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spk12: A reminder, today's conference is being recorded. I would now like to turn the call over to Doug Cole, Executive Vice President and Chief Financial Officer. Please go ahead. Doug Cole, Executive Vice President and Chief Financial Officer. Doug Cole, Executive Vice President and Chief Financial Officer. Please go ahead.
spk16: Doug Cole, Executive Vice President and Chief Financial Officer. Please go ahead. Doug Cole, Executive Vice President and Chief Financial Officer. Please go ahead. Doug Cole, Executive Vice President and Chief Financial Officer. Please go ahead. Doug Cole, Executive Vice President and Chief Financial Officer. Please go ahead. Doug Cole, Executive Vice President and Chief Financial Officer. Please go ahead. Doug Cole, Executive Vice President and Chief Financial Officer. Please go ahead. Doug Cole, Executive Vice President and Chief Financial Officer. Please go ahead. Doug Cole, Executive Vice President and Chief Financial Officer. Please go ahead. Doug Cole, Executive Vice President and Chief Financial Officer. Please go ahead. Doug Cole, Executive Vice President and Chief Financial Officer. Please go ahead. Doug Cole, Executive Vice President and Chief Financial Officer. Please go 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 SEC filings for more information on the exact risk factors that could cause actual results to differ. I'll now turn the call over to Fritz for some opening comments.
spk13: Good morning, and thank you for joining us to discuss SIA's first quarter results. While underlying macro trends remain lackluster in our view, Our year-over-year results in the first quarter reflected tremendous share gains made since last summer. In the quarter, we averaged approximately 33,000 shipments per day compared to approximately 28,500 per day last year, or an increase of nearly 16%. We've opened seven new locations in the past 12 months, and our employee count has grown significantly, allowing us to staff the new locations and enabling us to handle the growth in volumes while still providing our customers with excellent service. I'm particularly pleased to see all of our key service performance indicators continue to trend positively as we continue our expansion. Our first quarter revenue of $754.8 million increased from last year's first quarter by 14.3%, and is a record for any first quarter in our company's history. Yield, or revenue per hundredweight, excluding fuel surcharge, increased 10.5%, reflecting a constructive pricing backdrop despite a subdued demand environment in a traditionally slower period in our business. Revenue per shipment, excluding fuel surcharge, increased 1.4% despite a headwind from weight per shipment, which was down 8.2% in the quarter, and length of haul also down modestly by 0.4%. Our revenue per shipment growth, ex-fuel surcharge, continues to be the result of positive pricing and effective mix management. With our continuing high service levels, we actively review the performance of all of our accounts and are not shying away from having great discussions when necessary based on profitability, not the calendar. Our first quarter operating ratio of 84.4% improved by 60 basis points compared to our operating ratio of 85% posted in the first quarter last year and matches our best ever Q1 OR posted in 2022. As we continue to absorb the growth in volumes compared to the prior year, we've continued investing in our network to maintain our services while also optimizing how we provide the service with our expanding line haul and driving teams. Our plans to open 15 to 20 terminals in total this year remain, and we'll also continue relocating some existing terminals as we've done with four so far this year. Relocations are an important part of the story as these relocated terminals often offer us multiple benefits including better strategic position in the market and added capacity to better serve existing customers and also perhaps put us in a better position to serve new customers. Our teams are committed to accomplishing this growth with an eye on always putting the customer first. Our customer first initiatives have been the cornerstone of our success over the last several years. Included in that is our desire to have more locations through which to serve new and existing customers. The results of Mastio's latest survey highlight a couple of significant achievements for SIA. The scores highlight our continued improvement and positive feedback from our customers are recognizing SIA's ongoing investment in service and expanding footprint, and customers are viewing us as a leading national LTL provider. We've added 20 new facilities in the last two years with improving perceived levels of service which is critical to note. Customers are recognizing our ability to not only improve service, but to replicate that improved service in new locations. I'll now turn the call over to Doug for more details from our first quarter results.
spk16: Thanks, Fritz. As mentioned, first quarter revenue increased by $94.2 million to $754.8 million. Yield excluding fuel surcharge improved by 10.5%, and yield increased by 7.6%, including fuel surcharge. Fuel surcharge revenue increased slightly by 0.8% and was 15.7% of total revenue compared to 17.8% a year ago. Revenue per shipment X fuel surcharge increased 1.4% to $293.96 compared to $289.87 in the first quarter of 2023. Tonnage increased 6.2%, attributable to a 15.7% shipment increase partially offset by an 8.2% decrease in our average weight per shipment. Our length of haul decreased 0.4% to 888 miles. Shifting to the expense side for a few key items of note in the quarter. Salaries, wages, and benefits increased 14.3% from a combination of our employee headcount growth of over 15% year over year in response to overall increased volumes during the quarter and also the result of our July 2023 wage increase, which averaged approximately 4.1%. Purchase transportation expense increased by 12.4% compared to the first quarter last year and was 7% of total revenue compared to 7.1% in the first quarter of 2023. Truck and rail PT miles combined were 11.4% of our total line haul miles in the quarter. Fuel expense increased by 3.7% in the quarter, while company line haul miles increased 10.6% year-over-year as a result of increased shipments and decreased cost of diesel fuel compared to the prior year. Claims and insurance expense increased 24.2% year-over-year and was down 8% or $1.5 million sequentially from the fourth quarter of 2023. The increase compared to the first quarter of 2023 was primarily due to an increased activity and a small increase in premiums. Depreciation expense of $48.8 million in the quarter was 13.9% higher year over year, primarily due to ongoing investments in revenue equipment, real estate, and technology. Total operating expenses increased by 13.4% in the quarter, and with the year over year revenue increase of 14.3%, our operating ratio improved to 84.4% compared to 85% a year ago. Our tax rate for the first quarter was 23.7% compared to 23.2% in the first quarter last year, and our diluted earnings per share were $3.38 compared to $2.85 in the first quarter a year ago. I'll turn the call back over to Fritz for some closing comments.
spk13: Thanks, Doug. Our customer-first focus continues to deliver tangible results across our organization. In January, we're excited to close on what we view as the generational opportunity for our company to build our real estate pipeline, and it developed an opening plan that spans 2024 and 2025. As we stated from the outset of our geographic expansion initiatives in 2017, it is absolutely imperative that we improve while replicating service as we execute this plan. As we continue to invest in our network and expand our footprint to better serve our customers, we anticipate capital expenditures for 2024 to be approximately a billion dollars. As noted in Doug's comments, we're seeing the impact of depreciation related to this increased capital expenditure over the past couple of years. These investments will continue throughout the year as we approach a record amount of investment for the company, which we believe will create value for both our shareholders and our customers over the long term. As we continue our expansion plans, we remain focused on measuring our performance for customers. The MassGeo ratings clearly highlight our improved service profile, and our internal service metrics have never been better. Yet, we continue to emphasize a customer-first focus with a priority on achieving even higher levels of service. With a focus on our customers in advance of relocating our Oredo facility, we executed a new cross-border agreement with a leading Mexican LTL carrier, Fletes, which will allow us to expand our service both north and southbound. Although we do not see the seasonal pickup that we expected, Q1 was nonetheless a record quarter for SIA. The organization delivered a 14.3% increase in revenue to $754.8 million. While we made significant investments in the business and in advance of several openings, we still delivered an 18.9% increase in operating income to $117.9 million. As always, we remain intently focused on the long-term opportunity to enhance our service offering and coverage for our customers while delivering significant value to our shareholders. Our results included relocating four facilities in Q1. More significantly, we've already opened four new facilities in April alone, and we'll plan to open two and relocate an additional facility before the end of the quarter. We've proudly looked to our 100-year history as a foundation for our success. However, as we continue to build a talented and engaged workforce, we're proving that we are not stagnant, but are instead continuing to build a best-in-class organization rooted in this 100-year history that can meet and exceed customer expectations. As always, we remain flexible with the timing of openings and want to be mindful of the natural cyclicality of our business. After Q2, we expect to open as many as 15 additional companies. New locations this year, the majority of these in Q3, covering additional Great Plains locations. We maintain flexibility of these openings as it's critically important that we replicate our service. We may find it necessary to delay or pause openings, whether due to staffing challenges or other uncertainties. At this stage, we're excited on the core competency of opening terminals organically that we've developed over the past seven years, and we'll continue to follow that blueprint going forward. Establishing a great culture in a terminal is a critical step in making sure that terminal is successful over the long term. And we strive to get that right from day one with all new openings. So as we move forward through 2024, we continue to see macro uncertainty. At the same time, we continue to see widespread customer acceptance of SIA's now national network. I should highlight that this is a national network that will be poised to scale as customers seek to grow with a trusted partner. as the macro environment becomes more certain. As a result, we're confident in our ability to continue to execute on our plans to position SIA for long-term success. Before we open the line for questions, I would like to highlight this morning's other SIA press release. Our CFO, Doug Cole, has decided it's time to pursue his next chapter and will be retiring from SIA. As many of you well know, Doug has been in and around the transportation space in a variety of roles. but most significantly with SIA over the past decade. Doug has been a big help in setting up our strategic course and communicating with you on SIA's progress. For those of us that have been fortunate enough to work with Doug on a daily basis, we'll miss his wisdom and wit. I am personally quite grateful for the opportunity to work with him. In time, we'll name Doug's successor, but Doug has built and developed a great team at SIA and will be with us through the year and to help facilitate any transition. With that said, we're now ready to open the line for questions, operator.
spk12: Thank you. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw any questions, please press star one again. Our first question will come from Scott Group from Wolf Research. Please go ahead. Your line is open.
spk09: Hey, thanks. Good morning, and congrats to you, Doug, on a great career. Maybe let's just start on the monthly tonnage trends and April update. And Doug, maybe it's helpful, just given the Q1 revenue, maybe it's helpful to give some revenue thoughts around Q2. And I know you always give some OR thoughts as well. So maybe just get that out of the way.
spk16: Okay, buddy. Thanks for the comments too, Scott. So yeah, March, I think we quoted the March shipments up 16.8%. and tonnage was up 5.2% for the month, so still reflecting that weight per shipment decline we've been experiencing for the last several months. April so far, we've got a few days left here, but April is running up about 17% in terms of per workday shipment growth. That's benefiting a little bit from a Good Friday comparison. Good Friday was in April a year ago, and it's not in April this year. That's given that 17% a little bit of a pickup. It's probably a percent or two of benefit because it's an easy comp there. Tonnage per day so far in April is running about 6.5% up. Same thing, a little bit of a benefit because it's an easy comparison with Good Friday not in April this year. It would be the same thing, a percent and a half or two probably benefit to that tonnage because we don't have that Good Friday to deal with this April. You know, I think, you know, from what we've seen so far in April, I mean, the last few days make us feel a little bit better, but, you know, we're not going to, that doesn't make a quarter as we saw on Q1. So, you know, we feel a little bit better about what we're seeing lately, but I don't, we're not going to say it's a longer term trend, you know, but based on that, I'd say moving from Q1 to Q2, you know, if we got kind of mid single digit revenue growth, you know, I think that that would make sense to us and, know historically we usually get better quite a bit better in q2 on an operating ratio from an operating ratio standpoint 250 to 300 is probably our our history if you you know you take out the coveted years um no so but that that's not going to probably be gettable this year though it's um you know as fritz mentioned a lot of activity so far in preparation of openings some relocations that have already occurred more openings to come so you're going to see that some of that cost coming in advance of the revenue, like you already saw in Q1. You know, you'll probably have a depreciation step up from Q1 to Q2 of another 5 million or so. And maybe in the following quarter, you get another little step out before that starts to flatline. So, you know, we got depreciation. You do some of the hiring before you open a terminal, things like that. So, you know, for us this year, if we could improve 150 to 200 basis points maybe, with mid single-digit revenue growth, you know, I think we'd consider that, you know, progress. And if you did that, if you just pencil that in, you know, the year-over-year comparisons probably end up looking pretty good again if we can hit that. I mean, you'd still be talking about, you know, something with a team name on it for revenue growth if we did that year-over-year and, you know, operating income up a little better than that if we hit those goals. So, I mean... you know, to be doing that in this environment, you know, I think we knew it was going to be a growth year, a lot of activity, a lot of people, but I'm real pleased with how we've managed cost over the last few months. I mean, we geared up for bigger volumes in March, and when they didn't come through, when they didn't come through, you know, you're staffed up for it. You're hiring drivers in advance of your seasonal expectations. You're hiring dock workers, and You know, I mean, as the volumes didn't come through in March, we did a good job on the cost side, you know, pulling PT out, things like that, things we could control. So, you know, it's good to draw it up in a spreadsheet, but to manage the business, the variables are changing every day. So I've been pleased, but that's our Q2 outlook. And I'd still say, I mean, we don't give any, you know, we won't get into Q3 or Q4 yet, but when we look at the numbers and what we just put up in Q1, we still think 100 to 150 basis points improvement is gettable this year, and we'll see what the macro deals us. I mean, things could get worse from here or something, but, you know, we didn't, Q1 didn't knock us off a path to improve the OR this year, so that's our view today.
spk09: The 150 to 200, that's
spk16: sequential margin improvement correct q1 to q2 that's that's what you know looks possible again i got that depreciation step up staring me in the face and you know we make these investments and put people in place and train them and you know these we don't open them until we're ready to go so you know that's always fluid but we're real pleased these first um These first six openings this year, you know, we're really pleased that five of those are going to be staffed with SIA people, and we transfer that culture up there and focus on the employee and our non-union, I mean, our non-union employees and our customer. We want all that stuff to be consistent. So we're real pleased we're going to be able to open most of them with SIA people and spread that customer focus and employee message into the new terminals. So it's going well. It's just kind of a shaky macro still on the freight side.
spk09: And then maybe just lastly, Fritz, maybe just talk about pricing. I don't know if you gave the renewals number. Maybe share that and just, you know, overall, is pricing getting harder or not?
spk13: Listen, that's an ongoing pricing environment. That is something we're intently focused on. Our contractual renewals in the quarter were 9.2%, which we're pleased with that number. But know we're not satisfied with that number meaning that you know we've got we uh the service levels that we're providing deserve to be compensated and um so that is a ongoing focus as we uh see um opportunities or issues with the mix of business that we have we continue we're very uh conscious of that and pursue that we haven't you know certainly customers Don't like a rate increase, but I think you're in a lot stronger position to get the rate increase when you're in a position to point to the service levels that customers are getting and an expanding network.
spk09: All right. Thank you guys for the time. Appreciate it. Thanks, Scott.
spk12: Our next question comes from Amit Mehrotra from Deutsche Bank. Please go ahead. Your line is open.
spk19: Thanks. Morning, Doug. Congrats. It's been a remarkable career, so I wish you the best in whatever you're going to do down the road. I wanted to ask maybe a couple quick questions. The first one, you guys opened up a couple important facilities recently, Garland and Trenton. I know there's a couple other more, but those are kind of probably more important or bigger ones. Fritz, how have those gone? I mean, when you opened up the one in Beaufort in the middle of last year, That obviously had very, very quick positive impact. Can you just talk about what you're seeing from those two terminals in terms of bills per day or however you want to talk about what benefits they're giving you on the network?
spk13: Yeah, thanks, Amit. Yeah, you've highlighted two important ones, and we've got some more important facilities we're opening this quarter as well. Trenton, it's early, but it's certainly making a positive impact for us, particularly on the service side. We were trying to service that market from Newark and Philadelphia both, so that was expensive, and we weren't as responsive for our customers as we'd like to be. So early indications out of the gate, that's going to be a great investment for us, so we're really pleased. And it's important to note, I mean, I know sometimes it comes up, but that's being led by an experienced SCIA terminal manager from the start. we when we moved into that terminal we were ready to go with replicating saya culture and saya service so that's really exciting early early results would indicate that as well the second big facility that we opened was in the dallas metroplex which is arguably saya's strongest market we opened a facility there that also staffed by longtime SIA experience people, so they know exactly what it means to provide SIA service. So we're thrilled with the early results. Need to let it develop before I give you any better. I mean, we're only a couple weeks into this, but customer acceptance, particularly on the Garland facilities, because of its proximity to some important accounts for us, has been great to see. You know, when you're easy to do business with and you do it well, and they're talking to somebody that they've historically worked with, Um, that that's, that's a great, great opportunity for us. So we're thrilled with both of those investments.
spk19: Okay. And then just for my follow-up question, I wanted to double click on, you know, the pricing discussions and really focusing on, on revenue per shipment X fuel. Um, because, you know, the story has been over the last, you know, six, seven months, um, that, that there's a big pricing opportunity and, um, and, and, and obviously you're going to lean into the service and sell the service and, But when I look at revenue per shipment X fuel, that was actually down sequentially versus the fourth quarter, which is somewhat surprising. But then profit per shipment was up nicely as well. So it doesn't feel like there's a negative read on pricing when I look at kind of what's underneath the surface. But can you just help us understand what's happening on revenue per bill X fuel and give us a little bit of comfort that you know, the strategy around leading into price is actually working despite, you know, this key metric that's moving in the wrong direction.
spk16: Yeah. First of all, I'll probably tag team this one. You know, revenue per shipment, despite the lighter weight, it's still up year over year. The sequential trend, I mean, I think it's primarily explained by mix. You know, the direction matters. The freight can weigh the same per pallet and the length of haul can be the same, but You know, some of our national account customers are really sophisticated, and they optimize the use of the carriers in their Rolodex. And, you know, a shipment from Atlanta to Miami is one rate, and the same shipment Miami back to Atlanta can be a different rate. But you highlighted it. If I'm getting some economies on the cost side, so when I go to pick up with one of these larger accounts, instead of getting two or three bills, I'm getting five or six, and or maybe now that I've got more trailers in my fleet, if I can leave the national account customer a trailer for the day and they give me 10 shipments, I get really good cost economies there. So revenue per shipment was down sequentially Q4 to Q1, but cost per shipment was down more. So my margin picked up. So we're managing through it. I mean, we're not going to sit on our hands and just like you saw in Q4, we pulled a lot of discussions forward and And we'll do that again this quarter. And just because we talked in the fourth quarter, if we're looking at that business and we're being optimized and it's not working for us, we'll go back and try to get some more rate. But, you know, I said on the last call, I thought, you know, that with the capacity that's come out of our industry and with the focus on profitability, you know, top to bottom across our industry, we're really seeing it from our major competitors. I think, you know, everyone in our view is still holding the line on pricing. But if you give us a stronger macro backdrop, I still say, and I've been watching this stuff a long time, you know, you're going to see another leg up in this pricing. It's not getting any cheaper to do what all of us do. So, you know, ask our truckload friends. I mean, it's hard to go get price sometimes. And when the freight picks up, you know, we'll all go get some more price.
spk13: And I think I would add to that a couple of points. I mean, if you go back to when the disruption really started last summer, we talked at a lot about how we would see, you know, kind of that mix of freight bounce around a little bit from competitor to competitor as that got absorbed by the industry. I think you're seeing a little bit of that. I see you're also seeing an intense focus by us to continue to deliver on service and pricing at the same time so that service isn't inexpensive to deliver. So we make sure we go after that. But I would point out, there's a nuance here that hopefully doesn't get lost. As SIA develops that sort of network maturity, we start getting some of the scale and cost leverage that you saw from Q4 to Q1. You noted the cost per shipment changes. You know, that's unique to our sort of situation as we develop the maturity in our business. We have an opportunity to, you know, build that route density, build density around the line haul network. And it's some pretty good execution underneath that in a turbulent environment. So, you know, those are important value creators over time.
spk09: Okay. Very helpful. Thank you, guys. Appreciate it. Thanks, Matt.
spk12: Our next question comes from Bruce Chan from Stifel. Please go ahead. Your line is open.
spk18: Hey, good morning. This is Matt Mylas going for Bruce. We'd echo congratulations to Doug as well. I'm curious to get your thoughts on the overall competitive environment within the LTL industry and sort of how you think that's evolving early this year.
spk16: Yeah, I mean, I don't think we're seeing any change. We're not really seeing it in competitors' results who have put up numbers so far. You know, a lot of consolidation, right? I mean, there's a lot of capacity that's, you know, on the sidelines because we're There hasn't been an interest in it since the yellow auction. And there's a lot of capacity that, you know, has been acquired. It's kind of mothballed until people are ready to open terminals. So, you know, I don't think we're seeing any change other than, like Fred said, I mean, you know, right now when freight trends are softer, the shipper's got options, right? So, you know, if they're not as stressed because their need isn't as great. But if demand picks up seasonally or the macro tailwind develops, Well, then it becomes a little tighter, and then they want commitments, and they want really high service standards. So until we get a little bit of that, I think you're going to, like Fred said, continue to see people, you know, trying this carrier for a while, see if it works, try this carrier. And I think that's probably going on, but I don't think there's competitive actions going on out there that are negative.
spk18: Fair enough. Thanks for that. And secondly, how are you thinking about shipment growth in the back half of this year, really, as you start to anniversary some of the yellow share games?
spk16: Well, I mean, look, I mean, the comps are going to step up and start to get difficult for all of us in July, especially in August and then after that. But, you know, so I have got that idiosyncratic growth from these new terminal openings. I mean, we're putting up terminals everywhere. In markets we haven't been before, and folks like our service, and they've used us in other parts of the country, and they hear about the new service options, and that'll be a little bit of a tailwind for us. But in terms of forecasting a back half and what the macro is going to look like, you know, we're not going to take our shot at that. Others have tried, and we're not ready to call a turn or anything like that.
spk13: We have shown, I mean, as Doug pointed out, and we're not in a spot where we can really point to what we think the number would be, but I think we've shown that we know how to execute on an opening, deliver the service, and we're going to get growth out of these new facilities. Now, the question is what the sort of legacy might look like or what those opportunities might be. I mean, we saw it was not what we thought it was going to be in the first quarter, but at the same time, we delivered some pretty pretty solid results in light of that kind of core execution, despite, you know, the challenges that are in the marketplace. So, you know, I feel pretty good about the rest of the year and our core execution and what we might potentially do.
spk14: Thanks.
spk12: Our next question comes from Tom Wadowitz from UBS. Please go ahead. Your line is open.
spk06: Yeah, good morning. And, you know, Doug, congratulations to you as well. You've been – obviously one of the key leaders in the great growth story with SIA over the years. So congratulations to you. Let's see. I wanted to, I guess, get your thoughts on how you think about the pace of that capacity opening. You know, it sounds like a lot of it's kind of, you know, already set up with people. How much of that would you, if you have a flat freight market, which seems to be what you're seeing and maybe a little less than normal seasonality, do you ease up on some of that that might be in second half and does that affect what the margin outlook is or is it just kind of like you know maybe you open it but you staff it with fewer people how do we think about that dynamic and pace of openings and also kind of how the the margin would uh would be affected if you do ease up on the pace of openings looking out a ways obviously not second quarter
spk13: Yeah, thanks, Tom. I think the key thing for all of these openings, there was never an intent for SIAA to open these to impact 2024 or this quarter or next quarter. We view these as long-term investments, multi-year return, you know, 10-year sort of horizon. The Trenton and Garland facilities that we opened this quarter are ones that are simply in markets that we – already are serving to some extent that we're doing it inefficiently. So those are ones that the cadence of opening made sense to us because, first of all, as an immediate service lift for our customers, there's going to be some incremental business in there and there's also going to be a little cost savings. Those are big facilities for us and kind of our opening cadence. The Great Plains facilities, we'll open those the remaining ones. We've opened two, Missoula, Montana, and St. George, Utah already. But we'll open the remaining ones of those in August. And we'll do that actually July, August, and September. And we'll do that purposely because for us, there's some efficiency in opening those nearby each other in terms of timing to minimize sort of the inefficiency of having part of a line haul network put together. So we're going to go ahead with those. There's a customer demand for all those. I mean, Missoula, Montana has an opening that is, you know, for the entire SIA business is, I would say, not material, but it has far exceeded our initial expectations, and that's simply you have customers that know what they're experiencing with this, and they like dealing with SIA, and we're really pleased with the early results there. So we look at that and we say, all right, then it's worthwhile to go after the remaining Great Plains states. St. George, Utah is another one. These are small markets, but there are ones that customers value that consistent service that maybe they weren't getting before. So that makes a ton of sense for us to open them. Now, they may not be a big lift on the OR, the balance of the year, but I think they're ones that They're really important investments to make, and I think we can minimize the sort of cost to them. But at the same time, if we're really focused on the customer and on the long-term opportunity of this business, those are the investments we need to be making. So we're going to continue on that pace. We're going to obviously look for places that would minimize inefficiency or embedded cost. that we could avoid, absolutely. But there's just too much value in these not to continue to pursue them.
spk06: So that having been said, if you assumed a flat freight market, how much would the service center openings give you on shipments per day or tonnage? Is it like a couple points? I'm just thinking when you anniversary the yellow and black.
spk13: Yeah, it's tough to say. Missoula, Montana is not as big as Trenton, New Jersey or Garland, for that matter. So I think that's positive for us, the balance of the year. I'm not in a position to really call the macro freight market. I think it's probably mixed. But I think Siah's idiosyncratic story is pretty important to remember. And we've shown what we can do with these openings. And we've been able to execute in markets even in slower times.
spk07: OK. All right. Great. Thank you, Fritz. Thanks, Doug. Thanks, Tom.
spk12: Our next question comes from Eric Morgan from Barclays. Please go ahead. Your line is open.
spk11: Hey, good morning. Thanks for taking my question and congrats to Doug as well. I guess I wanted to ask another on volumes, you know, coming in below expectations in the quarter. Just given the pretty strong renewals number you gave earlier, would you say your push on price this year is having any kind of outsized impact there or Is it really just more of a broader market demand story?
spk13: I mean, I think it's probably a broader market. But listen, following SIA over time, and we're focused on generating value to our customer and generating returns for our shareholders. So we don't stay fixated on volume numbers. We stay fixated on making sure we meet those first two expectations. So, you know, we'll continue to push the service level and our expansion thing, because I think there are incremental opportunities for that, but that's only going to work if we keep working on pricing and mixing business, and we're committed to that.
spk11: Appreciate that. And just a quick follow-up on revenue per shipment. Do you think that 3% to 4% is still a good benchmark for the full-year ex-fuel, or is some of the mix changes going to have an impact on that?
spk16: Yeah, I mean, after what we saw on Q1, I'm probably – Without a crystal ball on the macro, I'm not as confident in that. But like I said, what I did like is the spread improvement, right? So I didn't get as much revenue per shipment as I had hoped. It's a mixed issue. We'll work on pricing at every turn. If the customer account's not operating profitably, we'll pull that discussion, you know, onto the table right now. But we're doing a good job managing the cost side. So that's why I was able to get the margin pickup. And that's why I think we can still get the 100 to 150 basis points for the full year. I mean, there's moving parts here. So if that's the kind of volume, but when I go there, I get some economies on the cost side, then it works for me on the margin side. I mean, that's what we're trying to do. We're growing the business and we're growing profitability more than that. I think that's what you kind of want in a business. You know, and on the volume side, I mean, yeah, I mean, for us and for the other transports I've heard report, you know, March didn't seem to come together like most expected. But, you know, we still had shipment growth in the quarter up, you know, 15.7%. I don't know how many others are doing that. So, we kind of think we're on the right track, and we'll work through the cyclicality that's inherent in our business.
spk11: Appreciate it.
spk16: Sure.
spk12: Our next question comes from Jordan Alliger from Goldman Sachs. Please go ahead. Your line is open.
spk20: Yeah, just a quick question. Curious with the expansion plans that you have, you know, at this point. What do you see in terms of the ability to get the folks that you need, both from a driver perspective and terminal perspective? And is there much cost inflation in terms of attracting these folks?
spk13: That's a good question. One of the exciting things about what we've got going at SIA is that as we add these facilities and this coverage footprint, we've always felt really good about our team. And one of the things that we've seen is that adding new facilities provides career track to a lot of our high performers in the balance of the company. And so as we've looked to open facilities, we've been able to staff key leadership roles in those facilities from the experience part of our company. So that's been great. That helps set the tone, sets the culture, right? And then When you get into the market of recruiting drivers or other staff to fill these facilities, you've got, first of all, the folks that are doing the recruiting, and they know what SIA is and what our culture is. So that's important part of the recruiting effort. And you know what? As always, when we're recruiting folks, we've got to stay market competitive. You've got a growing company, great place to work, great culture, a company that's very focused on culture. Those are recruiting advantages. You throw that in there with a very competitive pay and benefits package, and we've had success staffing and staffing people that understand our core values and kind of what we're trying to do. So we've been real pleased with what we've been able to do on that front. So that's going to be an important part of our growth story going forward.
spk07: Thank you.
spk12: Our next question comes from Jonathan Chappell from Evercore ISI. Please go ahead. Your line is open.
spk02: Thank you. Good morning. So, you've talked about a lot of new customers over the last 12 months, obviously, with the type of shipment growth you've been putting up. As it comes around to these pricing discussions with them, obviously, there's a vast array of different customers and different types of freight. How have these customers been receptive to some of the pricing discussions to try to get the value for your service?
spk13: Yes, Jonathan, Doug and I will double up on this answer. Just keep in mind is that one of the things that we benefited from early on with the disruption is that in many cases we had shared some of the national account customers with Yellow. They were people that were familiar with us. So we picked up, there were some pickup economies that kind of came along with that as we picked up that new business. As we have developed the, further developed our relationship with these customers, we have a better understanding of what the freight mix is and what the impacts are. And we've been very focused in Q3, Q4, and into Q1 around continued work around pricing to make sure the customers that understand and value the service that they're getting, that we're being appropriately compensated for that. And, you know, we've cycled through some of these customers that have resulted and decided, hey, you know, that maybe this, you know, we prefer something else and they're pursuing other options. So you see a bit of that. But I think what you also see and part of the traction that you see in our results is that customers are starting to value more what they're getting from us, and there's a little bit of stickiness there. So we like that. I think that speaks to some long-term opportunity for us.
spk02: Okay, thanks, Rhys. And then just to follow up, Doug, I don't want to put too fine a pin on this, but you're keeping the full year OR guide. You know, first quarter was in line, didn't throw you off track like you said, but it sounds like second quarter is going to be about 100 basis points lower than typical seasonality. Does that mean that we get better than seasonality in the back half of the year? Is this like a front-end loading of cost type thing in the second quarter? I mean, you know how this business works. People focus on the real short-term here. But if it doesn't throw the track off, even at the second quarter, it's maybe a lower starting point. I guess that's probably a key takeaway that we'd like to hear.
spk16: Yeah, I mean, you know, Q1 was, you know, on the OR side. You know, we were in the range. I mean, we all wanted it. do better without a big strong march. It didn't get there, but Q1 was kind of in the range. And yeah, I mean, this would be below normal historic seasonality, but the momentum on the volume side and starting to cover some of these fixed costs as shipments grow and these terminals were opening today. We open them today, I have all the costs in advance of the opening. I've got all the costs on day one and I have zero revenue. So as they build momentum throughout the year, we absolutely expect a pickup
spk13: know to come from that quarter two quarter three you know quarter four out after the opening so um there's some of that but um you know i think you have to you have to think about too so we've highlighted for you we're opening um we just opened trenton we've just opened uh garland we're going to open laredo in june we've got a block of Great Plains facilities we're going to open. Today, that freight often gets handed off. So that freight becomes 100% SIA revenue. So that's a pickup into the second half of the year. And we know what we're going to get service-wise when it travels on our equipment 100% of the time. And I think that's a real value opportunity for our customers. And it's certainly, from a revenue perspective for SIA, it's good. So that's what you're seeing and kind of what we think about the full year result.
spk02: Okay, that's very helpful. Thanks, Chris. Thanks, Doug.
spk12: Our next question comes from Daniel Imbrow from Stevens. Please go ahead. Your line is open.
spk03: Yeah, hey, good morning, guys. Thanks for taking the questions, and Doug, congrats on the retirement. I want to start on the freight mix. When we think about the density you've added and the capacity you're still adding, how much are you leaning on third parties or brokers to find freight, and is that mix impacting reported revenue for shipment or yield metrics, and then If so, how long would it take to transition that towards first-party freight as you stay in those new markets?
spk13: Yeah, certainly in some new markets, broker sort of that part of the mix of businesses is helpful to get started. But the nice thing that we have right now, and a lot of this is driven by our own sort of network maturity and business maturity, is that A lot of what's going to fuel the growth in the markets that we're growing in are customers that we're already doing business with. And that's what's really exciting. If you can go to a customer and you can now offer full Great Plains coverage. Now, granted, those are not the biggest markets. But if we go do a pickup in Dallas, Texas, and we can cover the Great Plains for the customer and also go to Trenton and also go to Laredo and maybe even to Mexico if the customer needs that. you're now having an opportunity to move up on the priority list with that customer where you're a much more strategic LTL partner with them because, frankly, we can do more for them. And we've proven that they can count on us to replicate service. So I think the exciting part about this, it's not going to be a mixed transition per se. It's going to be more of further penetration with customers that already know who we are And then customers that have held back doing business with us because they say, you know, you guys quite don't have the coverage I need. Now we do, or will have. And that's really part of the interesting value here for us.
spk03: That's helpful. And then for the longer-term one, I know you mentioned no one has a great crystal ball right now, maybe. But on the industry outlook, the market's soft. We're obviously going to have to lap yellow. It's a headline growth of a lot of rates. You mentioned you feel good about your ability to grow tonnage in price. How do you think the industry responds? Do you think, or I think there's a risk others maybe get more price competitive as their headline growth flows? And just curious, your broader thoughts as we lap yellow, how, if at all, that changes kind of the growth trajectory?
spk13: You know, I think that this business, if you look across the landscape of the business, I think the industry understands a couple of things that are really important. One is that underlying the surface of the business. It's an inflationary business, right? And it's a business that driver cost, employee cost, equipment costs, all those things, real estate, all those things are inflationary. And so that's a fundamental there. The other fundamental is that more volume at a lower price does not create incremental profitability. So that's another element of this business. So I think that there's that discipline across the landscape. Now we feel confident, um, with our own sort of on the things that we can control because we see what our team's doing around providing service to customer. That's, we think is a differentiator for us. Um, and as we expand the footprint, um, I think that that that's where we, you know, we will benefit. Um, but I think overall the industry, I, that sort of price led or price concession strategy, I don't know that that is a value driver, uh, for anybody in this space. So, I expect the discipline to remain.
spk14: Great. I appreciate the color. Best of luck.
spk12: Our next question comes from Brian Ostenbeck from J.P. Morgan. Please go ahead. Your line is open.
spk05: Hey, good morning. Thanks for taking the question and the congratulations and all the best with whatever's up next for you. I just wanted to ask a bit about the broader competitive dynamic. Truck load market has been, and the freight market in general, has been lower for longer here. The disruption of yellow helped out LTL. But do you think the truck market, given that it surprised all those carriers to the downside, do you think that's encroaching a bit more on what you would consider sort of the core LTL business? And so, therefore, when that tightens up, maybe you get a little bit better snapback than you would otherwise think? And is that specific to your network that you might see any of those leading indicators as we progress, hopefully, for the rest of this year?
spk16: Yeah, I mean, I know some of our competitors speak to this. I mean, we don't have a strong opinion about it. I guess, you know, our sophisticated national count shippers, you know, are probably figuring out ways to move more of their product on truckload and take advantage of the very favorable rate environment on the truckload side now. I don't know how much truckload is encroaching on LTL volumes beyond that, meaning, you know, As a rule, a truckload carrier pulls a trailer for customer and they don't handle the freight. And it'd be very difficult on a broad basis to replicate what an LTL carrier does, right? We handle pallets of freight. You need different assets to do that. You need a dock workforce and terminal network and things like that. But I do think the customer is taking advantage of this lower for longer environment. figuring out ways to consolidate and move more things truckload before they break it down to an individual pallet and move it. So yeah, as that tightens up, I expect we'll get a benefit primarily from that aspect. And then maybe there's some of that other stuff going on where a smaller truckload carrier decides to make multi-stops or something. But yeah, better freight backdrop would be good for all of us. And the industrial complex has just been weaker. I mean, a better Who knows? In an election year, maybe you get a different regulatory environment around energy or something like that, for example, over the next couple of years. That's been missing a bit. We all benefit when the industrial supply chain is full and moving and energy has been missing, for example. Some things like that are still out there to be determined. We'll see.
spk05: Understood. Thanks for that. Follow-up just on the Mexico and the cross-border business, maybe you can elaborate on what that partnership does for you, I guess, in the short term. In the longer term, does that help kind of fit with the relocation of Laredo? And it was mentioned the same in passing. I just don't know how those were tied together and sort of what you think of that partnership and that market in general, you know, over the next couple of years.
spk13: Yeah, listen, we're thrilled with this partnership opportunity. And, yeah, you know, depending on what your view is on near-shoring or reshoring, but if you look at the supply chain, certainly cross-border into and out of Mexico is continuing to develop, and we're very pleased with the opportunity to partner with a very high-quality carrier familiar with the Mexican market that we think, you know, we're in a position that we can seamlessly provide service to our customers north and southbound. You layer that in there with the Well, we think one of our real key investments that we made as part of the real estate auction, the Laredo facility, that's a really interesting opportunity for us. And most significantly for a customer, they can see that. And now we're a carrier that can provide them with that sort of seamless service at a very high quality level. And that makes someone's supply chain that much more efficient. And that's a good place for Cy to play. So we're excited about the opportunity. We're excited about how that matches up with our Laredo investment. And, you know, it's part of being a more important part of a customer supply chain.
spk05: All right. Thanks, guys, for your time. Appreciate it.
spk12: Our next question comes from Ravi Shankar from Morgan Stanley. Please go ahead. Your line is open.
spk08: Good morning, everyone. I appreciate the message that, you know, hey, it's going to take some time to add the resources, bring the new facilities on, and that's going to be a drag to operating leverage in the near term. But is there a risk that, you know, even if the cycle kicks in later on, like the shock of losing yellow is kind of lost a little bit by the time the industry kind of ramps up to its capacity and kind of gets everything in order here and shippers may be kind of less willing to take big price increases?
spk13: Yeah, I mean, I guess there's always a risk. I look at what SIA's story is with this or kind of what our idiosyncratic opportunity is. As you've followed us for years now, you know that our focus has been around quality and service and making sure that we are paid at industry levels or at market levels, however you want to define that. And I think as you look at SIA and look at our footprint and you look at us as more of a strategic national competitor and there's still a opportunity for us to make sure that SIA is paid at market, there's a idiosyncratic value driver for the SIA shareholder in there and for our customers also going to see a pretty significant opportunity to get a high service level partner. So, you know, yeah, certainly there are always macro economic situation in the industry, and as you pointed out, the yellow is that those assets are absorbed or exit the industry, and I think remains to be seen if all those assets actually make their way back to the industry. I'm not sure that they will. I think that the opportunity still remains constructive for us particularly, and I think for the industry, I think it's good.
spk08: Perfect. And maybe as a follow-up on pricing, I know you and all your peers have been kind of pushing some very big price increases. But for your peers in particular, are you hearing of any rollbacks? I mean, are these price increases sticking or are customers kind of happy to take them knowing the new environment?
spk13: Listen, I don't think, you know, there's not going to be a customer anyway that has a, you know, positive feedback around rate increases. I think that What's critically important, and this is what we focus on, is if we can maintain the level of service that justifies the rate increase, that's where we're most successful. And that's kind of our focus. And if you look across the industry, I think people are trying to adopt similar kind of strategies because fundamentally the additional volume at a lower rate in this business doesn't make any sense. So the economics of that don't work. industry continues to be very disciplined around this. I know that we are, and I know that our service levels justify that.
spk08: Understood. And Doug, congrats, and thank you for all your help over the years.
spk12: Thanks, Ravi. Our next question comes from Tyler Brown from Raymond James. Please go ahead. Your line is open.
spk15: Hey, good morning, guys. Morning, Tyler. Hey, Fritz, can we just come back to employees? So I'm just curious, how frontline turnover is trending. I'm assuming that it is easing, but my bigger question here is how do you feel about your training programs that are in place and how concerned are you about whether it be productivity or service taking a step back, particularly on the dock, just as you go through this big season of growth?
spk13: Tyler, let me make sure. You broke up a little bit for me. You were asking about turnover on our frontline employees at the beginning of your question. Yeah, sorry.
spk15: I'm afraid I may have a bad connection, but yes, yes.
spk13: No, you know, interestingly enough, we do a lot around employee retention efforts. I mean, we're very focused on employee engagement scores. What I've been really pleased to see is that our employee engagement score we measured last fall, and it was the highest it's been at SIA ever. And not surprisingly, we've seen our turnover rates increase. you know, at the dock and driver level kind of level out and actually come down from periods of, you know, a year or two or three years ago where we experienced higher levels of turnover. So that's been good. I think that in our, you know, there's certain spots that you have to deal with it on sort of dock folks. You do see a bit of a turn on those categories of our team simply because that's a In many cases, we're recruiting people new to the industry and they're having to learn, okay, how does an LTL work? But with that in mind, one of the things that we've been doing is that we have doubled down on leadership training for our frontline supervisors. And we do that for a few reasons, right? So our most important asset in the company are people. We're very focused on keeping high levels of engagement and very focused on maintaining and continuing to lower that turnover because we think that helps us drive consistency around product, service, safety, and all those things. And we've seen that that's paid off for us. It also gives us a pipeline of frontline leaders that ultimately are helping us staff these new facilities and continue to maintain that culture. So it's something we pay attention to on a daily basis simply because it's that important.
spk15: Yeah, no, that's great. And then just back to Brian's question about Mexico. If I'm not mistaken, you struck a similar interline deal in Canada a few years back, if I recall. I'm just kind of curious how big that lane is today. Is there any reason that this lane couldn't be equally, if not larger?
spk13: Yeah, I think the opportunity across border in and out of Mexico over time is certainly going to be stronger than Canada. Not that Canada is not important for us locally. I'd have to get back to you on what that breakout would be for that, which is Canada. But what's important, the success that we've had in Canada has been predicated on the basic concept is the customer is transparent to the customer, and the customer's experience is consistent. So they know they're going northbound on SIA, and it goes into Canada, and it's a place that they see the track and follow their freight and all those things. Those are all positives. We're going to do the same thing in Mexico. And I think what's interesting about Mexico is that with the nearshoring, the opportunity there is probably materially different over time than it is into Canada. Simply, it's the state of the supply chain. It's a larger opportunity. It's north and southbound. So thus our excitement about that, particularly partnering with an experienced Mexican carrier with high-quality systems, high-quality focus on quality and services. very similar match to how we operate. So we're really interested in that opportunity.
spk15: Perfect. Sorry if I was breaking up. I apologize. But Doug, congrats. No worries, guys.
spk12: Our next question comes from Bascom Majors from Susquehanna. Please go ahead. Your line is open.
spk10: Doug, could you give us an update on some of the visible costs and maybe cadence three months since the last call on DNA and interest expense now that you're getting further on in the terminal openings? And then just taking a step back, why is now the time to move on with this transformational 12 to 18 months ahead for the company? And Fritz, maybe if you could add some color on that. you know, the board's timeline, strategy, thinking on the kind of person you want to hire to lead the financial side of the business going forward. Thank you.
spk16: Hey, Bascom. Yeah, I'll give you a little bit more color around the modeling. You know, on the DNA side, like I said, I mean, Q1 to Q2, we've already taken delivery of, you know, like 3,000 units, if you include trailers, tractors, and forklifts kind of year to date. And we've got another step up coming, more to go. We're going to get a lot of that equipment and service in the next few months. So Q1 to Q2, like I mentioned, you know, a 10% step up in depreciation is probably the right way to think about it. Probably another little step up, maybe less than that, maybe 5% or so in Q3 before it starts to, you know, slow. I want you to think, too, about, you know, for the first time in a long time, you know, instead of interest income on all the cash we've been sitting on, you know, we're going to use our revolver a little bit this year and have some debt for the first time in a while. So there'll be an interest component you need to model for too. So maybe, you know, I'm thinking probably four and a half, five million in the second quarter. And then it should trend down a little bit after that. We've got seasonally stronger cash flow in the months that follow and our kind of, you know, historic modeling of it. So a little bit of interest expense, you know, as we work through all these deliveries and like I said, that depreciation step up. You know, the other things, I mean, You know, the line on the claims and insurance, it's a volatile line. But like I've always said, you know, if you take the trailing four quarters and maybe put a little inflation on that, 2% or 3% inflation, you'd probably get to the right spot. I think you'd have been right on the number in Q1 if you'd have used that modeling advice. So that's about all we're probably going to share on that. But like Fred said, you know, there's cost inflation in the business. You know, just because the environment's you know, softer doesn't mean you're going to be able to take a year off on wage inflation or healthcare costs, things like that. I would like to point out though, I mean, you know, we've been looking at a lot of numbers over the last few days and, you know, the reason we're going through this and maybe it plays to your second question and what we're building for the long term, you know, We're doing it because we see what that can be as we build it out. For example, we manage our business across 11 regions. So in the first quarter, a seasonally slower quarter with a lot of front-loading of expenses for our growth, we had a handful of regions of the 11 that operated sub-80. And when we look at those regions, we say, what's the common denominator? Well, it's great coverage. It's our brand's been there for a long time and well-received by those customers. Are our footprints competitive with some of our larger peers? And guess what? We get more share than our headline 6% industry share of revenue. So, you know, even in a quarter like this, we've got regions that are operating sub-80. So, you know, our goal is build out more of the map to look like those regions and push this whole thing lower into the 70s. So just something to think about.
spk13: I would just add, I mean, it's kind of building on Doug's comment. I mean, the One of the things that we've shown that we can do over the opening of the last 50 terminals is that we know how to add a terminal to a network and how to approach a market. And there's a lot of value that we can create both for our customer and for SAI at the same time. So all of the terminals that we have in our pipeline this year are all ones that we think have got a decade of opportunity for us.
spk14: So we're pretty excited about them.
spk12: Our next question comes from Jason Seidel from TD Cowan. Please go ahead. Your line is open.
spk04: Thanks, operator. Doug, congratulations. You're not much older than me, so I'm very jealous you're talking about retirement. I got a long ways to go ahead of me. Wanted to circle back on a few things. One, you know, obviously there's a lot of expansion going on here. You're opening up some very key terminals. How should we think about looking out to 25 in terms of the pace of expansion with more openings? And then, Doug, I wanted to circle back a little bit to the comments somebody asked, or the questions somebody asked about the truckload marketplace. It seems like you don't think the truckload marketplace has had a significant impact on the LTL space in either tonnage or pricing. I just want to make sure that I got your answer correct.
spk16: Well, that's one guy's opinion. I'm just saying it's a different business than ours, but our shippers are sophisticated, and they've got, you know, transportation management groups that are very technical, and if they're figuring out a way to move more in volume truckload before it gets down to a shipment-type move, then that certainly could be going on. I just don't think personally that there's a lot of multi-stop truckload going on. I mean, it's different equipment. A truckload driver's not typically used to handling freight or have the tool to handle freight. So I find that personally hard to believe that that's having a big impact. But the shipper themselves might be figuring out a way to use the favorable TL rate environment to take advantage of that because they're facing cost inflation too. So that's just my opinion. But look, I'm old. Maybe I'm retiring because I don't know what I'm talking about. But it seems to me that that makes sense.
spk13: And so on the first question about the multi-year or the expansion. Keep a couple things in mind. If we were having this conversation a year ago pre the yellow auction, we would have been telling you about 10 to 15 terminals a year out of our real estate pipeline because we've spent a lot of time developing sort of core competency around organic growth and particularly around how do we expand terminals. So we had a pipeline of facilities in there and then we added in the you know, the 28 that came through the yellow auction, which we're excited about. We're going to open a number of them this year. They will continue in the next year. You know, next year could be 10, could be 15, somewhere in there, potential openings or not. We'll see how that goes. But the pipeline that we have is multi-year. And, you know, once we get through the end of this year, I don't think we're going to have the exact full on footprint that we think we ultimately need to have. I think that you'll see us continue to replace and upsize facilities as our network matures and grows. So I think that that's an important part of our multi-year story here. So I think that, you know, there's opportunity for us in the next year around growing facilities.
spk04: Perfect. That's what I was looking for. Doug, looking forward to seeing you in June and having a beer with you, sir.
spk16: Thanks. See you then, buddy.
spk12: Our next question comes from Ken Huckster from Bank of America. Please go ahead. Your line is open.
spk21: Great. Thank you. Good morning. Doug, I'll throw it in. Congrats on your retirement or what we all know is your move to really try to get back to the sell side. So good luck on that. Great.
spk16: The competition is too stiff there now these days, Ken. I would not survive.
spk21: Fritz, can you talk about maybe customer engagement in the quarter? I just want to understand what happened on the volume side. Was it due to, I don't know, addition of large enterprise customer, yellow business that kind of came back and then you kind of re-hit on pricing and it fell away? I'm just trying to decipher the volume weakness here versus maybe what we see in some parts of the market.
spk13: So I would just kind of highlight that just the The macro situation, right? So just kind of the GDP report that came out earlier this week that said Q1 GDP is 1.6%. I think anybody would say that that's kind of a mixed sort of macro environment, maybe soft macro environment. So I think you have that sort of overhang for the industry. And I think you've seen that in other reports that are out there from other modes and competitors and such. So I think there's that going on. And I think what you see with SIA specifically is you see the impact of our own initiatives around our geographic expansion. I think that, you know, had we had a bit of a stronger macro environment, I think we would have seen a little bit more of a lift in Q1. But actually, despite the limited limits of the macro environment, I thought our performance was actually really good. And that's a reflection of kind of our idiosyncratic story and our ability to deliver service in that kind of environment. So I think what it does is that, I mean, I think the takeaway out of that is that, boy, when the macro, you know, maybe it becomes, it firms up or more certain or people are more comfortable, whatever it might be, SIA is going to be in a position to really take advantage of that. And because we're doing a good job in the environment we're in now. So again, I like how that sets up for us. I think the Q1 situation was, you know, as we've highlighted on the call, the macros backdrop, I think it's probably ongoing, maybe a little bit of churn around that. We're working on making sure we get the appropriate freight in our network. Maybe we shed a little bit there on the margins. But, you know, fundamentally, I think what we posted was still really good.
spk21: So just to clarify, it's not like what you took on was yellow freight or Amazon freight or something like that. And then, you know, it, you know, you took that on because it was in the market against a bad macro and you had to go reprice it. That's not.
spk13: No, no, no, no. I think, I think what you had is we got, we, we had yellow freight that came our way because there, we had a lot of shared accounts. And then in Q4, we were talking about pulling contracts forward. So you saw a little bit of that churn. We got, you know, mix of business changes a little bit, Q4 to Q1. And we, We're not giving up on that either. We're continuing to find that freight that makes the most sense for us and get the pricing right. So, you know, I think some of that's just kind of underlying business and what we deal with on a daily basis.
spk21: All right. And then for my follow-up, just your thoughts on claims ratio. I don't think you tossed that in the release. And then has tightening flattened out now? You know, are we seeing that settle in at this point? Or is it still volatile given some of those repricings and revisits of contracts?
spk13: You know, I think it's just kind of ongoing, specifically around your contractual question. I mean, I think we're in a unique spot because we're growing, we're, you know, taking on some new customers, or we're getting a different mix of business as we go. And I think what you find with that is that we've got to continue to need to reprice and get the book of business, the margins right, and make sure that we're getting paid at sort of market rates. And that's kind of key. So you'll continue to see that from us going forward in all likelihood.
spk14: And any other questions?
spk16: Yeah, I mean, the claims ratio has been hanging in there in the 0.5, 6.6 range for a while, very consistent service, even with all the new team members and things like that. So, you know, I think we're hearing good things about our service, and we look forward to rolling it out in more markets.
spk12: Our last question today will come from Daphne Moore from Jefferies. Please go ahead. Your line is open.
spk01: Hi. Good morning. Daphne Moore here from Jefferies. I thought you had a new assistant. I thought you had a new assistant. Me too. No, it's Daphne. Sorry about that, I guess it's been a busy week. But real quick here, look, I think every short-term and macro question has been asked, so I'm going to ask this a little bit differently. If you take a step back, how would you compare this year, 2024, and your expansion plan, how does this compare to maybe another year in the last, call it seven, that you've been embarked on this similar pretty aggressive capacity expansion plan? So whether it's by terminals or door count, however you want to look at it, but I'd love to get your perspective. you know, is there a similar year that you can kind of point us to where you're making these investments and ultimately see this loaded springboard for when the market eventually turns? I'd love to just hear your perspective. Thanks.
spk13: Yeah, you know, Stephanie, the interesting thing about, I mean, I hate to, this is kind of a tough answer, just to say every year is a little bit different, right, in terms of where you are in the expansion. What's really exciting about this one, this year that maybe differentiates a bit compared to the others is the kind of the range of opportunities we have. So we've got some really interesting market expansions, Trenton, Laredo, you know, places like Owatonna, Minnesota. This year, we're going to open a facility in Owatonna and then one in Duluth. And in the fall of last year, we opened one just outside of Minneapolis, St. Paul and Wisconsin. So SIA in a span of less than a year is going to go from being a, Minnesota being the end of the line to making that sort of a real market for us. So the openings that we have right now are ones that say these are all about the customer and providing that additional level of service. So that to me is really exciting. And then you've got these, you know, big strategic facilities that we're putting in place. And then you've got facilities across the Great Plains that we're going to add that you know, now we're going to be in a position to say to our customer, hey, look, we can go anywhere any of your other national account or national LTL players can go, and we know what we can do on a service basis, right? So that for us makes this a really exciting year and one that is probably a little bit different than the others from that perspective. And as I've mentioned a few times in the call, organic expansion is like this, this isn't our wheelhouse. We know how to do this. And, you know, I've heard, you know, there's been commentary out there that said that, you know, we haven't established, people haven't established a culture and all these things. And, you know, we just, well, at SIA, we have an established culture as well. We have an established culture that says we know how to replicate that over and over again. People are drawn to that and we know how to continue to build on that. And the next, you know, a hundred employees that we add are an important part of further enhancing that culture and providing that great service to customers. So I'm excited about this range of openings and I will be about the ones in the next year as well.
spk01: Got it. Thank you. I guess just from my perspective, I feel like we've seen this movie before and it almost takes me back to 2019 where, you know, not the best market, but you're investing pretty heavily and you kind of see that recovery in a meaningful way. And then, you know, as soon as the market does to return. So I guess that was my thought. So appreciate the call. Yeah.
spk13: And listen, Stephanie, on that point, I mean, I like the idea of having 210, 215 terminals teed up, ready to go, the established team, that when you have macro certainty, what the spring looks like for SIA, like springboard for SIA. I think that's a fantastic opportunity for us.
spk12: Got it. Thanks so much. Thank you. We have no further questions. I would like to turn the call back over to SIA's President and Chief Executive Officer, Fritz Holtgref, for closing remarks.
spk13: Thank you. And thank you, everybody, that's called in. And we appreciate the opportunity to talk about the great things happening at SIA. I really look forward to the next years and continue delivering the results. So thank you much.
spk12: This concludes today's conference call. Thank you for your participation. You may now disconnect.
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