Good day and welcome to the Saia Inc., Third Quarter 2012 Results Conference Call. Today’s conference is being recorded. At this time I’d like to turn the conference over to Ms. Renée McKenzie. Please go ahead ma’am. Renée McKenzie: Thank you. Good morning and welcome to Saia’s Third quarter 2012 conference call. Hosting today’s call are Rick O’Dell, Saia’s President and Chief Executive Officer and Jim Darby, our Vice President, Finance and Chief Financial Officer. Before we begin, you should know that certain comments made during this call -- during this call we may make some certain forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. These forward-looking statements and all other statements that might be made on this call that are not historical facts are subject to a number of risks and uncertainties and actual results may differ materially. We refer you to our press release and our most recent SEC filings for more information on the exact risk factors that could cause actual results to differ. Now, I would like to turn the call over to Rick O’Dell.

Well, good morning and thank you for joining us to discuss Saia’s third quarter results. The third quarter of 2012 was another exciting one for those of us at Saia. After several years of foundational work, it’s gratifying to see the positive results unfold. I’m pleased to report that Saia again delivered a significant increase in earnings this quarter. Our success was due to the hard work and dedication by every member of the Saia team. There are meaningful improvements across the number of targeted areas, many of which I’m going to discuss with you today. To get started, we’re going to review some highlights from the quarter compared to the third quarter of last year. Revenue per work day was up 5.3% to $278 million. Our earnings per share were $0.56 versus $0.30 last year, up 87%. Our operating ratio was 94.1 versus 96.4, LTL tonnage per work day increased -- decreased, I’m sorry, to 1.6% and LTL yield increased 6.6% due to effective yield management. The 230 basis point improvement in Saia’s operating ratio for the quarter demonstrates continued, effective execution across several key initiatives. Saia’s best-in-class service quality, strong yield results and operational excellence were the primary drivers of our margin improvement. While recovery in the transportation market appears to be moderating, we continue to advance our value proposition through investments that are improving the quality of our service, strengthening company infrastructure and technology and investing in our employees, all of our most important assets. I’d like to highlight a few specifics for you that contributed to the positive results for the quarter. Our industrial engineering initiatives and corresponding operational efficiencies have reduced purchased transportation miles per day by an impressive 28% compared to the third quarter of last year. Our fuel efficiency supported by our electronic…

Thanks, Rick, and good morning, everyone. As Rick mentioned, the third quarter 2012 earnings per share were $0.56 compared to $0.30 in the third quarter of 2011. For the quarter, revenues were $278 million with operating income of $16.4 million. This compares to 2011 third quarter revenue of $268 million and a reported operating income of $9.6 million. The LTL yield for the third quarter 2012 increased by 6.6% which primarily reflects the favorable impact of continued pricing actions. Our annual general rate increase or GRI of 6.9% with effective July 9. Continuing our trend from the past several quarters, yield showed steady improvement and we continue to achieve price increases and target poorly operating freights. Our industrial engineering initiatives and operational effectiveness continue to reduce our reliance on purchased transportation, significantly enhance our fuel utilization and reduce our self-insurance costs. The quarter however did include higher costs from wage and benefit increases, necessary to compensate our workforce and meet customer requirements. As we implemented a 3% of wage and salary increase company-wide effective on July 1, this increase will add approximately $13 million in expense on an annualized basis. We anticipate the impact of this wage increase to be partially offset by further productivity and efficiency gains. Our investments end and our commitment to our Quality Matters program are paying off and benefiting our customers. Our focus on safety training along with the decline in cargo claims resulted in a continued reduction in claims and insurance expense in the third quarter. Depreciation and amortization ran $12.3 million during the quarter versus $9.7 million in the prior year quarter due to our significant capital expenditures for tractors and trailers, which are now in service. Year-to-date revenues were $834 million compared to $777 million in the prior year period, a 7.3%…

Thanks, Jim. The quarter was marked by significant margin improvement and achieved with effective execution across our network. I believe our investments and employees, quality techniques and innovative technology solutions continue to provide a foundation for us to build upon these demonstrated results. We remain committed to our core strategy of improving yields, building density and enhancing customer satisfaction and reducing costs through engineered process improvements and continuous employee training. This strategy provides the base for long-term profitable growth and increased shareholder and customer value going forward. With these comments, we’re now ready to answer your questions. Operator?

[Operator Instructions] We’ll go first to William Greene from Morgan Stanley.

There's a few moving pieces here just if I remember correctly you’ve talked about having some headwinds sequentially in the third quarter referencing some of them in your remarks here. When we think about the fourth quarter margins and we look at them historically on a sequential basis, should we not use that normal seasonality as a rough guide, can you kind of talk a little bit about some of the puts and takes third quarter over fourth that need to keep in mind as we model.

Yes. Our historical third quarter to fourth-quarter performance is averaged about 1.9 of our points worse just because of the, normal seasonality and I think at this point we really don't see any reason for this year to be much different than that, while volumes are a little flat, the rate environment is still positive and we have good cost control and we're seeing pretty good margins are being maintained.

Okay, great and then as we look out to ‘13, I think in the past you’ve sort of said, look the pricing gains are probably going to moderate, there were really quite good here in the third quarter, how do you think that sort of tracks going forward as you sort of negotiate with customers here.

Yes. Even this quarter we saw some of our pricing on contract renewals is now more in the 3 to 4% range. And I think you are looking at, like you said a couple of things here first of all, the economy is obviously not robust, it's pretty soft at this point in time. I think we, continue as an industry to face some cost headwinds with regulations and increased equipment cost, et cetera, so I think customers are pretty accepting that the rates still need to go up, but we're looking at 18 months to 2 years, of us having increased yield very significantly particularly on some large customers that needed to have some corrective pricing, the good news is we’re kind of overlapping those at this point in time and we're back to where, I don't have a big group of customers that require a large increase to operate, okay. So, I would say probably more in that 3% to 4% range would be more of an expectation and that combined with some of our cost initiatives, I think we will work well for us to continue to improve our margins and get the types of returns that we need to justify investing in the business.

The next question comes from Jason Seidl with Dahlman Rose.

When you guys are looking at sort of the impacts of the storm, can you give that 1.9 OR, normalized impact from 3Q to 4Q sequentially, are you including the storm impacts or excluding?

I guess we are fairly fortunate in that the storm did not impact our geography very much at all. So we really did not see much impact, I guess the question is, what is the ultimate residual impact on the economy overall from the storm, that I'm not really certain about. But I guess what I would tell you is, through October, we've seen what I would consider to be normal, sequential margins and profit margins in the quarter, and our volume softened a little bit from September to October, but we've had some good cost initiatives, that we’ve been working through and progressing into the quarter and our margins are still pretty good.

If I go back to a survey of you of Railroad Shippers, it seems that about a third of them responded that they have been withholding investment to sort of post-election, post fiscal cliff. Are you hearing sort of the same things from some of your customers?

Yes, I think that's probably a fair statement, that we're just seeing some -- there is some hesitation, I guess in making strong commitments given, we only know what the regulatory and economic environments going to look like.

Then last one more for Jim. Jim, I might have missed this and I do apologize. Your tax rate for the quarter was, I guess a little bit below, what I would expect. Was there anything one time in nature in that number, and what should we look for going out?

It was a little bit lower in the quarter, it has to do with some credits that we actually realized in the quarter and we turn the provision adjustments we have. For the year, we are looking at 38% of effective tax rate.

And the next question will come from Art Hatfield with Raymond James.

This is Alex Scott here for Art. Can you speak a little bit about your industrial engineering initiatives, and I believe the purchased transportation, miles per day were down 28%, you also mentioned fuel utilization and self-insurance costs, also benefiting from those initiatives. Could you quantify what those benefits were?

We can highlight a few of those things. Our electronic on-board computers are really giving us some very detailed fuel measurement by a tractor and by a driver. We also can see driving habits; whether they’re doing progressive shifting is correct, whether there’s hard braking incidents, things like that. and so by working with the units themselves, maintenance and the drivers, the driving techniques, we’ve targeted some pretty significant improvements and we’re seeing about 6% improvement. We spend in the neighborhood of $200 million a year on fuel that you’re talking about $12 million a year. And I actually believe that we’re going to target some further improvements, because that really just got rolled out companywide with the electronic on-boards was just completed in July of this year. So I think there’s some additional opportunities for us to improve our effectiveness in fuel management going forward. So that’s a pretty big one. Obviously, we’re always working on our network optimization from the linehaul perspective, loading techniques, load average, always re-optimizing your use of purchase transportation, some of our -- the combination of effective linehaul management, plus more sophisticated lane based pricing to make sure we’re profitably compensated for imbalances on our network. The combination of those 2 things is allowing us to improve our linehaul expenses as a percent of revenue. So that’s again, working well from that perspective. And then this year, we made a lot of investments in quality with load quality inspectors. We put, new airbag systems in the terminals. We worked on, we’ve re-engineered some tools and replenishment functions for dockworker tools. We reinstituted some more sophisticated training for our dockworkers on freight handling techniques, and we’ve seen a significant improvement in our cargo claims ratio, which is now below 1%. And again, we believe that there are still some further improvements there as well. Those are probably the 3 highlight things that we’re highlighting.

Okay. And then if I could follow up on a comment you made earlier about volume softening a little bit sequentially from September on to October, if you could maybe provide the trends throughout quarter. And then, do you anticipate then trending down year-over-year as far as fourth quarter tonnage goes?

Alex, what I can tell you, I’ll walk you through the quarter. I mean you can see our LTL tonnage for the quarter was down 1.6% versus third quarter a year ago. In July, we were down 1.5%. In August, we were down 2.6%. And in September, it was a little bit better, we were down 4/10 of 1%. And that average is out to 1.6% down from the quarter. For the month of October, what we’ve seen is on LTL tonnage, we’re down 1.9%.

We’ll move next to Ed Wolfe with Wolfe Trahan.

Just as a follow-up to the last question. Jim, the negative 1.9 in October, was there any major change the last 3 or 4 days with the storm, I’m guessing from Rick’s earlier comments not really for you guys, but I just want to check?

No, not really, Ed. I think it was, we were down, trailing down through the month end, we didn’t see a lot of difference in the last couple of days.

Yes. Can you give the similar monthly trends for yields throughout the quarter? Renée McKenzie: That’s the number we don’t give out.

We look at it, because there’s variability and some of the mixes during the month and you can have some variations. So we really just do it on a quarterly basis.

What I would say is, while our rate increases from contract renewals moderated in the quarter from our prior quarters, because we’ve been running 5% to 6% in contract renewals and this quarter was more in a little over 3% range. But coming out of the quarter, we had higher yields than we did coming in obviously, so we continue to make progress from the yield perspective, just the pace is slowing somewhat.

So if it’s accelerating, but the pace is slowing, how do you put those 2 together, is it that the GRI is bigger, I mean what’s the -- what am I missing there?

No, I’m saying as we’re still getting, contract renewals are still increasing, right; it’s just try to get 5% to 6% of contract renewals I’m getting 3%. Every quarter, every month, right I have about 70% of our business is contractual, 30% is subject to general rate increase. So we’ve got 1/12 of that 70% every quarter that comes up for renewal approximately.

I got you. And then I thought I heard you say that the goal for next year is 3% to 4% on contractual renewals, but you are -- seem to be at the low end of that 3% to 4%. You’re confident you’ll be able to stay in that range?

I believe so and we’re seeing some good, we’re continuing to make some good progress on the yield side. And our value proposition in the marketplace is probably better than it’s ever been, we continue to advance that. And then also part of your net yield right off that, your business mix and we continue to see growth in field business, which have a higher yield, is growing at a faster rate than our national account revenue. So while we’re up about per work day basis about 5% field business is growing over 6% and national account business is up about 2.5%.

Rick, I mean you guys have just done a fantastic job over the last couple of years of balancing price in tonnage, and clearly, you’ve been leaning towards getting the price right in front of tonnage and the tonnage follows. As you look forward to 2013 and assuming the economy is kind of more of the same as this year, 1%, 2% let’s say GDP. What would you think in terms of that balance of tonnage and pricing, do you think it stays the same or at some point, do you start to move towards tonnage a little bit more or how do you think about it?

Yes. Obviously, one of our strategies is to build density in our network, I mean we have fixed costs and there is a good opportunity to improve our utilization there. I think as you’ve commented, I mean for the last 2 years, we’ve done some material re-pricing of large segment of our business. And I think once that’s behind you, you got to take a lot of risks when you need a double-digit increase from a major customer, right. The good, and so why you’ve over timely been able to do that re-priced lanes and maintain the relationship. I think going forward we don’t have to take that kind of risk, because we don’t have their group of accounts that operate that poorly any more. So I would think that we would be able to kind of regain some of our momentum from a share perspective with the quality that we have and not have to go out there and trade out business, so to speak, right.

That would make sense. Can you talk a little bit about the acquisition and what you are seeing from that and if there is revenue in the quarter, how much and where we see that?

Yes. I mean the business is well operated. They are having a good year, it’s not a very big business, but the top line and the bottom line is both growing at a double-digit pace. We just rebranded the companies. They contributed about $0.01 in the quarter, which is what we said, it would do. And now, we’re beginning to roll out the truckload plus the non-asset based truckload sales to our sales force, it’s actually going to start this month. So it’s small, but I think it’s a good opportunity, obviously non-asset margins are great. We’re excited about it.

Is there a revenue number in the quarter for us in July?

Yes. We want to pick up that revenue top line.

How much though?

Booking, net of purchase transportation, it’s about $1.1 million.

One last one, and then I’ll let you be. When we think about D&A, as you’ve been replenishing the fleet has been going up. Should we expect it to continue going up for a couple of quarters and then kind of go up or level off or should it start coming down. How do we think about D&A as you move forward?

I think we’ve said it should hit about $48 million for the year all along, and that’s what we’re anticipating. So we should end up full year basis about $48 million. And then going forward, as we are bringing on during the year, but you will remember that we spent a lot of money in the first 2 quarters. So the run rates probably above where it needs to be going forward. So if you look at third and fourth, that’s probably what we’d see going forward.

We’ll take the next question Willard Milby with BB&T Capital Markets.

First of all, do you have any scheduled wage increases for 2013 at this juncture?

No. Our wage increase last year was in July, and we would expect to evaluate the annual increase based up on company performance, and where the market is trending from the salary and wage perspective ahead of that same timeline next year.

All right. And I know you gave a monthly tonnage. Could you also give the monthly shipment numbers for the quarter ended October?

LTL shipments for the quarter, July was down 4.7%, August was down 5.4%. September was down 2.4%, and what we’ve seen so far, well, what we saw in October, it was down 4%, LTL shipments year-over-year.

One comment I would make on that here is obviously our weight per shipment is up year-over-year. And so as our revenue per freight bill is up materially as well. And again, that’s something we’re targeting from a business mix management to ensure that our shipment mix is profitable, and particularly, you don’t want to be handling a lot of minimum shipments at low revenue per bill that you’re not making money on. So, it’s absolutely well, I don’t like 4% negative shipment; I like $12 higher revenue per bill.

And just to clarify Q4 work days?

Quarter 4, I believe there are 62 work days this year.

The next question comes from Bruce Chan with Stifel, Nicolaus.

Just a follow-up on that last question, you mentioned that shipments were down, but weight per shipments were up and that’s something that you were targeting. Is that a trend that you’re kind of seeing on a secular basis or is that something you would think that’s related to sort of the tepid economic environment right now?

I don’t know, there are so many moving parts in that with the way that we price. And what I would tell you is, in the last year basically, we’ve re-priced with some more targeted pricing with all of our major 3PLs and many of our large customers, and I personally think that it’s probably more of our pricing actions as opposed to what’s going on in the marketplace. But we have to add up all that, what everybody else’s numbers sort of like, I think in that, we’ve seen some people whose weight per shipments have gone down, and some of the competitors have announced as well. So I think it’s more of a business mix thing.

Yes, certainly, and also, I don’t know if I missed it, there have been a lot of LTLs that’s flying around this morning. But can you quantify maybe how much of your tonnage decline was sort of intentional on a result of pricing action. And maybe how much of it wasn’t voluntary and related to kind of the softness in the market?

I don’t know, I think that’s fairly hard to measure. I think again, we’re committed to the value proposition that we provided in the marketplace and I make sure, we’re properly compensated for some of the investments that we’re making in quality in our network. And our customers are seeing that. And I guess one comment I would make, with respect to this, some of this granular more sophisticated lane based pricing. One issue that we’re all faced within our industry is that, customers are very sophisticated. And they can route shipments by lane, by containee and anyway that they want to, right. So, if we don’t price on a sophisticated manner, they will take advantage of your unsophistication, and you’ll get the shipments that you mispriced, right. And so from our perspective, and we’re seeing a pretty good customer acceptance, they’re saying, “well you can be as granular as you want with respect to price and we will have the sophistication to work through that, and give you business that you want.” And it’s something that has worked well for us and I would tell you, I think, we’ve made a lot of progress, I still think this will process as somewhat in its infancy, and there’s further opportunities for us to improve yield and make sure we’re growing business that contributes well to our margins.

The next question comes from Chaz Jones with Wunderlich.

Just one quick question on insurance obviously, Saia is showing some very strong improvement in that line-item. I’m just kind of curious of, you think that’s run its course or there’s still maybe more room in 2013, and ultimately, can that get below 2% of revenue?

Obviously, there’s 2 big components in there, right, that’s where our accident expense goes as well as our cargo claims, and I guess what I would tell you is that, we’ve institutionalized some improved processes from a cargo claims perspective, and I would expect to make some additional progress there. In our accident expense, again, I think with some of the technology and the safety programs that we have that we should be able to continue to maintain or improve that. This quarter, our accident expense was kind of in line with our historical average and in line with last year. But as you guys know, we’re self-insured for up to $2 million per accident. So that can have some volatility within any given quarter. But I would expect this, what I’d tell you this quarter was probably in line, is kind of a more normal run rate, and we would continue to target improvement in both areas.

But I wouldn’t expect necessarily for it to be on a run rate basis, let’s just say that half a point better than that immediately. But that’s probably a little bit in both lines that we’d continue to work with.

[Operator Instructions] And we’ll go next to Jack Waldo with Stephens Incorporated.

My first question is on that insurance issue. What was -- could you just talk a little bit about the year-ago comparison in the fourth quarter and what caused insurance to spike out so much?

Well, Jack, if you go back to last year, we had some accident severity that popped that line up, and it happened to it late in the year, actually in December, in the fourth quarter of last year. And what I would say is that line was probably about $3 million above where it would normally run due to the accident severity we had in the fourth quarter of last year. Does that help you?

Yes, sir, it does. And then what are your CapEx expectations for this year, and if you have any plans for next year?

Well, we boosted that, we’ve said how long we are going to do that $80 million this year. I think our final number we’re projecting is more like $83 million. So it’s a little bit heavier. All of our revenue equipment is pretty much in place now and in service, we have a few more dollars to spend in the fourth quarter. so we’ll end up about $83 million, we don’t announce next year until our fourth quarter call, which is on the end of January, but I would expect that we would see capital expenditures next year to be in the range similar to this year.

We’ve done our catch-up in our average age of our tractors is in line with where we needed to be. But we still have an investment to make in trailers. And one thing I would tell you is, I’m actually excited about that, because not only can that help us with CSA’s compliance and we should see some reduction in maintenance expense over a period of time. But right now, 25% of our pops that we use in our linehaul operation, what we call are smooth side meaning they don’t have logistics bars capability in them. And so the investment that we’re going to make in those pops, should provide a targeted return from a load average perspective as well as help support our cargo claims improvement initiative, because of the blocking and breaking capabilities you have in the modern trailer.

Okay. And then when you think about your business. And congrats to you guys for coming out of such great incremental margins. But I was wondering if when you think about the overall business, what type of incremental margins, do you think the business is capable of producing, I assume that in the last couple of quarters have been somewhat abnormal, given the circumstances surrounding both pricing and your internal initiatives?

Well, yes and no, right. I mean I guess, abnormal meaning, we don’t think we continue to get to our point improvement. That was this quarter. I’m not sure.

Yes. Your last 2 incremental margins were 60% and 70% respectively.

Yes. Yields are very powerful, very powerful still we found. I guess what I’d tell you is that, I think, particularly when you look at the fact that we made a lot of investments in our company, including restoring some wages and benefits. So they have been operating under some reductions, because of the environment that we’ve been in. Some of the investments that we’ve made in quality, I mean to me, those things are institutionalized within our company. And some of the technology investments that we have that we’re just beginning to see some benefits from -- I think there’s some further benefits there. So I guess what I would tell you is, I mean I think if you, if we get into a - if we get a 3% rate environment, and we have some additional cost increases from salaries and wages, more normalized, right. And employee benefits, if you’d see normal increases in those things. And then we can offset some of those increases obviously, with some efficiency initiative I think there is still an opportunity to have good margin improvement going forward in the next year. Even with the soft economic environment, I mean we’re obviously pretty deep into our planning initiatives for next year. And we’re not waiting till next year to implement them. So again, I mean I think there’s a couple of key initiatives, including in our linehaul network, which is a big targeted expense area as well as fuel efficiency are just 2 examples that could have a material cost improvement in 2013 that I think is very achievable.

[Operator Instructions] And we’ll go to Ed Wolfe with Wolfe Trahan.

This looks -- this year your operating ratio was better in second quarter than third quarter. And I’m guessing some of that has to do with the wage increase in July. But the last couple of years before that it was better in second, relative to third. Just going forward, as you think about things, which quarter should historically be your best margin quarter on a normalized year as you think about it?

Probably 2Q, to me the second quarter has been the best quarter for several years in a row. I think 2Q is probably a little bit better than the third quarter. And I think part of that too is that, we used to see that real seasonality that all built up to the Christmas holidays, that seems to have muted pretty regularly over the last several years. So where you saw, let’s kind of get that big run up that went all the way to November, I mean now, it’s kind of flattened out.

We have no further questions. I’d like to turn it back to our speakers for any additional or closing remarks.

All right. Well, thank you for your interest in Saia and we’d also like to, we know we’ve got a lot of shareholders, some of our analysts are in the Northeast and are certainly impacted by the storm. So I want you guys to know that our thoughts and prayers are with you guys. Thank you.

And that concludes today’s presentation. Thank you for your participation.