Saia, Inc.SAIANASDAQ
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Operator: Good day. And welcome to Saia, Inc. Fourth Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Matthew J. Batteh, Saia, Inc.’s Executive Vice President, Chief Financial Officer. Please go ahead.
Matthew J. Batteh: Thank you, Betsy. Good morning, everyone. Welcome to Saia, Inc.’s fourth quarter 2025 conference call. With me for today's call is Saia, Inc.’s President and Chief Executive Officer Frederick J. Holzgrefe. 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 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 SEC filings for more information on the exact risk factors that could cause actual results to differ. Also, in 2025, we recorded $14,500,000 in net operating expense impact from a gain on real estate disposal and impairment of real estate. When we discuss adjusted operating expenses, adjusted cost per shipment, adjusted operating ratio, or adjusted diluted earnings per share for the third quarter 2025 or full year 2025 in our comments, it refers to adjusted results that exclude the gain from that sale and impairment on that property. See our press release announcing fourth quarter results for a reconciliation of non-GAAP financial measures. That press release is available on the Financial Release page of Saia, Inc.’s Investor Relations website as well. I will now turn the call over to Fritz for some opening comments. Good morning and thank you for joining us to discuss Saia, Inc.’s fourth quarter and full year results. We look back on 2025, I am proud of our team's resilience and focus. Delivering strong execution for our customers even as volume patterns shifted day to day amid constant change. Having now completed our first full year at the national network, I am more excited than ever before about the future of Saia, Inc. Throughout the year, our now national footprint provided opportunities with both new and existing customers as our expanded reach enabled us to provide our industry-leading service in more markets. Having a national presence provides us with the opportunity to solve more problems for more customers, which we believe has resulted in increased market share. Our record capital investments of more than $2,000,000,000 over the last three years have allowed us to rapidly expand our footprint in a short period of time, and I believe we are still in the early stages of capitalizing on the opportunity that national network provides. Of course, our achievements would not be possible without a best-in-class team. While the demand environment remained dynamic throughout the year, our team responded to our customers' needs every day. Our core operations performed as we expected for the fourth quarter. However, reported results were impacted by self-insurance costs late in the quarter. Our fourth quarter operating ratio of 91.9% reflects these increased self-insurance costs. The sequential deterioration from third quarter's adjusted operating ratio was impacted by unexpected adverse developments on a few cases arising from accidents that occurred in prior years, which required reserve increases in the period of approximately $4,700,000. As we well know, accident-related costs continue to rise due to increased litigation costs and settlement values as well as general inflation, and can develop sometimes unexpectedly over several years. Regrettably, this unexpected need for reserve increases was related to the accidents that happened years ago. However, we continue to invest in industry-leading training and safety technology. We are seeing positive trends in our safety statistics. During 2025, despite having the largest fleet in company history and internal miles increasing by 2.4% year over year, we saw a 21% reduction in our preventable frequency and a 10% decline in lost time injuries, reflecting the benefits of these ongoing investments in safety. Focusing on the fourth quarter, volumes continue to reflect the muted demand environment the industry experienced throughout the year. Shipments per day were down 0.5% compared to 2024, while tonnage per day was down 1.5% compared to the same period last year. As is typical, we experienced some volume shifts in the weeks after the GRI, which was implemented on October 1, and we remain extremely focused on ensuring that we are compensated appropriately for the quality and service that we provide to customers. When we analyze the results of the GRI closely, we are pleased to see customer acceptance trends slightly above historic levels. Similarly, contractual renewals remained strong in the quarter, averaging 4.9% of the book of business contracted in the quarter. We continue our efforts to ensure that we are fully compensated for quality and service we provide and have seen a 6.6% contractual renewal increase in the month of January 2026. Despite the volume decline, our fourth quarter revenue of $790,000,000 is a record for any quarter in our company's history. Mix headwinds continue to impact our results with slight decreases in weight per shipment and length of haul compared to 2024. Additionally, revenue per shipment excluding fuel surcharge decreased 0.5% compared to last year. As we have discussed in our prior quarters, the volume decline in our Southern California region continued, as volume in the region in the fourth quarter was down about 18% compared to the prior year. This region is typically our highest revenue per bill market and the volume decline caused an estimated $4,000,000 revenue reduction for the quarter. While the Southern California region continues to play a factor in our mix dynamics, we are seeing growth with customers in both legacy and ramping markets as our expanded footprints allows us to get closer to our customers and handle segments of their business that we may not have had access to prior to the network expansion. Reflecting our ability to provide industry-leading service in more geographies, we were able to drive revenue per shipment excluding fuel surcharge up 1.1% sequentially from the third quarter. Our nationwide network has now been fully operational for one year, giving us clear perspective on the impact of our generational opportunity to expand the network over a very short period of time. Over the past year, we strengthened relationships with existing customers while bringing our high-quality service to many new customers, contributing what we believe is a record level of market share gain. These customer relationships will continue to develop, reflecting the long-term value of the strategic investments we have made over the past few years. With our network expansion, we were able to achieve a cargo claims ratio of 0.47% in the fourth quarter, which is a company record for any quarter. Considering the size and scope of our national network, with newer locations still in early stages of their life cycle and employing newer Saia, Inc. employees, this customer-centric metric is a testament to the culture instilled at each location in our organic expansion and our team's ability to perform at the highest level. This level of service reflects our team's consistent effort and attention to detail, core strengths that have helped establish Saia, Inc. as a leading national LTL carrier. I will now turn the call over to Matt for more details from our fourth quarter results. Thanks, Fritz. Fourth quarter revenue was largely flat compared to the prior year, increasing by 0.1% to $790,000,000, while revenue per shipment excluding fuel surcharge decreased 0.5% to $297.57 compared to $299.17 in 2024. Fuel surcharge revenue increased by 6.1% and was 15% of total revenue compared to 14.1% a year ago. Yield, excluding fuel surcharge, increased by 0.5%, while yield increased by 1.6% including fuel surcharge. Tonnage decreased 1.5% attributable to a 0.5% shipment decline in addition to a 1% decrease in our average weight per shipment. Our length of haul decreased 0.1% to 897 miles. Shifting to the expense side for a few key items to note in the quarter. Salaries, wages, and benefits increased 6.1% compared to 2024. This increase was primarily driven by increased employee-related costs, which include a company-wide wage increase of approximately 3% on October 1, due to adverse claim development on a few accident cases late in 2025 related to accidents that happened in prior years. In 2025, we are pleased to see a decrease in the number of preventable accidents year over year. However, cost per claim continued to rise due to increased cost of litigation and increases in settlement values. Depreciation and amortization expense of $62,900,000 in the quarter was 16.4% higher year over year, primarily due to ongoing investments in revenue equipment, real estate, and technology. Compared to 2024, cost per shipment increased 6.1%, largely due to increases in self-insurance-related costs and depreciation. Group health insurance alone accounts for more than 30% of the year-over-year cost per shipment increase due to continued inflation in healthcare-related costs. We continue to believe that we provide best-in-class benefits to support our employees who drive increased customer satisfaction, and while a headwind, we have absorbed the majority of the market rate increases that we have seen over time. Total operating expenses increased by 5.6% in the quarter, and with the year-over-year revenue increase of 0.1%, our operating ratio increased to 91.9% compared to 87.1% a year ago. Our tax rate for the fourth quarter was 22% compared to 23% in the fourth quarter last year, and our diluted earnings per share were $1.77 compared to $2.84 in the fourth quarter a year ago. Moving on to our full year 2025 results. Revenue was a record for Saia, Inc., increasing 0.8% compared to 2024. Operating income was $352,200,000. Adjusting for one-time real estate transactions, our operating income was $337,700,000 for 2025. Our operating ratio for the year deteriorated by 40 basis points to 89.1%, while our adjusted operating ratio was 89.6% for 2025. Focusing on the balance sheet, we finished the year with just under $20,000,000 of cash on hand and $63,000,000 drawn on the revolving credit facility, to bring us to approximately $164,000,000 in total debt outstanding at the end of the year, which is down from $200,000,000 at the end of 2024. Looking back on 2025, I was pleased with our team's core execution, despite a challenging macroeconomic environment. We insourced more miles compared to the prior year, cost-optimally scaling and leveraging our fleet's national network and technology investments driving our optimization efforts. Further evidence of our network optimization efforts shows in our handling metrics, which improved sequentially every quarter through the year and exited the year 1.5% below their first quarter peak. From a quality standpoint, our cargo claims ratio of 0.5% for the full year was a company record and improved year over year in every quarter compared to 2024. We continue to see the benefit of our investments in safety, training, and technology. Lost time injuries in 2025 declined 10% year over year, and preventable accident frequency declined 21% year over year. While the underlying nature of self-insurance remains inflationary, our reduced incidents have helped mitigate the rising costs. Importantly, our record investments have enabled us to drive increased customer satisfaction in more markets. Our ramping terminals, or those open since 2022, operated profitably for the year, despite the relative inefficiencies that come with opening 39 terminals in such a short period of time. The 21 terminals that we opened throughout 2024 continue to mature. We estimate that those terminals increased revenue market share by approximately 80 basis points in 2025. In aggregate, our ramping terminals, while weighing on the company's operating ratio, contributed incremental operating income for the year. We are seeing tangible results with our customers through our expanded service offerings, and I believe we are just beginning to unlock the full potential of our national network and technology investment. I will now turn the call back over to Fritz for some closing comments. Thanks, Matt. Despite uncertainty surrounding volumes in the broader macroeconomic environment in 2025, I am proud of how our team adapted each day to meet our customers' needs. Every day represents new variables, and our ability to consistently deliver strong service quality metrics reflects the strength of our Saia, Inc. culture across both our legacy and ramping terminals. While the inflationary costs associated with our industry continue to be pronounced in certain areas, we are actively working to manage costs through the use of network optimization technology. We accelerated our network optimization efforts that began in 2025 and are already seeing cost savings as a result. Fueled by our ongoing investments in technology, these initiatives improve density and efficiency across our national footprint, with handles declining steadily from the first quarter peak. As our network continues to scale, adding density and enhancing our ability to service customers, our value proposition continues to become increasingly clear. These investments we have made over the past three years, more than $2,000,000,000, have strategically allocated capital toward real estate, revenue equipment, and technology to support our long-term profitable growth. In addition to the investments we have made in our network expansion, the investments in revenue equipment and fleet modernization have improved operating efficiency and safety while also positioning us to improve the customer experience. We have also invested heavily in technology to optimize network performance and drive operating leverage, including advanced analytics for operational profitability insights, customer-facing capabilities, employee training, and process automation. We believe that the combination of these investments strengthen our competitive position and supports sustainable value creation for shareholders. As we look to 2026, our focus remains on strengthening core execution by continuing to invest in both technology and our people. Our national network provides a complete LTL solution for our customers, and our success is defined by consistently meeting and exceeding customer expectations while generating an appropriate return for these significant investments. We believe strongly that our national network is poised to scale as macroeconomic conditions improve. By leveraging these investments, combined with our team's commitment to excellence, we expect to drive incremental improvements to our performance in 2026 even if the macro environment remains soft as it was in 2025. The network investment over the past few years reflects a considerable deployment of capital, which requires a return. Our emphasis through 2026 will be on an intense focus on ensuring that we see return on these investments. We expect to be fairly compensated for these investments as our customers benefit from the increasing scale and quality that we provide. Over time, we will need to continue to reinvest in the inflationary and capital-intensive network and find ways to continue to deploy technology to operate more efficiently. Ongoing investment will require that we are appropriately compensated to provide a return to our shareholders. With that said, we feel very strongly that our business has never been in a better position to drive value for our customers and return to our shareholders. With that said, we are now ready to open the line for questions. Operator?
Operator: We will now begin the question and answer session. You may press star then 1 on your touchtone phone. Please, in the interest of time, we ask that you please limit yourself to one question. At this time, we will pause momentarily to assemble our roster. The first question comes from Jordan Robert Alliger with Goldman Sachs. Please go ahead.
Jordan Robert Alliger: Yes. Hi, good morning. I was just wondering, can you perhaps in the context of how your monthly tonnage data has been going through the quarter and then October, and then January, how that may tie into your thoughts around sequential margin seasonality 4Q to 1Q? Thank you.
Matthew J. Batteh: Sure. Hey, Jordan. I will give the monthly just so that everyone has that. So October shipments per day were down 3.4%, tonnage per day down 3.3%. November shipments per day up 2.6%, tonnage up 1.8%. December shipments up 0.6%, tonnage down 2.2%. And then when I look at January, obviously, we had some of the weather impacts that passed through, shipments per day down 2.1%, tonnage per day down 7%. But keep in mind, we have seen consistent weight per shipment for the past five or six months now, which is good to see that stability. We are comping some pretty heavy weighted shipment periods in the first quarter last year, so keep that in mind from a weight per shipment standpoint. If you remove the impacts of the storm or normalize them, shipments in January would have been slightly positive, which continues the trends that we have been seeing, so relatively in line there. From the margin standpoint, look, if you look at history, Q4 to Q1 sequentially is typically a degradation of about 30 to 50 basis points worse. If we get a normal February, normal March, we think we can outperform that and beat that, and if we get a stronger than normal March and see some of that come to fruition, we think we can even further outperform that and get below where we were last year, which really feels like we set up for a pretty good backdrop from that point. And I think that is a really important point, is that you know, we get through Q1, we have seen the macro data that is out there that has come up and has been positive, trends out there that would appear to be positive. I mean, I think this is our time, right? So this is the time where we have invested and positioned ourselves for this opportunity. And I think that you build off of what we could see in the first quarter, as Matt outlined, I think you are looking at a full-year kind of OR improvement 100 to 200 basis points. And if the market, if macro is kind of at the upper end of kind of the trends, then I think that is only better for us, right? So this is the scaling point. This is why we did this, this is the time we made the investments we have over the last number of years. And just one point, Jordan, to clarify the sequential margin, we are viewing that off of the normalized Q4, right, if you remove the one-off impacts that we called out. Just want to make that clear.
Jordan Robert Alliger: Insurance?
Matthew J. Batteh: That is right. Yes.
Jordan Robert Alliger: Okay. Thanks very much.
Operator: The next question comes from Jonathan B. Chappell with Evercore ISI. Please go ahead.
Jonathan B. Chappell: Thank you. One super quick clarification. Fritz, that 100 to 200, that you just mentioned, just what is the tonnage backdrop behind that? I know it is like the ISM is not getting better, but is it positive? Is it right, etcetera. And then go ahead.
Frederick J. Holzgrefe: Yes. I would just say that I am looking at the ISM data, so I am expecting that there will be some positive backdrop there, right? So in a positive backdrop, that is good for Saia, Inc. I think that if we have seen some other macro data out there that it would be positive, I think that would lead to a market in which we would see some potential tonnage growth. And if that is the case, then I think that is an opportunity for us. So I think it is more about if those things come together, this is why this is such a compelling opportunity for us. If those things do not come together, I think we are in a position where we could still improve OR, but clearly would be at the lower end of the range I described. But in a favorable backdrop, I like the opportunity.
J. Bruce Chan: All right. And you said several times getting compensated appropriately. You mentioned the, or maybe Matt said the GRI acceptance was a little better than usual. Is this a year where if you get a little bit of volume tailwind and like the weight seems to be relatively consistent, you know, what type of range are we looking at for pricing yield? How do we want to measure rev per shipment type of growth this year?
Matthew J. Batteh: Well, look, we are obviously, we have not been netting the renewals that we have been taking. Part of that is just volume shift in the period. But core inflation in this business is going up. We have got to be able to push take rate and part of that has been the ability to close the network gap and to provide more equal service in these markets with the national scale. That is how we think about it. The weight per shipment, obviously, is a headwind to year over year in Q1. But after that, you start to normalize a little bit more. Revenue per shipment improved 1.1% sequentially from Q3 to Q4. So we see it in the renewal number, we are focused on it, and we are not taking the day off from that even though the environment is a little bit light, we have got to get paid for it. I mean, it is year two of a national network, and we should expect price ahead of inflation.
J. Bruce Chan: And
Matthew J. Batteh: develop a margin on that. $2,000,000,000 of investments over the last three years serves a return. And we are focused on getting that return and being in a position to reinvest in the business over time.
J. Bruce Chan: Got it. The next question comes from Christian F. Wetherbee with Wells Fargo. Please go ahead.
Christian F. Wetherbee: Hey, thanks. Good morning, guys. Guess I want to ask about the new terminals open and kind of relative profitability. It sounds they did contribute positively to operating profit for the year. Can you give us a sense of where maybe the OR for those are? And then Fritz, in the context of the 100 to 200 basis point, how do we think about the contribution of the new terminals? Is that where you can get some incremental volume, you could see more material improvement in the OR there to drive towards the top end of that 100 to 200?
Matthew J. Batteh: Yes. From the first part, Chris, obviously, they are a drag on the company-wide. So they range, right? We have got some that are sub-95%. We have got some that are higher than that. In aggregate, they are sort of mid to upper 90s, but a lot of these, if you think about it, they are still within, and when we opened them in 2024 for the biggest batch, those all opened early in the year. So throughout the course of last year, just eclipsed the year of these operationally, which is really something that we are pleased with and proud of. We have got room to go and obviously work to do, but they are in that range. I would add that the margin improvement is going to come from the new, they are not going to be a drag time. I would point you back to what we did in the Northeast expansion, right? We saw that as those developed, sort of maturity, we can drive incrementals in those.
Frederick J. Holzgrefe: I think what is different this go around in the Northeast is that the incremental opportunities across the business. If you study our network cost stats that we described earlier, where we are able to insource and scale more of our linehaul network, that is all about building densities across a national network. Part of that is the contributions of the new facility. So I think that this is why this was such a compelling investment to make. And if we get the environment, we can accelerate that sort of performance. But I think it is great because it is going to come from both new and old, but it is going to benefit national network.
Matthew J. Batteh: Okay, helpful. And we are seeing real opportunities with that, Chris, just in customer conversations. You do not always get turned on overnight to some of that business, but the level of discussions that we can have with customers, or even frankly customers that we did not have the opportunity to get in the door with, because they want simplicity, they want ease of doing business. When you have got a full national network, you get that opportunity. So to Fritz’s point, it is not just the scale on the new ones, but even though we covered some of these markets before, we are getting new opportunities because we can have those discussions at a better level of detail and do more for the customer.
Christian F. Wetherbee: Helpful color. Thanks, guys. Appreciate it.
Operator: The next question comes from Stephanie Moore with Jefferies. Please go ahead.
Stephanie Moore: Great. Thank you so much. Maybe returning to the pricing commentary, maybe you could discuss a little bit on what you are seeing in the overall pricing environment. And also, as you think about your higher pricing capture, would you say this is more so customers starting to recognize the investments that you have made or maybe it is both? Are you being a bit more tactful with your own pricing actions? Thanks.
Matthew J. Batteh: From the environment, I would say we continue our own initiatives. We do not ever take a day off from that, as the business is inflationary. We have to go get rates. So we are continuing those efforts and really pushing the envelope harder in a lot of instances. So no change from us there. Obviously, with capacity where it is for everybody, shippers have options, and they maybe were willing to move to a more regional carrier or something for a time being, but that is just a product of where we are. I would not say that is new. We have been seeing that for the past couple of years at this point with the capacity environment the way it is. But our view is that if you look at history, when the environment gets a little bit tighter from a capacity standpoint, there is a flight back to quality and a flight back to national carriers. So, not taking a day off from the pricing aspect of it. In terms of our higher capture rate, we track that very closely. We study the results of the GRI and all pricing actions really closely. I think it is a combination of two things. We are getting more granular than we have before, and we are using our analytical tools to focus on key opportunity areas for us. But I think importantly, the opening of these terminals has given us national scale, has made it harder for customers to change out. When you have got a better value proposition and you have got the opportunity to go and talk to them about what you can do for them in every market, which we have not always had the ability to do, you get more conversation points. So I think it is a combination of both.
Frederick J. Holzgrefe: Yes. I would just add, and I would emphasize Matt's last point. National network, high-level consistent service, that makes that pricing discussion more palatable, right? If you are doing a great job, you come and say, look, this is the value we are creating for your supply chain, and this is what we need to do to be able to continue to support our customers' success and then continue to invest in our business. That is a continued opportunity for us. It only heightens now because of the success of the national network.
Stephanie Moore: Thank you. No, that is important context. And maybe just a follow-up on the volume trends and the sequential improvement we have seen for the last couple of months. As you kind of look at what your customers are telling you or what you are seeing, do you think that it is generally more optimism, kind of like what we have seen maybe in some of the macro data points, or is this, you know, truckload capacity? How does this compare to maybe what we saw at the start of 2025? Any context on the overall demand environment would be helpful. Thanks.
Matthew J. Batteh: I think it is a little bit of everything. I think it is a little bit of maybe a little bit more positive end of the year, which is good. I think there are maybe some structural market sort of influences here. But I think total, the tenor might be just a bit more positive, right? And I think that is good. Now, we will caution just by saying, look, we are seeing it and hearing it in a bit of customer conversations. I would like to see it more in volumes too, right? So, some of that will develop through the quarter. We think it will, but until we actually see it in the results, there is a potential that things could change. But overall, I would say year over year the factors would appear to be more positive.
Stephanie Moore: Thank you.
Operator: The next question comes from Scott Group with Wolfe Research. Please go ahead.
Scott Group: Hey, thanks. Good morning. So Matt, you were going pretty quick. What was the comment about Q1, maybe it is going to improve, maybe it is not going to improve on a year-over-year basis? I just was not sure, like the two different sort of environments you were talking about, if you can just add a little bit more color, then I have a follow-up. Yeah.
Matthew J. Batteh: Yes. So if you normalize for the Q4 item that we called out and use that as the anchor point, history says that Q4 to Q1 typically deteriorates 30 to 50 bps in that range. Different years, obviously. We think we can beat that, just thinking about if we get a normal rest of February, a normal March. But if March comes in a little bit more strong and we are starting to see some of this ISM data come through, whatever it may be, we think we can further outperform that and potentially get it below where Q1 operated last year. Obviously, a long way to go between here and there, but that is the distinction between the two, it would be more about March coming in a little bit stronger than what we would typically see in history.
Scott Group: Okay. And then just, you know, just a couple of other things. When do you think we start to see, like, the yield or revenue per shipment trends catch up to the renewal trends? And then it sounds like you are talking a little bit more about insourcing linehaul. Like, when do you think we start to see, like, that purchase transportation line start to more meaningfully decline as a percentage of revenue? Thanks.
Matthew J. Batteh: On the revenue per shipment side, I mean, keep in mind how weight per shipment impacts yield. Weight per shipment, you get a read from how that looks just with January numbers. So a headwind there from a revenue per shipment standpoint that helps yield, but then it starts to normalize a little bit more in Q2, Q3. Weight per shipment has been relatively steady for us over the past five or six months, which has been good to see. So once you start lapping some of the Q1 weight per shipment headwinds, I think we start to see that in the Q2, Q3 period. And obviously, if the environment tightens up a little bit more, you are going to see that run further and we are going to press the gas even harder on that. If you look at it from a PT standpoint, I mean, one of the things that we have talked about for a long time is just the ability to run more balanced when you have got a full nationwide network, selling in and out of more geographies, all of that. PT as a percent of total miles over for the full year of 2025 was 12.1%. If you go back to the 2021 period, that number was over 18% of miles. So we have reduced it pretty dramatically over time cost-optimally. We still feel really good about how we use PT. When you have a nationwide network, you are able to balance the network more, run more efficiently as you get more balance between your terminals. So it has come down a good bit over the years, but we still feel really good about how we use it as the network continues to scale, and certainly as volume comes back, we are going to have further opportunities around that, but we feel good about how we use it.
Frederick J. Holzgrefe: Yes. I think, Scott, too, just to add, we look at that, we study more cost per shipment and total network cost per shipment. So it is not the PT line under itself, that certainly is one line, but our salaries, wages, and benefits also has internal costs in there. So we kind of look at those two combined. And so over time, we like that trend. And I think as the business scales, I think we will continue to see that improve meaningfully.
Scott Group: Appreciate the time, guys. Thank you.
Operator: The next question comes from Richa Harnain with Deutsche Bank. Please go ahead.
Richa Harnain: Thanks, operator. Hello, good morning, gentlemen. So just a quick clarification on the January information that you said, that ex-weather shipments were up a little bit. Could you tell us what tonnage was doing ex-weather? Sorry if I missed that. And then, you know, my main question is, oh, go ahead. Go first, and then I will ask the second one.
Matthew J. Batteh: Yes. Shipments would have been up a little bit and tonnage down about 4% to 4.5%.
Richa Harnain: Got it. Okay. Thank you. And then you both have been talking about how the network is very, you know, poised to scale. I wanted to ask about, like, trends in cost per shipment. You know, ex those self-insurance costs bumping higher, you know, it still felt like it was higher than what we usually see sequentially per your ten-year average. I think cost per shipment was up 5.7%. Usually, we see a 4% increase Q3 to Q4. I know Q3 was a very solid cost-out quarter for you and that is part of it, you know, the base being lower. But how should we think about, like, cost going forward? Are you carrying just extra cost as a result of your network expansion? And it is going to take a more pronounced upturn to absorb all that? Maybe just, you know, talk about that and along those lines, can you mention, you know, how much excess capacity or slack you feel like you have in your system today to absorb extra volume should it come in? Thanks.
Matthew J. Batteh: Yes. So if I look at the cost side of it, we do not typically look ten years back. Our business has changed so much over that period. If you look at a little bit more of a shorter period of time, Q3 to Q4 cost per shipment generally is up in a sort of 5% to 5.5% range. Keep in mind too, that includes historically we would have a wage increase impact both in Q3 and Q4. We did not have the wage increase in Q3 this year. We had it on October 1. So that is an automatic headwind of an increase in cost compared to what you would see in a historical number. So that is one piece of it. You have got volume that is down 4.3% Q3 to Q4 on just a calendar period. And you have got two fewer workdays in the period. So you have got fixed costs that are just over a shorter amount of days. And I would say even all those workdays are not real revenue days. The day after Christmas is a workday, but it is not a full volume day. So you just do not get that leverage. But if you think about that, just that piece is important on the wage increase where it would not have been in that historical number. So, obviously, we are going to always work on that. We have got room to improve, but we feel like we managed it pretty effectively if you look in line with some of those historical trends. We called out the headcount portion too. Year over year in Q4, excluding linehaul drivers, is down 6.4%. If you look at that sequentially from Q3, that is down about 2%. So we continue to match hours with volume and feel good about how we are managing it, but we cannot take a day off from that. We have to work through that all the time. And on the network standpoint, obviously, we have got excess capacity. Like Fritz said, we opened all these terminals for a reason. It was a generational opportunity for us to expand the network. We have, you know, it is going to vary by market, but I would say on a broad base, 20% to 25% excess capacity. We are prepared for an inflection. But important to note, capacity in LTL comes in a lot of different ways. It is terminals, certainly, but it is also doors, it is yard space, it is people. You are really the lowest common denominator of all of those pieces when you think about capacity. But this is why we did this. We expanded in what has turned out to be a prolonged freight cycle, but if we had it to do all over again, we would do the same thing because we feel really good about what the opportunity is for us over the long term of the business. But we feel really poised to scale when the environment gets a little bit of an—
Operator: Thank you. The next question comes from Kenneth Scott Hoexter with Bank of America. Please go ahead.
Kenneth Scott Hoexter: Hey, great. Good morning. Just want to clarify, you were down 7% in tons in January, one of your peers was flat. So I just want to understand what is going on in the market maybe a little bit. Were you more impacted by weather as a national carrier as they are? Is there a difference in end markets, SMB adds? Just want to understand somebody is being more aggressive in pricing versus that differential? And then in the past, I just want to take this another level, you have noted revenue per shipment ex-fuel is a good indicator for price. So a lot of discussion here on rev per shipment given that it was down year over year, and I get the weight, but you noted contracts were up 6.5% in January, accelerating from just shy of 5% in the fourth quarter. So is that demand picking up? And so thoughts on pricing is accelerating? Just maybe one on tonnage, on pricing if you can.
Matthew J. Batteh: Yes. I would encourage you to look through. I mean, first of all, we are not seeing anybody on the pricing side act differently. So environment continues to remain rational, nothing different from what we have continued to see there. The tonnage comp for us, if you look at just where weight per shipment was the first three or four months of the year. That is the biggest component of this. Weight per shipment has been relatively steady, call it sort of May, June 2025 to where we are now. We are just lapping some weight per shipment comps that are much higher than that. So that is why the tonnage number is what it is for us. I would say from the peer set that you are talking about, I think weight per shipment is relatively consistent. I would have to go back and look, but that is really what the driver of that is, the higher weight per shipment comp, which continues to be a headwind in the March, April timeframe and then it starts to flatten out compared to where we are now.
Frederick J. Holzgrefe: I think the only thing I would add, just on January discrete, but we have incorporated the impact of this in Matt's discussion around what we think about Q1 in total. But that weather system, listen, this is an outdoor sport. You have got to deal with weather every year. But when Dallas gets shut down, our Texas market is impacted, that is, from a relative, that is the biggest portion of our company. So that is going to have a relatively large impact on us versus maybe some of our peers. But our guys did a heck of a job rallying, getting us back in position. But when Dallas through Memphis is frozen and Texas is frozen and we are not operating, and we track that on our website, that is tough for us. But because of the great work by those teams, we recovered from that. We are back full-scale operation now. So we feel good about what the trends are for the full quarter. But January, there are a few days there that were pretty tough.
Kenneth Scott Hoexter: Okay. And if I could just get one clarification, just because I have gotten some questions on the assumption for the first quarter, the OR commentary. I know you tried to answer this before, but I just want to get clarification. The tonnage that you are now assuming, I know you said it could get better. What is the base case, that 100, 200, maybe midpoint in your tonnage assumption?
Matthew J. Batteh: I mean, obviously, the Q1 headwind from a weight per shipment standpoint, then it flattens out. But I think for the top end of that range, like Fritz talked about for the full year, a little bit of a shipments and tonnage lift would be embedded in that. But importantly, we still feel like we can drive improvements even if the macro environment does not give a lot of uplift and just stays similar to what it was last year. And we look at historic seasonality through the quarter from here, right? So January is tough, we have the weather. But February and March would look like our normal, typical seasonality.
Kenneth Scott Hoexter: All right. Thanks, guys.
Operator: The next question comes from Thomas Richard Wadewitz with UBS. Please go ahead.
Thomas Richard Wadewitz: Yes, good morning. So I wanted to understand a little bit more your thoughts about flat market, flat freight market, just how you would think Saia, Inc. will perform if that is the case. Like, it would be great if ISM is right and you see a better backdrop. But, you know, what if you do not see that cyclical improvement? So in particular, do you think you will transition to shipment growth if that is the backdrop? Or would you say you just kind of, because it kind of seems like the December and January, it is hard to see outperformance versus the market or it is not as clear maybe versus what you have been going at. So how do you think about when you get beyond the tonnage headwind in 1Q, get beyond weather, what does shipment growth look like for Saia, Inc. against a, you know, flat freight market?
Frederick J. Holzgrefe: Well, I think I would look back to last year and how we performed in the market, however you want to describe it, flat, soft, recessionary, whatever. Growth for us came in our developing new markets, ramping markets. I think that is going to continue into the year, into this year. I do not see any reason why that sort of level of customer acceptance would not continue. I think in our legacy markets, I think what you would see is sort of normalized, flatten out there compared to what we saw in 2025, and then it is a focus on core execution. In a flat market from here, you probably would see kind of us grinding out some share primarily because customers look at us and say, hey, that is a great product. This is a national network. This is working. We take share in that way. And we price accordingly to try to continue to get those returns. So I think it is the 2025 playbook in a flat market into 2026, but if the ISM develops like it would sort of indicate, I mean, I think that is what is exciting, right? That is where I think you could accelerate that. Do I look at December and January volume trends? I always comment or note that in the course of the year, I do not know if February, January, or December are the nine, ten, or ten, eleven, twelve most important months of the year. I do not know. I do not know that there is a huge trend in there. But I think the core underlying execution for us has been good, despite sort of the macro conditions.
Thomas Richard Wadewitz: So, okay, well, I appreciate that. So, how do we think about the low end of that 100 to 200 basis points? Do you think that, does that assume some growth in revenue per hundredweight? Do you kind of get, I know you have had questions on it, but does that assume you get to two points of growth in revenue per hundredweight, something like that? And then also a little bit of shipment growth? Or what kind of revenue growth backdrop do you need to get to that low end of your OR comment?
Frederick J. Holzgrefe: Listen, I think that if we get sort of a macro freight market that is growing a bit, I do not know, 1%, 2%, yes. That would be great. But at the end of the day, I am not necessarily interested in, we are not as interested in leading the league in shipment growth. This is more about focusing on generating returns. So, if the market were stronger than that, you might see more of us, more of our return coming from evolving or developing our revenue per shipment. That probably accelerates in that kind of an environment. And then we will get some growth in our new markets, we will continue to grow. So the combination of that would take us up, and that revenue piece is really going to drive the incrementals. So, I would say that in that range that we have given, we have assumed that when we talked last, back in the last quarter, we said 50 basis points of improvement into this year just in the steady state grind environment. If we get a little bit of growth into the year, can we get to 100? Absolutely. And if you get more growth and a little bit more pricing as well, then you are going to go to the upper end of that range. And if you are investing and looking at Saia, Inc., what you are focused on is, you say, well, these guys know how to monetize the capital that they have deployed in the business. That is where the incrementals really look good. And I would encourage you to consider that over time. And we can point to history, we know we have done it before.
Thomas Richard Wadewitz: Okay. So you probably get some revenue to get to the low end of that 100 to 200. And obviously, if the market is stronger, you can do a lot more. Is that, sounds like—
Frederick J. Holzgrefe: Absolutely.
Operator: The next question comes from Brian Patrick Ossenbeck with J.P. Morgan. Please go ahead.
Brian Patrick Ossenbeck: Hey, good morning. Thanks for taking the question. First, just to follow-up on the sourcing linehaul. It sounds like the network is helping with that from a density perspective. But I thought you also mentioned some technologies. So is there more of a structural benefit you are getting here from an investment? And then maybe just wanted to hear an update on the mix of the portfolio. You mentioned the weight per shipment rather headwind. West Coast exposure, you had one to two lane growth previously. So maybe just an update in terms of where we are in that. Is that still going to be part of a tougher comp from a mix perspective here, maybe in the first couple of quarters?
Frederick J. Holzgrefe: Yes, Brian. So what I would point to, and I think one of the things that is always important when you consider our cost structure is to kind of reference us or compare us to our competitors. All the public guys are all larger than we are. And by and large, I think that if on an apples-to-apples basis, we have got a pretty good cost structure. And that is largely dependent on the deployment of technologies over the last few years around how we plan, schedule, and run our linehaul network. So we have never been necessarily concerned with using PT if it is cost-optimal, right? So as we have modeled the network over time, we have to use PT freely when it made sense to match our cost structure and importantly match customer expectations. So that same, we deploy that technology, that optimization technology, on a larger scale as we grow the business. And as you add 39 ramping points across the network, what you can do then is you take that same technology and figure out, all right, what is the better way to schedule and manage our sort of network costs, our linehaul and PT, and that is why the cost structure is, we feel like, pretty competitive. And although it is challenged in a seasonally soft fourth quarter, it is still pretty good overall compared to much larger competitors. So that is kind of a key skill set, technology-based solution that we deploy. We will continue to, like any technology, continue to invest in it because over time, you want to continue to improve whatever it is, the logic or algorithm that is driving those sort of decision points, you want to continue to refine and improve that. So that is something we will continue to focus on going forward, and I think it is a competitive skill set that we have.
Matthew J. Batteh: From a mix standpoint, Brian, I mean, LA headwind, weight per shipment headwind, those late March, April-ish timeframe are when those start to lap. Obviously, we are down, but in the areas that are growing, it is typically a little bit more in those shorter haul segments right now. But I think part of that is just expansion of the network. You get opportunities with customers to solve more problems, but from a larger standpoint, really that LA, weight per shipment part, that recedes a little bit after the late Q1, early Q2 time period. But importantly, we are focused on driving returns on the investments and focusing on price. We have got to get paid for the service that we provide, and we have got more conversation points than we ever have with the wider network. But those are the key points on the mix portion of it. Alright. Thanks. So just to clarify, Fritz, the optimization, is it just more doing more with the same technology? Nothing really new incremental, just to a broader base with better density. Is that correct?
Frederick J. Holzgrefe: Yes. I mean, that is. But I think, Brian, what is important to underscore here is that we continue to invest in that technology, right? So further refine the algorithms we use for that and the tools that we deploy with that around how we plan the network going forward. So it is not a static investment where we say, hey, two years ago we deployed this technology, we are now not making changes to it. We continue to invest in it. But that is really key for us.
Brian Patrick Ossenbeck: Right.
Matthew J. Batteh: Okay. Thanks for your time.
Operator: The next question comes from Ravi Shanker with Morgan Stanley. Please go ahead.
Ravi Shanker: Great. Thanks. Good morning, guys. Just one follow-up to start. Just to confirm on this insurance, like is this, like, should we treat it as a one-time item, what happened in the fourth quarter? Or is this the new baseline going forward? And also then you have seen some volume shifts after you pushed through the GRI. Can you unpack it a little bit more, kind of who did that go to? Was it entirely price driven? Was it a new customer, an old one? Any further detail there would be great. Thank you.
Frederick J. Holzgrefe: Yes. On the, I will just take the self-insurance and the accident expense. That is from a few years ago. Unfortunately, that was an unexpected adverse development. So it is appropriate to record reserve for that. I do not expect that to be the new run rate. Certainly do not want things coming from prior periods like that. But the reality of it is that underlying this business, accident expense is part of the business, right. So you have got to make sure, further explanation why you are going to focus on pricing and make sure you understand those things. But I would not consider that number as a run-rate item. We highlighted it simply because it was unexpected adverse from prior periods.
Matthew J. Batteh: On the GRI aspect of it, you always see a little bit of volume move when you take the GRI. And part of that is temporary, where customers are trying to shift things around, try to save some dollars. We did it in what is typically a seasonally weaker period of the year. But there is always a little bit of movement around that. We feel pretty strongly that we are really well positioned as that starts to flow back, but that is not out of the norm. We typically talk about sort of keeping 80% to 85% of that. We are, on that segment of business, seeing a flow-through rate just in excess of 90%. So we feel like we are getting a better hang on to that and we feel like it is partly the network. We have got more opportunities where customers are saying, hey, Saia, Inc. is doing a great job for me in more locations than they ever have. But you always see a little bit of volume trend, but importantly, the acceptance rate is really where we are focused and we are going to continue to press on.
Ravi Shanker: Sounds good. Thank you.
Operator: The next question comes from Ariel Luis Rosa with Citigroup. Please go ahead.
Eric Thomas Morgan: Hi, good morning. This is Ben Moore at Citi for Ari. Fritz, Matt, good to hear from you and thanks for taking our question. You previously noted not seeing meaningful restocking at retailers and curious to hear, as you are having your conversations with customers, what is the sense on restocking? Is it starting to happen? If not, what is your sense on kind of throughout the year when that might inflect?
Frederick J. Holzgrefe: Yes. I do not know that we have got a specific call out for that, Ben. I think that it is what we would expect from here based on at least what the sentiment you see is that kind of maybe more normal, if you will. So I do not know that it is an accelerated level of restocking or just more of a normalized supply chain management. So I do not know that we are in the, how would I say, the sort of up-and-down time with that. I think it seems to be stabilizing a bit. So we do not see quite the volatility that we might have seen even six months ago, as people were addressing changes in their supply chain. We do not see as much of that now as we did then.
Eric Thomas Morgan: Great. Really appreciate that. And maybe just as an add-on or clarification on your 20% to 25% excess capacity you mentioned earlier, you have in the past talked about maybe anticipating as much as 35% to 40% incremental margins on the excess capacity on an inflection, and kind of reaching gradually your sub-80 OR long-term target. What is your sense on that right now? Are those numbers still kind of what you have in mind, targeting perhaps maybe not 2026, but 2027 and beyond?
Frederick J. Holzgrefe: Listen, a $2,000,000,000 capital investment like what we have deployed in this business, the returns that we are expecting are sub-80 OR, right? So now, when does that happen? I think the market is going to influence that, but I do not see any reason why we do not drive performance of the business in the low 80s and into the 70s. Parts of the network, even today, that have some level of maturity, we actually operate in the upper 70s now. We use that as a guidepost. We say, look, we ought to be able to do that everywhere. And that is why we made the investment. So I do not think there is any hesitation on our side to say that that cannot be achieved.
Eric Thomas Morgan: Great. Thanks so much.
Operator: The next question comes from Eric Thomas Morgan with Barclays. Please go ahead.
Eric Thomas Morgan: I wanted to touch on salaries, wages, and benefits here in the fourth quarter. You talked about headcount being down, I think, above 5% year over year. Obviously, you had the wage increase here in October. But you would think that maybe, like, the headcount coming out and the wage increase on a year-over-year basis would offset each other. Can you talk about maybe, or just dig into the expenses in salaries, wages, and benefits line a little more? Is there anything in the fourth quarter that maybe will not repeat going forward? Or is there any reason that that could potentially be elevated? Or just add more color there would be helpful.
Matthew J. Batteh: Yes. I mean, you have always got, we talked about the health insurance inflationary environment. We talked a little bit about that in the prescripted comments. If I look at headcount, excluding linehaul drivers, it is down 6.4% compared to Q4 last year and down about 2% sequentially from Q3 to Q4. But on a cost per shipment basis, which I think is where you are getting at, Reade, if you look sequentially, you have got two fewer workdays. So your fixed costs are spread out over fewer days, fewer shipments. You have got a shipment deterioration that you see in the sequential Q3, Q4 numbers. And then the days that you have shipments, they are not all full revenue days, but the fixed cost of headcount, of salaries, in a way some of the insurance items, those are all embedded in there. But we are pleased with the pace that we continue to match hours with volume. We are never going to be, that is just part of our business. You have got to match hours with volume. So I think more than anything, it is just you did not have the wage increase in Q3. We did it in Q4. So that is an automatic increase compared to if you were just kind of looking and modeling historically. But we feel like we managed it pretty effectively in what is a challenging period of the year plus with a more challenging environment. We knew what October shipments were on the last call, and that was a 23-workday month, which is the most important month. November was 18 days. So just some of those nuances and headwinds on how the calendar lines up, but we feel like we managed costs how we typically do on a headwind from a wage increase that was only in one period versus the combination of the two. And then if I could just follow-up on the previous question on capacity. Can you talk about the capacity difference in your new markets versus your legacy markets? I would assume you have a little a little more excess in your new markets as you try to build density in those. But I just want to get a feel for where the legacy markets are as well.
Frederick J. Holzgrefe: Yes. I think Matt walked through this pretty well earlier, but I think you have to remember that capacity is measured by not only door count, it is yard space, it is drivers, it is equipment. In the new markets, we continue to have, and would expect to at this stage, ample capacity. We can, if things grew in those markets at a rate faster, you could easily add drivers or we could recruit drivers, add equipment, that sort of thing. In the legacy markets, we feel pretty well positioned there. When we say 20%, 25%, we are taking a whole range of assumptions and locations. Unlike maybe some of our larger, more established, mature peers. Our number is a whole range of variations. So there is not a lot of insight there that I can give you beyond to say, look, new markets, plenty of capacity, probably upwards of 50% in newer markets. Legacy a little bit less, probably around 20%. You have to weight how big are the new versus old. I do not spend a lot of time worrying about it, to be honest.
Eric Thomas Morgan: Got it. Well, thanks for squeezing me in, guys.
Operator: Next question comes from Jason H. Seidl with TD Cowen. Please go ahead.
Jason H. Seidl: Thank you, operator. Hey Fritz, Matt. If we look at these 39 terminals, and by the way, it is great to see them turning profit now. How should we think about the walk to sort of an average legacy profitability? So if we assume normalized economic environment and a rational LTL pricing environment, how many years do these terminals walk up to the average?
Matthew J. Batteh: Well, there is a wide range in, obviously, in that 39. You have got the Garland, Texas facility that is more meaningful than some of the smaller ones just in terms of freight environment and magnitude. Historically, we think about these on sort of a three-ish year time horizon to get towards company average. Now, the comment that you made was on a better macro. In a better macro backdrop, we want to get there faster. Yes. Normal, we think about it in a three-year time horizon. We have got some of these that are already operating below the company number. I mean, it is not all of them, it is a minority, certainly only a couple of them, but that is good to see in the scale impact of it. But typically, think about them on a three-year time horizon, and if the macro gives us a little bit of an uplift and it is a bit of a recovery scenario, you think about what Fritz just said in the previous question around excess capacity, well, you have fixed costs that are just associated with running these terminals. And, obviously, you have got variable costs in there as well. But the fixed costs are going to scale even more so in an uplift environment. That is what gets us so excited about this. In a volume uplift environment, you are not having to add costs at a one-for-one level. We can scale the investments that we have made. They are not for the results in these terminals in the next three months or six. It is three-, five-, ten-year investments that we are making in these. But that means that there are fixed costs embedded in those and inefficiencies that are not in some of the markets that have been open for much longer. So we get really excited about the opportunity to scale just because we are the only one that has opened this many new terminals in a short period of time. It is the right long-term move, but it really sets us up to take advantage in a bit of a better macro.
Jason H. Seidl: Right. No. That makes sense. And just a quick follow-up on the insurance side. Given sort of the rise that we have seen in sort of the mini nuclear verdict that has been more recently, any thought given to maybe upping your self-insurance level going forward?
Matthew J. Batteh: We are always looking at unique ways and conversations around our insurance tower. We factor in a lot of different things as we are going through those negotiations and the renewals. I think very important, we invest, and we have said this for a long period of time, we invest and will continue to invest in every piece of safety technology. Best-in-class equipment with all safety technology on it. So never going to take a break from that, but the environment is inflationary. I mean, you hear everybody talk about that. So the best way to prevent that is to have fewer incidences, and we are pleased with the progress we have made this year. So we have a pretty wide-ranging discussion every time on the insurance renewal side. We take it, there is no stone unturned when we are talking about those things.
Frederick J. Holzgrefe: And I would challenge, we would say it likely has, if not the top safety feature set fleet, as anybody in the business. I mean, we have never cut corners on that. Driver-facing, forward-facing cameras, all the mitigation technology onboard, training to support that. That is important to us. The most important thing we can do around safety is keep our drivers safe, get them home safely. That is how you save on insurance. Get people back home safe, back to work tomorrow safe.
Jason H. Seidl: Appreciate the time as always, guys.
Operator: The next question comes from Eric Thomas Morgan with Barclays. Please go ahead.
Eric Thomas Morgan: Hey, good morning. Thanks for taking my question. Just wanted to follow-up on the last one on insurance. I know you said we should not be including the prior period developments in the run rate. So just want to clarify if we, I mean, if we back out the $4.7 from the quarter, I think insurance costs would have come down sequentially a healthy amount to like $20,000,000. So just want to double check if that $20,000,000 or so is the run rate you are thinking going forward. And if so, what is kind of driving that sequential improvement? I know you have mentioned claims ratio improved there. So not sure if that is a factor as well. Thanks.
Matthew J. Batteh: Yes. The math you did, Eric, is right on the impact of that. So that would point to us having, and what was embedded in our guide, obviously, a pretty good quarter from an experience standpoint. I think you have got to use a longer-term average, certainly, when you are thinking about it from a modeling standpoint. You will look in our history and you will see pluses and minuses and just how that moves throughout the year. The environment is going to continue to be inflationary. But I think importantly, as Fritz noted a second ago, we spent a lot of time, and will continue to, on the training, and we are seeing it in our results, and we continue to. Preventable accidents down 21% compared to the prior year, and that was embedded in some of that Q4 look. But I think you have got to use a longer-term average. These discrete ones are not part of the run rate moving forward. But that line continues to be inflationary. I think it is fair to use more of a longer-term average with some inflation on top of it.
Frederick J. Holzgrefe: And then when we build in our guides, you know, we think about what our improvements are, that is assuming what we understand to be about sort of a normal case development, right? The handful that we described, that we called out here, were extraordinary in the sense that the tail on them, but when we think about the guide, appreciate that that is an inflationary line. So we try to include that in that analysis, and that would include some development of cases that have happened over time. So Matt's description around looking at that over time is important.
Eric Thomas Morgan: Thanks for the time.
Operator: The next question comes from Harrison Bauer with Susquehanna. Please go ahead.
Harrison Bauer: Great. Thanks for taking my question and squeezing me in here. Matt, building off some of your thoughts on fixed versus variable cost, some of your peers have offered what their view is on incremental margins in the early stages of a growing tonnage environment. Considering you have similarly invested heavily into your network with ample capacity, and as you get this network running, can you share what your view is on incremental margins in your business before you would have to invest materially in more capacity? If that is drastically different from the 40% plus that your peers have described? Thank you.
Matthew J. Batteh: No. I mean, look, this is, to Fritz’s earlier point, this is why we did this. And we do have these costs that are associated with opening 39 terminals over the past three or so years. But we feel really poised to scale out of that. There is no reason, I mean, we think about those same types of numbers in a slight uptick environment, and then certainly if it escalates further, a 30%, 40% incremental margin number. And you will see that probably in excess of that in some of these markets that are relatively new because you are not adding costs at the same pace as what the volume and the revenue is coming in, which is part of having a national network and part of why we scaled, and history proves that point. If you go look at the execution and the incremental margins post the Northeast expansion, that is exactly what we saw and there is nothing that stops us from getting to that point. So that is exactly how we think about it. And if the environment runs a little bit further or faster, the capacity environment tightens, we feel like we can outperform that. But that is absolutely the types of numbers that we think about.
Harrison Bauer: Thanks.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Frederick J. Holzgrefe, Saia, Inc.’s President and Chief Executive Officer, for any closing remarks.
Matthew J. Batteh: Betsy, it looks like one more person popped in the queue. Could we answer? Can we get Tyler?
Operator: My apologies. The next question comes from Tyler Brown with Raymond James. Please go ahead.
Tyler Brown: Hey. Thanks, guys. Thanks for squeezing me in. Just had a couple quick ones. So Fritz, I think you talked about your $2,000,000,000 investment that was obviously largely on real estate. I think you just gave CapEx guide of $350,000,000 to $400,000,000. But, Matt, where would you peg maintenance CapEx, and is this year's CapEx largely just fleet and fleet catch-up?
Matthew J. Batteh: There was a lot, obviously, in real estate over that period, but there is also a big investment in equipment over the past couple of years. If you look at the past couple of years, the biggest tractor investment in company history, the biggest trailer investment in company history. A lot of that was to catch up with all the volume growth over the past several years. So it is a lot of real estate, but it is also a lot of equipment as well in that period. From a maintenance CapEx standpoint, I mean, that is really what this year is from an equipment standpoint, is maintenance CapEx. Obviously, volumes are a little bit down compared to where we expected them to be when we walked into 2025. So we feel really good about the equipment pool. That is inflationary, just like every other line of our business, but from an equipment side, it is really a maintenance issue this year for sure.
Tyler Brown: Okay. So it feels that you guys will be still cash generative. You should have solid free cash. So your leverage is very manageable. M&A probably is not a story, and clearly, Fritz, you see a ton of upside. So does there come a point that you guys will contemplate additional shareholder returns? I mean, maybe through a buyback, or will you guys hold capital back for another CapEx cycle down the road? But how do you guys think about that over the next couple of years? Thanks.
Frederick J. Holzgrefe: So I would say all those things are in play, right? So first of all, we understand and respect the fact we are stewards of the shareholders' capital. So as this business generates returns, we will consider buybacks, dividends, whatever that might be. But that is important, right, because this is a business that we expect to generate a return. At the same time, I think that we are going to have to balance that with opportunities that will be presented to us as the market adjusts, as terminals become available in markets that we do not necessarily service as well as we would like to. We have got 212, 213 facilities right now nationwide, and I think that that potentially goes to 230. And I think that potentially there are some markets where we may have to build. There could be other markets where I think we are going to be able to find available real estate. So we are going to have to balance the deployment of capital in that way. I think the way to think about that, though, is obviously we are going to be stewards first and foremost. To the extent the investment opportunities present themselves, those are going to be accretive from a return on invested capital as well. So that would further fund shareholder returns in future years, because I think there is a lot of growth potential in this business still. So we are excited about that opportunity.
Matthew J. Batteh: I think it is important to add to that, Tyler, too, the point you made at the beginning of being free cash flow generative this year is a big deal. That is what we expect to be.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Frederick J. Holzgrefe, Saia, Inc.’s President and Chief Executive Officer, for any closing remarks.
Frederick J. Holzgrefe: Thank you, operator, and thanks to all that have called in. At Saia, Inc., we believe that our value proposition to the customer continues to be significant. We look forward to talking about success we will achieve in the quarters and years to come. Thanks all for the time.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.