Please stand by, we’re about to begin. Good day and welcome to the Saia Inc. Fourth Quarter 2012 Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Ms. Renée McKenzie. Please go ahead. Renée McKenzie: Thank you, Kevin. Good morning. Welcome to Saia’s Fourth 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. As we begin, you should know that during this call we may make some forward-looking statements within the meaning of the Private Securities Litigation Reform 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’d like to turn the call over to Rick O’Dell. Rick O’Dell: Thank you for joining us this morning. I’m pleased to report that Saia again delivered a significant increase in earnings this quarter. After two years of intense efforts centered around quality, yield management and operational excellence, it’s gratified to see that the positive results that these initiatives are generating. And let me say upfront that these initiatives were created, designed and implemented by Saia employees who are at the very heart of every success that we have. Some highlights from the quarter compared to the fourth quarter of last year, revenue increased 4.5% to $264 million, earnings per share were $0.33 versus $0.15, an increase of 120%, our operating ratio was 96.2 versus 97.6, LTL…

Thanks Rick and good morning everyone. As Rick mentioned, the fourth quarter 2012 earnings per share were $0.33 compared to $0.15 in the fourth quarter of 2011. For the quarter, revenues were $264 million with operating income of $10.1 million. This compares to 2011 fourth quarter revenue of $253 million and a reported operating income of $6.2 million. The LTL yield for fourth quarter 2012 increased by 6%, which primarily reflects the cumulative favorable impact of continued pricing actions. Continuing our trend from the past several quarters, we’ve been successful in our yield improvement as we achieve price increases even in an economic environment that is slowing. We continued to advance our industrial engineering initiatives and operational effectiveness projects which reduced our reliance on purchase transportation, significantly enhanced our fuel utilization and reduced our self-insurance cost. These initiatives are ongoing as we enter into 2013 which we believe will allow us to maintain our high-quality of service to customers and gain further operational efficiencies. The quarter did include increased health care and workers’ compensation expense as well as higher costs from wage and benefit increases necessary to compensate our workforce and meet customer requirements. We had implemented a 3% wage and salary increase companywide effective on July 1st. As I mentioned, last quarter, this increase will add approximately $13 million in expense on an annualized basis. The impact of this wage increase is partially offset by further productivity and efficiency gains. When compared to fourth quarter 2011, claims and insurance expense is $3.9 million less this year reflecting more normal accident severity. As we mentioned on last year’s call, accident severity in fourth quarter 2011 was unusually high, accounting for approximately $3 million of this difference. Our focus on safety training along with the decline in cargo claims resulted in…

Thank you. (Operator Instructions) We’ll take our first question from David Ross with Stifel Nicolaus. David Ross – Stifel Nicolaus: Yes, good morning everyone. Rick O’Dell: Good morning David.

Good morning. David Ross – Stifel Nicolaus: On the last call, when you’re talking about CapEx, the initial estimate was that 2013 was going to be similar to 2012 in kind of the $80 million range, but it came in a little higher at $90 million. I was wondering if that’s still offer replacement and then maybe the tech investments had a little bit more on top of that on the equipment side also. Is that more for tractors or trailers? Rick O’Dell: Yeah, we’re kind of back to a more normal cycle on tractors because we’ve got our average age down in our target range, but our trailers are still beyond our target range. So we’ve got a significant trailer purchased in 2013, which kind of drove the number up. One thing I would tell you that I think there is some significant benefits from that because we’re looking at our linehaul leave about 20% of our trailers today. Do not have logistics post capabilities so we call them smooth-sided trailers and so making that investment in the new trailers should further enhance some of our linehaul optimization and kind of support some of the targets that we have for some additional efficiencies next year. And then we also kind of bumped the number a little bit as we began to target some of our fuel efficiency management project which is part of our engineering targets again for this next year is we’re retrofitting all of our linehaul trailers with the trailer skirts and the new ones that we’re buying are going to have skirts on them as well. And I think the retrofit alone was in about $3 million and the addition for the new site accounts for about $4 million of the increase. And one thing on…

We’ll take our next question from William Greene with Morgan Stanley. William Greene – Morgan Stanley: Hi there, good morning. One clarification did you, I think Rick, you might have mentioned this in your comments just now that tonnage was down in January. Is that what you said or did I misunderstand that? Rick O’Dell: It is down and we were down a little bit for the quarter. I think Jim can kind of take you through the sequential trends on kind of where we were through the quarter. William Greene – Morgan Stanley: Yeah, that would be great.

Sure, I’ll walk you through that. LTL tonnage and these are year-over-year per work day comparisons. October was down 1.6%, November was down 3.7% and December was down 5.0%, now December can be a little harsh based on how the holidays fall and that type of thing. But for the quarter, we were down 3.2% and so far month-to-date in January we’re running down 3.1%. William Greene – Morgan Stanley: Okay. And then the rate trends, you’ve sort, I think in consistent in all your comments which is just, we’ll probably go to 3% to 4% number in ‘13, is that still the case? Is that where you feel things are still coming out? Rick O’Dell: They have been I tell you that this more granular sophisticated pricing continues to pay dividends. We continued to improve our quality and our specialized services to make sure we’re compensated for those things. We’re seeing contract renewals at this point have been in the 3% to 4% range. There are some other things that can clearly impact that including targeting smaller and more profitable accounts. So the average yield can be better than that. And what I would tell you is, again while our volumes are down about 3% as we’re into January, our yields are trending more, we’re into January at a higher yield level than we exited the fourth quarter. So we continue to make some solid progress there. William Greene – Morgan Stanley: And so the sequential change you typically see in or first quarter for things usually flattish, but perhaps last year was because of weather. Can you just sort of talk about anything we need to keep in mind as we think about modeling 1Q? Rick O’Dell: Yeah I guess if you look back our historical 4Q to first quarter it’s kind of been all over the board. Some usually have had wage increases in the quarter, some we haven’t fueled back a few years. I think we had a GRI in January one year, so I think at this point in time maybe we have to throw history out a little bit. But there is some things we probably need to consider obviously Saia reported a very strong first quarter last year with 95.9 OR on our yield progress, strong tonnage and we benefited from a very mild winter. As we look at this year, we’ve had a mild winter thus far, got positive yields and we’ve got some really good traction on some of our 2013 engineering cost initiatives. So I would tell you kind of given our current trends and absent any significant weather impacts or some expense volatility that can occur in self-insurance, we would expect flat to modest improvement over last year’s OR for the same quarter. William Greene – Morgan Stanley: Wow! In spite of downtown it’s just, that’s quite good. Okay, good. Thank you for the time. Rick O’Dell: Thank you. Renée McKenzie: Okay, thank you.

We’ll take our next question from Jack Waldo with Stephens Inc. Jack Waldo – Stephens Inc: Good morning and congrats on the year and the end quarter. Rick O’Dell: Good morning Jack. We can’t hear… Renée McKenzie: Jack, can you speak up a bit? Jack Waldo – Stephens Inc: Sure. Rick O’Dell: We can’t hear you very well. Renée McKenzie: No. Jack Waldo – Stephens Inc: Is this better? Renée McKenzie: There you go. Jack Waldo – Stephens Inc: So my question is, sticking on the OR trend, 260 basis points was a wonderful performance last year. You had incremental margins of 44% where it seems like historically it’s been in that 15% to 20% range. With tonnage growth that’s flat to negative, would you anticipate going back to a more historical kind of 20% range? Are there any initiatives I guess positive or negative that might impact that as we head into 2013? Rick O’Dell: Sure, I mean we have a number of initiatives to target growth. Obviously our current trends are a little bit negative. We’ve been very discipline from a pricing perspective, but I would tell you we have a number of targeted marketing initiatives focused on prospecting, on growing our insight sales resources, on using our CRM to do effective pipeline management to take share over a period of time. And so again while our current trends are negative I think particularly as we get into the second half, we would not necessarily expect to have negative tonnage trends going forward. But that fits is, it is kind of what the current is and again we’re facing some tough comps for the first two quarters as we had pretty robust tonnage and it really started dropping off in May and a lack of weather related issue.…

Well I mean I think obviously we saw some economic softness through the fourth quarter, but I think it’s also partially due to our pricing discipline. We just – we’re being very disciplined in our pricing and very granular in saying, well in that locations it had haul line I can’t give you the pricing you want. So within customers, we’ve lost some shares, some lanes because we’re unwilling to price in places that do not work for us. But I think the economy is pretty soft and what I would tell you is I think given some of the large corrective action pricing things that we’ve done over the last two years, I mean, most of those are behind us. I have very few accounts that require material increase. So what I would expect to see more going forward is, we participate in the economic growth through our existing customer base and then with some of the projects that we have focused on target marketing and some growth and prospecting opportunities and we would expect to get back and taken some share. Jack Waldo – Stephens Inc: Fair enough. Rick, how much of your business is delivered in three days or more?

It’s about 20%. We’re still about 80/20. It’s a larger proportion of the revenue obviously but on a shipment account basis its 80/20. Jack Waldo – Stephens Inc: And then my last question, you have a competitor that’s union that’s negotiating the contract right now. Do you believe that you’ve seen any frank diversions so far from that or do you believe has that been much of a topic of conversation with customers at this point?

Not specifically. Jack Waldo – Stephens Inc: Okay. Thank you guys, very much for your time. Congrats. Renée McKenzie: Thank you. Rick O’Dell: All right, thanks.

We’ll take our next question from Chaz Jones with Wunderlich. Chaz Jones – Wunderlich Securities: Yeah, hey good morning everyone. Nice quarter. Renée McKenzie: Thank you. Chaz Jones – Wunderlich Securities: First question was, I was just curious, could you actually quantify the impact on the quarter with the additional health care and work comp expense? Is there a dollar figure? Rick O’Dell: Sure. Looking forth to forth, which is probably what you’re asking right? Chaz Jones – Wunderlich Securities: Right.

The health plan was up about $2.1 million and the work comp compared to a year ago was up about $0.5 million. Chaz Jones – Wunderlich Securities: Do you see the health care is more one-time or is that probably something as we move forward is still going to have some cost pressure in it?

Well I think ongoing there will continue to be some increases in the health care. Fourth quarter increase was the sharpest that we’ve seen this year. Actually third quarter was fairly flat year-over-year. So it came on a little bit faster. When we look at the whole year health care, our cost was about 4% and that was a little bit less than an increase in what we saw in 2011 when it went up 14.5%. So going forward, we would expect to see some increases in that maybe in the 8% range or so due to rising cost of services, the prescription costs continue to go up and the new health care law was that ever increasing maximum, annual maximums on individuals, those are driving our cost up. But I would say somewhere in the range of 8% or so. Chaz Jones – Wunderlich Securities: Okay, great. Yeah that’s helpful. And then on the improved purchase transportation cost, just looking at it as far as in the quarter dropping below I think 6% of revenue, is that a number that you feel comfortable with from a run rate standpoint. Or is there still opportunity if you’re looking at on a percentage of revenue basis to continue to maybe drive that down a little bit more?

I think the magnitude of the decrease from fourth quarter ‘11 to fourth quarter ‘12 is probably we’re not going to see that level again going forward. We’re had a pretty good rate now, the linehaul guys have done a very good job of bringing those miles in-house, using less purchase transportation outside. But I would say you can see some seasonality of that as you go forward, but it’s a pretty good run rate to use. You’ll see a little bit of seasonality as we get to the heavier quarters and you get to some vacations and that type of thing, but they’ve done a very good job of managing through some of our change in mix where we have to cover purchase transportation in the short run, but they’ve done a very good job of holding that down. As Rick mentioned those miles are down substantially from a year ago. Chaz Jones – Wunderlich Securities: Got it. One last question, just in terms of the CapEx, I know that you’ve kind of been going through on equipment refresh the last couple of years here and I know its early to think about 2014, but is 2014 a year as we sit here today that perhaps CapEx starts to come back down some? Rick O’Dell: I guess I would say it kind of depends on our outlook on what we think the returns look like. We probably have one more year to kind of refresh the city trailer fleet and then we would be finished. This year, we’re addressing a linehaul trailers and some smaller group of the city trailers. But we really have probably one more year unfortunately of that. I mean for three years we basically didn’t spend any money, so. Chaz Jones – Wunderlich Securities: Thanks for taking my question. I’m sorry, go ahead.

That’s right. As Rick mentioned on the tractors, we pretty much caught up the average age of fleet on tractors is now about 5.7. We feel comfortable with that and those purchases for 2013 really at a maintenance level. The trailers are the ones that are going to spike up because we let those age out a little bit, but so there is a little bit of catch up there. But as Rick mentioned, we’ll have to see as things develop through 2014 all the way into 2014 as you mentioned, it’s a little early to project that. Chaz Jones – Wunderlich Securities: Got it. Thanks for taking my question. Renée McKenzie: Thank you.

Our next question comes from Art Hatfield with Raymond James. Arthur Hatfield – Raymond James: Hey, good morning everyone. Rick O’Dell: Good morning Art.

Good morning. Renée McKenzie: Good morning. Arthur Hatfield – Raymond James: Hey, Jim, just real quick back on health care. You talked about a growth rate of 8% going forward. Did you give what the total spend in ‘12 was on health care?

Just under $60 million. Arthur Hatfield – Raymond James: Okay.

And that was up, that increase was a little bit less than the ‘10 to ‘11 that we saw. But I think so it was a little bit better what we’d anticipated but going forward, we’d expect to be maybe in the 8% range on increase. Arthur Hatfield – Raymond James: Fair enough, fair enough. That’s helpful. I had ‘10 and ‘11, but I couldn’t find the ‘12. Just one other thing, as we think about, kind of, as to try and contemplate modeling for ‘13, and you guys are doing tremendous stuff on the productivity side, but as you noted, the volume environment isn’t great right now. Is everything that you’re doing on the productivity side and focusing on rates? Are you just basically mitigating the impact on the OR that’s being caused by less tonnage or at these tonnage levels can you still grow the OR, or improve the OR I shouldn’t grow, but improve the OR in 2013 or do you need tonnage levels to improve from here? Rick O’Dell: To me the tonnage levels are compounding thing, right, I mean if I just look at the cost initiatives that we have of say $20 million and then if you get our targeted yield increases in the 3% to 4% range, it gives you a pretty good bucket of improvement opportunities and then obviously that’ll be offset by some other things we’ve talked about partially offset anyway by health care, wage and benefit increases, increased depreciation, all right. But we think there is – we don’t think we’re dependent upon a lot of tonnage growth to improve the operating ratio, obviously it certainly enhances it, should we get in a better environment and/or have success at improving our tonnage levels at a reasonable yield and thus far the yield environment has been pretty solid. We’ve seen a few people that have started to price some 3PL accounts and things that can move business pretty quickly. So a couple of people are responding in that manner, but we have not seen any widespread major negotiation type issues or challenges at this point in time. Arthur Hatfield – Raymond James: Okay. Fair enough, all right. Thanks for the time. Renée McKenzie: Thank you. Rick O’Dell: Thanks Art.

We’ll take our next question from Thom Albrecht with BB&T. Thom Albrecht – BB&T Capital Markets: Good morning everyone. Rick O’Dell: Good morning Thom. Thom Albrecht – BB&T Capital Markets: Couple of follow-up questions. Hey, good morning. Couple of follow up questions. Jim, do you have some guidance for depreciation for 2013?

Well we don’t give specific guidance, but I can give you what you might expect as it’s ramped up in 2012 when it’s at the high level of CapEx and we finished the year about $48 million in total. That was up substantially from ‘11. Going forward, I would expect that with the level of capital expenditures that we’ve quoted for next year, Thom, being in a $90 million range, it would probably go up a little over $1 million a quarter, somewhere in the range of $53 million or so. And that will manifest and bring the equipment on as well. Thom Albrecht – BB&T Capital Markets: Yeah, that makes sense. I just needed some ballpark thoughts there. Rick, rather on your purchase transportation line, now that you got Robart in there and there are some PT expenses paid out through there, it’s kind of hard to know how much of that lining item is the linehaul for LTL versus brokerage, so of the, let’s say, $15 million in the fourth quarter. What’s an approximate split?

Okay. Well the PT, the way that we record the purchase transportation the way we record revenue for our new subsidiary is the revenue comes in net of PT on the top line. Rick O’Dell: So it’s the brokerage revenue basically what’s recorded, so there is no – it’s all side LTL rate in the purchase transportation line. There is no gross up. Thom Albrecht – BB&T Capital Markets: Okay. All right. And then, let me see what else I have here. So given the improvement there, I know you talked about a lot of your initiatives Rick and I’m sorry to kind of repeat myself, but do you think purchase transportation linehaul and all that represents as much of an opportunity in ‘13 as what you’ve seen over the last four, five quarters? Rick O’Dell: Yes, I do actually because we actually started another linehaul optimization initiative in November and in both December and January we set new records for load average at our company on what are two of the lightest tonnage periods of the year. And when I also consider that by May probably we’ll have the new linehaul pups in which will give us some enhanced capacity in the linehaul network there from a loading capability and some increased tonnage at that time. I think we can further our efficiencies there. So obviously the linehaul is a big bucket, the purchase transportation is just one segment of that that’s obviously sticks out on the financial statements, but the fuel and linehaul driver expense, the fuel and the operating expense line and the linehaul driver expense in the ways line our big numbers too. Thom Albrecht – BB&T Capital Markets: Yeah. I hear you. And then just couple of other, so what was your workers’ comp total in 2012 and cargo claims? There is a percentage of revenue or however you might want to give that? Rick O’Dell: Cargo claims was 1.1% of revenues for the year and it was below 1% of revenue for the second half and we expect to maintain that cargo claims ratio going forward if you work comp about 17%.

The work comp for the year was right around 20 and that includes the adjustment that we booked into fourth quarter because we do an actuarial study every year and we were surprised by greater adverse development in prior year claims and that of course applies to the current year claims that where we expect higher development. So we booked an adjustment into fourth quarter that got us for the year about 20. Thom Albrecht – BB&T Capital Markets: What was like a year ago, 17, 18?

About 19 a year ago. Rick O’Dell: Both years actually had some unfavorable development in them and 2010 and 2011 we had some work comp severity that was higher than it was in ‘12. And obviously I think any time you do an actuarial study and do a true-up you think you got the number right, but we’ve taken some pretty significant adjustments two years in a row. And with our current safety performance we have targeted internally so I would say some reductions and expense in that line.

Yeah, Thom, and I mentioned to the earlier question that forth to forth work comp was up about $0.5 million. If we compare since both of those had adverse adjustments, if you look at the adverse is what would be a more normal quarter, it might have been about 1.5 more than a normal quarter, just for forth because that had the upward adjustment. Thom Albrecht – BB&T Capital Markets: Right. Okay, thank you very much. Rick O’Dell: Thanks Thom. Renée McKenzie: Thank you.

Our next question comes from Scott Group with Wolfe Trahan. Please go ahead. Ed Wolfe & Scott Group – Wolfe Trahan & Co.: Hey, thanks. Good morning. Rick O’Dell: Hi, Scott. Renée McKenzie: Good morning. Ed Wolfe & Scott Group – Wolfe Trahan & Co.: Good morning. So I just want to make sure I’m understanding your comments about purchase transportation. I thought I heard in one question you said its tough to get much better than where we are in fourth quarter and then I thought I heard you say to Tom, just last question that there is more to go here. So when we think about that line item, obviously a nice year-over-year reduction in absolute PT in 2012. How are you thinking about that line on an absolute basis in ‘13? Rick O’Dell: Okay, so it’s Rick. Here is what you have to consider. Our linehaul expense, I mean the purchase transportation portion is a very small portion of our overall linehaul expense because most of our freights moved with company drivers which have wages, equipments costs, maintenance and fuel are the biggest components of that. So what I’m saying is, while we believe that our purchase transportation is optimized on today’s trait and tonnage levels, there is still an opportunity particularly as tonnage increases to get further linehaul optimization. Now the PT portion is now a smaller portion of our expense, it will really come more in the wage benefit and fuel line. But I think that was what Jim’s point was is, we would more expect PT to kind of trend with tonnage levels as they go through the seasonality on a percentage basis etc, better than we don’t have savings that we’ll see in the fuel and wage line will be the two primary…

(Operator Instructions) We’ll take our next question from Jason Seidl with Dahlman Rose. Jason Seidl – Dahlman Rose: Rick, Jim, Renée, how are you folks this morning? Rick O’Dell: Good, how are you? Renée McKenzie: Good morning. Jason Seidl – Dahlman Rose: Hanging in guys. Couple of quick questions. One, just conceptually not put any numbers around it, if I look at 1Q, you started off tonnage down, but you think you could have some OR improvement if we exclude the impact from the one-time tax benefit in the quarter. Is it safe to say on a modeling throughout the course of the year that this is probably going to be your most difficult quarterly comp all things being equal? Rick O’Dell: Well 2Q was a really good quarter too, but and then our tonnage kind of dropped off in the second half, which I think everyone did, right. We saw some softening, some weaknesses in the second half. So, yeah I think the first half of the year, obviously have some tougher comps and the second half of the year, to me, quite frankly, we could have done better in the third quarter and the fourth quarter. We’ve identified some opportunities to address some of those internal opportunities and to do better there. If we get a little bit of second half recovery and some of our marketing initiatives could have some benefit and as well as you get more traction through these engineered initiatives and we get the capital and technology in place, we demonstrated good results from that. So I think your comment is fair as the first half comps are going to be a little bit more difficult given tonnage trends and mild winter weather and how well we did last year during those two quarters.…

We’ll go next to Jack Waldo with Stephens Inc. Jack Waldo – Stephens Inc: Hey guys, I just wanted to follow-up on the tax issue. Would you mind explaining that one more time?

Sure. And we gave what the effective rate was in ‘12 and what we expect it to be in 2013. And what we said was because of the fiscal-cliff legislation that was enacted, wasn’t actually enacted until January 2nd, so the retroactive benefit for 2012, you cannot book that in 2012, it’ll be handled as a subsequent event and it’ll have about $0.06 impact on first quarter. The rate that I quoted the effective rate for 2013 takes into account the extra credits that we’re allowed in 2013. So that’ll be a subsequent event that will record in first quarter. That makes sense? Rick O’Dell: Right. So in other words, there is the propane tax credit has got alternative fuel tax which was propane tax that’s got reinstated. That’s going to have $0.12 impact in 2013, but $0.06 of it is retroactive at all we booked in the first quarter and we’ll all throw it out. Jack Waldo – Stephens Inc: So the full year be the 37.5% you guided or it will be the 37.5% you guided?

Yes, excluding the $0.06 from the last year. We did not include the retroactive piece in that because that all gets reported in the first quarter. Jack Waldo – Stephens Inc: So it’ll be less than 37.5.

So the effective tax rate for 2013 is the 37.5%, but we will have a $0.06 benefit which that relates to last year that’s not in that rate because that all gets books in the first quarter. Jack Waldo – Stephens Inc: Okay, thank you. Rick O’Dell: Okay.

We’ll go next to Thom Albrecht with BB&T. Thom Albrecht – BB&T Capital Markets: Right. So just one more point on that. So then the $0.06 for 2013 is really just going to be spread amongst Q2, Q3, and Q4? Correct?

That’s correct. Rick O’Dell: Yeah actually one through…

One through four. Rick O’Dell: Thom Albrecht – BB&T Capital Markets: Right, so… Rick O’Dell: For the back on run rate and then there’ll also be another $0.06 booked in the first quarter. Thom Albrecht – BB&T Capital Markets: So really the first quarter is about $0.075 of which $0.06 is for the 2012 retroactive. Rick O’Dell: Right.

That’s correct. And Thom, the reason we said that is because when we report first quarter, we’ll specifically identify that $0.06 impact as being retroactive for 2012 and it’s not a rate that applies to 2013. The way you said it was right. Rick O’Dell: But we won’t retroactive our $1.94 to $2.

No. We’re not allowed to do that. Thom Albrecht – BB&T Capital Markets: All right. So we’re putting in about $1.2 million is what that works out to after-tax, so as we fill around for Q1.

Yeah. Thom Albrecht – BB&T Capital Markets: Okay. Thank you very much.

Thanks Thom. Rick O’Dell: All right, thanks.

Rick O’Dell: Great, thank you for your interest. And we look forward doing another call next quarter.

This concludes today’s conference. We thank you for your participation.