Saia's Q2 earnings surpass expectations, leading to a 13% rise in stock price prior to market opening.
Saia, a leading less-than-truckload (LTL) freight carrier, reported its second-quarter earnings on Tuesday, revealing a complex picture of growth and challenges.
The company's shares surged 12.9% in pre-market trading following the earnings report, as Saia reported earnings per share of $2.67, $9 million ahead of analysts' expectations. However, the revenue of $817 million marked a slight year-over-year dip.
Despite the revenue decrease, the second-quarter earnings per share were 28 cents ahead of consensus and 81 cents better than the first quarter. Yet, they were $1.16 lower year over year.
The operating ratio, a key performance indicator for LTL carriers, worsened to 87.8%, indicating higher operating expenses relative to revenue. This was mainly due to lower revenue and operating income, but operational efficiencies and improved pricing per shipment partly offset these pressures.
Total revenue decreased slightly by 0.7%, while operating income fell 27.8%. LTL shipments per workday declined 2.8%, but tonnage per workday increased 1.1%, which may have helped optimize efficiency. Despite the revenue challenges, LTL revenue per shipment excluding fuel surcharge increased 2.7%, showing improved pricing or mix management offsetting some volume declines.
Management highlighted substantial operational efficiency improvements and focus on customer service, especially in new markets, driving better cost control and volume growth in select areas. However, the company’s ability to manage costs in response to volume trends helped mitigate some margin pressure but was not sufficient to improve the overall operating ratio.
The cost per shipment was up 7.7%, but revenue per shipment increased only 1.8%. This discrepancy was due to higher shipment weights and only partially offset by a 0.6% increase in length of haul. The company incurred a higher interest expense due to net debt used to fund terminal acquisitions increasing $125 million year-over-year.
A higher tax rate was a 10-cent drag on the quarter. Despite these challenges, the operating ratio was 120 bps better than management's guidance.
Saia will host a conference call at 10 a.m. EDT on Friday to discuss the company's second-quarter results in detail. The details about the conference call were announced in the news release. This event will provide an opportunity to discuss the company's financial performance in detail and hear management's insights on the strategies for the future.
Investors may find potential opportunities in Saia's shares, as the second-quarter earnings per share were significantly ahead of analysts' expectations. However, the company's focus on business strategies such as operational efficiency improvements and customer service in new markets may require further investments in finance, particularly in managing increased interest expenses due to terminal acquisitions.
