Despite sluggish volumes, higher pricing helped boost first-quarter earnings to record levels at Saia, the freight carrier reported this week.
The Georgia-based less-than-truckload carrier achieved a record-best first-quarter operating ratio, down 2.3 percent year-over-year to 92.8.
“Positive pricing actions and strong execution by the entire Saia team, enabled us to achieve solid results despite what I would categorize as a seasonally sluggish freight trends,” said President and CEO Richard O’Dell in an earnings call Wednesday.
Saia’s LTL tonnage dropped 6.6 percent year-over-year, matched by a 2.8 percent decrease in shipments. The company, however, still managed to boost its operating income 39 percent to $21.2 million, O’Dell said. Revenues were also up, by 2.2 percent, to $293 million.
Shipments in the first three months of 2015 took a beating from inclement winter weather and softness in the oil patch, O’Dell told investors and analysts Wednesday. Continued pricing actions, offset by markedly lower fuel surcharge contribution, helped combat the odds stacked against the firm, he said.
“We executed particularly well in the pricing, network optimization, safety and claim prevention areas,” O’Dell said, “which contributed materially to the results and should set the stage for solid performance for the remainder of this year.”
In addition to healthy increases in revenue and income, Saia pushed up revenue per hundredweight or LTL yield by 4.6 percent, even with materially lower fuel surcharges. Yield is a measure of pricing and efficiency. For shareholders, that translated to a 45.7 percent year-over-year increase in earnings per share, the company said.
First quarter results were impacted by some key expenses, said Frederick Holzgrefe, the company’s chief financial officer.
Net capital expenditures in the first quarter, including equipment acquired with capital leases, were up 75 percent to $33.2 million.
“Salaries, wages and benefits rose 5 percent to $158 million in the first quarter, reflecting salary increases and investments we have made to support safety, claims prevention, employee relations and field sales resources,” Holzgrefe said.
Salary, wage and benefit increases and other expenditures were offset by a decline in purchased transportation expenses, down 20 percent year-over-year to $4.3 million.
“This comparison was aided by network improvements, lower volumes and a slightly less capacity constrained environment than in the first quarter a year ago,” Holzgrefe said. “Purchased transportation miles as a percentage of our total line haul miles declined for the third quarter in a row.”
Saia expects net capital expenditures in 2015 to reach approximately $125 million for the year.