Fritz Holzgrefe could hardly have been more emphatic.
“At no time in the company’s 100-year history have we had a similar opportunity,” the president and CEO of Saia Inc. told analysts and investors Feb. 2 when discussing his team’s plans to spend up to $1 billion this year on real estate, equipment, and technology—a quarter more than the fleet’s outlays in 2022 and 2023 combined.
The opportunity Holzgrefe and his lieutenants see stems from the shutting down of Yellow Corp. last summer, one of the largest players in the less-than-truckload market. On a conference call, Holzgrefe called Yellow’s closure “a generational type of moment” for the trucking industry.
Saia, which ranked No. 21 on last year’s FleetOwner 500: For-Hire list, was among the competitors who moved quickly to pick up freight Yellow would have moved: The Georgia-based company hired 1,500 people in the second half of last year to handle growing volumes, which were up 18% in the fourth quarter versus late 2022 (tonnage rose about 8%) and powered Saia to a record revenue quarter of $751 million.
Saia’s growth strategy is now getting another jolt in the form of 17 former Yellow terminals the company bought last month for $236 million. That figure is included in the 2024 $1 billion total capex budget and will grow a little bit because of the required investments to reopen them. On top of that, CFO Doug Col said on the conference call that another roughly $300 million will go to other real estate projects nationwide.
In addition, plans call for the opening of 15 to 20 terminals this year (with Saia moving some of its existing operations into ex-Yellow sites) versus a total of 20 in the last two years. More than $400 million will be spent on tractors and trailers and about $50 million on various technology projects.
See also: First wave of auctioned Yellow terminals set to fetch $1.9B
Holzgrefe told analysts he is confident Saia can quickly turn much of that investment into profitable business. That goes beyond the former Yellow terminals in markets where Saia already is active, he said, to some Great Plains states where the company has been going through agents.
“If we have a reasonable backdrop, I think we ought to be able to think about a range of 100 to 200 basis points of [operating ratio] improvement from ’23,” Holzgrefe said. “Even in a softer environment, we have an opportunity to differentiate, and we have an opportunity for our team to execute. And I think we can drive those kinds of returns even while we’re making substantial investments in the business.”
Saia posted a fourth-quarter profit of $89.2 million, an increase of 26% from late 2022. The $751 million in operating revenue was up nearly 15% year over year, helped by revenue per hundredweight climbing nearly 12%. For 2024, that last number looks set to grow again: Holzgrefe noted that the average rate increase Saia negotiated in the fourth quarter was 8.7%.
The successes and big ambitions of Saia are similar to those of XPO Inc., No. 12 on the FO500. There, CEO Mario Harik oversaw a late-2023 capex boost of about $150 million so that XPO could maintain its service levels as it was picking up Yellow clients. (XPO will report its fourth-quarter results later this week.)
Shares of Saia (Ticker: SAIA) popped more than 14% to about $534 on the earnings news. Since last August, they are up nearly 25%, which has grown the company’s market capitalization to more than $14 billion.
