a little bit softer Some of that is our own action around making sure that we're compensated appropriately. some of that is our own action around making sure that we're compensated appropriately Part of that, I think there's a little has been at least for us a little bit of softness in that area, but other markets have been pretty good. part of that i think there's a little has been at least for us a little bit of softness in that area but other markets have been pretty good

Speaker 7: Okay. That's helpful. And just a follow-up on the comment about normal wage increases I was just kind of curious, are you suggesting that you haven't done it yet or that it may not happen in the third quarter? Just want to get a sense of how you're thinking about that normal process? Okay. okay That's helpful. that's helpful And just a follow-up on the comment about normal wage increases and just a follow-up on the comment about normal wage increases I was just kind of curious, are you suggesting that you haven't done it yet or that it may not happen in the third quarter? i was just kind of curious are you suggesting that you haven't done it yet or that it may not happen in the third quarter Just want to get a sense of how you're thinking about that normal process? just want to get a sense of how you're thinking about that normal process

Speaker 3: Yes. And if you look at it over time is that we would typically do that in the third or fourth quarter. We haven't made a formal call on that yet. So it could still happen this quarter or it could be in the fourth quarter. But we'll let you know as we kind of figure out where the market is and what we need to do. Yes. yes And if you look at it over time is that we would typically do that in the third or fourth quarter. and if you look at it over time is that we would typically do that in the third or fourth quarter We haven't made a formal call on that yet. we haven't made a formal call on that yet So it could still happen this quarter or it could be in the fourth quarter. so it could still happen this quarter or it could be in the fourth quarter But we'll let you know as we kind of figure out where the market is and what we need to do. but we'll let you know as we kind of figure out where the market is and what we need to do

Speaker 7: Got it. Thanks for the time. Appreciate it. Got it. got it Thanks for the time. thanks for the time Appreciate it. appreciate it

Speaker 1: The next question comes from John Chappell with Evercore ISI. Please go ahead. The next question comes from John Chappell with Evercore ISI. the next question comes from john chappell with evercore isi Please go ahead. please go ahead

Speaker 8: Thank you. Good morning. I know contract renewals are just a small piece of the portfolio. The 5.1% that you mentioned is much lower than a lot of the 8s and 9s we've seen recently. Is that just a function of more difficult comparisons or should we read that into more competitive pricing overall? Thank you. thank you Good morning. good morning I know contract renewals are just a small piece of the portfolio. i know contract renewals are just a small piece of the portfolio The 5.1% that you mentioned is much lower than a lot of the 8s and 9s we've seen recently. the 5.1% that you mentioned is much lower than a lot of the 8s and 9s we've seen recently Is that just a function of more difficult comparisons or should we read that into more competitive pricing overall? is that just a function of more difficult comparisons or should we read that into more competitive pricing overall

Speaker 2: John, could we heard you clearly the first half, but then it broke up a little bit. Would you mind repeating? John, could we heard you clearly the first half, but then it broke up a little bit. john could we heard you clearly the first half but then it broke up a little bit Would you mind repeating? would you mind repeating

Speaker 8: Yes, sorry. 5.1% contractual renewals in the quarter, a lot a little bit lower than the 8%, 9% that we've seen recently. Is this representative of just more difficult comparisons or is this speaking more to the competitive nature of the market right now? Yes, sorry. yes sorry 5.1% contractual renewals in the quarter, a lot a little bit lower than the 8%, 9% that we've seen recently. 5.1% contractual renewals in the quarter a lot a little bit lower than the 8% 9% that we've seen recently Is this representative of just more difficult comparisons or is this speaking more to the competitive nature of the market right now? is this representative of just more difficult comparisons or is this speaking more to the competitive nature of the market right now

Speaker 2: Well, and just to provide a little clarity on the first part of that, about 60% to 70% of our business is subject to a contract. Those renew pretty ratably throughout the year. So it's a majority of our business. The renewal number, we it gives us an indication of how the customers are viewing our service and what they're willing to pay for the quality and service that we provide. But what's most important that we track very diligently is what happens after that goes into place. Well, and just to provide a little clarity on the first part of that, about 60% to 70% of our business is subject to a contract. well and just to provide a little clarity on the first part of that about 60% to 70% of our business is subject to a contract Those renew pretty ratably throughout the year. those renew pretty ratably throughout the year So it's a majority of our business. so it's a majority of our business The renewal number, we it gives us an indication of how the customers are viewing our service and what they're willing to pay for the quality and service that we provide. the renewal number we it gives us an indication of how the customers are viewing our service and what they're willing to pay for the quality and service that we provide But what's most important that we track very diligently is what happens after that goes into place. but what's most important that we track very diligently is what happens after that goes into place Are we handling the volume that we expect? Are we growing in the lanes that we expect? That's where we look really closely to understand what's happening afterwards and be able to talk with our customers to better understand their freight flows and where we should be handling business and making sure that it's at our rates. So the pricing environment remains rational. We haven't seen anything different in that. Are we handling the volume that we expect? are we handling the volume that we expect Are we growing in the lanes that we expect? are we growing in the lanes that we expect That's where we look really closely to understand what's happening afterwards and be able to talk with our customers to better understand their freight flows and where we should be handling business and making sure that it's at our rates. that's where we look really closely to understand what's happening afterwards and be able to talk with our customers to better understand their freight flows and where we should be handling business and making sure that it's at our rates So the pricing environment remains rational. so the pricing environment remains rational We haven't seen anything different in that. we haven't seen anything different in that We remain really focused on making sure that we get compensated fairly for what we do and provide for customers. So no change from that perspective and where we get really excited as we continue to see great opportunities with both new and existing customers throughout the network. We've never had two thirteen facilities like we do right now to sell to our customers and getting more and more of that than we have in prior periods. Gives us more opportunities. We remain really focused on making sure that we get compensated fairly for what we do and provide for customers. we remain really focused on making sure that we get compensated fairly for what we do and provide for customers So no change from that perspective and where we get really excited as we continue to see great opportunities with both new and existing customers throughout the network. so no change from that perspective and where we get really excited as we continue to see great opportunities with both new and existing customers throughout the network We've never had two thirteen facilities like we do right now to sell to our customers and getting more and more of that than we have in prior periods. we've never had two thirteen facilities like we do right now to sell to our customers and getting more and more of that than we have in prior periods Gives us more opportunities. gives us more opportunities

Speaker 3: I think it's important to note too, Jonathan, is that the that our renewal number is reflected of the book of business that actually got renewed in the quarter. And it's so that can change quarter to quarter. So it's reflective of those that set of customers only. I think it's important to note too, Jonathan, is that the that our renewal number is reflected of the book of business that actually got renewed in the quarter. i think it's important to note too jonathan is that the that our renewal number is reflected of the book of business that actually got renewed in the quarter And it's so that can change quarter to quarter. and it's so that can change quarter to quarter So it's reflective of those that set of customers only. so it's reflective of those that set of customers only

Speaker 8: Yes, that makes sense. And Fritz, just a quick follow-up. The move in the new terminal OR from breakeven to mid-90s, you're doing that in an environment where freight demand is still somewhat compressed. Is that strictly a function of just getting experience, repetitions, a little bit of scale there? Are you making some of the big cost changes in the new terminals that you're doing in the legacy? Yes, that makes sense. yes that makes sense And Fritz, just a quick follow-up. and fritz just a quick follow-up The move in the new terminal OR from breakeven to mid-90s, you're doing that in an environment where freight demand is still somewhat compressed. the move in the new terminal or from breakeven to mid-90s you're doing that in an environment where freight demand is still somewhat compressed Is that strictly a function of just getting experience, repetitions, a little bit of scale there? is that strictly a function of just getting experience repetitions a little bit of scale there Are you making some of the big cost changes in the new terminals that you're doing in the legacy? are you making some of the big cost changes in the new terminals that you're doing in the legacy

Speaker 3: Well, the first thing that has to happen in the new terminal is you better be doing a good job, right. So claims are going to be good, on time has got to be good, customers care about that, right. So if you do that, you get a shot at more business. And the great thing about those facilities is because they are well positioned, we've got a good team in place, the opportunity to scale those, meaning the incrementals on them can be pretty good. And that's kind of what you saw Q1 to Q2. Well, the first thing that has to happen in the new terminal is you better be doing a good job, right. well the first thing that has to happen in the new terminal is you better be doing a good job right So claims are going to be good, on time has got to be good, customers care about that, right. so claims are going to be good on time has got to be good customers care about that right So if you do that, you get a shot at more business. so if you do that you get a shot at more business And the great thing about those facilities is because they are well positioned, we've got a good team in place, the opportunity to scale those, meaning the incrementals on them can be pretty good. and the great thing about those facilities is because they are well positioned we've got a good team in place the opportunity to scale those meaning the incrementals on them can be pretty good And that's kind of what you saw Q1 to Q2. and that's kind of what you saw q1 to q2 So good execution, actually some great execution, customer satisfaction and that leads to profitability improvement because you're basically leveraging your investment at that point. So good execution, actually some great execution, customer satisfaction and that leads to profitability improvement because you're basically leveraging your investment at that point. so good execution actually some great execution customer satisfaction and that leads to profitability improvement because you're basically leveraging your investment at that point

Speaker 8: Thank you. Thank you. thank you

Speaker 1: The next question comes from Ravi Shankar with Morgan Stanley. Please go ahead. The next question comes from Ravi Shankar with Morgan Stanley. the next question comes from ravi shankar with morgan stanley Please go ahead. please go ahead

Speaker 9: Great. Nice morning, everyone. Hopefully, you can hear me okay. Just one from me on the cost side. How you said that you're taking these cost actions in response to the volume environment, which is completely understandable. Great. great Nice morning, everyone. nice morning everyone Hopefully, you can hear me okay. hopefully you can hear me okay Just one from me on the cost side. just one from me on the cost side How you said that you're taking these cost actions in response to the volume environment, which is completely understandable. how you said that you're taking these cost actions in response to the volume environment which is completely understandable But how much of these cost actions do you think would be classified as short term tactical given the downturn versus longer term structural gains? And also kind of if you are taking cost actions now particularly in headcount, is there a risk that might limit the operating leverage a little bit when the up cycle does come? Thank you. But how much of these cost actions do you think would be classified as short term tactical given the downturn versus longer term structural gains? but how much of these cost actions do you think would be classified as short term tactical given the downturn versus longer term structural gains And also kind of if you are taking cost actions now particularly in headcount, is there a risk that might limit the operating leverage a little bit when the up cycle does come? and also kind of if you are taking cost actions now particularly in headcount is there a risk that might limit the operating leverage a little bit when the up cycle does come Thank you. thank you

Speaker 3: Ravi, that's a fair question. You've been around it long enough to know. I mean the core tenet of this business is that as volume goes up and down, the variable nature of your short term labor costs that tends to move with it as well. So that there's certainly a fair number of the headcount that were impacted or the hours that were impacted would come back if the volume scales. But I think what is really significant for us that might be different than a traditional model is that as we optimize our line haul network, we're building density as we grow from here. Ravi, that's a fair question. ravi that's a fair question You've been around it long enough to know. you've been around it long enough to know I mean the core tenet of this business is that as volume goes up and down, the variable nature of your short term labor costs that tends to move with it as well. i mean the core tenet of this business is that as volume goes up and down the variable nature of your short term labor costs that tends to move with it as well So that there's certainly a fair number of the headcount that were impacted or the hours that were impacted would come back if the volume scales. so that there's certainly a fair number of the headcount that were impacted or the hours that were impacted would come back if the volume scales But I think what is really significant for us that might be different than a traditional model is that as we optimize our line haul network, we're building density as we grow from here. but i think what is really significant for us that might be different than a traditional model is that as we optimize our line haul network we're building density as we grow from here The density plays is really significant. So the incrementals have potentially can be pretty good. And they don't require a lot of headcount add backs. So to the extent that in our legacy facilities, which is where most of the impacted hours are, they would naturally some of those would come back, but I would not expect the line haul hours or the network cost to ratably increase simply because I think there's a scale opportunity for us. That's why we made those changes and those investments. The density plays is really significant. the density plays is really significant So the incrementals have potentially can be pretty good. so the incrementals have potentially can be pretty good And they don't require a lot of headcount add backs. and they don't require a lot of headcount add backs So to the extent that in our legacy facilities, which is where most of the impacted hours are, they would naturally some of those would come back, but I would not expect the line haul hours or the network cost to ratably increase simply because I think there's a scale opportunity for us. so to the extent that in our legacy facilities which is where most of the impacted hours are they would naturally some of those would come back but i would not expect the line haul hours or the network cost to ratably increase simply because i think there's a scale opportunity for us That's why we made those changes and those investments. that's why we made those changes and those investments

Speaker 9: Very good. Thank you. Very good. very good Thank you. thank you

Speaker 1: The next question comes from Stephanie Moore with Jefferies. Please go ahead. The next question comes from Stephanie Moore with Jefferies. the next question comes from stephanie moore with jefferies Please go ahead. please go ahead

Speaker 10: Hi, good morning. Thank you. Hi, good morning. hi good morning Thank you. thank you I wanted to maybe touch on the pricing environment a little bit. You talked about making progress on kind of I guess, you could talk about the progress you've made on repricing some legacy freight as well as freight in new terminals. Clearly, is always a factor, but maybe any opportunity that you've seen in terms of winning heavier freight and the like? Thanks. I wanted to maybe touch on the pricing environment a little bit. i wanted to maybe touch on the pricing environment a little bit You talked about making progress on kind of I guess, you could talk about the progress you've made on repricing some legacy freight as well as freight in new terminals. you talked about making progress on kind of i guess you could talk about the progress you've made on repricing some legacy freight as well as freight in new terminals Clearly, is always a factor, but maybe any opportunity that you've seen in terms of winning heavier freight and the like? clearly is always a factor but maybe any opportunity that you've seen in terms of winning heavier freight and the like Thanks. thanks

Speaker 3: Well, I think it's important, Stephanie, just in general, that the pricing actions are a bit of a journey sometimes, right? Is it over time as you win new customers, you come in, want to be at market, sometimes you find out maybe you're not, sometimes you find out the customer freight is a little bit more complex than you expected. So you got to make some adjustments there. I think what we are internal measurements, we simply look at public data that's out there, revenue per shipment versus our peers, our now peers, national footprint peers, and we continue to see opportunity there. So to the extent that we're pleased with progress in the quarter, in the last quarters for that matter, I think there's still a fair amount of runway there. Well, I think it's important, Stephanie, just in general, that the pricing actions are a bit of a journey sometimes, right? well i think it's important stephanie just in general that the pricing actions are a bit of a journey sometimes right Is it over time as you win new customers, you come in, want to be at market, sometimes you find out maybe you're not, sometimes you find out the customer freight is a little bit more complex than you expected. is it over time as you win new customers you come in want to be at market sometimes you find out maybe you're not sometimes you find out the customer freight is a little bit more complex than you expected So you got to make some adjustments there. so you got to make some adjustments there I think what we are internal measurements, we simply look at public data that's out there, revenue per shipment versus our peers, our now peers, national footprint peers, and we continue to see opportunity there. i think what we are internal measurements we simply look at public data that's out there revenue per shipment versus our peers our now peers national footprint peers and we continue to see opportunity there So to the extent that we're pleased with progress in the quarter, in the last quarters for that matter, I think there's still a fair amount of runway there. so to the extent that we're pleased with progress in the quarter in the last quarters for that matter i think there's still a fair amount of runway there And as I look around and I look at sort of public data, and I look at the national footprint, which more it looks more and more like others, we got to continue to press to market. We can only do that if we continue to sort of high level of service that we're providing. So that's kind of how it is we're early innings. So opportunity remains for sure, but pleased with progress. And as I look around and I look at sort of public data, and I look at the national footprint, which more it looks more and more like others, we got to continue to press to market. and as i look around and i look at sort of public data and i look at the national footprint which more it looks more and more like others we got to continue to press to market We can only do that if we continue to sort of high level of service that we're providing. we can only do that if we continue to sort of high level of service that we're providing So that's kind of how it is we're early innings. so that's kind of how it is we're early innings So opportunity remains for sure, but pleased with progress. so opportunity remains for sure but pleased with progress

Speaker 10: And just a follow-up to some comments you made previously in terms about optimizing your business or your network given now being a national carrier and making pretty swift actions in the second quarter. Could you just give us a couple of maybe the key areas that changed in the second quarter? What specific actions were put into place that really optimized your network for the national footprint? Thanks. And just a follow-up to some comments you made previously in terms about optimizing your business or your network given now being a national carrier and making pretty swift actions in the second quarter. and just a follow-up to some comments you made previously in terms about optimizing your business or your network given now being a national carrier and making pretty swift actions in the second quarter Could you just give us a couple of maybe the key areas that changed in the second quarter? could you just give us a couple of maybe the key areas that changed in the second quarter What specific actions were put into place that really optimized your network for the national footprint? what specific actions were put into place that really optimized your network for the national footprint Thanks. thanks

Speaker 3: Sure. I mean, think the real center of this is that when you have a network that was established over a number of years and it didn't have sort of full national coverage, a lot of our your freight goes through different sort of routings in our network. If we were probably the easiest example is that historically we haven't had that corridor across North Dakota, Montana all the way to the West Coast. Now we can actually run direct line haul from say Minnesota to Seattle. And having that ability to build density along that, we'll introduce triples of those lanes in the coming months. Sure. sure I mean, think the real center of this is that when you have a network that was established over a number of years and it didn't have sort of full national coverage, a lot of our your freight goes through different sort of routings in our network. i mean think the real center of this is that when you have a network that was established over a number of years and it didn't have sort of full national coverage a lot of our your freight goes through different sort of routings in our network If we were probably the easiest example is that historically we haven't had that corridor across North Dakota, Montana all the way to the West Coast. if we were probably the easiest example is that historically we haven't had that corridor across north dakota montana all the way to the west coast Now we can actually run direct line haul from say Minnesota to Seattle. now we can actually run direct line haul from say minnesota to seattle And having that ability to build density along that, we'll introduce triples of those lanes in the coming months. and having that ability to build density along that we'll introduce triples of those lanes in the coming months That'll be important. That's a density play. I mentioned earlier, the Ohio example around line haul about building the triple sort of operation in a recently purchased facility. That's all about line haul optimization. And that's in the first quarter, we talked about the challenges we had with new facilities having to route freight through our big break operations. That'll be important. that'll be important That's a density play. that's a density play I mentioned earlier, the Ohio example around line haul about building the triple sort of operation in a recently purchased facility. i mentioned earlier the ohio example around line haul about building the triple sort of operation in a recently purchased facility That's all about line haul optimization. that's all about line haul optimization And that's in the first quarter, we talked about the challenges we had with new facilities having to route freight through our big break operations. and that's in the first quarter we talked about the challenges we had with new facilities having to route freight through our big break operations Well, now if you build a little bit of density in the originating market, now you can build a direct that maybe bypass es a break operation. Well, it's one less handle in the network. That's important. So we realigned where some of our hub and sort of where we routed freight in the second quarter. That allowed us to build some density in some key lanes. Well, now if you build a little bit of density in the originating market, now you can build a direct that maybe bypass es a break operation. well now if you build a little bit of density in the originating market now you can build a direct that maybe bypass es a break operation Well, it's one less handle in the network. well it's one less handle in the network That's important. that's important So we realigned where some of our hub and sort of where we routed freight in the second quarter. so we realigned where some of our hub and sort of where we routed freight in the second quarter That allowed us to build some density in some key lanes. that allowed us to build some density in some key lanes And doing that, you see cost leverage at surfaces in our line haul network. That I would encourage you to study the not only the salary and wages line, but the PT line together. Those two together are really kind of what how we measure kind of our wage structure. That was that performance is driven largely, I mean, some of it at the terminal levels as well, but big part of that came through the line haul cost savings. And doing that, you see cost leverage at surfaces in our line haul network. and doing that you see cost leverage at surfaces in our line haul network That I would encourage you to study the not only the salary and wages line, but the PT line together. that i would encourage you to study the not only the salary and wages line but the pt line together Those two together are really kind of what how we measure kind of our wage structure. those two together are really kind of what how we measure kind of our wage structure That was that performance is driven largely, I mean, some of it at the terminal levels as well, but big part of that came through the line haul cost savings. that was that performance is driven largely i mean some of it at the terminal levels as well but big part of that came through the line haul cost savings

Speaker 10: Thank you. Thank you. thank you

Speaker 1: The next question comes from Brian Ossenbeck with JPMorgan. Please go ahead. The next question comes from Brian Ossenbeck with JPMorgan. the next question comes from brian ossenbeck with jpmorgan Please go ahead. please go ahead

Speaker 11: Hey, guys. Good morning. Thanks for taking the question. First, just a clarification. I got a couple of questions, if I'm right, but just clear. Hey, guys. hey guys Good morning. good morning Thanks for taking the question. thanks for taking the question First, just a clarification. first just a clarification I got a couple of questions, if I'm right, but just clear. i got a couple of questions if i'm right but just clear Is the quarter to quarter guidance you're talking about, is that assuming you put the wages increase through in the third quarter or not, just to be clear? And then one thing I thought was pretty interesting, we've seen this NMSE shift coming for a little while now, but largest carrier earlier this week pushed it out for, I guess, one hundred and fifty days or so to early December. Just wanted to see if that had any implications for your business, for the broader industry, that say that shippers are having a hard time getting there with the new codes. So just some thoughts on those two. Thanks. Is the quarter to quarter guidance you're talking about, is that assuming you put the wages increase through in the third quarter or not, just to be clear? is the quarter to quarter guidance you're talking about is that assuming you put the wages increase through in the third quarter or not just to be clear And then one thing I thought was pretty interesting, we've seen this NMSE shift coming for a little while now, but largest carrier earlier this week pushed it out for, I guess, one hundred and fifty days or so to early December. and then one thing i thought was pretty interesting we've seen this nmse shift coming for a little while now but largest carrier earlier this week pushed it out for i guess one hundred and fifty days or so to early december Just wanted to see if that had any implications for your business, for the broader industry, that say that shippers are having a hard time getting there with the new codes. just wanted to see if that had any implications for your business for the broader industry that say that shippers are having a hard time getting there with the new codes So just some thoughts on those two. so just some thoughts on those two Thanks. thanks

Speaker 2: Yes. In terms of the guide and the wage increase, like Fritz mentioned, we are evaluating our timeline. Our guide includes what our forecast is on that. So it's inclusive of where we stand right now and we'll provide some information on that as time moves on. But in terms of the NMFTA changes, look, we're not backing down on the implementation of that. Yes. yes In terms of the guide and the wage increase, like Fritz mentioned, we are evaluating our timeline. in terms of the guide and the wage increase like fritz mentioned we are evaluating our timeline Our guide includes what our forecast is on that. our guide includes what our forecast is on that So it's inclusive of where we stand right now and we'll provide some information on that as time moves on. so it's inclusive of where we stand right now and we'll provide some information on that as time moves on But in terms of the NMFTA changes, look, we're not backing down on the implementation of that. but in terms of the nmfta changes look we're not backing down on the implementation of that It's good for the industry long term. We feel like this is a trend in the right direction. We sell space on our trailers and this aligns more of the book to be density based, which we feel is important for us, important for our shippers. So, from our standpoint, we dimension 75 percentage of our freight every day. We get a view of what that looks like. It's good for the industry long term. it's good for the industry long term We feel like this is a trend in the right direction. we feel like this is a trend in the right direction We sell space on our trailers and this aligns more of the book to be density based, which we feel is important for us, important for our shippers. we sell space on our trailers and this aligns more of the book to be density based which we feel is important for us important for our shippers So, from our standpoint, we dimension 75 percentage of our freight every day. so from our standpoint we dimension 75 percentage of our freight every day We get a view of what that looks like. we get a view of what that looks like We've invested heavily in Dimensioners over the years for that exact reason. We leverage that technology. So we're working closely with our shippers and we feel like we had a good opportunity to get in front of that and get ahead with them and talk about what the impact could look like. That's all about the partnership with our customers. So we don't have any plans to back that off. We've invested heavily in Dimensioners over the years for that exact reason. we've invested heavily in dimensioners over the years for that exact reason We leverage that technology. we leverage that technology So we're working closely with our shippers and we feel like we had a good opportunity to get in front of that and get ahead with them and talk about what the impact could look like. so we're working closely with our shippers and we feel like we had a good opportunity to get in front of that and get ahead with them and talk about what the impact could look like That's all about the partnership with our customers. that's all about the partnership with our customers So we don't have any plans to back that off. so we don't have any plans to back that off I guess it remains to be seen what that does for others. But in our view, it's a good these changes from the NMFDA are good for the industry and we're here to support it. I guess it remains to be seen what that does for others. i guess it remains to be seen what that does for others But in our view, it's a good these changes from the NMFDA are good for the industry and we're here to support it. but in our view it's a good these changes from the nmfda are good for the industry and we're here to support it

Speaker 11: Just to be clear, it's been a long week. So the current guide for the sequential is based on what you think right now, which is to be determined. So I guess we'll have to stay tuned for an update. Is that right? Just to be clear, it's been a long week. just to be clear it's been a long week So the current guide for the sequential is based on what you think right now, which is to be determined. so the current guide for the sequential is based on what you think right now which is to be determined So I guess we'll have to stay tuned for an update. so i guess we'll have to stay tuned for an update Is that right? is that right

Speaker 3: Yes. Yes. yes

Speaker 11: All right. Okay. Thanks very much. All right. all right Okay. okay Thanks very much. thanks very much

Speaker 1: The next question comes from Eric Morgan with Barclays. Please go ahead. The next question comes from Eric Morgan with Barclays. the next question comes from eric morgan with barclays Please go ahead. please go ahead

Speaker 12: Hey, good morning. Thanks for taking my question. I wanted to ask about the mix management initiatives you referenced. Just looking at second quarter shipments, I think you have the smallest sequential improvement in maybe at least twenty years outside the pandemic. So just curious how much of that is action you took to manage the book relative to underlying demand softness? Hey, good morning. hey good morning Thanks for taking my question. thanks for taking my question I wanted to ask about the mix management initiatives you referenced. i wanted to ask about the mix management initiatives you referenced Just looking at second quarter shipments, I think you have the smallest sequential improvement in maybe at least twenty years outside the pandemic. just looking at second quarter shipments i think you have the smallest sequential improvement in maybe at least twenty years outside the pandemic So just curious how much of that is action you took to manage the book relative to underlying demand softness? so just curious how much of that is action you took to manage the book relative to underlying demand softness And looking ahead, is there more work to do on that? Or should we be thinking about sequentials from here as more reflective of underlying demand you're seeing? And looking ahead, is there more work to do on that? and looking ahead is there more work to do on that Or should we be thinking about sequentials from here as more reflective of underlying demand you're seeing? or should we be thinking about sequentials from here as more reflective of underlying demand you're seeing

Speaker 2: Just to confirm, Eric, you're talking about the sequential change Q1 to Q2? Correct. Well, keep in mind, we're starting to lap terminals that we opened last year. We opened six in Q2 last year. Those were some of the larger facilities that we opened. Just to confirm, Eric, you're talking about the sequential change Q1 to Q2? just to confirm eric you're talking about the sequential change q1 to q2 Correct. correct Well, keep in mind, we're starting to lap terminals that we opened last year. well keep in mind we're starting to lap terminals that we opened last year We opened six in Q2 last year. we opened six in q2 last year Those were some of the larger facilities that we opened. those were some of the larger facilities that we opened But we've been bucking the trend because we've been growing, but the freight environment has been negative for three years now. Industrial production hasn't been great. Our legacy markets are looking a little bit more like what others are, but less because we're getting more and more opportunities with customers. So I think that's really just a component of what the industrial backdrop looks like, what the landscape looks like. But we're again, we've never had two thirteen facilities like we do now to sell to our customers, which we feel like really positions us well. So I mean, I think just to add to But we've been bucking the trend because we've been growing, but the freight environment has been negative for three years now. but we've been bucking the trend because we've been growing but the freight environment has been negative for three years now Industrial production hasn't been great. industrial production hasn't been great Our legacy markets are looking a little bit more like what others are, but less because we're getting more and more opportunities with customers. our legacy markets are looking a little bit more like what others are but less because we're getting more and more opportunities with customers So I think that's really just a component of what the industrial backdrop looks like, what the landscape looks like. so i think that's really just a component of what the industrial backdrop looks like what the landscape looks like But we're again, we've never had two thirteen facilities like we do now to sell to our customers, which we feel like really positions us well. but we're again we've never had two thirteen facilities like we do now to sell to our customers which we feel like really positions us well So I mean, I think just to add to so i mean i think just to add to

Speaker 3: that, Eric, our focus is on what we can control, right? So we've got to perform for the customer. We got to do that in a cost optimal way. That was a big part of what we achieved in this in the second quarter. But at the same time, we spent $1,000,000,000 in capital last year, and we're providing a very high level of service. that, Eric, our focus is on what we can control, right? that eric our focus is on what we can control right So we've got to perform for the customer. so we've got to perform for the customer We got to do that in a cost optimal way. we got to do that in a cost optimal way That was a big part of what we achieved in this in the second quarter. that was a big part of what we achieved in this in the second quarter But at the same time, we spent $1,000,000,000 in capital last year, and we're providing a very high level of service. but at the same time we spent $1,000,000,000 in capital last year and we're providing a very high level of service So there is a we have an expectation that we'll get a return on that. So we are going to continue to focus finding the customers that value that sort of strategic and long term investment in them. And so the pricing is part of that as well and mix management is part of that. In an environment we're in right now, maybe it's a little bit muted. Certainly, as you look at our trends through the quarter, I mean, it's we're off, have not been on seasonality, the historical seasonality. So there is a we have an expectation that we'll get a return on that. so there is a we have an expectation that we'll get a return on that So we are going to continue to focus finding the customers that value that sort of strategic and long term investment in them. so we are going to continue to focus finding the customers that value that sort of strategic and long term investment in them And so the pricing is part of that as well and mix management is part of that. and so the pricing is part of that as well and mix management is part of that In an environment we're in right now, maybe it's a little bit muted. in an environment we're in right now maybe it's a little bit muted Certainly, as you look at our trends through the quarter, I mean, it's we're off, have not been on seasonality, the historical seasonality. certainly as you look at our trends through the quarter i mean it's we're off have not been on seasonality the historical seasonality That, to be quite honest, in the business, that's a little bit of life in the big city. So, you've got to focus then what can we handle inside our four walls, and that's what we do. That, to be quite honest, in the business, that's a little bit of life in the big city. that to be quite honest in the business that's a little bit of life in the big city So, you've got to focus then what can we handle inside our four walls, and that's what we do. so you've got to focus then what can we handle inside our four walls and that's what we do

Speaker 12: Appreciate that. And maybe just a quick one on the balance sheet, if I could. I think your CapEx should be coming down in the back half. Do you think you'll be able to start reducing your leverage and interest costs in the back half? Or how should we be thinking about how to manage our expectations for cash on the balance sheet? Appreciate that. appreciate that And maybe just a quick one on the balance sheet, if I could. and maybe just a quick one on the balance sheet if i could I think your CapEx should be coming down in the back half. i think your capex should be coming down in the back half Do you think you'll be able to start reducing your leverage and interest costs in the back half? do you think you'll be able to start reducing your leverage and interest costs in the back half Or how should we be thinking about how to manage our expectations for cash on the balance sheet? or how should we be thinking about how to manage our expectations for cash on the balance sheet

Speaker 2: Yes. We'll still be into the line. We've got some spend in the back half of the year, dollars 600,000,000 to $650,000,000 is probably where we land in terms of the full year on the CapEx line. But I'd expect it to start to taper down on line usage in the back part of the year in Q4. But a lot of that depends on timing with some of the real estate opportunities that are in our pipeline. Yes. yes We'll still be into the line. we'll still be into the line We've got some spend in the back half of the year, dollars 600,000,000 to $650,000,000 is probably where we land in terms of the full year on the CapEx line. we've got some spend in the back half of the year dollars 600,000,000 to $650,000,000 is probably where we land in terms of the full year on the capex line But I'd expect it to start to taper down on line usage in the back part of the year in Q4. but i'd expect it to start to taper down on line usage in the back part of the year in q4 But a lot of that depends on timing with some of the real estate opportunities that are in our pipeline. but a lot of that depends on timing with some of the real estate opportunities that are in our pipeline But we'll still be into the line, but I expect that will start to trend down in the back quarter of the year. But we'll still be into the line, but I expect that will start to trend down in the back quarter of the year. but we'll still be into the line but i expect that will start to trend down in the back quarter of the year

Speaker 12: Thanks a lot. Thanks a lot. thanks a lot

Speaker 1: The next question comes from Tyler Brown with Raymond James. Please go ahead. The next question comes from Tyler Brown with Raymond James. the next question comes from tyler brown with raymond james Please go ahead. please go ahead

Speaker 13: Hey, good morning guys. Can you all hear me? Hey, good morning guys. hey good morning guys Can you all hear me? can you all hear me

Speaker 3: Can. Loud and clear. Can. can Loud and clear. loud and clear

Speaker 13: Hey, Fritz. You've given some really good operational color. But I just kind of want to hammer this home. So what are you guys seeing from a network balance perspective? So have you guys started to see that those new markets have built on the outbound side? Hey, Fritz. hey fritz You've given some really good operational color. you've given some really good operational color But I just kind of want to hammer this home. but i just kind of want to hammer this home So what are you guys seeing from a network balance perspective? so what are you guys seeing from a network balance perspective So have you guys started to see that those new markets have built on the outbound side? so have you guys started to see that those new markets have built on the outbound side Just any color maybe on that inbound outbound ratio in those newer terminals, because I would assume that if that balance has started to improve, that's been maybe a driver to that mid-90s outcome? Just any color maybe on that inbound outbound ratio in those newer terminals, because I would assume that if that balance has started to improve, that's been maybe a driver to that mid-90s outcome? just any color maybe on that inbound outbound ratio in those newer terminals because i would assume that if that balance has started to improve that's been maybe a driver to that mid-90s outcome

Speaker 3: Tyler, it's a good read. Yes, the answer is it's improving. Is it where it needs to be? No. And I think that the opportunity is that's the opportunity for us not only this year, but into next year as we continue to mature those facilities. Tyler, it's a good read. tyler it's a good read Yes, the answer is it's improving. yes the answer is it's improving Is it where it needs to be? is it where it needs to be No. no And I think that the opportunity is that's the opportunity for us not only this year, but into next year as we continue to mature those facilities. and i think that the opportunity is that's the opportunity for us not only this year but into next year as we continue to mature those facilities We're not in the game of trying to fill them up though in the sense of let's go see how much volume we can get in there. It's we've got to be very strategic around that, make sure we're picking up freight that works. But I think the opportunity absolutely to build scale in those facilities and it really shows up in the line haul network costs, as we move freight through our operation, not only building a direct from Trenton West, surely drive some efficiency versus building a pump that goes through Harrisburg somewhere else, right. So that we know those are efficiencies that we're gaining as we build maturity in these markets. And that's we're really excited to see that trend. We're not in the game of trying to fill them up though in the sense of let's go see how much volume we can get in there. we're not in the game of trying to fill them up though in the sense of let's go see how much volume we can get in there It's we've got to be very strategic around that, make sure we're picking up freight that works. it's we've got to be very strategic around that make sure we're picking up freight that works But I think the opportunity absolutely to build scale in those facilities and it really shows up in the line haul network costs, as we move freight through our operation, not only building a direct from Trenton West, surely drive some efficiency versus building a pump that goes through Harrisburg somewhere else, right. but i think the opportunity absolutely to build scale in those facilities and it really shows up in the line haul network costs as we move freight through our operation not only building a direct from trenton west surely drive some efficiency versus building a pump that goes through harrisburg somewhere else right So that we know those are efficiencies that we're gaining as we build maturity in these markets. so that we know those are efficiencies that we're gaining as we build maturity in these markets And that's we're really excited to see that trend. and that's we're really excited to see that trend

Speaker 2: Think you see that in the cost per shipment Tyler too, it's down 4% sequentially. And usually if you're on seasonality, Q2 typically is the best volume ramp and volume quarter for us. So you'd get even more leverage on those fixed cost lines like depreciation that we got a little bit of, but not all of. So that balance and that execution you see in our cost per shipment line despite that lack typical ramp that helps you leverage the fixed cost. And that's where when this thing ramps back up, great incremental margin opportunity for us because you're able to leverage that even more over a network that's becoming more balanced that you've got more in and out opportunities. Think you see that in the cost per shipment Tyler too, it's down 4% sequentially. think you see that in the cost per shipment tyler too it's down 4% sequentially And usually if you're on seasonality, Q2 typically is the best volume ramp and volume quarter for us. and usually if you're on seasonality q2 typically is the best volume ramp and volume quarter for us So you'd get even more leverage on those fixed cost lines like depreciation that we got a little bit of, but not all of. so you'd get even more leverage on those fixed cost lines like depreciation that we got a little bit of but not all of So that balance and that execution you see in our cost per shipment line despite that lack typical ramp that helps you leverage the fixed cost. so that balance and that execution you see in our cost per shipment line despite that lack typical ramp that helps you leverage the fixed cost And that's where when this thing ramps back up, great incremental margin opportunity for us because you're able to leverage that even more over a network that's becoming more balanced that you've got more in and out opportunities. and that's where when this thing ramps back up great incremental margin opportunity for us because you're able to leverage that even more over a network that's becoming more balanced that you've got more in and out opportunities These terminals have really been opened less than a year that we opened last year. So each month that passes, we continue to work on that. These terminals have really been opened less than a year that we opened last year. these terminals have really been opened less than a year that we opened last year So each month that passes, we continue to work on that. so each month that passes we continue to work on that

Speaker 13: Right. So the message is it's improved, but there's still plenty of work to do. Right. right So the message is it's improved, but there's still plenty of work to do. so the message is it's improved but there's still plenty of work to do

Speaker 3: Yes. Business, we don't see a reason why it shouldn't operate in the 70s and part of getting there is building densities in those markets. Yes. yes Business, we don't see a reason why it shouldn't operate in the 70s and part of getting there is building densities in those markets. business we don't see a reason why it shouldn't operate in the 70s and part of getting there is building densities in those markets

Speaker 13: Right. And then this kind of goes hand in hand with that last question. But one of the key side effects of a greenfield strategy in LTL is that you need more breaks. You just can't run a lot of directs without that outbound density, right? So I don't know how you measure it. Right. right And then this kind of goes hand in hand with that last question. and then this kind of goes hand in hand with that last question But one of the key side effects of a greenfield strategy in LTL is that you need more breaks. but one of the key side effects of a greenfield strategy in ltl is that you need more breaks You just can't run a lot of directs without that outbound density, right? you just can't run a lot of directs without that outbound density right So I don't know how you measure it. so i don't know how you measure it But if you looked at something like breaks per bill or your direct percentage, do you feel like you've seen peak pain on those metrics at this point and basically on the downward slope? But if you looked at something like breaks per bill or your direct percentage, do you feel like you've seen peak pain on those metrics at this point and basically on the downward slope? but if you looked at something like breaks per bill or your direct percentage do you feel like you've seen peak pain on those metrics at this point and basically on the downward slope

Speaker 2: Well, freight flows change, but if we look at our productivity metrics very closely and one of the things that we monitor is handling handling or touches. And touches improved sequentially from Q1 to Q2 and we saw that continue into June. So it's you always have to continue that work because freight flows change and customer patterns change, but we were really pleased with the execution. We saw that come through in the productivity metrics and the handles. We gave that example before about how things have to route differently and Fritz talked about it. Well, freight flows change, but if we look at our productivity metrics very closely and one of the things that we monitor is handling handling or touches. well freight flows change but if we look at our productivity metrics very closely and one of the things that we monitor is handling handling or touches And touches improved sequentially from Q1 to Q2 and we saw that continue into June. and touches improved sequentially from q1 to q2 and we saw that continue into june So it's you always have to continue that work because freight flows change and customer patterns change, but we were really pleased with the execution. so it's you always have to continue that work because freight flows change and customer patterns change but we were really pleased with the execution We saw that come through in the productivity metrics and the handles. we saw that come through in the productivity metrics and the handles We gave that example before about how things have to route differently and Fritz talked about it. we gave that example before about how things have to route differently and fritz talked about it When you can route direct and you eliminate a handle that's a big deal, not only is it service to a customer that could be different, but you eliminate a cost that's associated with a handle and we saw that improvement. But we are always working on that because every day is a little bit different in the business. When you can route direct and you eliminate a handle that's a big deal, not only is it service to a customer that could be different, but you eliminate a cost that's associated with a handle and we saw that improvement. when you can route direct and you eliminate a handle that's a big deal not only is it service to a customer that could be different but you eliminate a cost that's associated with a handle and we saw that improvement But we are always working on that because every day is a little bit different in the business. but we are always working on that because every day is a little bit different in the business

Speaker 13: Right. I mean, you run more directs, you run more triples, I would assume that would have a profound impact on line haul. Right. right I mean, you run more directs, you run more triples, I would assume that would have a profound impact on line haul. i mean you run more directs you run more triples i would assume that would have a profound impact on line haul

Speaker 3: Listen, like for like triples versus a set is 30% reduction, right. So that's a big deal. Listen, like for like triples versus a set is 30% reduction, right. listen like for like triples versus a set is 30% reduction right So that's a big deal. so that's a big deal

Speaker 13: Right. Okay. Thanks for the time guys. Right. right Okay. okay Thanks for the time guys. thanks for the time guys

Speaker 1: The next question comes from Ari Rosa with Citigroup. Please go ahead. The next question comes from Ari Rosa with Citigroup. the next question comes from ari rosa with citigroup Please go ahead. please go ahead

Speaker 14: Hey, good morning. Fritz, you mentioned in your prepared comments just conviction around the long term prospects remain intact. I was hoping you could speak a bit more to that. Just what's the progression to getting to a sub-eighty percent OR and really growing the revenue in a meaningful way from here? Hey, good morning. hey good morning Fritz, you mentioned in your prepared comments just conviction around the long term prospects remain intact. fritz you mentioned in your prepared comments just conviction around the long term prospects remain intact I was hoping you could speak a bit more to that. i was hoping you could speak a bit more to that Just what's the progression to getting to a sub-eighty percent OR and really growing the revenue in a meaningful way from here? just what's the progression to getting to a sub-eighty percent or and really growing the revenue in a meaningful way from here

Speaker 3: Well, I think that there's one of the things that would help broadly, right, I think that if we saw a little bit stronger macro backdrop, I think you'd see more conviction from our customers and there's probably a little bit more growth. We've been dealing with this sort of freight economy for a number of couple of years now. But with that said, I think that there is an opportunity for us to continue to methodically grow our business winning in the marketplace, taking share frankly because we're performing at a high level. And we not get the outsized growth that you might see in a more stronger backdrop, but I think we have an opportunity to continue to drive improvements. Now, do I know what that's going to look like into next year? Well, I think that there's one of the things that would help broadly, right, I think that if we saw a little bit stronger macro backdrop, I think you'd see more conviction from our customers and there's probably a little bit more growth. well i think that there's one of the things that would help broadly right i think that if we saw a little bit stronger macro backdrop i think you'd see more conviction from our customers and there's probably a little bit more growth We've been dealing with this sort of freight economy for a number of couple of years now. we've been dealing with this sort of freight economy for a number of couple of years now But with that said, I think that there is an opportunity for us to continue to methodically grow our business winning in the marketplace, taking share frankly because we're performing at a high level. but with that said i think that there is an opportunity for us to continue to methodically grow our business winning in the marketplace taking share frankly because we're performing at a high level And we not get the outsized growth that you might see in a more stronger backdrop, but I think we have an opportunity to continue to drive improvements. and we not get the outsized growth that you might see in a more stronger backdrop but i think we have an opportunity to continue to drive improvements Now, do I know what that's going to look like into next year? now do i know what that's going to look like into next year I to be fair, I think we all need to figure out what exactly that macro looks like. But what I would say though is if I look across our operation and we look at our reference benchmark facilities where we have the most maturity, the most sort of long established well known brand efficiencies, all those things, this business operates in the 70s, so in those markets. We don't see a potential that says the newer markets or newer regions of the country for us couldn't approach those sort of levels. So the long term opportunity is certainly there. I think I'm still open as to what the timing of that would be. I to be fair, I think we all need to figure out what exactly that macro looks like. i to be fair i think we all need to figure out what exactly that macro looks like But what I would say though is if I look across our operation and we look at our reference benchmark facilities where we have the most maturity, the most sort of long established well known brand efficiencies, all those things, this business operates in the 70s, so in those markets. but what i would say though is if i look across our operation and we look at our reference benchmark facilities where we have the most maturity the most sort of long established well known brand efficiencies all those things this business operates in the 70s so in those markets We don't see a potential that says the newer markets or newer regions of the country for us couldn't approach those sort of levels. we don't see a potential that says the newer markets or newer regions of the country for us couldn't approach those sort of levels So the long term opportunity is certainly there. so the long term opportunity is certainly there I think I'm still open as to what the timing of that would be. i think i'm still open as to what the timing of that would be I think we need to get a little more clarity around what that looks like. But I think the fundamentals for us are good. And as we're pointing out in the last question is that this the ability to develop maturity in a national network is an important scaling opportunity for the overall cost structure of the business. I think we need to get a little more clarity around what that looks like. i think we need to get a little more clarity around what that looks like But I think the fundamentals for us are good. but i think the fundamentals for us are good And as we're pointing out in the last question is that this the ability to develop maturity in a national network is an important scaling opportunity for the overall cost structure of the business. and as we're pointing out in the last question is that this the ability to develop maturity in a national network is an important scaling opportunity for the overall cost structure of the business

Speaker 14: That's encouraging to hear. Thanks for that. And then I just wanted to clarify, I think you mentioned that there was a shift in mix towards more national customers, more retail accounts. I'm a little surprised by that because when we hear from some of your peers, it seems like there's a big focus on moving the other way with kind of regional accounts being more profitable. So I was hoping you could just kind of address what's driving that strategy and what's really driving the revenue mix? Thanks. That's encouraging to hear. that's encouraging to hear Thanks for that. thanks for that And then I just wanted to clarify, I think you mentioned that there was a shift in mix towards more national customers, more retail accounts. and then i just wanted to clarify i think you mentioned that there was a shift in mix towards more national customers more retail accounts I'm a little surprised by that because when we hear from some of your peers, it seems like there's a big focus on moving the other way with kind of regional accounts being more profitable. i'm a little surprised by that because when we hear from some of your peers it seems like there's a big focus on moving the other way with kind of regional accounts being more profitable So I was hoping you could just kind of address what's driving that strategy and what's really driving the revenue mix? so i was hoping you could just kind of address what's driving that strategy and what's really driving the revenue mix Thanks. thanks

Speaker 2: Yeah. And just to clarify that a little bit Ari, it's not necessarily new customers that are coming in that are more national retailers, more business with customers that we already work with and have worked with for a long time. If you look back in our history, that's not uncommon. In Q2, maybe late Q1, but more so Q2, that trend to a little bit more seasonal retail type freight is not uncommon for us. And we when you get an opportunity to serve more markets for customers that you already work with and have with for a long time, you get more opportunities at freight in some of these newer markets and even legacy markets because you can just do more for them. Yeah. yeah And just to clarify that a little bit Ari, it's not necessarily new customers that are coming in that are more national retailers, more business with customers that we already work with and have worked with for a long time. and just to clarify that a little bit ari it's not necessarily new customers that are coming in that are more national retailers more business with customers that we already work with and have worked with for a long time If you look back in our history, that's not uncommon. if you look back in our history that's not uncommon In Q2, maybe late Q1, but more so Q2, that trend to a little bit more seasonal retail type freight is not uncommon for us. in q2 maybe late q1 but more so q2 that trend to a little bit more seasonal retail type freight is not uncommon for us And we when you get an opportunity to serve more markets for customers that you already work with and have with for a long time, you get more opportunities at freight in some of these newer markets and even legacy markets because you can just do more for them. and we when you get an opportunity to serve more markets for customers that you already work with and have with for a long time you get more opportunities at freight in some of these newer markets and even legacy markets because you can just do more for them So that shift is not something that's uncommon for us in our history. So that shift is not something that's uncommon for us in our history. so that shift is not something that's uncommon for us in our history

Speaker 3: And it's not necessarily a bad thing. Right. I mean, it's you certainly have things like pickup economies. If you further penetrate a national account, meaning you get more business there, you have the opportunity, you have some density, you build on your pickups or frankly even on your deliveries. So part of what may be driving that is some of those national accounts are tapping a national network and that's part of the opportunity for us. And it's not necessarily a bad thing. and it's not necessarily a bad thing Right. right I mean, it's you certainly have things like pickup economies. i mean it's you certainly have things like pickup economies If you further penetrate a national account, meaning you get more business there, you have the opportunity, you have some density, you build on your pickups or frankly even on your deliveries. if you further penetrate a national account meaning you get more business there you have the opportunity you have some density you build on your pickups or frankly even on your deliveries So part of what may be driving that is some of those national accounts are tapping a national network and that's part of the opportunity for us. so part of what may be driving that is some of those national accounts are tapping a national network and that's part of the opportunity for us Now you could argue that part of our opportunity in some of these new markets, regional accounts or field accounts that haven't gotten to know SI yet, that's opportunity for us, that's runway. So, I look at this as kind of a maybe a win win problem, if that makes sense. Geez, we're growing some of the business that we've done had good partnerships with historically, that's good. And we still have opportunities in new markets that may drive that mix of business a little bit different in the future. Now you could argue that part of our opportunity in some of these new markets, regional accounts or field accounts that haven't gotten to know SI yet, that's opportunity for us, that's runway. now you could argue that part of our opportunity in some of these new markets regional accounts or field accounts that haven't gotten to know si yet that's opportunity for us that's runway So, I look at this as kind of a maybe a win win problem, if that makes sense. so i look at this as kind of a maybe a win win problem if that makes sense Geez, we're growing some of the business that we've done had good partnerships with historically, that's good. geez we're growing some of the business that we've done had good partnerships with historically that's good And we still have opportunities in new markets that may drive that mix of business a little bit different in the future. and we still have opportunities in new markets that may drive that mix of business a little bit different in the future

Speaker 14: Got it. Okay. Thanks for the time. Good luck with that. Got it. got it Okay. okay Thanks for the time. thanks for the time Good luck with that. good luck with that

Speaker 1: The next question comes from Daniel Imbro with Stephens. Please go ahead. The next question comes from Daniel Imbro with Stephens. the next question comes from daniel imbro with stephens Please go ahead. please go ahead

Speaker 15: Hey, good morning guys. Thanks for taking our questions. Fritz, maybe a follow-up just on the service. I think you mentioned claims ratio was flat at 0.5% from the first quarter. I guess what about other service metrics, on time deliveries, missed pickups and then continuing that discussion on legacy versus new markets. Hey, good morning guys. hey good morning guys Thanks for taking our questions. thanks for taking our questions Fritz, maybe a follow-up just on the service. fritz maybe a follow-up just on the service I think you mentioned claims ratio was flat at 0.5% from the first quarter. i think you mentioned claims ratio was flat at 0.5% from the first quarter I guess what about other service metrics, on time deliveries, missed pickups and then continuing that discussion on legacy versus new markets. i guess what about other service metrics on time deliveries missed pickups and then continuing that discussion on legacy versus new markets I mean how different are the service metrics that you're getting from the field between the legacy and the new markets? I mean how different are the service metrics that you're getting from the field between the legacy and the new markets? i mean how different are the service metrics that you're getting from the field between the legacy and the new markets

Speaker 3: Well, the good on time and we're pleased with the results there. On time as well as pickup completion, those are all trending at high levels, which are key service metrics for our team. Very, very competitive. We think probably as good as anybody in the industry. What's really exciting is that the service metrics generally between the new facilities and the old facilities are pretty consistent. Well, the good on time and we're pleased with the results there. well the good on time and we're pleased with the results there On time as well as pickup completion, those are all trending at high levels, which are key service metrics for our team. on time as well as pickup completion those are all trending at high levels which are key service metrics for our team Very, very competitive. very very competitive We think probably as good as anybody in the industry. we think probably as good as anybody in the industry What's really exciting is that the service metrics generally between the new facilities and the old facilities are pretty consistent. what's really exciting is that the service metrics generally between the new facilities and the old facilities are pretty consistent And that matters to those national account customers because they know they can count on the same service everywhere they go. That's how you win share in new markets. And that matters to those national account customers because they know they can count on the same service everywhere they go. and that matters to those national account customers because they know they can count on the same service everywhere they go That's how you win share in new markets. that's how you win share in new markets

Speaker 15: Okay. That's helpful. And then Matt, maybe as a follow-up, I'll ask the wage increase question a different way. Understanding we don't know what happens this year, but historically how much of the normal degradation of 100 to 200 basis points is from the wage increase, so we can understand how impactful this either will or won't be for the third quarter? Okay. okay That's helpful. that's helpful And then Matt, maybe as a follow-up, I'll ask the wage increase question a different way. and then matt maybe as a follow-up i'll ask the wage increase question a different way Understanding we don't know what happens this year, but historically how much of the normal degradation of 100 to 200 basis points is from the wage increase, so we can understand how impactful this either will or won't be for the third quarter? understanding we don't know what happens this year but historically how much of the normal degradation of 100 to 200 basis points is from the wage increase so we can understand how impactful this either will or won't be for the third quarter

Speaker 2: Yes. And like Chris said, we're evaluating our timeline on that. So if you look back in history, it ranges, but depending on the volume levels and the hours worked and things like that in the period. But I'd say probably in the 75 ish bps range on that number in the past. Again, varies with some of the volume and seasonal patterns and trends like that, but that's probably a pretty good long term average. Yes. yes And like Chris said, we're evaluating our timeline on that. and like chris said we're evaluating our timeline on that So if you look back in history, it ranges, but depending on the volume levels and the hours worked and things like that in the period. so if you look back in history it ranges but depending on the volume levels and the hours worked and things like that in the period But I'd say probably in the 75 ish bps range on that number in the past. but i'd say probably in the 75 ish bps range on that number in the past Again, varies with some of the volume and seasonal patterns and trends like that, but that's probably a pretty good long term average. again varies with some of the volume and seasonal patterns and trends like that but that's probably a pretty good long term average

Speaker 15: Okay, super helpful. I appreciate the color. Okay, super helpful. okay super helpful I appreciate the color. i appreciate the color

Speaker 1: The next question comes from Bruce Chan with Stifel. Please go ahead. The next question comes from Bruce Chan with Stifel. the next question comes from bruce chan with stifel Please go ahead. please go ahead

Speaker 16: Hey, good morning, gents. A lot of helpful commentary around the line haul density so far. And maybe just related to that, Matt, I think you mentioned that you're at 12% outsourced PT now. How are you thinking about that number as you go forward, especially with the maturing network and the planning tools that you have in place and some of the changes like Youngtown that Fritz mentioned? Is there sort of a target number that you're thinking about over the next year or so? Hey, good morning, gents. hey good morning gents A lot of helpful commentary around the line haul density so far. a lot of helpful commentary around the line haul density so far And maybe just related to that, Matt, I think you mentioned that you're at 12% outsourced PT now. and maybe just related to that matt i think you mentioned that you're at 12% outsourced pt now How are you thinking about that number as you go forward, especially with the maturing network and the planning tools that you have in place and some of the changes like Youngtown that Fritz mentioned? how are you thinking about that number as you go forward especially with the maturing network and the planning tools that you have in place and some of the changes like youngtown that fritz mentioned Is there sort of a target number that you're thinking about over the next year or so? is there sort of a target number that you're thinking about over the next year or so

Speaker 3: So, Bruce, I'll jump in on this one. Our target number is to get whatever we have to do to provide great service to our customer that gets to 75 70s OR, right. So there could be times where it makes the most sense for us to use PT. As long as we meet, we do not in any way disappoint the customer. That's kind of the critical decision making. So, Bruce, I'll jump in on this one. so bruce i'll jump in on this one Our target number is to get whatever we have to do to provide great service to our customer that gets to 75 70s OR, right. our target number is to get whatever we have to do to provide great service to our customer that gets to 75 70s or right So there could be times where it makes the most sense for us to use PT. so there could be times where it makes the most sense for us to use pt As long as we meet, we do not in any way disappoint the customer. as long as we meet we do not in any way disappoint the customer That's kind of the critical decision making. that's kind of the critical decision making So when we think about what it takes to run our line haul network, it's sort of a network cost sort of perspective. The decision tree starts with what's the customer need and in any way do we impact the customer, answer no, or we meet their expectations, that's critical. And then the second step is what's the most cost optimal way to do that. So what that could mean is in some markets we use more PT, because it may be a market that is not in balance and we don't have outbound freight from the market. It could be in other markets like when you build the triples operation, you say, well, we got a lot of efficiency we could drive here, because we're in balance. So when we think about what it takes to run our line haul network, it's sort of a network cost sort of perspective. so when we think about what it takes to run our line haul network it's sort of a network cost sort of perspective The decision tree starts with what's the customer need and in any way do we impact the customer, answer no, or we meet their expectations, that's critical. the decision tree starts with what's the customer need and in any way do we impact the customer answer no or we meet their expectations that's critical And then the second step is what's the most cost optimal way to do that. and then the second step is what's the most cost optimal way to do that So what that could mean is in some markets we use more PT, because it may be a market that is not in balance and we don't have outbound freight from the market. so what that could mean is in some markets we use more pt because it may be a market that is not in balance and we don't have outbound freight from the market It could be in other markets like when you build the triples operation, you say, well, we got a lot of efficiency we could drive here, because we're in balance. it could be in other markets like when you build the triples operation you say well we got a lot of efficiency we could drive here because we're in balance So it's that's kind of how the decision works for us. So we figure out we're focused more on sort of the financial return and meeting customer expectation than we are specifically around a target around what percentage of PT. So it's that's kind of how the decision works for us. so it's that's kind of how the decision works for us So we figure out we're focused more on sort of the financial return and meeting customer expectation than we are specifically around a target around what percentage of PT. so we figure out we're focused more on sort of the financial return and meeting customer expectation than we are specifically around a target around what percentage of pt

Speaker 16: Okay. That's fair enough. And then maybe just a quick follow-up on a comment that you made for it. Appreciate what you said about moving the customer service to field locations. It sounds like a wise investment in service. Okay. okay That's fair enough. that's fair enough And then maybe just a quick follow-up on a comment that you made for it. and then maybe just a quick follow-up on a comment that you made for it Appreciate what you said about moving the customer service to field locations. appreciate what you said about moving the customer service to field locations It sounds like a wise investment in service. it sounds like a wise investment in service Just curious if there's any cost impact to call out as a result of that whether one time or ongoing? Just curious if there's any cost impact to call out as a result of that whether one time or ongoing? just curious if there's any cost impact to call out as a result of that whether one time or ongoing

Speaker 3: Yes. No, over time that will we think that will actually be a lower investment, because what we're we took out a duplicative sort of resource. So both groups were focused on touching the customer. We think that having the frontline engage with the customer is the best, easiest, most efficient, transparent way to help that customer get what they need. So yes, there's a bit of a cost savings in there. Yes. yes No, over time that will we think that will actually be a lower investment, because what we're we took out a duplicative sort of resource. no over time that will we think that will actually be a lower investment because what we're we took out a duplicative sort of resource So both groups were focused on touching the customer. so both groups were focused on touching the customer We think that having the frontline engage with the customer is the best, easiest, most efficient, transparent way to help that customer get what they need. we think that having the frontline engage with the customer is the best easiest most efficient transparent way to help that customer get what they need So yes, there's a bit of a cost savings in there. so yes there's a bit of a cost savings in there But we'll also invest in some areas we may add back resources and field locations to meet that. So it's kind of a transition right now. Pleased with the early results with it though. But we'll also invest in some areas we may add back resources and field locations to meet that. but we'll also invest in some areas we may add back resources and field locations to meet that So it's kind of a transition right now. so it's kind of a transition right now Pleased with the early results with it though. pleased with the early results with it though

Speaker 16: Okay, great. Appreciate the time. Okay, great. okay great Appreciate the time. appreciate the time

Speaker 1: The next question comes from Bascome Majors with Susquehanna. Please go ahead. The next question comes from Bascome Majors with Susquehanna. the next question comes from bascome majors with susquehanna Please go ahead. please go ahead

Speaker 17: Thanks for taking my questions. Matt, just sort of a housekeeping item. I think last year you said normal margin seasonality in the fourth quarter was about two fifty bps of degradation. Without commenting on where you might come in versus that, is that still a decent measure of a seasonal bogey? Thanks for taking my questions. thanks for taking my questions Matt, just sort of a housekeeping item. matt just sort of a housekeeping item I think last year you said normal margin seasonality in the fourth quarter was about two fifty bps of degradation. i think last year you said normal margin seasonality in the fourth quarter was about two fifty bps of degradation Without commenting on where you might come in versus that, is that still a decent measure of a seasonal bogey? without commenting on where you might come in versus that is that still a decent measure of a seasonal bogey

Speaker 2: Yes. We're really focused on Q3 for now, but that's probably the right long term average. Q4 always varies depending on where the holidays fall and calendar and things like that, especially now where holidays tend to be a little bit more stretched out in some of the business environment demand and things like that, but that's where we're staying right now. Yes. yes We're really focused on Q3 for now, but that's probably the right long term average. we're really focused on q3 for now but that's probably the right long term average Q4 always varies depending on where the holidays fall and calendar and things like that, especially now where holidays tend to be a little bit more stretched out in some of the business environment demand and things like that, but that's where we're staying right now. q4 always varies depending on where the holidays fall and calendar and things like that especially now where holidays tend to be a little bit more stretched out in some of the business environment demand and things like that but that's where we're staying right now

Speaker 3: But I'd be I'd caution you a little bit of that, Bascome, because this will be the first time that we've had 21 facilities that we didn't have before. So I don't know, we don't know exactly what that what history looks like there yet. We're intently focused on Q3 and we'll have a better view picture of what we think Q4 will be down the road. But I'd be I'd caution you a little bit of that, Bascome, because this will be the first time that we've had 21 facilities that we didn't have before. but i'd be i'd caution you a little bit of that bascome because this will be the first time that we've had 21 facilities that we didn't have before So I don't know, we don't know exactly what that what history looks like there yet. so i don't know we don't know exactly what that what history looks like there yet We're intently focused on Q3 and we'll have a better view picture of what we think Q4 will be down the road. we're intently focused on q3 and we'll have a better view picture of what we think q4 will be down the road

Speaker 17: Understood. And thank you for clarifying that with the color about the new facilities. And I think certainly with just kind of following seasonality out, it does feel that volume is going to be under pressure through the back half of this year, maybe even the 1Q with the comp and I think analysts and investors are coming to terms and understand that. But rather than talking about when it gets better and how quickly it gets better just from a macro perspective, if we were to enter a world where we're back to kind of low to mid single digit tonnage growth in the Saia network, do you have a sense of how we should think about that financially? I don't know if it's an incremental margin framework. Understood. understood And thank you for clarifying that with the color about the new facilities. and thank you for clarifying that with the color about the new facilities And I think certainly with just kind of following seasonality out, it does feel that volume is going to be under pressure through the back half of this year, maybe even the 1Q with the comp and I think analysts and investors are coming to terms and understand that. and i think certainly with just kind of following seasonality out it does feel that volume is going to be under pressure through the back half of this year maybe even the 1q with the comp and i think analysts and investors are coming to terms and understand that But rather than talking about when it gets better and how quickly it gets better just from a macro perspective, if we were to enter a world where we're back to kind of low to mid single digit tonnage growth in the Saia network, do you have a sense of how we should think about that financially? but rather than talking about when it gets better and how quickly it gets better just from a macro perspective if we were to enter a world where we're back to kind of low to mid single digit tonnage growth in the saia network do you have a sense of how we should think about that financially I don't know if it's an incremental margin framework. i don't know if it's an incremental margin framework Just any way to kind of tops down think about without necessarily putting a date on it, what the recovery looks like for Saia, so we can kind of run your thoughts into our models? Thank you. Just any way to kind of tops down think about without necessarily putting a date on it, what the recovery looks like for Saia, so we can kind of run your thoughts into our models? just any way to kind of tops down think about without necessarily putting a date on it what the recovery looks like for saia so we can kind of run your thoughts into our models Thank you. thank you

Speaker 3: Yes, no problem. That's a fair question. I think the first thing I would do, I would go back and look at what Saia did through our Northeast expansion and see the incrementals that we were generating per quarter as we mature those parts of our network. I think we returned to that and arguably because this is a national scale, we might be able to do even better than that. So it's the network, the benefits of having a national network certainly provide all kinds of benefits to customers, but it also allows us to build scale. Yes, no problem. yes no problem That's a fair question. that's a fair question I think the first thing I would do, I would go back and look at what Saia did through our Northeast expansion and see the incrementals that we were generating per quarter as we mature those parts of our network. i think the first thing i would do i would go back and look at what saia did through our northeast expansion and see the incrementals that we were generating per quarter as we mature those parts of our network I think we returned to that and arguably because this is a national scale, we might be able to do even better than that. i think we returned to that and arguably because this is a national scale we might be able to do even better than that So it's the network, the benefits of having a national network certainly provide all kinds of benefits to customers, but it also allows us to build scale. so it's the network the benefits of having a national network certainly provide all kinds of benefits to customers but it also allows us to build scale So the opportunity for us to drive incrementals, I think there would be some of the incrementals you saw in the highest, the best periods as we grew out of the Northeast expansion. And I think you'd see that going forward from here. Just I don't know where that when that starts. Certainly, a little volume will help that, but I think the incremental volumes in the facility that's running at 30% capacity today, boy, those are pretty good. Adding a third line haul trailer, that's all incremental, right, in terms of efficiency for our line haul network. So the opportunity for us to drive incrementals, I think there would be some of the incrementals you saw in the highest, the best periods as we grew out of the Northeast expansion. so the opportunity for us to drive incrementals i think there would be some of the incrementals you saw in the highest the best periods as we grew out of the northeast expansion And I think you'd see that going forward from here. and i think you'd see that going forward from here Just I don't know where that when that starts. just i don't know where that when that starts Certainly, a little volume will help that, but I think the incremental volumes in the facility that's running at 30% capacity today, boy, those are pretty good. certainly a little volume will help that but i think the incremental volumes in the facility that's running at 30% capacity today boy those are pretty good Adding a third line haul trailer, that's all incremental, right, in terms of efficiency for our line haul network. adding a third line haul trailer that's all incremental right in terms of efficiency for our line haul network So all those things could contribute to some very, very long term nice performance and returns to shareholders. So all those things could contribute to some very, very long term nice performance and returns to shareholders. so all those things could contribute to some very very long term nice performance and returns to shareholders

Speaker 17: Thank you for that. Thank you for that. thank you for that

Speaker 1: The next question comes from Christopher Kuhn with Benchmark. Please go ahead. The next question comes from Christopher Kuhn with Benchmark. the next question comes from christopher kuhn with benchmark Please go ahead. please go ahead

Speaker 18: Yes. Hey, thanks for the questions. So Matt, Fritz, I'm just wondering on the pricing maybe out of the new markets or from the newer freight you've taken on, how that's been progressing? Yes. yes Hey, thanks for the questions. hey thanks for the questions So Matt, Fritz, I'm just wondering on the pricing maybe out of the new markets or from the newer freight you've taken on, how that's been progressing? so matt fritz i'm just wondering on the pricing maybe out of the new markets or from the newer freight you've taken on how that's been progressing

Speaker 2: Well, it's I mean, we're just starting to lap some of these. And what we really try to do when we enter a new market is find what the market rate is and work with our customers and find that. One of the great things about entering into these new markets is our lead list every single time is our existing book of customers. We get to go to them and say, hey, we're doing a great job for you in these markets. We're now in these, we can provide national service. Well, it's I mean, we're just starting to lap some of these. well it's i mean we're just starting to lap some of these And what we really try to do when we enter a new market is find what the market rate is and work with our customers and find that. and what we really try to do when we enter a new market is find what the market rate is and work with our customers and find that One of the great things about entering into these new markets is our lead list every single time is our existing book of customers. one of the great things about entering into these new markets is our lead list every single time is our existing book of customers We get to go to them and say, hey, we're doing a great job for you in these markets. we get to go to them and say hey we're doing a great job for you in these markets We're now in these, we can provide national service. we're now in these we can provide national service So we get to have conversations about the freight mix and the characteristics. Now we can't necessarily go turn around and raise the rate the next day because we are growing and building density and inefficient in some of these markets. But we're trying to find the market rate and the big opportunity for us is that when we do more for customers and we improve our share of wallet, we're able to provide service in more markets, we become stickier with them. We are harder to change out because we're doing a great job for them in a lot of markets over time that gets us priced. So we continue to see that and we see those opportunities and it often opens us up to a larger mix of that customer's business that we may not have had access to before because we weren't able to cover that directly or at the level that they wanted us to. So we get to have conversations about the freight mix and the characteristics. so we get to have conversations about the freight mix and the characteristics Now we can't necessarily go turn around and raise the rate the next day because we are growing and building density and inefficient in some of these markets. now we can't necessarily go turn around and raise the rate the next day because we are growing and building density and inefficient in some of these markets But we're trying to find the market rate and the big opportunity for us is that when we do more for customers and we improve our share of wallet, we're able to provide service in more markets, we become stickier with them. but we're trying to find the market rate and the big opportunity for us is that when we do more for customers and we improve our share of wallet we're able to provide service in more markets we become stickier with them We are harder to change out because we're doing a great job for them in a lot of markets over time that gets us priced. we are harder to change out because we're doing a great job for them in a lot of markets over time that gets us priced So we continue to see that and we see those opportunities and it often opens us up to a larger mix of that customer's business that we may not have had access to before because we weren't able to cover that directly or at the level that they wanted us to. so we continue to see that and we see those opportunities and it often opens us up to a larger mix of that customer's business that we may not have had access to before because we weren't able to cover that directly or at the level that they wanted us to So that's an ongoing initiative for us. And number one, first and foremost, like Fred said before, you have to do a great job for the customer in that market. None of the rest of it happens without doing a good job for them. So we get that opportunity every day and more at best than we've ever had. So that's an ongoing initiative for us. so that's an ongoing initiative for us And number one, first and foremost, like Fred said before, you have to do a great job for the customer in that market. and number one first and foremost like fred said before you have to do a great job for the customer in that market None of the rest of it happens without doing a good job for them. none of the rest of it happens without doing a good job for them So we get that opportunity every day and more at best than we've ever had. so we get that opportunity every day and more at best than we've ever had

Speaker 18: So you still you see opportunity to price those as you continue to serve the customers? So you still you see opportunity to price those as you continue to serve the customers? so you still you see opportunity to price those as you continue to serve the customers

Speaker 2: Very simply, we look at the publicly available data and it tells us that we are cheaper than our peers that are national coverage. That's what we look at. That's our benchmark. So absolutely. Very simply, we look at the publicly available data and it tells us that we are cheaper than our peers that are national coverage. very simply we look at the publicly available data and it tells us that we are cheaper than our peers that are national coverage That's what we look at. that's what we look at That's our benchmark. that's our benchmark So absolutely. so absolutely

Speaker 18: Got it. Thanks guys. Appreciate it. Got it. got it Thanks guys. thanks guys Appreciate it. appreciate it

Speaker 1: The next question comes from Tom Wadewitz with UBS. Please go ahead. The next question comes from Tom Wadewitz with UBS. the next question comes from tom wadewitz with ubs Please go ahead. please go ahead

Speaker 19: Yes, good morning. So I wanted to I know you had a good amount of discussion on, I guess, price and a bit on mix. But can you give any thoughts on how we might model revenue per 100 weight ex fuel or revenue per shipment in 3Q versus 2Q? Do you think that keeps going up sequentially or I guess I think revenue per hundredweight was up sequentially, but per shipment down sequentially. Just trying to think about how that potentially moves and whether it's reasonable to model that up sequentially? Yes, good morning. yes good morning So I wanted to I know you had a good amount of discussion on, I guess, price and a bit on mix. so i wanted to i know you had a good amount of discussion on i guess price and a bit on mix But can you give any thoughts on how we might model revenue per 100 weight ex fuel or revenue per shipment in 3Q versus 2Q? but can you give any thoughts on how we might model revenue per 100 weight ex fuel or revenue per shipment in 3q versus 2q Do you think that keeps going up sequentially or I guess I think revenue per hundredweight was up sequentially, but per shipment down sequentially. do you think that keeps going up sequentially or i guess i think revenue per hundredweight was up sequentially but per shipment down sequentially Just trying to think about how that potentially moves and whether it's reasonable to model that up sequentially? just trying to think about how that potentially moves and whether it's reasonable to model that up sequentially

Speaker 2: Well, we don't give a guide on that, but mix plays a big component of that. We saw some muted trends out of the Los Angeles region that maybe is an indicator of what some of the port activity was, but mix plays a role in that. So we don't give a guide on that, but we're critically focused on making sure that we get compensated appropriately for the service that we provide. We don't take a day off from that, but we're focused on ensuring that margins meet our expectations with each individual customer. But mix plays a role in that. Well, we don't give a guide on that, but mix plays a big component of that. well we don't give a guide on that but mix plays a big component of that We saw some muted trends out of the Los Angeles region that maybe is an indicator of what some of the port activity was, but mix plays a role in that. we saw some muted trends out of the los angeles region that maybe is an indicator of what some of the port activity was but mix plays a role in that So we don't give a guide on that, but we're critically focused on making sure that we get compensated appropriately for the service that we provide. so we don't give a guide on that but we're critically focused on making sure that we get compensated appropriately for the service that we provide We don't take a day off from that, but we're focused on ensuring that margins meet our expectations with each individual customer. we don't take a day off from that but we're focused on ensuring that margins meet our expectations with each individual customer But mix plays a role in that. but mix plays a role in that When weight per shipment moves around a little bit and length of haul does that, those are components of mix, but direction also matters. Freight flows, balance of the network. So no guide from us there, but we're focused on price and the environment remains rational for that. That's where we remain intently focused. Okay. When weight per shipment moves around a little bit and length of haul does that, those are components of mix, but direction also matters. when weight per shipment moves around a little bit and length of haul does that those are components of mix but direction also matters Freight flows, balance of the network. freight flows balance of the network So no guide from us there, but we're focused on price and the environment remains rational for that. so no guide from us there but we're focused on price and the environment remains rational for that That's where we remain intently focused. that's where we remain intently focused Okay. okay

Speaker 19: And I guess in terms of the impact and kind of runway on idiosyncratic initiatives that help the OR in the current freight environment, which is continues to be pretty muted, right? Relative to just showing tons of operating leverage when freight really picks up, right? Because I think it's fairly clear you should have really strong ethanol. How do you think about that? Like can you keep can you show meaningful OR improvement to kind of mid-80s, 100 basis points a year if you don't get a freight improvement? Or is this about, a, you're doing what you can, but the big lever is really the market? And I guess in terms of the impact and kind of runway on idiosyncratic initiatives that help the OR in the current freight environment, which is continues to be pretty muted, right? and i guess in terms of the impact and kind of runway on idiosyncratic initiatives that help the or in the current freight environment which is continues to be pretty muted right Relative to just showing tons of operating leverage when freight really picks up, right? relative to just showing tons of operating leverage when freight really picks up right Because I think it's fairly clear you should have really strong ethanol. because i think it's fairly clear you should have really strong ethanol How do you think about that? how do you think about that Like can you keep can you show meaningful OR improvement to kind of mid-80s, 100 basis points a year if you don't get a freight improvement? like can you keep can you show meaningful or improvement to kind of mid-80s 100 basis points a year if you don't get a freight improvement Or is this about, a, you're doing what you can, but the big lever is really the market? or is this about a you're doing what you can but the big lever is really the market

Speaker 3: Yes, that one's a tough one, Tom. I there clearly are cost opportunities for us kind of going forward to continue to build density kind of methodically. We are seeing growth in our new facilities, which is important. Those are ones at scale. So those are in this environment, so you got to make sure you take advantage of that, be able to leverage that line haul network. Yes, that one's a tough one, Tom. yes that one's a tough one tom I there clearly are cost opportunities for us kind of going forward to continue to build density kind of methodically. i there clearly are cost opportunities for us kind of going forward to continue to build density kind of methodically We are seeing growth in our new facilities, which is important. we are seeing growth in our new facilities which is important Those are ones at scale. those are ones at scale So those are in this environment, so you got to make sure you take advantage of that, be able to leverage that line haul network. so those are in this environment so you got to make sure you take advantage of that be able to leverage that line haul network Same time, you've got to manage the hours and sort of the workload in the markets where maybe aren't growing or slightly declining. So it's tough to say kind of where that could go in the environment we're in right now. All I know is that we're focused on let's manage the cost because that's in the four walls that we can handle, right? And let's make sure we manage the service at the same time. So right now that's about the best guide we can give. So I think we can we'll continue that focus. Same time, you've got to manage the hours and sort of the workload in the markets where maybe aren't growing or slightly declining. same time you've got to manage the hours and sort of the workload in the markets where maybe aren't growing or slightly declining So it's tough to say kind of where that could go in the environment we're in right now. so it's tough to say kind of where that could go in the environment we're in right now All I know is that we're focused on let's manage the cost because that's in the four walls that we can handle, right? all i know is that we're focused on let's manage the cost because that's in the four walls that we can handle right And let's make sure we manage the service at the same time. and let's make sure we manage the service at the same time So right now that's about the best guide we can give. so right now that's about the best guide we can give So I think we can we'll continue that focus. so i think we can we'll continue that focus

Speaker 19: So maybe you can do a little better than seasonality without improvement in freight, but it's maybe not a big difference. Is that fair? So maybe you can do a little better than seasonality without improvement in freight, but it's maybe not a big difference. so maybe you can do a little better than seasonality without improvement in freight but it's maybe not a big difference Is that fair? is that fair

Speaker 3: That's fair. I mean, I don't know that there's a huge breakthrough for us, but there's a methodical chipping away building density opportunity for us. That's fair. that's fair I mean, I don't know that there's a huge breakthrough for us, but there's a methodical chipping away building density opportunity for us. i mean i don't know that there's a huge breakthrough for us but there's a methodical chipping away building density opportunity for us

Speaker 19: Yes. Okay, great. Thank you. Yes. yes Okay, great. okay great Thank you. thank you

Speaker 1: The next question comes from Jason Seidl with TD Cowen. Please go ahead. The next question comes from Jason Seidl with TD Cowen. the next question comes from jason seidl with td cowen Please go ahead. please go ahead

Speaker 20: Thank you, operator. Hey, Fritz, team. Just wanted to talk a little bit more about your tonnage numbers. You said you're about flat in July. Just curious, did you guys see any pull forward in July with all the tariff stuff in your consumer business at all? Or has it been relatively stable? Thank you, operator. thank you operator Hey, Fritz, team. hey fritz team Just wanted to talk a little bit more about your tonnage numbers. just wanted to talk a little bit more about your tonnage numbers You said you're about flat in July. you said you're about flat in july Just curious, did you guys see any pull forward in July with all the tariff stuff in your consumer business at all? just curious did you guys see any pull forward in july with all the tariff stuff in your consumer business at all Or has it been relatively stable? or has it been relatively stable

Speaker 2: It's hard to tell. I'd say relatively stable. It bounces around in a given day, given week really. I mean, so I wouldn't call out anything specific in terms of end markets or pull forward or anything like that at all. It all sounds good to us, but until we see it in the data, there's not much that stands out to us. It's hard to tell. it's hard to tell I'd say relatively stable. i'd say relatively stable It bounces around in a given day, given week really. it bounces around in a given day given week really I mean, so I wouldn't call out anything specific in terms of end markets or pull forward or anything like that at all. i mean so i wouldn't call out anything specific in terms of end markets or pull forward or anything like that at all It all sounds good to us, but until we see it in the data, there's not much that stands out to us. it all sounds good to us but until we see it in the data there's not much that stands out to us

Speaker 20: And you called out that you have tougher comps, I think on the tonnage side in the back half of the quarter. Can you remind us when they start? And you called out that you have tougher comps, I think on the tonnage side in the back half of the quarter. and you called out that you have tougher comps i think on the tonnage side in the back half of the quarter Can you remind us when they start? can you remind us when they start

Speaker 2: Yes, shipments and tonnage both tougher comps just as we start to lap the facility. So when we opened six in Q2 last year and a good chunk of those started in the back half of May and June. So those started to ramp and then we opened 11 in Q3 with the majority of those happening in August and September. So those just as those volumes start to come on and those terminals came online, we opened two in July, six in August and three in September that make up the 11 in Q3. The back half of the quarter, those just started to come online. Yes, shipments and tonnage both tougher comps just as we start to lap the facility. yes shipments and tonnage both tougher comps just as we start to lap the facility So when we opened six in Q2 last year and a good chunk of those started in the back half of May and June. so when we opened six in q2 last year and a good chunk of those started in the back half of may and june So those started to ramp and then we opened 11 in Q3 with the majority of those happening in August and September. so those started to ramp and then we opened 11 in q3 with the majority of those happening in august and september So those just as those volumes start to come on and those terminals came online, we opened two in July, six in August and three in September that make up the 11 in Q3. so those just as those volumes start to come on and those terminals came online we opened two in july six in august and three in september that make up the 11 in q3 The back half of the quarter, those just started to come online. the back half of the quarter those just started to come online

Speaker 20: So the right way to think about it, if nothing else changes in the demand side, if you're flat in July, probably have a negative comp in August and September then? So the right way to think about it, if nothing else changes in the demand side, if you're flat in July, probably have a negative comp in August and September then? so the right way to think about it if nothing else changes in the demand side if you're flat in july probably have a negative comp in august and september then

Speaker 2: Yes, that's fair. Okay. Yes, that's fair. yes that's fair Okay. okay

Speaker 20: The other thing is you guys obviously are seeing some nice progress in some in getting those newer terminals to profitability. I guess where are you seeing those density gains? Is it more from your existing customer base? Are you adding more new customers to sort of help out that profitability? The other thing is you guys obviously are seeing some nice progress in some in getting those newer terminals to profitability. the other thing is you guys obviously are seeing some nice progress in some in getting those newer terminals to profitability I guess where are you seeing those density gains? i guess where are you seeing those density gains Is it more from your existing customer base? is it more from your existing customer base Are you adding more new customers to sort of help out that profitability? are you adding more new customers to sort of help out that profitability

Speaker 3: I don't want to say it's the easiest because it's a tough hurdle to always service the customer and do it effectively. But the nice thing about the strategy and just to remind you kind of the basics for us when we open a new facility, we call on our existing customers first. So that raises the bar for us. They have an expectation that we're going to repeat the same level of service in a new facility. So you kind of penetrate those customers to start. I don't want to say it's the easiest because it's a tough hurdle to always service the customer and do it effectively. i don't want to say it's the easiest because it's a tough hurdle to always service the customer and do it effectively But the nice thing about the strategy and just to remind you kind of the basics for us when we open a new facility, we call on our existing customers first. but the nice thing about the strategy and just to remind you kind of the basics for us when we open a new facility we call on our existing customers first So that raises the bar for us. so that raises the bar for us They have an expectation that we're going to repeat the same level of service in a new facility. they have an expectation that we're going to repeat the same level of service in a new facility So you kind of penetrate those customers to start. so you kind of penetrate those customers to start And then what's really interesting over time, and we know this from our Northeast expansion is that once you're in the market and you establish your foothold with existing legacy customers, that's when you've built some density and then you've got the opportunity to go win some new business and with customers that maybe aren't familiar with you. So that's kind of next leg for us and I think that that's longer term what certainly is part of the opportunity. And then what's really interesting over time, and we know this from our Northeast expansion is that once you're in the market and you establish your foothold with existing legacy customers, that's when you've built some density and then you've got the opportunity to go win some new business and with customers that maybe aren't familiar with you. and then what's really interesting over time and we know this from our northeast expansion is that once you're in the market and you establish your foothold with existing legacy customers that's when you've built some density and then you've got the opportunity to go win some new business and with customers that maybe aren't familiar with you So that's kind of next leg for us and I think that that's longer term what certainly is part of the opportunity. so that's kind of next leg for us and i think that that's longer term what certainly is part of the opportunity

Speaker 1: And our last questioner today will be a follow-up from Ken Hoexter with Bank of America. Please go ahead. And our last questioner today will be a follow-up from Ken Hoexter with Bank of America. and our last questioner today will be a follow-up from ken hoexter with bank of america Please go ahead. please go ahead

Speaker 4: Hey, great. Appreciate you coming back to me. Fritz, I guess the stock has moved from up maybe 12% to up 2.5%. So I think there's some confusion. Just want to give you maybe a chance to kind of talk through the message here. Hey, great. hey great Appreciate you coming back to me. appreciate you coming back to me Fritz, I guess the stock has moved from up maybe 12% to up 2.5%. fritz i guess the stock has moved from up maybe 12% to up 2.5% So I think there's some confusion. so i think there's some confusion Just want to give you maybe a chance to kind of talk through the message here. just want to give you maybe a chance to kind of talk through the message here So maybe it was on the 100 to 200 basis points normal OR. You said you could do 100, but if you do add wages, whether it's in 3Q or 4Q, it would be another 75 basis point hit. So it sounds like you'd still be within your range on the OR normal seasonality. I don't know maybe if it's on the volumes that Jason just ran over, if given you started off flat and it's going to get tougher, maybe just hit on the messaging again because it seems like there's some confusion. Obviously, you don't give pricing thoughts that Matt highlighted. So maybe it was on the 100 to 200 basis points normal OR. so maybe it was on the 100 to 200 basis points normal or You said you could do 100, but if you do add wages, whether it's in 3Q or 4Q, it would be another 75 basis point hit. you said you could do 100 but if you do add wages whether it's in 3q or 4q it would be another 75 basis point hit So it sounds like you'd still be within your range on the OR normal seasonality. so it sounds like you'd still be within your range on the or normal seasonality I don't know maybe if it's on the volumes that Jason just ran over, if given you started off flat and it's going to get tougher, maybe just hit on the messaging again because it seems like there's some confusion. i don't know maybe if it's on the volumes that jason just ran over if given you started off flat and it's going to get tougher maybe just hit on the messaging again because it seems like there's some confusion Obviously, you don't give pricing thoughts that Matt highlighted. obviously you don't give pricing thoughts that matt highlighted So I don't know if you just want to dig into that for a minute. So I don't know if you just want to dig into that for a minute. so i don't know if you just want to dig into that for a minute

Speaker 3: Yes. So what we said, let's be clear, 100 to 200 basis point degradation Q2 to Q3 has been history, right? We said we would encompassing all available things, which could be a wage increase, could be volumes, we said 100 is kind of what we're targeting for the quarter. There are as we all know, I hope we all understand, there are a lot of variables in this business, right? So we're managing all those variables. Yes. yes So what we said, let's be clear, 100 to 200 basis point degradation Q2 to Q3 has been history, right? so what we said let's be clear 100 to 200 basis point degradation q2 to q3 has been history right We said we would encompassing all available things, which could be a wage increase, could be volumes, we said 100 is kind of what we're targeting for the quarter. we said we would encompassing all available things which could be a wage increase could be volumes we said 100 is kind of what we're targeting for the quarter There are as we all know, I hope we all understand, there are a lot of variables in this business, right? there are as we all know i hope we all understand there are a lot of variables in this business right So we're managing all those variables. so we're managing all those variables So we give that kind of a guide. What we're giving is our best assessment of all those options and what we think all those variables and all the things that we can consider. So that I don't hopefully that's clear, but that's kind of how we thought about it. So we give that kind of a guide. so we give that kind of a guide What we're giving is our best assessment of all those options and what we think all those variables and all the things that we can consider. what we're giving is our best assessment of all those options and what we think all those variables and all the things that we can consider So that I don't hopefully that's clear, but that's kind of how we thought about it. so that i don't hopefully that's clear but that's kind of how we thought about it

Speaker 4: Appreciate it. Just want to run it through because I've been getting a lot of things during the call. Just want make sure I fully understood it. Thank you. Appreciate it. appreciate it Just want to run it through because I've been getting a lot of things during the call. just want to run it through because i've been getting a lot of things during the call Just want make sure I fully understood it. just want make sure i fully understood it Thank you. thank you

Speaker 2: Yes. No problem. Yes. yes No problem. no problem

Speaker 1: Concludes our question and answer session. I would like to turn the conference back over to Fritz Holzgraf for any closing remarks. Concludes our question and answer session. concludes our question and answer session I would like to turn the conference back over to Fritz Holzgraf for any closing remarks. i would like to turn the conference back over to fritz holzgraf for any closing remarks

Speaker 3: Great. Thank you. I appreciate everybody calling in and hearing about Saia's second quarter. We're very, very pleased with the execution that we had in the quarter, particularly on what we did for the customer. We like the operating side of our performance as well around costs. Great. great Thank you. thank you I appreciate everybody calling in and hearing about Saia's second quarter. i appreciate everybody calling in and hearing about saia's second quarter We're very, very pleased with the execution that we had in the quarter, particularly on what we did for the customer. we're very very pleased with the execution that we had in the quarter particularly on what we did for the customer We like the operating side of our performance as well around costs. we like the operating side of our performance as well around costs We look at kind of what the opportunity is from Q2 to Q3. And I think we'll be able to outperform our traditional sort of 100 to 200 basis point degradation from Q2 to Q3 OR. A lot of variables in this business, we're going to manage all of them to kind of that sort of range. And but more importantly for the long term investor, the thesis around SAIA is very, very strong and we're excited about what the prospects are for us in this new national network. Thank you all for taking the opportunity to listen to our results and look forward to future conversations. We look at kind of what the opportunity is from Q2 to Q3. we look at kind of what the opportunity is from q2 to q3 And I think we'll be able to outperform our traditional sort of 100 to 200 basis point degradation from Q2 to Q3 OR. and i think we'll be able to outperform our traditional sort of 100 to 200 basis point degradation from q2 to q3 or A lot of variables in this business, we're going to manage all of them to kind of that sort of range. a lot of variables in this business we're going to manage all of them to kind of that sort of range And but more importantly for the long term investor, the thesis around SAIA is very, very strong and we're excited about what the prospects are for us in this new national network. and but more importantly for the long term investor the thesis around saia is very very strong and we're excited about what the prospects are for us in this new national network Thank you all for taking the opportunity to listen to our results and look forward to future conversations. thank you all for taking the opportunity to listen to our results and look forward to future conversations

Speaker 1: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. The conference has now concluded. the conference has now concluded Thank you for attending today's presentation. thank you for attending today's presentation You may now disconnect. you may now disconnect