Good day and welcome to the Saia, Inc., Second Quarter 2013 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 ma’am. Renée McKenzie: Thank you, Kayla. Good morning and welcome to Saia’s second 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, 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’d like to turn the call over to Rick O’Dell. Richard O’Dell: Good morning and thank you for joining us. I’m pleased to report that Saia again delivered record earnings in the second quarter. Our success is due to the hard work and dedication of every member of the Saia team. You see improved results across the board in everything from customer service, technology, claims and safety. It’s gratifying that we continue to achieve these meaningful improvements despite a relatively sluggish economy. To keep items comparable, all per share data in these remarks have been adjusted to reflect the company’s recent three-for-two stock split. Let me start by reviewing some highlights from the quarter compared to the second quarter of last year. Revenue was 293 million, up 2%. Earnings per share were…

Thanks, Rick and good morning everyone. As Rick mentioned, the second quarter 2013 earnings per share report were $0.54 compared to $0.48 in the second quarter of 2012. For the quarter, revenues were 293 million with an operating income of 23.3 million. This compares to 2012 second quarter revenue of 288 million and operating income of 21.2 million. The LTL yield for second quarter 2013 increased by 3.2% which primarily reflects the favorable impact of continued pricing actions. Continuing our trend from the past several quarters, yield showed steady improvement as we continue to achieve price increases. Our industrial engineering initiatives and operational effectiveness have reduced our reliance on purchase transportation, significantly enhanced our fuel fluidization and reduced our self-insurance cost. The quarter however did include higher cost from wage and benefit increases necessary to compensate our work force and meet customer requirement. While we have invested heavily in new tractors and have reduced the age of our fleet, maintenance costs were again impacted by more costly routine maintenance and higher parts cost. These factors increased maintenance expense by 3.3 million compared to the second quarter of 2012. Depreciation and amortization ran 12.4 million during the quarter versus 12 million in the prior year quarter. As we previously announced, we implemented a 3% wage and salary increase companywide effective in early July. This increase will add approximately $13 million expense on an annualized basis. We anticipate the impact of this wage increase to be partially offset by further productivity and efficiency gains. Year-to-date revenues were 566 million compared to 556 million in the prior year period. In the first half of 2013, operating income was 37.8 million with net income of 22.7 million compared to operating income of 32.2 million with net income of 17.4 million in the prior year…

Thank you. [Operator Instructions]. And we’ll take our first question from William Greene with Morgan Stanley. William Greene – Morgan Stanley: Yeah hi there. Good morning. Rick one of the things that I think you’ve mentioned in the past is that if you’re able to hit your targets or sort of inspirational OR of kind of this 93 range you’ll sort of look to expand the network in various ways and go back into kind of more of a growth mode or build mode. If you look at some of the acquisitions you’ve done in the past, as you’ve gone down and done those acquisitions how long did it take to sort of do the integration as well as deliver synergies? What kind of turnaround was that when you started to invest that way? Richard O’Dell: We actually when we made acquisitions in the past, we’ve made some we had. We were really doing it for the synergy revenue of the cost so we made the integrations were on a very quick timeline. Generally we did it within 60 to 90 days and made the company Saia and began to cross-sell essentially immediately. So I mean but I think each acquisition is different depending upon what the geography is and what you’re trying to achieve with it and may be the stability or quality of the company that you acquire could have an impact on that as well. In the past again immediately adjacent geographies with very little overlap and we did those integrations very quickly. William Greene – Morgan Stanley: Yeah okay so that makes sense. So when you look at 2014 and beyond and you think about resuming sort of a growth strategy, can you just remind us sort of the level of maintenance CapEx and sort of what your comfortable spending for growth What is that realistic levels of growth CapEx? Thank you. Richard O’Dell: I mean I think our maintenance CapEx Jim you want to answer that question first

Yes and for next year we still would have some deferred tax CapEx for trailer purchases. So we would expect to have an elevated level next year in CapEx somewhat similar to what we are having this year. That would be absent growth. And then if you looked at beyond that maintenance levels we would probably run 65 million or so and then you’d have to layer in on top of that growth. Richard O’Dell: And I guess from a capital standpoint we have some additional capacity both in some in our fleet as well a significant amount in our real-estate to grow within our existing geography and obviously whether you’re acquiring the company or expanding organically would require some potentially some incremental investments depending upon the scope of the geography you expanded into potentially right? William Greene – Morgan Stanley: Okay. That’s great. Thanks for the time. Richard O’Dell: Alright Thanks.

And we’ll take our next question from Jason Seidl with Cowen. Jason Seidl – Cowen Securities: Guys good morning. How are you? Richard O’Dell: Good morning how are you? Jason Seidl – Cowen Securities: Hanging in there. Couple of quick questions (inaudible) in their conference call the other day basically was saying that they felt that the LTL pricing environment improved during 2Q just wanted to get a sense of how Saia viewed it? Richard O’Dell: Yeah I mean I think it stayed pretty stable I mean our contract renewal continue to be in the 3% to 4% range and that’s kind of what we had anticipated and what we’ve been saying. And then our theoretical yield model shows adjusted like the hallway for shipment that our yields actually increase in that range as well. So I think the yield environment has been pretty good stayed rational. Jason Seidl – Cowen Securities: Okay. And when I look at some of your new services that you guys have been rolling out, how should we view that going forward in terms of sort of the margins on that and the flow through towards the P&L? Richard O’Dell: Yeah I mean the margins are good on that business it’s just small and I think we would say we said initially we thought $0.04 to $0.06 accretive on a performance basis for this year and it’s performing in alignment with that. So far it’s grown nicely but I think there is clearly a lot of upside there as well. And as we’ve kind of set the business up to be scalable and handle some incremental volume there’s been some near term investments in that but the incremental margins are still good I would expect them to improve going forward. So again I think $0.04…

And we’ll take our next question from Brad Delco with Stephens Brad Delco – Stephens Inc.: Hi yeah good morning Jim Rick and Renée how are you all? Richard O’Dell: Good. Good morning Brad Brad Delco – Stephens Inc.: Jim I think this is your favorite question but we’re seeing I guess on a year-over-year basis some LTL tonnage improvements. Did we see that through the quarter? May be can you provide the year-over-year and then may be what you’re seeing so far in July?

Sure Brad and you’re right it was improving as we went through the quarter. We reported the LTL tonnage being down 1.6% for the quarter but it did improve each month. April was down 2.5% versus the prior year April May was down 2% versus the prior year May and June was essentially flat with the prior year. So far what we’re seeing in the month of July is including a barely weak July that fell as a day by itself after the holiday. We’re showing down 0.8% if we take out that one unusually light day the rest of the days are showing that we’re actually trending up 0.7% with LTL tonnage over last year’s July. Brad Delco – Stephens Inc.: Got you. So do you think we’re at a point now and I think we talked about this in prior calls where we’re going to see positive tonnage growth in potentially third and fourth quarter? Richard O’Dell: I think that would be our objective clearly and I think if you look at again kind of the weird comp takers you have that July 5th I call it as the dangling work day one day weak there not a lot of people worked apparently. So that was really light and again (inaudible) we’re trending up almost 1% compared to the negative comps we saw previously. So if we see normal seasonality from that going forward plus some of our marketing efforts we would expect to see some positive tonnage obviously that could contribute to our margin improvement going forward. And I think as we are generating some much better margins clearly it’s worth reinvesting in the business at these types of returns and obviously seeking some stronger returns from those density benefits going forward. Brad Delco – Stephens Inc.:…

And we’ll take our next question from David Ross from Stifel. David Ross – Stifel Nicolaus: Good morning gentlemen, lady. Renée McKenzie: Hello Richard O’Dell: Good morning David David Ross – Stifel Nicolaus: Could you talk a more about the yields fuel surcharge did that have a negative impact on the yield year-over-year? And then also, given that haul is up and rate per shipment were down those were both kind of positive tailwinds for yield it seemed to me that core pricing might be below 3% if that were the case given the yields were only up 3.2% inclusive of the mix change Richard O’Dell: Yeah the main difference there is that the fuel surcharge year-over-year was actually lower on percentage basis because fuel prices are down a little bit. David Ross – Stifel Nicolaus: But would you say core pricing 3% 4% still kind of the norm not going up much not going down much it’s pretty stable? Richard O’Dell: Correct David Ross – Stifel Nicolaus: And then I think Jim you made a comment about higher costs from wage and benefiting increases negatively impacting the second quarter. Was that anything out of the normal wage and benefit increases that you look last year?

No you’re exactly right. We did a wage increase July of last year and so you’re going to have some of that affect second quarter compared to second quarter a year ago. So that was pretty much as expected. David Ross – Stifel Nicolaus: Okay Richard O’Dell: But again first to second quarter last year we had the same timing of the wage increase and then our general rate increase is effective on July the 1st and essentially the increase from the general rate increase it will essentially offset the wage increase for the quarter. David Ross – Stifel Nicolaus: And then I don’t know if I missed but did you talk about the line haul load average is that still improving? Richard O’Dell: It is our load average is actually over 4%. We talked about purchase transportation being down but we actually set an objective as far of our $20 million savings that’s in line haul optimization that included load average and our load average is up little over 4% been a nice contributor to our margin improvement. David Ross – Stifel Nicolaus: Yeah that’s great. And then last question is based on the new revolver that you guys negotiated. What’s the impact on borrowing cost or interest expense going forward? Is there kind of an annual savings number you can give us Jim?

Dave what I can tell you that would be dependent of course on our level of borrowing. What I would tell you is that if you look at our level of borrowing in the second quarter, we would have improved it would have been about $75,000 lower from the quarter. David Ross – Stifel Nicolaus: Okay. Excellent. Thank you very much

And we’ll take our next question from Art Hatfield with Raymond James. Arthur Hatfield – Raymond James: Hey good morning Renée and young men. Renée McKenzie: Good morning. Richard O’Dell: Good morning. Arthur Hatfield – Raymond James: Just real quick lot of my questions have been answered but Rick as we think about things going forward, the last couple of years you’ve done such a good job on the cost side in a fairly tough freight environment. I think in the quarter I think my calculation was your incremental margin on the revenue growth was about 40% I think it’s been higher than that recently. Where are you at in this kind of I don’t want to call it restructuring but kind of reengineering of the company and the network? And what needs to happen for you to kind of get to be able to maintain those types of incremental margins if it’s even feasible to do so? Richard O’Dell: I mean I think there is obviously a lot of opportunities that’s we go through them all the time with quarterly reviews and try to identify where there are opportunities for further optimization and I think too We talk about in our conference calls We have had seven quarters of our 98% on-time service center in a row and that’s in terms of the history of the company that’s not really very long right? We upped our service standards and performed at a much higher level. I think this call it a rethinking kind of our pricing mechanism to be more sophisticated and targeted in what we’re trying to do and willing to do which is clearly required as your customer base gets more sophisticated. We’ve cycled through basically our existing customer base with that and I think the big…

And we’ll take our next question from Thom Albrecht with BB&T Thom Albrecht – BB&T Capital Markets: Hey everybody good morning. Richard O’Dell: Hey Thom. Renée McKenzie: Good morning. Thom Albrecht – BB&T Capital Markets: Rick I know you mentioned the load average was up about 4% do you have a number you can share? Richard O’Dell: The absolute number? Thom Albrecht – BB&T Capital Markets: Yeah, yeah. Richard O’Dell: I mean it’s in the mid 28 Thom Albrecht – BB&T Capital Markets: Okay. And then you mentioned fuel surcharge I know in the 10-K report you do give what that is as a percentage of revenues last year it was 17.3%. When you mentioned it was a little bit lower on a year-over-year average was it above or below the 17.3 figure? Richard O’Dell: It’s running about 0.7% last I believe Thom. It was less than second quarter this year than it was a year ago Thom Albrecht – BB&T Capital Markets: Alright. And would that be also below that 17.3 or 0.7% year-over-year? Richard O’Dell: Yes. Thom Albrecht – BB&T Capital Markets: I’m sorry Richard O’Dell: Compared to the 17.3 it would be about 0.7% below. Thom Albrecht – BB&T Capital Markets: Okay. And then where do you stand Rick with the logistics trailers? How many have you taken between new and retrofitted? I know that’s going to be a big part of your productivity going forward and got underlying some in the second quarter but bring us up to speed? Richard O’Dell: Yeah sure. Just last week ran 97% of line haul schedules were run on logistics trailers and previously like we had 75% of our trailers were all logistics trailers previously but we actually ran about 80% to 82% on logistics because we have a methodology…

Those are both good questions Thom. The first one the deprecation because we are equipment came in a little bit slower than what we had expected, I’m now looking at deprecation for the year to be closer to 51 million. Thom Albrecht – BB&T Capital Markets: Okay

You can see second quarter only went up from basically 12 million to 12.4 million. So I mean it was a little bit less than we had anticipated because of the slowness of getting the new units in service. So I’m projecting the year to be about 51 now. As far as the increase in the health plan it’s pretty much tracking and we’re still expecting increases that we quoted before that we believe were in the range of 5 million for the year. And that’s pretty much in line with what we’ve talked about before legislative impact the excess carrier cost and just general inflation have taken up that against this year. Thom Albrecht – BB&T Capital Markets: Okay that’s helpful. Thanks very much everyone

Thanks, Thom Renée McKenzie: Thank you.

And we’ll take our next question from Scott Group with Wolfe Research Scott Group – Wolfe Research: Hey thanks. Morning everyone.

Good morning Scott Richard O’Dell: Good morning. Scott Group – Wolfe Research: I wanted to ask kind of a third quarter margin question in a bit of a different way. It’s a tricky quarter and then there is no clear trend of third quarter being better or worse than second quarter sequentially on a margin standpoint. May be if you can just help us think about the moving parts I think maybe there is an extra operating day some of the maintenance costs were high in the second quarter but not sure how to think about margin sequentially from second and third and may be you can provide a little bit of color Richard O’Dell: Sure as you said it’s been a long variance particularly if you look back over the last five years, third quarter versus second quarter of last year though that was actually deteriorated by 1.5 operating points. Again as I commented earlier I was clearly disappointed on second half last year and we did have some what we would be hope to non-recurring self-insurance adjustment and work comp that impacted kind of the second half actually there was some bulk quarter. And if you look at our history the average is deterioration of about 0.7 OR points and I guess I would say given some of the company focused initiatives and our tonnage turning positive that we would this point expect to deal a little bit better than absent some potential self-insurance and some other volatility that we clearly could have. But we would expect our core performance to deliver better than that. Scott Group – Wolfe Research: Okay, that’s great. Appreciate that. And then longer term and as we think about the margins and 92 is obviously a really good quarter you had a OD…

And we will take our next question from Chaz Jones with Wunderlich Securities Chaz Jones – Wunderlich Securities: Good morning. Thanks for taking my question. I just had one quick one on the 20 million of cost savings, should we be thinking of that as kind of proportionally across a year or is that something that accelerate in the back half? Richard O’Dell: I would say there are some of it left but say from our cost savings opportunity but a lot of it we actually achieved kind of earlier in the year. I would tell you that the load average has improved dramatically early in the year and as we talked to Thom a little bit about what we think some of those futures opportunities are I think it could be still a couple of percent better. So that would be some improvement opportunity we have in the back half and obviously if we could achieve some growth and see a normal seasonality I mean we should be able to improve the load average and get the density benefits there. And the other big opportunity there is then in fuel economy. And some of the new equipment came in little later than we had anticipated but some of the trailers again we think all – We have most of our new trailers are in at the end of this quarter and we’re 86% complete retrofitting our existing fleet of line haul equipment. And so we would expect some second half benefit in fuel economy. We also continue to work with our drivers on (inaudible) shifting and fuel efficient driving techniques and we’re seeing some improvement in that. We actually achieved record miles per gallon in the month of June and we have some more equipment new equipment coming in that’s getting better than our average miles per gallon. So the fuel efficiency is probably the biggest opportunity in the second half. Chaz Jones – Wunderlich Securities: Okay, great. That’s helpful.

And we will take our final question from Thom Albrecht with BB&T. Thom Albrecht – BB&T: Just a couple of items here, what level of compliance are you at for weighing in research? And are you at 20 dimensioners and if so do you plan to add any more? Richard O’Dell: Actually just five more that are coming in August. Thom Albrecht – BB&T: Okay. And then how about the weighing in research compliance? I think you’re shooting for north to 95% this year but just wanted to get an update Richard O’Dell: We are at a very high level of reweighs and we don’t see much incremental opportunity there. So that’s probably already optimized. Thom Albrecht – BB&T: Okay. Thank you Richard O’Dell: But I mean on the late inspection side, inspection side is probably the biggest opportunity that we have more than on the scale utilization and deployment. Thom Albrecht – BB&T: Okay. Thank you. Richard O’Dell: Alright. Thanks.

And there are no further questions at this time. Richard O’Dell: Alright. Thank you for your interest and your participation. We’ll talk to you soon.

And this concludes today’s conference. Thank you for participation.