Less-than-truckload (LTL) carrier Saia, Inc. (NASDAQ: SAIA) posted a near 9% increase in fourth quarter revenue, but operating income declined 17.7% due to the high costs of the company's U.S. expansion, increased labor costs, a rise in depreciation and amortization expenses, and a spike in insurance claims due to several severe accidents.
Saia reported fourth-quarter earnings per share of 81 cents, 4 cents per share less than analysts' consensus estimates. Revenue came in slightly higher than analysts' estimates.
Saia opened 10 facilities during 2019–most of them in the Northeast as part of its three year program to penetrate the competitive region. Company executives said Monday that they plan to throttle back significantly on expansion in 2020 and will focus on deepening the integration of its Northeast region with the rest of its U.S. network.
Saia, which was founded in 1924, did not start serving the Northeast on its own until 2017.
In the quarter, operating income came in at $27.4 million. Shipments and tonnage rose 6.3% and 4.3%, respectively, year-over-year. Weight per shipment declined by 2%. Operating ratio, the ratio of expenses to revenues, was reported at 93.8%, a 200 basis point increase over the 2018 quarter as higher costs weighed. Revenue per shipment rose 1.8% to $238.45.
For the year, revenue hit a record $1.8 billion, an 8% increase over 2018. Operating income was $152.6 million, an 8.1% increase. Daily volume rose 4.3%, but tonnage dipped 0.4%. Revenue per shipment rose 3.4%.
Saia CEO Rick O'Dell said in a statement that the expenses associated with the facility openings "were a drag in the back half of the year." Saia has opened 18 terminals in the Northeast since the program launched in May 2017. The company is on a $280 million annualized revenue run rate in and out of the region, O'Dell said.
Saia's President and Chief Operating Officer Fritz Holzgrefe added that the LTL pricing environment remains "rational" despite the ongoing sluggishness in industrial activity that has compressed the top-lines of all LTL carriers.
Saia shares were up more than $4 in late-morning trading Feb. 3.
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