Good day everyone and welcome to the Saia, Inc., First Quarter 2013 Earnings 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 ma’am. Renée McKenzie: Thank you, Lisa. Welcome to Saia’s first quarter 2013 conference call. Hosting today’s call are Rick O'Dell, Saia’s President and Chief Executive Officer and Jim Darby, our Vice President of Finance and Chief Financial Officer. Before 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 would like to turn the call over to Rick O'Dell.

Good morning and thank you for joining us to review and discuss Saia’s first quarter results. Saia achieved record first quarter earnings that represents the dedication, effort and contributions from Saia’s 8000 employees. Progress was made on a number of front including the company's effective revenue management, strong cost execution and attention to quality across our network. Revenue was $274 million, up 2% compared to the first quarter of 2012 and our operating income increased 32% to $14.5 million. We achieved a 120 basis point improvement in our operating ratio by marketing to customers who value quality service and achieving targeted operational efficiencies. I am pleased that the company's execution in key areas continues to progress margins and our earnings per share. Some highlights from the quarter compared to the first quarter of last year are, earnings per share were $0.55 compared to $0.34. First quarter 2013 EPS includes $0.06 in tax credits from 2012, excluding the $0.06 in tax credits our EPS increased by 44%. Our operating ratio was 94.7% compared to 95.9%, 120 basis points improvement. Our LTL tonnage per work day decreased 2.1%, LTL weight per shipment increased 1.4%. Our LTL yield increased 5.4% due to yield management and higher fuel surcharge. Saia’s service was consistently 98% on time for the sixth consecutive quarter. This success validates our continued commitment to advancing our value proposition through major investments in equipment and technology that are major drivers of operational efficiency. I was particularly pleased that we achieved projected efficiencies in our linehaul network in spite of relatively soft tonnage. I believe that Saia’s strong overall service, focused pricing discipline and operational excellence provides solid foundation for additional long-term profitable growth and increased shareholder value as well for our customers. Although, the main areas that contributed to our record…

Thanks, Rick and good morning everyone. As Rick mentioned, the first quarter 2013 earnings per share were $0.55 compared to $0.34 in the first quarter of 2012. Again, first quarter 2013 EPS includes $0.06 due to the impact of reporting tax credits enacted in 2013 retroactively reinstated to 2012. For the quarter, revenues were $274 million with operating income of $14.5 million. This compares to 2012 first quarter revenue of $269 million and operating income of $11 million. The LTL yield for the first quarter 2013 increased by 5.4% and was favorably impacted by continued pricing action and higher field surcharge; while decelerating from the past few quarters, yield showed steady improvement as we continued to achieve price increases and target customers to value the company’s high service quality. First quarter results were again adversely impacted by higher cost from healthcare and maintenance. As I have previously mentioned, inflation in healthcare costs and increases in maximum spending limit have continued to increase healthcare expense. While we have invested heavily in new tractors and have reduced the age of fleet, maintenance costs were impacted by more costly routine maintenance and higher parts costs. These factors increased maintenance expense by $1.7 million compared to the first quarter of 2012. As Rick mentioned we plan our annual wage and salary increase effective in July. 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 effective tax rate was 37.6% in the first quarter. This rate excludes the impact of the tax credits recorded during the first quarter of 2013 that were retroactive to 2012. For modeling purposes, we expect our 2013 effective tax rate to be approximately 37.5%. At March 31,…

(Operator Instructions) Our first question comes from Jason Seidl with Cowen Securities.

Question for you guys I guess a little bit Jim you mentioned about the pricing decelerating a little bit, but are you guys comfortable with the pricing environment that you are seeing in the LTL market right now and enough to continue to sustain sort of year-over-year or (inaudible) gains for you guys going forward.

Sure. A couple of things first of all again our more granular sophisticated pricing continues to pay dividends, we are very committed in making sure that we are properly compensated for our quality, our specialized services as well as land imbalances. You know our theoretical model shows that through adjusted yield adjusted for length of the hallway for shipment was up 4.5% and while volumes are fairly soft, a lot of our significant increases on major accounts were necessary or behind us. So contract renewals are more in the 3% to 4% range and contract renewals averaged during the first quarter, just over 3%. Again a side from those negotiations, we're targeting smaller, more profitable accounts. So we would probably expect the third quarter general rate increase. So we're seeing the environment being pretty rational and a lot of good opportunities coming to us which we are filtering through our process and I think the yield is fine.

3% to 4% sounds very fine to me. Rick you went over some of the efficiencies that you guys are giving from some of these, whether it's (inaudible) tablets or whether (inaudible) trailers, can you sort of tell us sort of where we are in terms of trying to expect some of that stuff that continue to flow through. Is there another sort of larger step up in regaining some of these efficiencies from some of these projects throughout the year or just sort of be just more steady?

No. I guess here is what I will tell you. We got off to a very good start on a number of our initiatives that we targeted early on and the biggest one of those was in our line haul operation. We said the last four months, we set record load average every month and January and February aren’t exactly robust seasonal tonnage month, okay. So that was really significant. Our year-over-year improvement in load average was 5.4%. We think there is additional upside as we get our new logistics (inaudible) replacing our older trailers and those are just starting to come in. We only had about 150 of those (inaudible) that were in operation in the month of March and they came in at the end of the quarter. So there is additional opportunity there; those trailers should be fully within our network by July. So we would expect some additional second half benefits. On the fuel economy side, while year-over-year we are up, we are still not at our targeted improvements, and part of what's going to drive that besides some continuous progress we have working on progressive shifting and effective fuel management, or some new tractors of which we didn’t get any. Essentially in the first quarter I think we had a few team tractors came into end of the quarter, but it was immaterial and then our trailer skirt retrofit, it just started in March and during the month of March we had about 1000 of those have been put on and when you really get the benefit is when the whole system is there and they project plus 3% of fuel efficiency from having a trailer skirts on and again we will have between the new trailer plus the retrofit will essentially be completed this quarter. So that’s second half opportunity we’ve targeted some reduce retail fuel, we got eight [book] fuel locations that really weren’t on the first quarter that we are trying to progress and get taking care and then we put in that work in place for a retail fuel purchase that has some additional benefits versus what we previously had and really that happened through the first quarter. And then some of our other initiatives to reduce workers compensation, target some additional cargo claims and again we had a good, good quarter with that, but I think there are some opportunities there and then we have a couple of other efficiency technology projects underway such as some real-time doc production systems that we are working on, so I feel I am pleased with the jump start that we got in the first quarter and we probably got some of the benefits early then I would have anticipated, but there is still some material second half opportunities that are still in front of us and we feel very confident in that.

That’s good to hear and I thought it was pretty impressive in the cargo plans considering that you had a tough weather comp last year. One final question, and I will turn it to everyone else, there obviously was a working day in a quarter disadvantage in the 1Q. Could you sort of give us a ball park again on where you think you could have been if you had sort of a flat year-over-year comp and working days, and is there going to be any bump here heading in to 2Q because of the change in the Good Friday comp?

I don't know, those things probably kind of get lost in the rounding and there is potentially some could have been more favorable in the first quarter and could potentially be more favorable in the second quarter, but I think how the volumes develop and what happens with yield and those single were probably more important than the Good Friday and half a business today impact which is basically what it is. On that day, we tend to be 50% to 60% of a normal volume day, so not a really good profit day for us just to say that, like other 25 holiday.

Guys, I appreciate, time is always, thank you.

We will take our next question from Brad Delco with Stephens, Inc.

I guess Rick the first question, a lot of progress on the productivity initiative. Is there any way to kind of and you suggested that, you got a little bit more than what you thought and I know you put out a $20 million productivity target for the year. Is there any way that kind of gaze how much you felt like you saw in the first quarter and where you are in terms of progressing to that number for the full year?

Yeah, I mean, obviously, I would tell you we are ahead of that number for the year and part of that is obviously reflected on our run rate, but when you achieve a targeted operating efficiency, you kind of just raise the goal and say let's keep working on it. There are some other opportunities that we have. So we are not quitting. And I guess I would also tell you that I'm publicly telling you my target is $20 million, I probably have initiatives that are greater than that because we know you don't always meet a 100% of your targets, right. So in this [press] technology implementations and things so, as those phase in and where we are, I guess I can just tell you with confidence I think our organization has become increasingly sophisticated in implementing these technology and process changes. We are good buying commitment from our employee associates and we could kind of outline what the opportunities are and that we've targeted them, I guess I would just express confidence that we would continue to advance those ahead. We made some early progress on the line haul, the load average things and I told one of my executives that we obviously set the goal too because we made it so quickly. And he told me that he’s fine with that, people have been raising his goals, his entire career.

That makes sense.

You are never a 100% efficient, right. So you just continuously worked on those.

That makes sense. And then Rick, as we think about I think it’s safe to say this is kind of new Saia which clearly seeing a lot of improvement in service metrics and you know obviously very disciplined on price. How do you think about the sale process and kind of selling this new service product from Saia? And I guess what I'm trying to get at is, you know tonnages was down but clearly the yield initiative is more than offsetting that. I guess when do we start thinking about what could really happen with your efficiencies as you get more density and when do you think that tonnage kind of turns positive is kind of your customer or new customers realize this new service product you are offering? Rick O’Dell: Yeah, well, I mean you know last year, through the first half of the year actually through May we are seeing pretty strong activity levels and then in May and June and July things just stepped down and our comps have kind of been negative since then. I would obviously through the -- in the first quarter, our comps are less negative than they were in the fourth quarter. And I would certainly expect to see some positive tonnage comps as we get into the second half. I would also tell you that our whole organization is clearly focused on target marketing and marketing to customers who value our service and you know a lot of our negative tonnage could be part of our pricing discipline obviously particularly lane based. A lot of times we don't lose the customer, but we may lose a lane that we mispriced previously you know. And so that's actually obviously helped us kind of rebalance our network and contributed to some of the efficiencies being more margin improvement. But I would express confidence in our marketing and sales efforts, a few comments there in our inside sales continue to achieve growth and we think this is an additional function that should help us grow profitable smaller customer segment and then we also put in place early last year CRM system. We made some additional enhancements to that that provide our sales force a very robust tool and you know when you put something in the first year, I think there is a learning process to that. We’ve made some additional enhancements to that to give our sales force an improved tool. And I would expect further benefit from that and then we’ve also started doing some lead purchasing and things like that. So we can make sure that we're properly prospecting and we believe there are some customers out there too don’t know us and we need to get our story out in front of them better. So we’ve got some defined initiatives that should -- that we would expect to progress and have some success with over a period of time.

That makes sense. And then maybe just finally one housekeeping question. Jim or Renée, is there any way you can provide us tonnage by month through the quarter and then any update on April thus far?

Sure, Brad. I’ve got that and I can give it to you by month. January and we are talking LTL tonnage comps year-over-year. January was down 2.6%, February was down 1%, March was down 2.3%, and so far month-to-date in April we’re down 2.6%.

Great, guys. Congrats on the quarter and look forward to what's to come. Thanks.

One quick comment on those comps, so I think we all need to remember how strong last year was in February, March and April you know. So we're not necessarily seeing at this point things getting, things actually from April are a little more negative than what we saw in March even with the Good Friday impact, but as we look at our modeling, it's really more, it's not as favourable as last year, but it's more in line with what we would say a historical normal seasonality.

That makes sense. All right, guys. Thanks again.

We will take our next question from Scott Group with Wolfe Trahan.

So what you said on the yield side and just make sure my understanding is right what you guys are talking about. Should we be thinking about kind of underlying pricing in the 3% to 4% range and then may be there is some more to go on the mix side on top of that? And I guess the follow up to that is, when I think about mix, what percent of the book at this point have you already gone through in terms of some of the lane based price impacts?

Well, we are 100% through it at least once, but that’s constantly work-in-process. When I say that, we didn’t necessarily on every account get every lane optimize. We make progress a new balance, your tonnage and business needs and the relationship as you progress it forward. So I guess my comment would be that we need to take much less price risk as we move forward and obviously the company is operating much better, but there still a significant amount of opportunities there.

[Is that new stuff and] mix can be a positive on top pricing for the next few quarters at least?

I do and then part of mix too, if you feel business goes let's just say more than national accounts, I mean on average we feel business operates better so that you end up getting potentially a better yields on that. So, I mean, I think there is upside on yield at the same time, we might obviously see some growth and positive tonnage and we have got some capacity in our network and there is other optimization initiatives and as the margins improve and we are certainly willing to grow and invest in equipment and resources, it takes to do that. So you balance those things with your needs. So I don't want to handle business at a loss, at the same time when the company's margins are improving and there is good opportunities to grow at targeted margins, then we will balance those decisions and base the increases in over a period of time and balance that with what our tonnage looks like.

Okay. That makes sense. In terms of the $20 million of savings, is it fair to think about the few efficiency as the biggest part of that for this year. And when I think about that $20 million, is the right that's the 2013 number, so to the extent that’s some of the fewer stuff is back floated and we will see kind of an incremental or full year benefit in ‘14?

Okay. So the largest opportunity is in our float average line haul network and we already meeting or exceeding that target on run rate basis that's started in January basically, okay. So the biggest bucket was that the second biggest bucket is the fuel economy which should be on an annualized basis which will probably be back, should be back-end loaded, all right. And just a math, right, I mean if we spend about $200 million a year on fuel and if we line haul mile, the 60% of our miles and if you get a 3% improvement which should be at 3 to 5 and look they say, it’s in the neighborhood of $400 million a year, so it’s a $1 million a quarter and that's just the skirts okay, beyond that the new tractors that we are buying are more fuel efficient than the ones we got previously. We continue to advance our progressive shifting initiatives, so today 73% of our drivers are meeting our target and that continues to go up, it used to be 50% to 60% alright, and so, but that's an additional opportunity for us as well. And then we've got this bulk fuel change that we are trying to enhance to save us money, I mean there is a number of things in there, but that's the second largest bucket.

Okay, that's really helpful. And then just last two things, one is it near term question and how are you thinking about just kind of margin sequentially better or worse than normal in second quarter and then longer term now that we are kind of at new peak margins here when do you start thinking about growth again and building out the network more?

First of all, I don't think we are at peak margin though; there is somebody out there defining peak margins and it’s not us, so we are continuing to work towards the peak margins that are being achieved in the industry. So first of all, I'd say that and then just in terms of kind of we not only make comments about kind of the second quarter and I would like to consider a couple of things on that. First of all, our historical first quarter and the second quarter has been about three points and I think given how strong the first quarter was that really we got off to a good start in January and February. So I would probably suggest something less than the normal sequential improvement, you know and I think that being said and you talk about what we are looking at from a longer term perspective, we expect to have much more significant second half results and improvements year-over-year as we expect more normal seasonality progress with yield, continued advancements of the cost initiatives that we've discussed. So I mean I would encourage us let's just not just focus on the second quarter, but also take a good look at the second half of the year and we talked pretty openly about what some of our targets are with yield and efficiency and what some of our inflationary costs are, so I think what we will see is less favorable year-over-year comps in 2Q, but I think there's a good opportunity to materially improve over last year’s second half which given some of the declining tonnage that we saw and quite frankly I was disappointed in the second half of last year with some of the initiatives and things we have targeted internally; I'm pretty optimistic about the second half of this year.

And on the growth side of the question?

Over time you are saying or in the second…….?

No, no, longer, or when do you start thinking about growth?

Well, first of all, I’ll hope to grow in our existing geography through the quick clarity through the second half of the year. We expect favorable comps there and then I think with our target marketing and some of the value proposition that we established in the market and as we’ve kind of weed it out let's just say some unprofitable lanes etcetera., which I wouldn't expect us to go through those challenges, again that impacted our tonnage; I mean we generally target you know a couple of percent at least over the industry growth to kind of take market share and that will be within the existing geography. And then obviously we have the non-asset groups that we are selling that should help us grow some topline and clearly earnings, as good margins on that and we would look as I have commented that we get to the 93% type OR range that and if the company is providing good returns then we would evaluate good opportunities for geographic expansion whether that be through either acquisition or organic growth in some of the industrial markets that are towards the Northeast of our current network.

Sounds great; thanks guys.

The timing of that, obviously we achieved, we continue to progress so I would expect and we would be evaluating those other opportunities sooner rather than later.

And we’ll move on to our next question from David Ross with Stifel Nicolaus.

Jim, I didn’t write fast so, what were you saying about the wage increase in July; you mentioned some annual basis impact and I just failed to catch that?

Yeah, Dave, on an annualized basis, we are expecting that increase to cost us about $13 million.

Okay.

So we expect to have offset from that based on initiatives and more productivity.

And then the operating cash flow in the first quarter declined significantly year-over-year; what were the main drivers of that and do you expect that to get back to a normal $25 million plus in 2Q?

Right. When you look at it from operations, you got to take in to account some of the changes and the working capital items and that’s why it looks negative year-over-year. Obviously what was provided by earnings was improved.

Part of that was the payables for the equipment; with so much equipment that we purchased in the first quarter of last year, right, was in accounts payable.

Okay.

So you got to remember, I mean last year in the first quarter when we spend $39 million...

$39 million.

Yeah $39 million compared to this year; part of that equipment has been delivered and we’re spending at (inaudible), so that was the primary driver of that; it’s just on short timing basis.

Okay. That should reverse in the second quarter; you don’t expect another working capital headwind?

Yes; (inaudible) but as we have made significant equipment purchases we will probably have some in payables right?

Yeah, that makes sense to me. Rick on the last call you said that you were pretty much done with tractor CapEx in terms of lowering the fleet age, but you still needed more trailer replacements. Now that kind of the business is getting better and moving along, margins are a little bit higher; is there a reason to may be look at lowering average fleet age even further; you kind of had achieved your targeted range, but what's the kind of cost better for analysis of lowering the fleet age further?

Yeah, actually that’s something we are working on, particularly some of the maintenance expense challenges that we have so we’re kind of revaluating right now what the optimal age is and the other thing that kind of happens here is if you get in a growth mode we tend to buy our growth capital attached to the new equipment and lower your average age anyway. So I think the combination of the two you’ll probably see some continued, some decline overtime on the average age of our tractor available to further evaluate what benefit that has. And then on the trailer age, we made a lot of progress on that this year, but there will be another year, fairly high CapEx there and the good news is I think that the linehaul fleet again 25% of our top trailers don't have logistics post settlement, that will be taken care of during this quarter right here and there are clearly some benefits from that.

Yeah, and I think newer fleet with lower maintenance, more fuel efficiency and better load factors are all good things. On the insurance and claims line you continue to make progress on safety initiatives, should that borrowing not accident here and there be a good run rate to you now kind of below $6 million a quarter?

We made some progress with obviously with cargo claims that we discussed. Our accident expense was favorable to our historical average; our frequency was actually better and we kind of had it maybe a little better than our historical average on every side; I feel strongly that some of the things we are doing on the safety side are paying some substantial dividends there. That being said there can be some volatility from a very small number of accidents in that line, so again, please we had a good quarter, but its about flat with the first quarter of last year, we always work to improve that by the way we tell you from the absolute number based on our history, from an absolute number objective is there is probably more opportunity in work comp which is in the salaries, wages and benefit line then there is accident just because sometimes things happen.

And just last question for Jim about the depreciation and amortization dropped sequentially from the fourth quarter, with the new fleet coming, and I would expect this to continually rise; what happened there?

Absolutely, we took some units aged them off; we didn't do a lot of CapEx in the first quarter, that will ramp back up strongly in the second quarter. So I think we've been asked in the past about where we expect depreciation to be for the full year and we were projecting somewhere in the range of $54 million. I would tell you with the delivery being pushed in the second quarter that's more like $52 million for the full year.

We will take our next question from William Greene from Morgan Stanley.

Rick I just want to refer back to a comment you kind of made earlier which is, when you work with some of the pricing it’s more that you lose business in a specific lane rather than lose if kind of on-mass from a customer. When you look at the overall dynamics of that outcome do you feel like there's under cutting going on where other carriers are willing to take that business at a price point that you just find unsatisfactory now or what's kind of the dynamic there.

Well, I don't know if I'd call it under cutting, but maybe their lane balances in their pricing are different, I'm talking about the competitor standpoint or maybe they make mistakes in the sophistication of the model. I mean I don't really know, right. I just know from our perspective we believe we mis-priced the lane and so we are making the necessary adjustments. Even though sometimes we make material adjustments, sometimes we keep those lanes and sometimes they have a better option and they move on. I guess what I would tell you is, generally most customers while they don't necessarily like it because we are doing a good job in the lane etcetera, they make their business decision based on what their alternatives are and they are generally agreeable to a more sophisticated lane based pricing model we are seeing a pretty high level of acceptance with that, especially if they had another alternative I mean. We tell them it doesn't work for us and the alternative for us is to take a higher across the board. They are better if we say; no we will accept a 3.5% on base of your business, but this one lane I need 27% on or 15% or these two lanes, whatever it is right. Then they have to make a decision and we don't put our entire relationship at risk and we get the account corrected.

That makes sense. So basically what you are saying is that often when you find the business goes away you feel like your action caused them to react rather than a competitor came in and chose to undercut you on a lane.

I agree with that, and I would also comment just likewise as other people get more sophisticated with their pricing and do things, we are seeing some of those opportunities come to us and we have to evaluate whether it works for us or not.

Makes sense.

Right, I mean everybody is kind of, we think based on public comments they are figuring us out and moving through their customer base and again I think from our tonnage perspective that activity is kind of behind us. So to the extent that we are seeing some opportunities from other people’s actions as they take their corrective actions. The high rate makes sure works for us.

Yeah, of course, of course. Have you seen any opportunities that have come from any of the labor negotiations, can you tell if you've won any share in that regard?

Can't tell.

Yeah.

Nothing material or visible I'd say.

Okay, and then just the last question and this one is a little bit more on balance sheet and that is when you kind of look at getting toward your target of 93 OR and thinking about kind of ramping up growth, do you feel like you’ve got the cash on hand to do that or does it make sense to sort of think about maybe coming to market from a secondary perspective for the equity, it would help with float but it also could kind of give you a nice work trust to do something bigger if you wanted. How do you think about managing that aspect of the balance sheet?

We have plenty of borrowing capacity, though. If we decide to expand as Rick mentioned, growth would be after we attain the OR that we are shooting for and we have plenty of borrowing capacity available.

Our leverage is low as a company and we would obviously evaluate if there was a material strategic opportunity that caused us to look at things differently, we would look at that. But we think from the cash flow and the company and our available credit capacity that we think we can fund some growth opportunities over the period of time through those resources.

So flow considerations are something that comes in to equation for you?

Right.

Our next question comes from Chaz Jones with Wunderlich Securities.

It’s Nick Bender on for Chaz. Just a sort of follow-up in terms of the business that you’ve seen come up in certain lane, either that has gone away from you based on your pricing conditions or that has come in to you as you sort of reevaluate it. Has there been any trend or consistency in terms of either geographically or with certain end markets or you are seeing that business shift one way or another?

Not really. It periodically happens, but I would say there is a player out there we see being regularly aggressive. I mean those with some other carries are that for some reason something works for them that doesn’t work for us and we see them, they like minimum shipments, we may or may not depending upon what kind of synergies we see with that customer. So I mean there are some things like that that we know we see regularly. I guess what I would tell you is, I don't see one or two or anybody really out there being particularly irrational that they just price the way that works for their model and there is not really any surprising activity out there.

Got you, that makes sense. Can you discuss a little bit your business with the three TL players and how that’s progressed, the sort of direction that you feel that business is going.

Yeah I mean most of those guys continue to take some share and that business grow and there is apparently some customers who like that. We do business with them like we do other customers to the extent that it makes sense for us. There was a time when we may be mistakenly change tonnage with them from a pricing perspective and we don't really do that as long as it works for us and we are okay with that. There is an element in the industry that’s pretty significant at this time and as you would expect, we do business with all of them to varying degrees.

Right and I’ll follow-up just one the last question here. Saia TL Plus, you guys have talked about a $0.06 to $0.08 contribution to EPS this year. Is that sort of still a target or can we think potentially some upside there in coming quarters as you more fully embrace the cross selling opportunity?

It could be better but it was a little over pining in the first quarter, and when you consider the goodwill amortization and the contribution from a cash flow it’s better than that, but its been thus far it’s in line with our expectations and then what I would tell you is there is a significant growth opportunity available to us there. We are just staging that end and making sure that operationally and service wise that we can meet customer expectations and or not overwhelm them. So our initial thing right is to really set up the infrastructure so that we can service the customers the way that we want, as it was a fairly small company and so we are staging that end. At this point time we have 65 of our 250 sales resources of marketing it and we are achieving our goal. I would expect it to grow over a period of time or probably be conservative with the contribution there if it is not all that materially either at this point.

Right, now I got you, any thought to augmenting that with additional acquisitions in the space or are you happy with how it’s growing right now?

Potentially, I mean, we think there is a good opportunity to leverage this through our existing customer based, so we don't feel like we really need to buy additional market share and pay some of the premiums that those businesses require. But that being said, there is a right opportunity and the synergy there was easy and the price was okay, we would look at that. I like the business, not I don't like our trucks; but it’s an interesting business with good margins and not very capital intensive.

(Operator Instructions) We will take our next question from Art Hatfield with Raymond James.

Rick I wanted to go back to your comment that you made about the OR and cautioned everybody on Q2, with regards to the historical Q1 to Q2 improvement. When we look back last year, you had a phenomenally good second quarter. And given what volumes have done, do you think it’s feasible that we should be thinking about the possibility that OR could deteriorate year-over-year just given the strength of a year ago and how volumes have trended over the last 12 months?

Well, I would say that's not our expectation.

Okay.

We would -- if we got some surprise in self-insurers or something that could potentially happen or something else happen, that's not expected.

But just as you see it today you could perform better than you did a year ago without surprises?

Our target is to improve not the kind of improvement, but yeah we certainly expect to see in the second half. And I guess -- so I think we made our comments about the second quarter, I'll be happy to clarify that further you know, but I would say not that it couldn’t be three OR points, but given the trends that we are seeing and it’s good as last year was, we would say it will probably be less than that, even though our historical average has been three. And part of that is just because the first quarter was so good and we got up to a really good start in January and February, were really good months for us and that contributed to the quarter. With that being said, here's one thing I want to make sure we -- the second half really needs to be evaluated in my opinion, because if we talk about 3% yield increases and $20 million of cost savings, that's a $55 million improvement and then we have some inflationary things that are in the $30 million to $35 million range and that gets us to about two OR points for the year, right but we only improved 1.2 in the first quarter. We are telling you the second quarter will be difficult comps, I mean our expectation with targeting some things and if we get normal seasonality in the back half of the year is where we would expect comps to be favorable again.

I appreciate that. And I think when the goal starts because that's the most guidance you've given in the history of the company.

We don't give guidance. I'm just doing math.

I understand, I understand. I got you. That is extremely helpful. I appreciate that. I want to take following up on Bill’s question about doing an equity offering. I want to take the other side of that and say you know given that you do expect to grow say over the next five years, do you at all think about maybe going out into the market and taking down maybe some five-year paper given where interest rates are today to may be get ahead of moving interest rates as things in the economy say improve over the next couple of years?

Yes. And obviously the debt markets are pretty attractive right now. We have some fixed rate debt at much higher rate than today's opportunities are that is amortizing off pretty quickly you know through 2017 and of our $50 million, $22 million that we pay down this year in June 30 and December 31. So yes, we are interested in taking a look at that. That being said, we are projecting good cash flow and we don’t have a big deed right now, but to even refinance the debt that we have at a much lower rate with a longer-term, you know, given like you said some of the strategic end or growth opportunity that should come before us in the future, we clearly would consider that.

Thank you for that. And just final thoughts on that you know you have been focused on getting, maybe I am saying this wrong and I am sure you will correct me if I am, but focused on getting pricing up, but obviously there is a balance between price and volume, right. So maybe as you mentioned, some of your competitors can take lower price business because that fits, it bounces better within their lane. Do you think about that much or is the focus on moving price up or are you doing kind of what I am saying, some of your competitors are doing? You are willing to take a little bit less price if in fact it fits within your network well.

It works for us that we make good margins on, that's how we're evaluating business, right? And we understand sometimes there maybe a regional competitor and for whatever reason business works for us. The positive that we have is with our current network in 34 states, we’ve got broader coverage than they do and we can just sell outside of their network if it works for them and doesn’t work for us. Like we don’t have to play that game, right. And I think that’s the other opportunities as we look at geographic expansion and that creates other opportunities to do that. And if somebody in a region is either has a different cost structure or has different targeted margins then you can work around that and still market grow being with the customer. Part of what has if you are in with the customer in a lane and you could be in a couple small lanes and some thing may happen with their other provider, be it they have a bad service experience, their claims ratio goes out, etcetera and then you know you build a relationship with them and sometimes you get over time either some or all of their business at your price and that’s just what we have to look at. I mean, our cost and if we didn’t learn anything else, I mean you can't rationalize your way into the fact that I need density at bad price that clearly doesn’t work.

Got it. Now that’s really helpful clarification. Thanks for your time.

Sure.

And we have a follow-up question from Jason Seidl with Cowen Securities.

Guys real quickly, Rick you are talking about how your frequency of accidents looks a lot better and I know anything can happen, but if this continues, if this trend continues should we look for an actual area adjustment at some point this year?

No, not on the accident side that would be on the work comp side. The accident expense all we have a reserve out there, those tend to be settled in a fairly short time period and a pretty defined and we really don't change that much, whereas we really use the actuarial say more in our comp which actually work comp expenses higher than accident expense for our company and so that’s potentially where over time we could see some benefits by improvements in our injury, prevention and case management processes which we’re clearly working on. And I think as we commented another reason to kind of look at the second half of this year that could potentially be a favourable versus last year, because we had some unfavourable work comps through a type of adjustments both in 2011 and 2012, both in the second half. I would be surprised if we had that again given the material adjustments that we have made.

Okay, good enough. Thanks for the call guys. I appreciate it.

Sure.

And that concludes today's question-and-answer session. I would like to turn the conference back over to Mr. Rick O'Dell for any additional or closing remarks.

Thank you for your interest in Saia and I would really like to congratulate Saia’s 8000 employees for the job that they are doing and the contributions that they are making. I think as a company we’ve never performed better and I think the foundation is solid for us to continue to advance on the initiatives and the focus that we have. Thanks again for your interest.

And that concludes today's teleconference. Thank you for your participation.