UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-49983
Saia, Inc.
(Exact name of registrant as specified in its charter)
Delaware
48-1229851
(State of incorporation)
(I.R.S. Employer
Identification No.)
11465 Johns Creek Parkway, Suite 400
Johns Creek, GA
30097
(Address of principal executive offices)
(Zip Code)
(770) 232-5067
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, par value $.001 per share
SAIA
The Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
There were 26,411,736 shares of Common Stock outstanding at July 25, 2022.
1
SAIA, INC. AND SUBSIDIARIES
INDEX
PAGE
PART I. FINANCIAL INFORMATION
ITEM 1:
Financial Statements
3
Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021
Condensed Consolidated Statements of Operations for the quarters and six months ended June 30, 2022 and 2021
4
Condensed Consolidated Statements of Stockholders’ Equity for the quarters and six months ended June 30, 2022 and 2021
5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021
6
Notes to Condensed Consolidated Financial Statements
7
ITEM 2:
Management's Discussion and Analysis of Financial Condition and Results of Operations
11
ITEM 3:
Quantitative and Qualitative Disclosures About Market Risk
18
ITEM 4:
Controls and Procedures
19
PART II. OTHER INFORMATION
Legal Proceedings
20
ITEM 1A:
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
21
Defaults Upon Senior Securities
Mine Safety Disclosures
ITEM 5:
Other Information
ITEM 6:
Exhibits
22
Signature
23
2
Item 1. Financial Statements
Saia, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(unaudited)
June 30, 2022
December 31, 2021
Assets
(in thousands, except share and per share data)
Current Assets:
Cash and cash equivalents
$
137,871
106,588
Accounts receivable, net
357,052
276,755
Income tax receivable
9,412
—
Prepaid expenses and other
32,041
32,912
Total current assets
536,376
416,255
Property and Equipment, at cost
2,277,527
2,144,528
Less: accumulated depreciation
924,628
864,074
Net property and equipment
1,352,899
1,280,454
Operating Lease Right-of-Use Assets
105,376
107,781
Goodwill and Identifiable Intangibles, net
18,576
19,157
Other Noncurrent Assets
34,628
21,603
Total assets
2,047,855
1,845,250
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable
145,298
114,010
Wages, vacation and employees’ benefits
78,945
73,109
Claims and insurance accruals
49,222
54,717
Other current liabilities
25,594
38,551
Current portion of long-term debt
17,935
19,396
Current portion of operating lease liability
22,155
21,565
Total current liabilities
339,149
321,348
Other Liabilities:
Long-term debt, less current portion
21,360
31,008
Operating lease liability, less current portion
85,522
88,409
Deferred income taxes
123,229
124,137
Claims, insurance and other
74,833
60,015
Total other liabilities
304,944
303,569
Stockholders’ Equity:
Preferred stock, $0.001 par value, 50,000 shares authorized, none issued and outstanding
Common stock, $0.001 par value, 100,000,000 shares authorized, 26,411,736 and 26,336,589 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
26
Additional paid-in-capital
271,395
274,633
Deferred compensation trust, 83,197 and 94,627 shares of common stock at cost at June 30, 2022 and December 31, 2021, respectively
(6,103
)
(4,101
Retained earnings
1,138,444
949,775
Total stockholders’ equity
1,403,762
1,220,333
Total liabilities and stockholders’ equity
See accompanying notes to condensed consolidated financial statements.
Condensed Consolidated Statements of Operations
For the quarters and six months ended June 30, 2022 and 2021
Second Quarter
Six Months
2022
2021
(in thousands, except per share data)
Operating Revenue
745,554
571,333
1,406,770
1,055,407
Operating Expenses:
Salaries, wages and employees' benefits
295,052
268,786
584,515
513,223
Purchased transportation
91,819
62,481
170,067
107,512
Fuel, operating expenses and supplies
145,530
90,664
268,301
175,565
Operating taxes and licenses
15,979
14,559
32,552
28,897
Claims and insurance
14,216
17,328
24,952
28,808
Depreciation and amortization
36,944
34,659
76,896
70,031
Loss (gain) from property disposals, net
(69
45
(268
Total operating expenses
599,561
488,408
1,157,328
923,768
Operating Income
145,993
82,925
249,442
131,639
Nonoperating Expenses (Income):
Interest expense
668
834
1,360
1,686
Other, net
769
(430
1,004
(561
Nonoperating expenses, net
1,437
404
2,364
1,125
Income Before Income Taxes
144,556
82,521
247,078
130,514
Income Tax Provision
35,311
20,047
58,409
30,749
Net Income
109,245
62,474
188,669
99,765
Weighted average common shares outstanding – basic
26,507
26,332
26,489
26,309
Weighted average common shares outstanding – diluted
26,665
26,704
26,662
26,687
Basic Earnings Per Share
4.12
2.37
7.12
3.79
Diluted Earnings Per Share
4.10
2.34
7.08
3.74
Condensed Consolidated Statements of Stockholders’ Equity
Common Shares
Common Stock
Additional Paid-in Capital
Deferred Compensation Trust
Retained Earnings
Total
(in thousands, except share data)
Balance at December 31, 2021
26,336,589
Stock compensation, including options and long-term incentives
2,056
Exercise of stock options, less shares withheld for taxes
10,992
907
Shares issued for long-term incentive awards, net of shares withheld for taxes
60,821
(11,230
Purchase of shares by Deferred Compensation Trust
2,445
(2,445
Sale of shares by Deferred Compensation Trust
(1,066
1,066
Net income
79,424
Balance at March 31, 2022
26,408,402
267,745
(5,480
1,029,199
1,291,490
1,756
Director deferred share activity
2,327
1,170
1,007
101
631
(631
(8
8
Balance at June 30, 2022
26,411,736
Balance at December 31, 2020
26,236,570
267,666
(2,944
696,540
961,288
1,711
46,741
3,678
50,381
(6,350
742
(742
(17
17
37,291
Balance at March 31, 2021
26,333,692
267,430
(3,669
733,831
997,618
1,810
1,404
1,256
112
(112
Balance at June 30, 2021
26,335,096
270,608
(3,781
796,305
1,063,158
Condensed Consolidated Statements of Cash Flows
For the six months ended June 30, 2022 and 2021
(in thousands)
Operating Activities:
Noncash items included in net income:
(907
3,183
3,862
5,640
Changes in operating assets and liabilities, net
(60,615
(38,479
Net cash provided by operating activities
207,905
140,140
Investing Activities:
Acquisition of property and equipment
(156,351
(100,202
Proceeds from disposal of property and equipment
1,060
236
Net cash used in investing activities
(155,291
(99,966
Financing Activities:
Repayments of revolving credit agreement
(1,000
(27,614
Borrowings of revolving credit agreement
1,000
27,614
Proceeds from stock option exercises
1,008
Shares withheld for taxes
Repayment of finance leases
(11,109
(9,950
Net cash used in financing activities
(21,331
(12,622
Net Increase in Cash and Cash Equivalents
31,283
27,552
Cash and Cash Equivalents, beginning of period
25,308
Cash and Cash Equivalents, end of period
52,860
(1) Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of Saia, Inc. and its wholly-owned subsidiaries (together, the Company or Saia). All significant intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements.
The condensed consolidated financial statements have been prepared by the Company without audit by the independent registered public accounting firm. In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the condensed consolidated balance sheets, statements of operations, stockholders’ equity and cash flows for the interim periods included herein have been made. These interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information, the instructions to Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted from these statements. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Operating results for the quarter and six months ended June 30, 2022 are not necessarily indicative of the results of operations that may be expected for the year ended December 31, 2022.
Business
The Company provides national less-than-truckload (LTL) services through a single integrated organization. While more than 97 percent of its revenue has been derived from transporting LTL shipments across 45 states, the Company also offers customers a wide range of other value-added services, including non-asset truckload, expedited and logistics services across North America. The Company’s customer base is diversified across numerous industries.
Revenue Recognition
The Company’s revenues are derived primarily from the transportation of freight as it satisfies performance obligations that arise from contracts with its customers. The Company’s performance obligations arise when it receives a bill of lading (“BOL”) to transport a customer's commodities at negotiated prices contained in either a transportation services agreement or a publicly disclosed tariff rate. Once a BOL is received and accepted, a legally-enforceable contract is formed whereby the parties are committed to perform and the rights of the parties, shipping terms and conditions, and payment terms have been identified. A customer may submit many BOLs for transportation services at various times throughout a service agreement term but each shipment represents a distinct service that is a separately identified performance obligation.
The typical transit time to complete a shipment is from one to five days. Billing for transportation services normally occurs after completion of the service and payment is generally due within 30 days after the invoice date. The Company recognizes revenue related to the Company’s LTL, non-asset truckload and expedited services over the transit time of the shipment as it moves from origin to destination. Revenue for services is recognized based on transit status at the end of each reporting period.
Key estimates included in the recognition and measurement of revenue and related accounts receivable are as follows:
The portion of the gross invoice related to interline transportation services that involve the services of another party, such as another LTL service provider, is not recorded in the Company’s revenues. Revenue from logistics services is recognized as the services are provided.
Remaining performance obligations represent the transaction price allocated to future periods for freight services started but not completed at the reporting date. These amounts include the unearned portion of billed and unbilled amounts for freight shipments in transit that the Company expects to recognize as revenue in the period subsequent to the reporting date, which is generally less than one week. The Company has elected to apply the optional exemption in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, as it relates to additional quantitative disclosures pertaining to remaining performance obligations.
Claims and Insurance Accruals
Effective March 1, 2018, the Company entered into a new automobile liability insurance policy with a three-year term. Generally, the Company is responsible for the risk retention amount per occurrence of $2.0 million under the policy. Thereafter, the policy provides insurance coverage for a single loss of $8.0 million, an aggregate loss limit of $24.0 million for each policy year, and a $48.0 million aggregate loss limit for the 36-month term originally ended March 1, 2021. Under the policy, the Company could elect to commute the policy with respect to the first 12 months of the policy term and concurrently extend the policy for an additional one-year period if paid losses in the first 12 months of the policy were less than $5.2 million. In August 2019, the Company elected to commute the policy for such period. As a result, the Company received a return of $5.2 million of the premium paid (the maximum return premium available), based on the amount of claims paid and the insurer was released from all liability in connection with claims occurring in such 12-month period. The Company is now self-insured for the first $10.0 million per occurrence with respect to such 12-month period and the policy was extended for one additional year to March 1, 2022. The Company recognized the remaining $0.3 million of the return premium as a reduction in insurance premium expense in the first quarter of 2022. Effective March 1, 2022, the policy term was extended for one additional year to March 1, 2023. As of June 30, 2022, the Company is required to pay additional amounts of up $11.5 million if losses paid by the insurer are greater than $18.4 million over the four-year policy period ending March 1, 2023. Previously, the Company was required to pay additional amounts of up to $11.0 million if losses paid by the insurer were greater than $17.5 million over the three year period ending March 1, 2022. Based on claims occurring since March 1, 2019, no such additional amount was accrued as of June 30, 2022. Commencing on August 30, 2023, the Company may elect to commute the policy with respect to the insurer’s entire liability under the policy in which case the Company would be entitled to a return of a portion of the premium paid, up to $18.4 million, based on the amount of claims paid and the insurer would be released from all liability under the policy ending March 1, 2023. As a result, if the Company elects to commute the policy as to the entire policy term, the Company would be self-insured for $10.0 million per occurrence for the five years ended March 1, 2023.
Effective March 1, 2022, the Company entered into an additional automobile liability insurance policy with a three-year term that is applicable when an occurrence exceeds $10.0 million. Thereafter, the policy provides insurance coverage for a single loss of an additional $5.0 million, an aggregate loss limit of $10.0 million for each policy year, and a $20.0 million aggregate loss limit for the three-year term ending March 1, 2025. Under the policy, the Company may elect to commute the policy for the three year term if losses incurred are less than $1.4 million and the Company does not elect to renew the policy. In the event the Company elects to commute the policy for such period, it will be entitled to a return of a portion of the premium paid, up to $1.1 million, based on the amount of claims paid and the insurer will be released from all liability in connection with such period. As a result, if the Company elects to commute the policy as to such period, the Company will be self-insured for the $10.0 million to $15.0 million loss layer per occurrence for the three years ended March 1, 2025. The election to commute the policy can not be made before June 1, 2024 and must be made prior to December 1, 2025, unless the insurer agrees to extend such date. Additionally, the Company is required to pay additional amounts of up to $7.5 million if losses paid by the insurer are greater than $1.4 million over the three-year policy period ending March 1, 2025. Based on claims occurring since March 1, 2022, no such additional amounts were accrued at June 30, 2022.
(2) Computation of Earnings Per Share
The calculation of basic earnings per common share and diluted earnings per common share was as follows (in thousands, except per share amounts):
Numerator:
Denominator:
Denominator for basic earnings per share–weighted average common shares
Dilutive effect of share-based awards
158
372
173
378
Denominator for diluted earnings per share–adjusted weighted average common shares
For the quarter ended June 30, 2022, options and restricted stock for 38,437 shares of common stock were excluded from the calculation of diluted earnings per share because their effect was anti-dilutive. For the six months ended June 30, 2022, options and restricted stock for 22,493 shares of common stock were excluded from the calculation of diluted earnings per share because their effect was anti-dilutive. For the quarter and six months ended June 30, 2021 options and restricted stock for 19,250 shares of common stock were excluded from the calculation of diluted earnings per share because their effect was anti-dilutive.
(3) Commitments and Contingencies
The Company pays its pro rata share of the cost of letters of credit outstanding for certain workers’ compensation claims incurred prior to March 1, 2000 that Saia’s former parent maintains for insurance programs. The Company’s pro rata share of these outstanding letters of credit was $1.8 million at June 30, 2022.
The Company is subject to legal proceedings that arise in the ordinary course of its business. Management believes that adequate provisions for the resolution of all contingencies, claims and pending litigation have been made for probable and estimable losses and that the ultimate outcome of these actions will not have a material adverse effect on its financial condition but could have a material adverse effect on the results of operations in a given quarter or annual period.
(4) Fair Value of Financial Instruments
The carrying amounts of financial instruments including cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximated fair value as of June 30, 2022 and December 31, 2021, because of the relatively short maturity of these instruments. Based on the borrowing rates currently available to the Company for debt with similar terms and remaining maturities, the estimated fair value of total debt at June 30, 2022 and December 31, 2021 was $39.3 million and $50.8 million, respectively, based upon level two in the fair value hierarchy. The carrying value of the debt was $39.3 million and $50.4 million at June 30, 2022 and December 31, 2021, respectively.
(5) Debt and Financing Arrangements
At June 30, 2022 and December 31, 2021, debt consisted of the following (in thousands):
Credit Agreement with Banks, described below
Finance Leases, described below
39,295
50,404
Total debt
Less: current portion of long-term debt
The Company’s liquidity needs arise primarily from capital investment in new equipment, land and structures, information technology and letters of credit required under insurance programs, as well as funding working capital requirements.
9
The Company is party to a revolving credit agreement with a group of banks to fund capital investments, letters of credit and working capital needs.
Credit Agreement
The Company is a party to a Sixth Amended and Restated Credit Agreement with its banking group (the Amended Credit Agreement), which provides up to a $300 million revolving line of credit through February 2024. The Amended Credit Agreement also has an accordion feature that allows for an additional $100 million availability, subject to certain conditions and availability of lender commitments. The Amended Credit Agreement provides for a LIBOR rate margin range from 100 basis points to 200 basis points, base rate margins from minus 50 basis points to plus 50 basis points, an unused portion fee from 17.5 basis points to 30 basis points and letter of credit fees from 100 basis points to 200 basis points, in each case based on the Company’s leverage ratio. Under the Amended Credit Agreement, the Company must maintain a minimum debt service coverage ratio set at 1.25 to 1.00 and a maximum leverage ratio set at 3.25 to 1.00. The Amended Credit Agreement provides for a pledge by the Company of certain land and structures, accounts receivable and other assets to secure indebtedness under this agreement. The Amended Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants and provisions relating to events of default. Under the Amended Credit Agreement, if an event of default occurs, the banks will be entitled to take various actions, including the acceleration of amounts due.
At June 30, 2022, the Company had no outstanding borrowings and outstanding letters of credit of $31.2 million under the Amended Credit Agreement. At December 31, 2021, the Company had no outstanding borrowings and outstanding letters of credit of $29.3 million under the Amended Credit Agreement. The available portion of the Amended Credit Agreement may be used for general corporate purposes, including capital expenditures, working capital and letter of credit requirements as needed.
Finance Leases
The Company is obligated under finance leases with seven-year original terms covering revenue equipment. Total liabilities recognized under finance leases were $39.3 million and $50.4 million as of June 30, 2022 and December 31, 2021, respectively. Amortization of assets held under the finance leases is included in depreciation and amortization expense. As of June 30, 2022 and December 31, 2021, approximately $73.8 million and $85.1 million of finance leased assets, net of depreciation, were included in Property and Equipment, respectively. The weighted average interest rates for the finance leases at June 30, 2022 and December 31, 2021 were 3.6 percent and 3.6 percent, respectively.
Principal Maturities of Long-Term Debt
The principal maturities of long-term debt, including interest on finance leases, for the next five years (in thousands) are as follows:
Amount
9,022
2023
15,409
2024
10,606
2025
5,453
2026
919
Thereafter
41,409
Less: Amounts Representing Interest on Finance Leases
2,114
10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and our 2021 audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Those consolidated financial statements include additional information about our significant accounting policies, practices and the transactions that underlie our financial results.
Forward-Looking Statements
The Securities and Exchange Commission (the SEC) encourages companies to disclose forward-looking information so that investors can better understand the future prospects of a company and make informed investment decisions. This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations,” contains these types of statements, which are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “may,” “plan,” “predict,” “believe,” “should” and similar words or expressions are intended to identify forward-looking statements. Investors should not place undue reliance on forward-looking statements, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, except as otherwise required by applicable law. All forward-looking statements reflect the present expectation of future events of our management as of the date of this Quarterly Report on Form 10-Q and are subject to a number of important factors, risks, uncertainties and assumptions that could cause actual results to differ materially from those described in any forward-looking statements. These factors, risks, uncertainties and assumptions include, but are not limited to, the following:
These factors and risks are described in Part I, Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as updated by Part II, Item 1A. of this Quarterly Report on Form 10-Q.
As a result of these and other factors, no assurance can be given as to our future results and achievements. Accordingly, a forward-looking statement is neither a prediction nor a guarantee of future events or circumstances and those future events or circumstances may not occur. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this Form 10-Q. We are under no obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by applicable law.
Executive Overview
The Company’s business is highly correlated to non-service sectors of the general economy. The Company’s strategy is to improve profitability by increasing yield while also increasing volumes to build density in existing geography and to pursue geographic expansion to promote profitable growth and improve our customer value proposition over time. The Company’s business is labor intensive, capital intensive and service sensitive. The Company looks for opportunities to improve safety, cost effectiveness and asset utilization (primarily tractors and trailers). Pricing initiatives have had a positive impact on yield and profitability. The Company continues to execute targeted sales and marketing programs along with initiatives to align costs with volumes and improve customer satisfaction. Technology continues to be an important investment that is improving customer experience, operational efficiencies and Company image.
Second Quarter Overview
The Company’s operating revenue increased by 30.5 percent in the second quarter of 2022 compared to the same period in 2021. The increase resulted primarily from increases in revenue per shipment, fuel surcharge revenue and tonnage.
Consolidated operating income was $146.0 million for the second quarter of 2022 compared to $82.9 million for the second quarter of 2021. In the second quarter of 2022, LTL shipments were up 1.8 percent per workday and LTL tonnage was up 2.8 percent per workday compared to the prior year quarter. Diluted earnings per share were $4.10 in the second quarter of 2022, compared to diluted earnings per share of $2.34 in the prior year quarter. The operating ratio (operating expenses divided by operating revenue) was 80.4 percent in the second quarter of 2022 compared to 85.5 percent in the second quarter of 2021. The improved operating ratio compared to prior year is due to the Company’s continued focus on pricing initiatives, cost control and operating efficiencies in addition to the impact of our fuel surcharge program.
12
The Company generated $207.9 million in net cash provided by operating activities in the first six months of 2022 compared with $140.1 million in the same period last year. The increase is primarily due to increased profitability partially offset by a change in working capital, primarily driven by increases in accounts receivable compared to prior year. The Company’s net cash used in investing activities was $155.3 million during the first six months of 2022 compared to $100.0 million in the first six months of 2021, primarily as a result of increased capital expenditures related to real estate acquisitions in the first six months of 2022. The Company’s net cash used in financing activities was $21.3 million in the first six months of 2022 compared to $12.6 million during the same period last year. This change was primarily due to equity based compensation shares withheld for taxes as well as decreased proceeds from stock option exercises during the first six months of 2022, compared to the first six months of 2021. The Company had no outstanding borrowings under its revolving credit agreement, total outstanding letters of credit of $33.0 million and a cash and cash equivalents balance of $137.9 million at June 30, 2022. The Company also had $39.3 million in obligations under finance leases at June 30, 2022. At June 30, 2022, the Company had $268.8 million in availability under the revolving credit facility. The revolving credit facility also has an accordion feature that allows for an additional $100 million availability, subject to certain conditions and availability of lender commitments. The Company was in compliance with the debt covenants under its revolving credit agreement at June 30, 2022.
General
The following Management’s Discussion and Analysis describes the principal factors affecting the results of operations, liquidity and capital resources, as well as the critical accounting policies and estimates of Saia, Inc. and its wholly-owned subsidiaries (together, the Company or Saia).
Saia is a transportation company headquartered in Johns Creek, Georgia that provides national less-than-truckload (LTL) services through a single integrated organization. While more than 97 percent of revenue is historically derived from transporting LTL shipments across 45 states, the Company also offers customers a wide range of other value-added services, including non-asset truckload, expedited and logistics services across North America.
Our business is highly correlated to non-service sectors of the general economy. Our business also is impacted by a number of other factors as discussed under “Forward Looking Statements” and Part II, Item 1A. “Risk Factors.” The key factors that affect our operating results are the volumes of shipments transported through our network, as measured by our average daily shipments and tonnage; the prices we obtain for our services, as measured by revenue per hundredweight (a measure of yield) and revenue per shipment; our ability to manage our cost structure for capital expenditures and operating expenses such as salaries, wages and benefits; purchased transportation; claims and insurance expense; fuel and maintenance; and our ability to match operating costs to shifting volume levels.
13
Results of Operations
Selected Results of Operations and Operating Statistics
For the quarters ended June 30, 2022 and 2021
Percent
Variance
'22 v. '21
(in thousands, except ratios, workdays, revenue per hundredweight, revenue per shipment and length of haul)
30.5
%
Salaries, wages and employees’ benefits
9.8
47.0
6.6
Fuel and other operating expenses
175,746
122,482
43.5
76.1
Operating Ratio
80.4
85.5
Nonoperating Expense
255.7
Working Capital (as of June 30, 2022 and 2021)
197,227
68,986
Cash Flows provided by Operating Activities (year to date)
Net Acquisitions of Property and Equipment (year to date)
155,291
99,966
Saia Motor Freight Operating Statistics:
Workdays
64
-
LTL Tonnage
1,446
1,406
2.8
LTL Shipments
2,048
2,012
1.8
LTL Revenue per hundredweight
25.05
19.84
26.3
LTL Revenue per shipment
353.75
277.24
27.6
LTL Pounds per shipment
1,412
1,397
1.1
LTL Length of haul
910
911
(0.1
Quarter and six months ended June 30, 2022 compared to quarter and six months ended June 30, 2021
Revenue and volume
Consolidated revenue for the quarter ended June 30, 2022 increased 30.5 percent to $745.6 million primarily as a result of increased revenue per shipment, fuel surcharge revenue and tonnage. Saia’s LTL revenue per shipment increased 27.6 percent to $353.75 per shipment for the second quarter of 2022 as a result of changes in business mix and pricing actions. Our service initiatives, including our network expansion, continue to allow us to support our improved pricing. For the second quarter of 2022, Saia’s LTL tonnage was up 2.8 percent per workday to 1.4 million tons, and LTL shipments increased 1.8 percent per workday to 2.0 million shipments. Our organic network expansion is also positively impacting customer experience, as well as volume and tonnage growth. For the second quarter of 2022, approximately 75 to 80 percent of Saia’s operating revenue was subject to specific customer price negotiations that occur throughout the year. The remaining 20 to 25 percent of operating revenue was subject to a general rate increase which is based on market conditions. For these customers subject to a general rate increase, on January 24, 2022 and January 18, 2021, Saia implemented 7.5 and 5.9 percent general rate increases, respectively. Competitive factors, customer turnover and mix changes, impact the extent to which customer rate increases are retained over time.
Operating revenue includes fuel surcharge revenue from the Company’s fuel surcharge program, which is designed to reduce the Company’s exposure to fluctuations in fuel prices by adjusting total freight charges to account for changes in the price of fuel. The Company’s fuel surcharge is based on the average national price for diesel fuel (as estimated by the United States Energy Information Administration) and is typically reset weekly. Fuel surcharges have remained in effect for several years, are widely accepted in the industry and are a significant component of revenue and pricing. Fuel surcharges are an integral part of customer contract negotiations but represent only one portion of overall customer price negotiations, as customers may negotiate increases in base rates instead of increases in fuel surcharges or vice versa. Fuel surcharge revenue as a percentage of operating revenue increased to 21.7 percent for the quarter ended June 30, 2022 compared to 14.4 percent for the quarter ended June 30, 2021, as a result of increases in the cost of fuel.
14
For the six months ended June 30, 2022, operating revenues were $1.4 billion, up 33.3 percent from $1.1 billion for the six months ended June 30, 2021. This increase is primarily due to increased revenue per shipment, fuel surcharge revenue and shipments during the first six months of 2022 compared to the comparable period last year. Fuel surcharge revenue as a percentage of operating revenue increased to 19.4 percent for the six months ended June 30, 2022 compared to 13.7 percent for the six months ended June 30, 2021, as a result of increases in the cost of fuel.
Operating expenses and margin
Consolidated operating income was $146.0 million in the second quarter of 2022 compared to $82.9 million in the prior year quarter. Overall, the increase in consolidated operating income was the result of improved pricing actions, the impact of our fuel surcharge program, increased tonnage and business mix management during the second quarter of 2022. These actions in 2022, along with continued focus on cost controls and operational efficiencies drove improvement during the quarter. The second quarter of 2022 operating ratio (operating expenses divided by operating revenue) was 80.4 percent compared to 85.5 percent for the same period in 2021.
Salaries, wages and employees’ benefits increased $26.3 million in the second quarter of 2022 compared to the second quarter of 2021. This change was primarily driven by increased headcount required to support ongoing business growth and network expansion. In addition, in August 2021 the Company implemented a salary and wage increase of approximately 4.7 percent. Purchased transportation increased $29.3 million in the second quarter of 2022 compared to the second quarter of 2021 partially due to linehaul capacity expansion to support growth and customer service requirements, combined with the increased cost of this expanded capacity. Fuel, operating expenses and supplies increased by $54.9 million, largely due to increased diesel fuel costs and volume increases and related terminal growth during the quarter. The increased cost of this growth is offset by capacity utilization benefits. Claims and insurance expense was $3.1 million lower than the second quarter of 2021 primarily due to lower claims activity. Depreciation and amortization expense increased $2.3 million in the second quarter of 2022 compared to the same period in 2021 primarily due to revenue equipment, real estate and technology investments in the second half of 2021 and the beginning of 2022.
For the six months ended June 30, 2022, consolidated operating income was $249.4 million, up 89.5 percent compared to $131.6 million for the six months ended June 30, 2021. This increase was largely due to pricing actions, improved fuel surcharge revenue and increased shipments.
Salaries, wages and benefits increased $71.3 million during the first six months of 2022 compared to the same period last year largely due to salary and wage increases that were effective in August of 2021 and increases in overall headcount over the past twelve months. Purchased transportation increased $62.6 million for the first six months of 2022 compared to the same period last year primarily due to higher rates for purchased miles during the first six months of 2022 in addition to linehaul capacity expansion to support growth and customer service requirements. Fuel, operating expenses and supplies increased $92.7 million during the first six months of 2022 compared to the same period last year largely due to higher fuel costs resulting from increases in the price per gallon of diesel and volume increases during the first six months of 2022. During the first six months of 2022, claims and insurance expense was $3.9 million lower than the same period last year primarily due to lower claims activity. Depreciation and amortization expense increased $6.9 million during the first six months of 2022 compared to the same period in 2021 primarily due to revenue equipment, real estate and technology investments in the second half of 2021 and the beginning of 2022.
Other
Interest expense in the second quarter of 2022 was lower than the same period in 2021 as the Company continued to pay down finance lease obligations.
The effective tax rate was 24.4 percent and 24.3 percent for the quarters ended June 30, 2022 and 2021, respectively. The increase in the second quarter effective tax rate in 2022 is primarily due to the reduction of available tax credits related to alternative fuels compared to the prior year, as alternative fuel tax credits have not been enacted for 2022. For the six months ended June 30, 2022 and June 30, 2021, the effective tax rates were 23.6 percent. For the six months ended June 30, 2022 approximately $71.4 million in cash tax payments were made compared to $40.2 million in the six months ended June 30, 2021.
Net income was $109.2 million, or $4.10 per diluted share, in the second quarter of 2022 compared to net income of $62.5 million, or $2.34 per diluted share, in the second quarter of 2021. Net income was $188.7 million, or $7.08 per diluted share, for the first six months of 2022 compared to net income of $99.8 million, or $3.74 per diluted share, for the first six months of 2021.
Working capital/capital expenditures
Working capital at June 30, 2022 was $197.2 million, an increase from $69.0 million at June 30, 2021.
15
Current assets at June 30, 2022 increased by $182.5 million as compared to June 30, 2021 which includes an increase in cash and cash equivalents of $85.0 million and an increase in accounts receivable of $95.9 million. Current liabilities increased by $54.3 million at June 30, 2022 compared to June 30, 2021 largely due to an increase in accounts payable as a result of increased volumes. Cash flows provided by operating activities were $207.9 million for the six months ended June 30, 2022 versus $140.1 million for the six months ended June 30, 2021. The increase is primarily due to increased profitability, partially offset by a change in working capital compared to the prior year. For the six months ended June 30, 2022, net cash used in investing activities was $155.3 million compared to $100.0 million in the same period last year, a $55.3 million increase. This increase resulted from increased capital expenditures related to real estate acquisitions as the Company continues to expand its footprint and add density in markets. The Company currently expects that net capital expenditures in 2022 will be in excess of $500 million. For the six months ended June 30, 2022, net cash used in financing activities was $21.3 million compared to $12.6 million during the same period last year, as a result of equity based compensation shares withheld for taxes, as well as decreased proceeds from stock option exercises during the first six months of 2022 compared to the same period in 2021.
Outlook
Our business remains highly correlated to non-service sectors of the general economy and competitive pricing pressures, as well as the success of Company-specific improvement initiatives. Our outlook for 2022 is dependent on a number of external factors, including geopolitical developments, inflation, labor availability, fuel prices and supply chain constraints. The potential impact of these factors on our operations, financial performance and financial condition, as well as the impact on our ability to successfully execute our business strategies and initiatives, remains uncertain and difficult to predict. We are continuing initiatives to improve and enhance customer service in an effort to support our ongoing pricing and business mix optimization, while controlling costs and improving productivity. On January 24, 2022 and January 18, 2021, Saia implemented a 7.5 and 5.9 percent general rate increase, respectively, for customers comprising approximately 20 to 25 percent of Saia’s operating revenue. The success of cost improvement initiatives is impacted by the cost and availability of drivers, dock workers and other employees and purchased transportation, fuel, self-insurance claims and insurance expense, regulatory changes, successful expansion of our service geography throughout the United States, the COVID-19 pandemic and other factors discussed under “Forward-Looking Statements” and Part II, Item 1A. “Risk Factors.”
Effective July 2022, the Company implemented a market competitive salary and wage increase for all employees, other than Saia officers. The compensation increase was approximately 4.3 percent, and the Company anticipates the impact will be partially offset by productivity and efficiency gains.
See “Forward-Looking Statements” and Part II, Item 1A. “Risk Factors” for a more complete discussion of potential risks and uncertainties that could materially affect our future performance.
Financial Condition, Liquidity and Capital Resources
At June 30, 2022, the Company had no outstanding borrowings and outstanding letters of credit of $31.2 million under the Amended Credit Agreement. At December 31, 2021, the Company had no outstanding borrowings and outstanding letters of credit of $29.3
16
million under the Amended Credit Agreement. The available portion of the Amended Credit Agreement may be used for general corporate purposes, including capital expenditures, working capital and letter of credit requirements as needed.
The Company is obligated under finance leases with seven-year original terms covering revenue equipment. Total liabilities recognized under finance leases were $39.3 million and $50.4 million as of June 30, 2022 and December 31, 2021, respectively. Amortization of assets held under the finance leases is included in depreciation and amortization expense. The weighted average interest rates for the finance leases at June 30, 2022 and December 31, 2021 were 3.6 percent and 3.6 percent, respectively.
Cash Flows and Expenditures
The Company has historically generated cash flows from operations to fund a large portion of its capital expenditure requirements. Cash flows from operating activities were $382.6 million for the year ended December 31, 2021, while net cash used in investing activities was $277.8 million. Cash flows provided by operating activities were $207.9 million for the six months ended June 30, 2022, $67.8 million higher than the first six months of the prior year. The increase in operating cash flows is primarily due to increased profitability, partially offset by a change in working capital, largely increases in accounts receivable compared to the prior year. The timing of capital expenditures can largely be managed around the seasonal working capital requirements of the Company. The Company believes it has significant sources of capital to meet short-term liquidity needs through its operating cash flows and availability under the Amended Credit Agreement. At June 30, 2022, the Company had $268.8 million in availability under the Amended Credit Agreement. The Company was in compliance with its debt covenants at June 30, 2022. Future operating cash flows are primarily dependent upon the Company’s profitability and its ability to manage its working capital requirements, primarily accounts receivable, accounts payable and wage and benefit accruals.
Net capital expenditures pertain primarily to investments in tractors and trailers and other revenue equipment, information technology, land and structures. Projected net capital expenditures for 2022 are expected to be in excess of $500 million, which represents an increase
from 2021 net capital expenditures of $277.3 million. Projected 2022 capital expenditures include a normal replacement cycle of revenue equipment and technology investment for our operations. Net capital expenditures were $155.3 million in the first six months of 2022. Approximately $206.3 million of the 2022 remaining capital budget was committed as of June 30, 2022.
Contractual Obligations
Contractual obligations for the Company are comprised of lease agreements, purchase obligations and long-term debt obligations related to any outstanding balance under the Company’s revolving line of credit. Total contractual obligations for operating leases at June 30, 2022 totaled $119.6 million, including operating leases with original maturities of less than one year, which are not recorded in our consolidated balance sheet in accordance with U.S. generally accepted accounting principles. Additionally, in April 2021, the Company committed to an additional terminal lease estimated to commence in 2023 of approximately $57 million with a lease term of 15 years with annual rent ranging from $3.1 million to $4.6 million. Annual rental payments under this lease are not included in the contractual obligations for operating leases at June 30, 2022. Contractual obligations in the form of finance leases were $41.4 million at June 30, 2022, which includes both principal amounts and $2.3 million of interest based on borrowings and commitments outstanding at June 30, 2022. See Note 5 to the accompanying condensed consolidated financial statements in this Current Report on Form 10-Q. Purchase obligations at June 30, 2022 were $208.8 million, including commitments of $206.3 million for capital expenditures. As of June 30, 2022, the revolving line of credit had no outstanding principal balance.
Other commercial commitments of the Company typically include letters of credit and surety bonds required for collateral towards insurance agreements and the outstanding available line of credit. As of June 30, 2022 the Company had total outstanding letters of credit of $33.0 million and $74.1 million in surety bonds. Additionally, the Company had $268.8 million available under its revolving credit facility, subject to existing debt covenants at June 30, 2022.
The Company has accrued approximately $3.8 million for uncertain tax positions and $0.4 million for interest and penalties related to the uncertain tax positions as of June 30, 2022. At June 30, 2022, the Company has accrued $112.7 million for claims and insurance liabilities.
Critical Accounting Policies and Estimates
There have been no significant changes to the application of the critical accounting policies and estimates contained in our Form 10-K at December 31, 2021. The reader should refer to the Notes to our Consolidated Financial Statements in our 2021 Annual Report on Form 10-K for a full disclosure of all critical accounting policies and estimates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to a variety of market risks including the effects of interest rates and fuel prices. The detail of the Company’s debt structure is more fully described in the Notes to Consolidated Financial Statements set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. To help mitigate our risk to rising fuel prices, the Company has implemented a fuel surcharge program. This program is well established within the industry and customer acceptance of fuel surcharges remains high. Since the amount of fuel surcharge is based on average national diesel prices (as estimated by the United States Energy Information Administration) and is typically reset weekly, exposure of the Company to fuel price volatility is significantly reduced. However, the fuel surcharge may not fully offset fuel price fluctuations during periods of rapid increases or decreases in the price of fuel and is also subject to overall competitive pricing negotiations.
The following table provides information about the Company’s third-party financial instruments as of June 30, 2022. The table presents principal cash flows (in millions) and related weighted average interest rates by contractual maturity dates. The fair value of the fixed rate debt (in millions) was estimated based upon level two in the fair value hierarchy. The fair value of finance leases is based on current market interest rates for similar types of financial instruments.
Expected maturity date
Fair Value
Fixed rate debt
8.4
14.5
10.2
5.3
0.9
39.3
Average interest rate
3.6
Item 4. Controls and Procedures
Quarterly Controls Evaluation and Related CEO and CFO Certifications
As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company conducted an evaluation of the effectiveness of the design and operation of its “disclosure controls and procedures” (Disclosure Controls). The Disclosure Controls evaluation was performed under the supervision and with the participation of management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO).
Based upon the controls evaluation, the Company’s CEO and CFO have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s Disclosure Controls are effective to ensure that information the Company is required to disclose in reports that the Company files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
During the period covered by this Quarterly Report on Form 10-Q, there were no changes in internal control over financial reporting that materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Attached as Exhibits 31.1 and 31.2 to this Quarterly Report on Form 10-Q are certifications of the CEO and the CFO, which are required in accordance with Rule 13a-14 of the Exchange Act. This Controls and Procedures section includes the information concerning the controls evaluation referred to in the certifications and it should be read in conjunction with the certifications.
Definition of Disclosure Controls
Disclosure Controls are controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed under the Exchange Act is recorded, processed, summarized and reported timely. Disclosure Controls are also designed to ensure that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. The Company’s Disclosure Controls include components of its internal control over financial reporting which consists of control processes designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles.
Limitations on the Effectiveness of Controls
The Company’s management, including the CEO and CFO, does not expect that its Disclosure Controls or its internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Item 1. Legal Proceedings — For a description of all material pending legal proceedings, see Note 3 “Commitments and Contingencies” of the accompanying unaudited condensed consolidated financial statements.
Item 1A. Risk Factors—Risk Factors are described in Item 1A. “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as updated by the risk factor set forth below. Other than the risk factor set forth below, which revises, among other things, the duration, layers, thresholds and applicable amounts payable under the Company’s automobile liability insurance, there have been no other material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The risk factor below replaces in its entirety the risk factor found under “Business and Operational Risks” originally filed with the same title.
Ongoing insurance and claims expenses could significantly reduce and cause volatility in our earnings.
We are regularly subject to claims resulting from personal injury, cargo loss, property damage, group healthcare and workers’ compensation claims. The Company has self-insured retention limits generally ranging from $250,000 to $1 million per occurrence for medical, workers’ compensation, casualty and cargo claims and from $2 million to $10 million for auto liability. We also maintain insurance with licensed insurance companies above these self-insured retention limits. In recent years the trucking business has experienced significant increases in the cost of liability insurance, in the size of jury verdicts in personal injury cases arising from trucking accidents and in the cost of settling such claims. If the number or severity of future claims continues to increase, claim expenses might exceed historical levels or could exceed the amounts of our insurance coverage or the amount of our reserves for self-insured claims, which would adversely affect our financial condition, results of operations, liquidity and cash flows.
The Company is dependent on a limited number of third party insurance companies to provide insurance coverage in excess of its self-insured retention amounts. Recently, several insurance companies have completely stopped offering coverage to trucking companies or have significantly reduced the amount of coverage they offer or have significantly raised premiums as a result of increases in the severity of automobile liability claims and sharply higher costs of settlements and verdicts. To the extent that the third party insurance companies propose increases to their premiums for coverage of commercial trucking claims, the Company may decide to pay such increased premiums or increase its financial exposure on an aggregate or per occurrence basis, including by increasing the amount of its self-insured retention or reducing the amount of total coverage. This trend could adversely affect our ability to obtain suitable insurance coverage, could significantly increase our cost for obtaining such coverage, or could subject us to significant liabilities for which no insurance coverage is in place, which would adversely affect our financial condition, results of operations, liquidity and cash flows. Additionally, as the number of third party insurance companies willing to provide insurance coverage to trucking companies decreases, the risk of failure of one of these companies increases. In the event of the failure of one of the insurance companies, the Company may be faced with a situation where the insurance company may not be able to fund a catastrophic loss.
Our self-insured retention limits can make our insurance and claims expense higher and/or more volatile. We accrue for the costs of the uninsured portion of pending claims based on the nature and severity of individual claims and historical claims development trends. Estimating the number and severity of claims, as well as related judgment or settlement amounts is inherently difficult. This, along with legal expenses associated with claims, incurred but not reported claims, and other uncertainties can cause unfavorable differences between actual self-insurance costs and our reserve estimates.
Generally, the Company is responsible for the risk retention amount per occurrence of $2.0 million under its automobile liability insurance policy. Thereafter, the policy provides insurance coverage for a single occurrence of $8.0 million, an aggregate loss limit of $24.0 million for each policy year, and a $48.0 million aggregate loss limit for the 36-month term originally ended March 1, 2021. The automobile liability insurance policy contains a provision under which we have the option, on a retroactive basis, to assume responsibility for the entire cost of covered claims during certain periods in exchange for a refund of a portion of the premiums we paid for the policy. This is referred to as “commuting” the policy. In August 2019, the Company elected to commute the policy for the period from March 1, 2018 to February 28, 2019. As a result of commuting the policy for that 12-month period, the Company is now self-insured for the first $10.0 million per occurrence with respect to such 12-month period and the policy was extended for one additional year to March 1, 2022. Effective March 1, 2022, the policy term was extended for one additional year to March 1, 2023. As of June 30, 2022, the Company is required to pay additional amounts of up $11.5 million if losses paid by the insurer are greater than $18.4 million over the four-year policy period ending March 1, 2023. Previously, the Company was required to pay additional amounts of up to $11.0 million if losses paid by the insurer were greater than $17.5 million over the three year period ending March 1, 2022. Commencing on August 30, 2023, the Company may elect to commute the policy with respect to the insurer’s entire liability under the policy in which case the Company would be entitled to a return of a portion of the premium paid, up to $18.4 million, based on the amount of claims paid and the insurer would be released from all liability under the policy ending March 1, 2023. As a result, if the Company elects to commute the policy as to the entire policy term, the Company would be self-insured for $10 million per occurrence for the five years ended March 1, 2022.
Effective March 1, 2022, the Company entered into an additional automobile liability insurance policy with a three-year term that is applicable when an occurrence exceeds $10.0 million. Thereafter, the policy provides insurance coverage for a single loss of an additional $5.0million, an aggregate loss limit of $10.0 million for each policy year, and a $20.0 million aggregate loss limit for the three-year term ending March 1, 2025. Under the policy, the Company may elect to commute the policy for the three year term if losses incurred are less than $1.4 million and the Company does not elect to renew the policy. In the event the Company elects to commute the policy for such period, it will be entitled to a return of a portion of the premium paid, up to $1.1 million, based on the amount of claims paid and the insurer will be released from all liability in connection with such period. As a result, if the Company elects to commute the policy as to such period, the Company will be self-insured for the $10.0 million to $15.0 million loss layer per occurrence for the three years ended March 1, 2025. The election whether to commute the policy cannot be made before June 1, 2024 and must be made prior to December 1, 2025, unless the insurer agrees to extend such date. Additionally, the Company is required to pay additional amounts of up to $7.5 million if losses paid by the insurer are greater than $1.4 million over the three-year policy period ending March 1, 2025.
To the extent the Company incurs one or more significant claims not covered by insurance, either because the claims are within our self-insured layer or because they exceed our total insurance coverage, our financial condition, results of operation, and liquidity could be materially and adversely affected.
Furthermore, insurance companies, as well as certain states, require collateral in the form of letters of credit or surety bonds for the estimated exposure of claims within our self-insured retentions. Their estimates of our future exposure as well as external market conditions could influence the amount and costs of additional letters of credit required under our insurance programs and thereby reduce capital available for future growth or adversely affect our financial condition, results of operations, liquidity and cash flows. In addition, insurance companies are increasingly encouraging or requiring trucking companies to increase the level of technology and safety measures used in their fleet, which could increase the costs of our fleet in order to obtain acceptable coverage or avoid rate hikes.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds —
Issuer Purchases of Equity Securities
Period
(a) TotalNumber ofShares (orUnits)Purchased (1)
(b) AveragePrice Paidper Share(or Unit)
(c) Total Numberof Shares (or Units)Purchased as Partof PubliclyAnnounced Plansor Programs
(d) MaximumNumber (orApproximate DollarValue) of Shares (orUnits) that may Yetbe Purchased underthe Plans or Programs
April 1, 2022 through
April 30, 2022
940
(2)
216.70
May 1, 2022 through
May 31, 2022
1,710
(3)
199.35
June 1, 2022 through
490
(4)
176.24
3,140
(1)
Shares purchased by the Saia, Inc. Executive Capital Accumulation Plan were open market purchases. For more information on the Saia, Inc. Executive Capital Accumulation Plan, see the Registration Statement on Form S-8 (No. 333-155805) filed on December 1, 2008.
The Saia, Inc. Executive Capital Accumulation Plan had no sales of Saia stock during the period of April 1, 2022 through April 30, 2022.
The Saia, Inc. Executive Capital Accumulation Plan had no sales of Saia stock during the period of May 1, 2022 through May 31, 2022.
The Saia, Inc. Executive Capital Accumulation Plan sold 117 shares of Saia stock at an average price of $191.24 during the period of June 1, 2022 through June 30, 2022.
Item 3. Defaults Upon Senior Securities—None
Item 4. Mine Safety Disclosures—None
Item 5. Other Information—None
Item 6. Exhibits
Exhibit
Number
Description of Exhibit
3.1
Restated Certificate of Incorporation of Saia, Inc., as amended (incorporated herein by reference to Exhibit 3.1 of Saia, Inc.’s Form 8-K (File No. 0-49983) filed on July 26, 2006).
3.2
Certificate of Amendment to Restated Certificate of Incorporation of Saia, Inc. (incorporated herein by reference to Exhibit 3.1 of Saia, Inc.'s Form 8-K (File No. 0-49983) filed on July 2, 2021).
3.3
Certificate of Amendment to Restated Certificate of Incorporation of Saia, Inc. (incorporated herein by reference to Exhibit 3.1 of Saia, Inc.’s Form 8-K (File No. 0-49983) filed on June 9, 2022).
3.4
Certificate of Amendment to Restated Certificate of Incorporation of Saia, Inc. (incorporated herein by reference to Exhibit 3.2 of Saia, Inc.’s Form 8-K (File No. 0-49983) filed on June 9, 2022).
3.5
Amended and Restated By-laws of Saia, Inc. (incorporated herein by reference to Exhibit 3.1 of Saia, Inc.’s Form 8-K (File No. 0-49983) filed on July 29, 2008).
Certificate of Elimination filed with the Delaware Secretary of State on December 16, 2010 (incorporated herein by reference to Exhibit 3.1 of Saia, Inc.’s Form 8-K (File No. 0-49983) filed on December 20, 2010).
31.1
Certification of Principal Executive Officer Pursuant to Exchange Act Rule 13a-15(e).
31.2
Certification of Principal Financial Officer Pursuant to Exchange Act Rule 13a-15(e).
32.1
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
The following financial information from Saia, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in iXBRL (Inline Extensible Business Reporting Language) includes: (i) Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (unaudited), (ii) Condensed Consolidated Statements of Operations for the quarters and six months ended June 30, 2022 and 2021 (unaudited), (iii) Consolidated Statements of Stockholders’ Equity for the quarters and six months ended June 30, 2022 and 2021 (unaudited), (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited), and (v) the Notes to Condensed Consolidated Financial Statements (unaudited). XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104
The cover page from Saia’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted in Inline XBRL (included as Exhibit 101).
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SAIA, INC.
Date: July 27, 2022
/s/ Douglas L. Col
Douglas L. Col
Executive Vice President and Chief Financial Officer