10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-49983
Saia, Inc.
(Exact name of registrant as specified in its charter)
(State of Incorporation) (I.R.S. EmployerIdentification No.)
(Address of Principal Executive Offices) (Zip Code)
(770) 232-5067
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class TradingSymbol(s) Name of each exchange on which registered
Common Stock, par value $.001 per share SAIA The Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐No☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of June 30, 2024, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $12,611,329,837 based on the last reported sales price of the common stock as reported on the National Association of Securities Dealers Automated Quotation System National Market System.
The number of shares of Common Stock outstanding as of February 18, 2025 was 26,628,578.
Documents Incorporated by Reference
Portions of the definitive Proxy Statement to be filed within 120 days of December 31, 2024, pursuant to Regulation 14A under the Securities Exchange Act of 1934 for the Annual Meeting of Stockholders to be held April 24, 2025, have been incorporated by reference into Part III of this Form 10-K.
Auditor Name: KPMG LLP Auditor Location: Atlanta, Georgia, United States Auditor Firm ID: 185
SAIA, INC. AND SUBSIDIARIES
INDEX
Page
PART I.
Item 1. Business 3
Additional Information 10
Executive Officers of the Registrant 11
Item 1A. Risk Factors 12
Item 1B. Unresolved Staff Comments 27
Item 1C. Cybersecurity 27
Item 2. Properties 28
Item 3. Legal Proceedings 28
Item 4. Mine Safety Disclosures 29
PART II.
Item 6. [Reserved] 33
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 44
Item 8. Financial Statements and Supplementary Data 45
Item 9A. Controls and Procedures 69
Item 9B. Other Information 70
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 70
PART III.
Item 10. Directors, Executive Officers and Corporate Governance 71
Item 11. Executive Compensation 71
Item 14. Principal Accountant Fees and Services 72
PART IV.
Item 15. Exhibits, Financial Statement Schedules 73
Signatures 78
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PART I.
Item 1.Business
Overview
Saia, Inc., through its wholly-owned subsidiaries, is a transportation company headquartered in Johns Creek, Georgia (Saia, Inc. together with its subsidiaries, the Company or Saia). We provide less-than-truckload (LTL) services through a single integrated organization. While more than 97% of our revenue is derived from transporting LTL shipments, we also offer customers a wide range of other value-added services, including non-asset truckload, expedited and logistics services across North America.
Founded in 1924, Saia Motor Freight Line, LLC (Saia LTL Freight), a wholly-owned subsidiary of Saia, Inc., is a leading LTL carrier that provides direct service to the 48 contiguous states and provides LTL services to Canada and Mexico through relationships with third-party interline carriers. Saia LTL Freight specializes in offering its customers a range of LTL services including time-definite and expedited options. Saia LTL Freight primarily provides its customers with solutions for shipments between 100 and 10,000 pounds.
As of December 31, 2024, Saia LTL Freight operated a network comprised of 214 owned and leased terminals, plus three general offices and one warehouse. At December 31, 2024, Saia LTL Freight owned approximately 6,600 tractors and 26,200 trailers, including equipment acquired with finance leases.
Over the past five years, Saia has invested in excess of $2 billion in capital expenditures, primarily for real estate, revenue equipment and technology. The real estate investments have been made to support Saia’s long-term strategy of expanding our footprint in both new and existing markets in order to be closer to our customers and support our goals to gain market share. Equipment and technology investments have been made to support this growth as well as improve our fleet. The investments have provided us improved fuel economy, enhanced safety features across the fleet and reduced carbon emissions. We have also made investments in technology to support our growth, including investments in network optimization, data analytics around operations and profitability, customer service, training and business processes.
In January 2024 Saia closed on the purchase of 17 freight terminals and acquired leases for an additional 11 terminals through the Chapter 11 bankruptcy proceedings of Yellow Corporation. Over time Saia intends to integrate these terminals into its network to allow for more direct service to the customer.
In 2024, Saia generated revenue of $3.2 billion and operating income of $482.2 million compared to revenue of $2.9 billion and operating income of $460.5 million in 2023. In 2024, the average Saia LTL Freight shipment weighed approximately 1,343 pounds and traveled an average distance of approximately 891 miles. In 2023, the average Saia LTL Freight shipment weighed approximately 1,386 pounds and traveled an average distance of approximately 894 miles.
Industry
The trucking industry consists of three segments: a private fleet segment and two “for-hire” carrier segments. The private fleet segment consists of fleets owned and operated by shippers who move their own goods. The two “for-hire” carrier segments, truckload and LTL, are defined by the typical shipment sizes handled by the transportation service companies. Truckload refers to providers generally transporting shipments greater than 10,000 pounds and LTL refers to providers generally transporting shipments less than 10,000 pounds. Saia is primarily an LTL carrier. In addition to the three main trucking segments, Saia also competes with small package carriers, final mile delivery services, railroads, air freight carriers, third party logistics providers and other emerging digital competitors.
LTL carriers typically pick up numerous shipments, generally ranging from 100 to 10,000 pounds, consolidate them at local carrier-operated freight terminals and then transport the shipments from the terminal to the carrier-operated destination terminal for delivery to the ultimate destination. As a result, LTL carriers require expansive
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networks of pick-up and delivery operations around local freight terminals and linehaul operations to transport freight between the local terminals.
The truckload segment is the largest portion of the “for-hire” carrier market. Truckload carriers primarily transport large shipments from origin to destination with no intermediate handling.
Because truckload carriers do not require an expansive network to provide point-to-point service, the overall cost structure of truckload carriers is typically lower and more variable relative to LTL carriers. However, the lack of a network can subject their drivers to extended periods away from home, often resulting in higher driver turnover and periodic driver shortages. The truckload segment is comprised of several major carriers and numerous small entrepreneurial players. At the most basic level, a truckload carrier can be started with capital for rolling stock (a tractor and a trailer), insurance, a driver and little else. As truckload carriers become larger in scale, capital is needed for technology, infrastructure and some limited facilities. Saia LTL Freight may participate in the truckload market as a means to fill empty miles in lanes that are not at capacity. Saia also offers its customers the truckload and expedited offerings of its non-asset operations.
Capital requirements are significantly higher in the traditional LTL segment versus the truckload segment. In the LTL sector, substantial amounts of capital are required for a network of freight terminals, shipment handling equipment and revenue equipment (both for city pick-up, delivery and linehaul). In addition, investment in technology has become increasingly important in the LTL segment largely due to the number of transactions and number of customers served on a daily basis. Saia LTL Freight picks up approximately 35,000 shipments per day, each of which has a shipper and consignee, and sometimes a third-party payor, all of whom need access to information in a timely manner. In addition to customer service, technology plays a key role in improving operations efficiency and compliance, safety and revenue management. As a result of the significant infrastructure required to operate an LTL carrier, the LTL segment is more concentrated than the truckload segment with the largest LTL players operating nationally or in regional markets. Driver turnover in the LTL sector is significantly lower relative to the truckload sector, although LTL carriers also face periodic driver shortages.
Business Strategy
Saia has grown historically through a combination of organic growth and geographic integration or “tuck-in” acquisitions of smaller trucking and logistics companies. In recent years, Saia has largely grown through organic growth, which it intends to continue going forward.
Key elements of our business strategy include:
Continue to focus on operating safely.
Our most valuable resource is our employees. It is a corporate priority to continuously emphasize the importance of safe operations to reduce both the frequency and severity of injuries and accidents. As part of our ongoing replacement and growth of our tractor fleet, we have been adding accident avoidance technology over the last several years in our new over-the-road tractors, including active braking assistance, adaptive cruise control, lane departure warning systems and roll stability control. This emphasis on safe operations is important to protecting our employees and the communities in which we operate. A safety first focus has the added benefit of helping to control inflationary insurance costs.
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Manage pricing and business mix.
This element of our business strategy involves managing both the price we charge for our services and the mix of freight we transport to operate our network more profitably. Expansion of our geographic footprint and improvement in our service offering over the last several years has allowed the Company to provide unique solutions to our customers which has lead to increases in revenue per shipment, excluding fuel surcharges.
Increase density in existing geographies.
We gain operating leverage by growing volume and density within our existing geography. Depending on pricing and the specific geography, we estimate that the potential incremental profitability on growth in current markets can be significant. We actively monitor opportunities to add freight terminals where there is sufficient market potential. Future volume growth at Saia could result from improvements in the general economy, industry consolidation, geographic expansion and strategic acquisitions, as well as specific sales and marketing initiatives.
Continue to focus on delivering best-in-class service.
The foundation of Saia’s growth strategy is consistent delivery of high quality service through on-time delivery and reduced claims for lost and damaged freight. Customers value commitment to service quality, which allows us to charge fair compensation for our services and positions us to improve market share.
Continue to focus on improving operating efficiencies.
We have operating initiatives focused on continuing to improve efficiency, including optimizing our linehaul scheduling and pick-up and delivery operations. These initiatives help offset a variety of structural cost increases like wages, healthcare benefits, casualty insurance, workers’ compensation claims, casualty claims and parts and maintenance expense. Optimizing our linehaul scheduling and pick-up and delivery operations provides the opportunity to better utilize assets and thus reduce fuel consumption and carbon emissions. We believe we continue to be well positioned to manage costs, utilize assets and explore additional opportunities for cost savings.
Continue growing the organization through an expanded geographic terminal footprint.
We plan to further pursue geographic expansion and build additional density in markets to promote profitable growth and improve our customer value proposition over time. As a result, we plan to continue to invest in new terminals, in our tractor and trailer fleet and in new technology to enable us to efficiently handle the increased volume we anticipate within new and existing markets. In addition to direct expansion through adding new terminals, we may consider acquisitions from time to time to help expand geographic reach and density while gaining the business base of the acquired entity.
Continue to address environmental and employee relations.
We are dedicated to building on our strong, positive culture by being a leading corporate citizen for the benefit of our customers, employees, communities and stockholders. In recent years, we have invested heavily in our tractor and trailer fleet to improve fuel efficiency and reduce carbon emissions, while also improving safety and reliability and lowering maintenance expenses. We are also working to optimize our linehaul scheduling and pick-up and delivery operations to better utilize our assets and thus further improve fuel consumption and carbon emissions. We are conducting pilot programs involving the use of alternative fuels for our operations, including testing of tractors powered by compressed natural gas and electricity. We have procedures that are designed to reduce the risk of spills of hazardous materials that we transport and to quickly and efficiently react to any environmental incidents. At our terminals, we have implemented electricity-saving procedures, and we have conservation initiatives in place to recycle used oil, scrap metal, paper, tires and batteries. Additionally, we are using best practices of including green initiatives where possible in our newly constructed terminals.
Based on the most recently available rankings, for 2023, Saia continued to maintain high marks in the EPA’s SmartWay Carrier Performance Rankings for LTL carriers for carbon dioxide, nitrogen oxide and particulate matter emissions per ton-mile. We have also participated in the EPA’s SmartWay Program since 2006, which assists
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companies with advancing supply chain sustainability by measuring, benchmarking and improving freight transportation efficiency.
We are focused on maintaining strong relationships with our employees. We invest in our employees through training and professional development programs, safety training, wellness programs, internal employee communications and employee recognition programs, along with providing competitive wages and employee benefit programs.
Seasonality
Our revenues are subject to seasonal variations. Customers tend to reduce shipments after the winter holiday season, and our operating expenses tend to be higher as a percent of revenue in the winter months primarily due to lower capacity utilization and weather effects. Generally, the first quarter is the weakest quarter while the second and third quarters are the strongest quarters in terms of revenue and profit. Quarterly profitability is also impacted by the timing of salary and wage increases and general rate increases, which have varied over the years.
Human Capital
We believe our success depends on the strength of our workforce. Our Executive Vice President and Chief Human Resources Officer, reporting to our President and Chief Executive Officer, is responsible for developing and executing our human capital strategy. These responsibilities include recruiting, hiring, training and retention, as well as the development of our compensation and benefits programs.
Our mission is to safely drive our customers' success with custom solutions built on the three pillars of our service-focused values: people, purpose and performance. Our core values place the Customer First as they are the heart of the business. Safety is a unifying fundamental behavior and practice that supports our Company’s purpose and goals. Taking Care of Each Other is rooted in our leadership team caring for our employees and our employees caring for each other. Every employee deserves to be treated with Dignity and Respect. Our emphasis to Do the Right Thing focuses on making the ethical choice. Ultimately, we seek and embrace our responsibility to the Community where we live and operate.
Our nearly 15,300 union-free employees are comprised of about 50% licensed commercial drivers, about 25% dock workers (approximately one-quarter of whom are part-time) and the remaining 25% work in sales, technology and administration to support our business. Approximately 88% of our workforce is male. Approximately 49% of our employees have self-identified as Hispanic or Latino, Native American, Pacific Islander, Asian, Black or African American, or of two or more races. Additionally, more than 75% of our workforce is under the age of 55, while our driver average tenure is seven years.
As the success of our business is fundamentally connected to the well-being of our people, we offer benefits that support their physical, financial and emotional well-being. We provide our employees and their families with access to affordable and convenient medical, dental and vision programs. To foster retention, employees with ten or more years of service do not pay premiums for participation in the medical program. Additionally, we strive to help employees lead healthier lives through a voluntary wellness program aimed at engaging employees to promote proactive evaluation, tracking and management of major health and wellness indicators.
As an added benefit for employees, we offer a 401(k) savings plan with a Company match as well as paid vacation and personal days. These benefits are in addition to the Company’s market-based compensation program designed to maintain competitive compensation packages for all employees. We assess the competitiveness of our compensation by principal job classifications in markets across the country through periodic compensation surveys. Company-wide wage increases are also implemented from time-to-time, including an approximate 4.1% wage increase in July 2024, excluding executives.
In recent years, due to competition for quality employees, the compensation divide between union and non-union carriers has closed dramatically. We believe a direct relationship with our employees provides for better communications and employee relations. This dialogue with our employees enhances operating flexibility and ultimately lowers costs. In addition, non-union carriers have more flexibility with respect to work schedules, routes and other similar items. This flexibility is a major consideration in meeting the service levels required by customers.
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We believe this differentiation provides stronger future growth prospects, improved efficiencies and customer service capabilities.
Recruiting, Hiring, Training and Professional Development.
We seek to hire employees with the desire that they spend their career with us to retirement. With that in mind, identifying qualified candidates and attracting them with competitive compensation and benefits is key to our success. We have regional recruiting managers across the Company to help meet our hiring needs. If necessary, and to attract the most qualified candidates, we offer periodic signing bonuses to new hires.
More than 300 of our drivers also serve as driver trainers to assist in providing all new drivers with over 80 hours of training. We annually train drivers in defensive driving processes with emphasis on special operations in addition to weekly safety training through various mediums, including videos and group and individual presentations on diverse safety topics. Our tractor fleet is equipped with extensive safety technology, including video recording systems which enable managers to provide coaching and feedback to drivers throughout the year. Our dock employees also receive onboarding instruction which is supplemented with on-going safety and job training. Employees who express an interest in a long-term driving career can enroll in a Company-sponsored dock-to-driver program to obtain the necessary commercial driver certifications. Annual safety awards and recognition are given to drivers, mechanics and dock employees who qualify.
Employee Engagement.
We focus on driving employee engagement throughout our organization. We believe it is important to our success as an organization for our employees to understand how their work contributes to our overall performance. We communicate with our workforce through a variety of channels and encourage open and direct communication. Our communication starts with an employee’s manager and is supplemented by a variety of means, including regular industry updates, a monthly magazine, reports on quarterly performance directly from the CEO and executive team and annual employee engagement surveys.
We are committed to fostering a work environment that values collaboration, fairness, and employee growth. We pride ourselves on the equitable treatment of our employees and aim to achieve high levels of satisfaction and productivity. We use periodic engagement and compensation surveys to evaluate our efforts in meeting employee needs and driving organizational success.
We seek to create a culture that encourages authenticity and values unique perspectives. By fostering an environment that highlights shared experiences and celebrates individual contributions, we empower our employees to achieve excellence.
Saia’s commitment to fostering a culture of engagement, innovation, and collaboration is exemplified by our emphasis on retention, leadership development, and opportunities for employee growth. This approach ensures alignment with our core values of safety and taking care of each other.
Our workforce engagement efforts reflect a cross-functional perspective on fostering collaboration and fairness, striving to promote a workplace where all employees feel valued for their contributions. Through ongoing evaluation of processes and programs, we focus on attracting, developing, and retaining top talent.
Competition
Although there has been some tightening of capacity and some industry consolidation, shippers continue to have a wide range of choices. We believe that service quality, price, variety of services offered, geographic coverage, responsiveness and flexibility are the important competitive differentiators.
Saia provides LTL services in a highly competitive environment against a wide range of transportation service providers. These competitors include a small number of large, national transportation service providers in the long haul and two-day LTL markets and a larger number of shorter-haul or regional transportation companies in the two-day and overnight LTL markets. The larger the service area, the greater the barriers to entry into the LTL trucking
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segment due to the need for additional equipment and freight terminals associated with this coverage. The level of technology investment required and density needed to provide adequate labor and asset utilization make larger-scale entry into the LTL market difficult. Saia also competes against several modes of transportation, including truckload and private fleets, small package carriers, final mile delivery services, railroads, air freight carriers, third party logistics providers and other emerging digital competitors.
Regulation
The trucking industry is subject to regulation by many federal, state and local government agencies in the U.S., and these authorities have broad powers over matters ranging from the authority to engage in motor carrier operations, motor carrier registration, driver hours of service, safety and fitness of transportation equipment and drivers, port security, insurance requirements, employment practices, taxation, data privacy and security, certain mergers and acquisitions, financial reporting, fuel efficiency and emissions standards and the transportation and handling of hazardous materials. Regulatory requirements, and changes in regulatory requirements or guidance, may adversely affect our business or the economics of the industry by requiring changes in operating practices that could influence the demand for and increase the costs of providing transportation services.
Key areas of regulatory activity include:
Department of Transportation.
Motor carrier and freight brokerage operations are subject to safety, insurance and bonding requirements prescribed by the U.S. Department of Transportation (DOT) and various state agencies. We are also subject to a variety of vehicle registration and licensing requirements in certain states and local jurisdictions where we operate.
Within the DOT, the Federal Motor Carrier Safety Administration (FMCSA) has issued rules, including hours of service regulations that limit the maximum number of hours a driver may be on duty between mandatory off-duty hours and require driver rest breaks. The rules provide that a truck driver may work no more than a maximum of 60 hours within 7 consecutive days and 70 hours within 8 consecutive days. FMCSA rules further impose a maximum work period of 14 hours (no more than 11 hours of which may be driving time) after first coming on-duty following 10 consecutive hours of off-duty time. Drivers are also required to take a 30-minute break prior to driving beyond 8 hours.
The FMCSA’s Compliance Safety Accountability Program (CSA) is an enforcement and compliance model that assesses a motor carrier’s on-road performance and investigation results for a 24-month period using roadside stops and inspections, resulting in safety and performance ratings in the following categories: unsafe driving; hours-of-service compliance; driver fitness; controlled substances/alcohol; vehicle maintenance; hazardous material compliance; and crash indicators. The evaluations are used to rank carriers and individual drivers and to select carriers for audit and other interventions or enforcement action.
The FMCSA maintains the Commercial Driver’s License Drug and Alcohol Clearinghouse (DAC), which is a database that discloses drug and alcohol violations of commercial motor vehicle drivers. The DAC requires us to check for current and prospective employees' drug and alcohol violations and annually query for violations of each driver we employ. Drivers with a prohibited status in the DAC will have their state issued commercial driver licenses downgraded and will be unable to continue driving with such until they complete the return-to-duty process.
Department of Homeland Security.
Federal, state and municipal authorities have implemented and continue to implement anti-terrorism measures, including checkpoints and travel restrictions on large trucks. The Transportation Security Administration (TSA) and Customs and Boarder Protection (CBP) continue to focus on trailer security, driver identification, security clearance and border-crossing procedures. These and other safety and security measures, such as rules for transportation of hazardous materials and cargo-security regulations, could increase the cost of operations, reduce the number of qualified drivers and disrupt or impede the timing of our deliveries to customers.
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Environmental Regulations.
Our operations are subject to federal, state, local, and foreign regulations with regard to air and water quality and other environmental matters. Regulation in this area continues to evolve with changes in the enforcement of existing regulations, as well as the enactment and enforcement of new regulations that may require us or our customers to modify, supplement or replace equipment or facilities or to change or discontinue present methods of operation. Specifically, the EPA has issued regulations reducing the sulfur content of diesel fuel and reducing engine emissions.
Our operations are subject to environmental laws and regulations dealing with the handling of hazardous materials, underground fuel storage tanks and discharge and retention of storm water. We operate in industrial areas where truck terminals and other industrial activities are located and where groundwater or other forms of environmental contamination may have occurred. Under existing law, we could be held responsible for costs related to environmental contamination at or emanating from our current and past facilities and at third party waste disposal sites. Our operations involve the risks of fuel spillage or seepage, environmental damage and hazardous waste disposal and costs associated with the leakage or discharge of hazardous materials we transport for our customers, among others. Violations of applicable environmental laws or regulations or spills or other accidents involving hazardous substances may subject us to cleanup costs, liabilities not covered by insurance, substantial fines or penalties and to civil and criminal liability, any of which could adversely affect our financial condition, results of operations, liquidity and cash flows.
Clean Trucks Plan
The EPA and DOT have announced fuel efficiency standards for medium and heavy-duty trucks, which require a reduction of up to 25 percent in carbon emissions over the next decade. In 2021, the EPA announced its “Clean Trucks Plan,” which aimed to develop new rules over a three-year timeframe to reduce greenhouse gas emissions and other air pollutants from heavy-duty trucks. In 2022, the EPA finalized the first phase of the Clean Trucks Plan by adopting a final rule that sets more stringent nitrogen oxides emission standards for new heavy-duty vehicles and engines starting in model year 2027. In March 2024, the EPA approved a new rule under the Clean Trucks Plan regarding new greenhouse gas standards for the manufacture, sale, or importation of heavy-duty trucks that aims to reduce greenhouse gas emissions by up to 60 percent by 2032 for some vehicle classes. The standards apply to heavy-duty vehicles manufactured starting in model year 2028 through model year 2032 and revise certain greenhouse standards for model year 2027 that were established under the prior rulemaking.
California Air Resources Board (CARB)
Several states have enacted and may continue to enact legislation relating to engine emissions, trailer regulations, fuel economy, and/or fuel formulation, such as regulations enacted by CARB. CARB regulations apply to both in-state California carriers and carriers outside of California who own or dispatch equipment in the state. In 2021, CARB adopted more stringent standards to reduce nitrogen oxide emissions by heavy-duty engines. CARB has also adopted regulations to accelerate large-scale transition in California to zero-emission medium and heavy-duty trucks, including trucks of a type used in our operations in California.
Advanced Clean Trucks
CARB’s Advanced Clean Truck regulation is designed to ensure that zero-emission vehicles are brought to market in California. That regulation requires manufacturers to sell zero-emission trucks as an increasing percentage of their annual California sales. By 2035, zero-emission truck/chassis sales must account for 40 percent of truck tractor sales in the state. Numerous other states have adopted or are in the process of adopting the Advanced Clean Trucks Regulation.
Advanced Clean Fleets
In 2023, CARB adopted the Advanced Clean Fleets (ACF) regulation mandating that operators of 50 or more trucks must operate fleets comprised of an increasing percentage of zero-emission vehicles. The regulation includes a
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phase-in period from 2027 to 2045, depending on the class of vehicle. In January 2025, CARB withdrew its request to the EPA for a waiver that would have allowed it to adopt and enforce the ACF standards. It remains unclear how the decision to withdraw CARB’s request for waiver and authorization will affect its implementation of the ACF regulations or enforcement of the requirements.
Food and Drug Administration.
As a transportation provider of foodstuffs, we are subject to rules and regulations issued by the Food and Drug Administration (FDA) to provide for the security of food and foodstuffs throughout the supply chain. The FDA has issued a final rule to establish certain requirements under the Sanitary Food and Transportation Act (SFTA) for vehicles and transportation equipment, transportation operations, training, recordkeeping and waivers. The rule is designed to promote best practices in the industry concerning cleaning, inspection, maintenance, loading and unloading of, and operation of vehicles. Under the SFTA requirements, carriers are required to develop and implement written procedures subject to recordkeeping that specify its practices for cleaning, sanitizing, and inspecting vehicles and transportation equipment.
Data Privacy Regulations.
We are subject to laws and regulations regarding data protection and transparency in how data is used and stored in the U.S. and other countries. As a transportation and logistics provider, we collect and process significant amounts of data daily.
Trademarks and Patents
We have registered several service marks and trademarks in the United States Patent and Trademark Office, including Saia Guaranteed Select®, Saia Customer Service Indicators® and Saia Xtreme Guarantee®. We believe these service marks and trademarks are important components of our marketing strategy.
Additional Information
Saia has a website that is located at www.saia.com. Saia makes available, free of charge through its website, all filings with the Securities and Exchange Commission (SEC) as soon as reasonably practicable after making such filings with the SEC.
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Information about our Executive Officers
Information regarding executive officers of Saia is as follows:
Name Age Positions Held
Officers are appointed by the Board of Directors of Saia, Inc. and serve at the discretion of the Board. With the exception of Mr. Holzgrefe, none of the officers of the Company are subject to an employment agreement with the Company. There are no family relationships between any executive officer and any other executive officer or director of Saia or its subsidiaries.
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Item 1A. Risk Factors
Certain factors may have a material adverse effect on our business, financial condition, and results of operations. You should carefully consider the risks and uncertainties described below, together with all the other information included in this Annual Report on Form 10-K, including our financial statements and the related notes. Our business, financial condition, operating results, cash flow and prospects could be materially and adversely affected by any of these risks or uncertainties. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we currently see as immaterial may also adversely affect our business. Some statements in this Annual Report on Form 10-K, including statements in the following risk factors, constitute forward-looking statements. Please refer to “Cautionary Note Regarding Forward-Looking Statements.”
Industry and Economic Risks
We are subject to general economic conditions, any of which could adversely affect our business.
Our business is subject to a number of general economic conditions that may have a material adverse effect on our financial condition, results of operations, liquidity and cash flows. These conditions include recessionary economic cycles and downturns in customer business cycles, labor and supply shortages, global uncertainty and instability, inflation, changes in U.S. social, political, and regulatory conditions, tariffs and disruptions in oil and financial markets. Economic conditions may adversely affect the business levels of our customers, the amount of transportation services they need and their ability to pay for our services and could reduce the prices we are able to charge for our services.
We operate in a highly competitive industry and our business will be adversely impacted if we are unable to adequately address competitive pressures, such as industry consolidation, new competitors in the market, potential downward pricing pressures and other factors.
Numerous competitive factors could reduce our revenues, profit margins or market share or otherwise impair our business, any one of which may materially adversely affect our financial condition, results of operations, liquidity and cash flows. These factors include the following:
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Competition with many other transportation service providers of varying types including LTL carriers, truckload and parcel carriers, non-asset based logistics, freight brokerage companies, air-freight carriers and railroads, some of whom have more equipment, a broader coverage network, a wider range of services and greater capital resources than we do or have other competitive advantages;
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Transportation companies periodically reduce their prices to gain business, especially during economic recessions or times of reduced growth rates in the economy, which may limit our ability to maintain or increase prices or grow our business;
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Many customers reduce the number of carriers they use by selecting approved transportation service providers, periodically accepting bids from multiple carriers for their shipping needs, or by developing their own or using alternative delivery mechanisms, and these practices may depress prices or result in the loss of business;
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The trend towards consolidation in the surface transportation industry may create other large carriers with greater financial resources than us and other competitive advantages due to their size;
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Disruptive technologies, including driverless trucks, electric vehicles, alternative fuels, artificial intelligence (AI) applications and software applications to monitor supply and demand may significantly alter historical business models of the trucking industry, potentially leading to increased capital expenditures and emergence of new competitors, some of whom may have greater financial resources than us and other advantages due to their size;
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Large business enterprises, including e-commerce companies, with greater financial resources than us and other competitive advantages due to their size, have made or could make in the future investments that could enable them to enter into and compete with us in the LTL market;
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The trend toward increased sales in the e-commerce sector as opposed to the traditional brick and mortar store model could threaten the continued operation of our retail customers, which could reduce the demand for our services and adversely impact our revenues; and
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Technological advances require increased investments to remain competitive, and we may not utilize enough advanced technology, select the correct technology solutions or convince our customers to accept higher prices to cover the cost of these investments.
The transportation industry is affected by business risks that are largely out of our control.
Businesses operating in the transportation industry are subject to risks that are largely out of our control. These risks include the health of the economy, weather and other seasonal factors, excess capacity in the transportation industry, supply chain disruptions, labor shortages, strikes or disruptions involving U.S. or international ports, decline in U.S. manufacturing, the impact of new or higher tariffs, armed conflicts, acts of terrorism and the government’s subsequent response, health epidemics, interest rates, inflation, fuel costs, taxes, license and registration fees, healthcare costs, insurance premiums and coverage availability. These risks, among others, may materially adversely affect our financial condition, results of operations, liquidity and cash flows.
We are dependent on cost and availability of qualified employees and purchased transportation.
There is significant competition for qualified drivers within the trucking industry and attracting and retaining qualified drivers has become more challenging due to a decreasing pool of qualified drivers and high turnover rates. Age demographics, hours of service rules, the legalization and growing recreational use of marijuana and regulatory requirements, including the Compliance Safety Accountability program (CSA) and the Commercial Driver’s License Drug and Alcohol Clearinghouse of the FMCSA, have contributed to the reduction in the number of eligible drivers and may continue to do so in the future.
Moreover, as a result of general macroeconomic factors and the increasingly competitive labor market, we are experiencing difficulty hiring sufficient qualified employees to fill all available positions, including qualified drivers. The labor shortage is not limited to qualified drivers and at times, we have been unable to hire qualified dockworkers, mechanics and office personnel. We may experience shortages of qualified employees that could result in the failure to meet customer demands, upward pressure on wages and benefits, underutilization of our truck fleet and/or use of higher cost purchased transportation, any of which could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
Our operating and growth strategy depends on our ability to maintain adequate capacity throughout our service network, and we rely on purchased transportation to meet these needs. There is significant competition for quality purchased transportation within the trucking industry. We periodically experience shortages of quality purchased transportation that could result in higher costs for these services or prevent us from meeting customer demands which could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
Inflation may increase our expenses and lower profitability.
Economic pressures caused by inflation have been significant in the United States in recent years. Inflation increases most of our expenses, including equipment prices, maintenance and supply costs, diesel fuel costs, insurance costs, claims costs, utility costs, employee wages and benefits, real estate costs, and purchased transportation. With increasing costs, we may have to increase our prices to maintain the same level of profitability. If we are unable to increase our prices sufficiently to offset increasing expenses, then inflation may have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
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We are dependent on the cost and availability of diesel fuel and on fuel surcharges.
Diesel fuel is a significant operating expense, and its availability is vital to daily operations. We do not hedge against the risk of diesel fuel price increases. General economic conditions, global political events, armed conflicts, acts of terrorism, cybersecurity incidents, inflation, tariffs, federal, state and local laws and regulations, world supply and demand imbalances, changes in refining capacity, public and investor sentiment, natural or man-made disasters, adverse weather conditions and other external factors could adversely affect the cost and availability of diesel fuel. In the past, we have been able to obtain diesel fuel from various sources and in the desired quantities, but there can be no assurance that this will continue to be the case in the future. Any shortage or interruption in the supply or distribution of diesel fuel could materially affect our financial condition, results of operations, liquidity and cash flows. To the extent not offset by diesel fuel surcharges or other customer price changes, volatility in diesel fuel prices could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows. Historically, we have been able to offset significant diesel fuel price volatility through fuel surcharges and other pricing adjustments but we may not be able to do so in the future. Fluctuations in our fuel surcharge recovery may result in fluctuations in our revenue. Rapid and significant fluctuations in diesel fuel prices could reduce our profitability unless we are able to make the appropriate adjustments to our pricing strategy. Such fluctuations could materially adversely affect our financial condition, results of operations, liquidity and cash flows.
Business and Operational Risks
Ongoing insurance and claims expenses could materially reduce and cause volatility in our earnings.
We are regularly subject to claims resulting from personal injury, cargo loss, property damage, group healthcare and workers’ compensation claims. The Company is self-insured for portions of medical, workers’ compensation, auto liability, casualty and cargo claims. We maintain insurance with licensed insurance companies above these self-insured retention limits. The trucking business has experienced significant increases in the cost of liability insurance, in the size of jury verdicts in personal injury cases arising from trucking accidents and in the cost of settling such claims. If the number or severity of these claims continues to increase, claims expenses might exceed historical levels or could exceed the amounts of our insurance coverage or the amount of our reserves for self-insured claims, which could materially adversely affect our financial condition, results of operations, liquidity and cash flows.
The Company is dependent on a limited number of third-party insurance companies to provide insurance coverage in excess of its self-insured retention amounts. In recent years, several insurance companies have completely stopped offering coverage to trucking companies or have significantly reduced the amount of coverage they offer or have significantly raised premiums as a result of increases in the severity of automobile liability claims and sharply higher costs of settlements and verdicts. To the extent that the third-party insurance companies propose increases to their premiums for coverage of commercial trucking claims, the Company may decide to pay such increased premiums or increase its financial exposure on an aggregate or per occurrence basis, including by increasing the amount of its self-insured retention or reducing the amount of total coverage. This trend could adversely affect our ability to obtain suitable insurance coverage, could significantly increase our cost for obtaining such coverage, or could subject us to significant liabilities for which no insurance coverage is in place, which could materially adversely affect our financial condition, results of operations, liquidity and cash flows.
Our self-insured retention limits can make our insurance and claims expenses higher and/or more volatile. We accrue for the estimated costs of the uninsured portion of pending claims based on the nature and severity of individual claims and historical claims development trends. Estimating the number and severity of claims, as well as related judgment or settlement amounts is inherently difficult. This, along with legal expenses associated with claims, incurred but not reported claims, and other uncertainties can cause unfavorable differences between actual self-insurance costs and our reserve estimates.
To the extent the Company incurs one or more significant claims not covered by insurance, either because the claims are within our self-insured layer or because they exceed our total insurance coverage, our financial condition, results of operations, and liquidity could be materially and adversely affected.
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Furthermore, insurance companies, as well as certain states, require collateral in the form of letters of credit or surety bonds for the estimated exposure of claims within our self-insured retentions. Their estimates of our future exposure as well as external market conditions could influence the amount and costs of letters of credit or surety bonds required under our insurance programs and thereby reduce capital available for future growth or adversely affect our financial condition, results of operations, liquidity and cash flows.
We face risks related to our geographic and network expansion.
We have implemented a strategy to significantly expand our geographic and terminal network. Consistent with our growth strategy, we have recently opened numerous new terminals in new and existing markets, and we intend to continue this terminal network growth in the future. There can be no assurance that we will be successful at adding new markets or terminals as planned or that such markets or terminals will be profitable. Our expansion has required and will continue to require significant investments in purchased or leased terminals, equipment (including the purchase of new tractors and trailers), technology, employees and other related start-up costs to facilitate our growth plans. Expansion could cause disruptions in our existing geography or customer service levels or require management to devote excessive time and effort to manage the expansion, which could materially adversely affect our business operations and profitability. Operating in new geographies may also increase the possibility of union organizing efforts. A delay between the outlay of expenditures to expand our geographic and network footprint and generation of new revenue or higher than anticipated costs or lower than expected revenues from the expansion could negatively impact our business. We may experience decreased profitability until we are able to fully realize the benefits of the investment, if ever. A failure or delay in realizing the benefits of this investment may adversely impact our financial condition, results of operations, liquidity and cash flows.
We face risks related to our purchase of certain real estate assets from Yellow Corporation.
In January 2024, we acquired 17 freight terminals and leases to operate an additional 11 freight terminals pursuant to a sale by Yellow Corporation under Sections 363 and 365 of Chapter 11 of Title 11 of the U.S. Code. In connection with this acquisition, the Company assumed certain liabilities related to those facilities, including assumption of the 11 leases and liabilities relating to environmental, health and safety matters in connection with the ownership, operation, use or maintenance of such facilities, to the extent not extinguished by the proceedings of the U.S. Bankruptcy Court for the District of Delaware. The Company acquired these real estate assets on an as-is basis and could incur costs and expenses in connection with the acquisition that are unexpected or that exceed costs and expenses otherwise known. Furthermore, the acquisition, refurbishment, integration, opening and operation of such facilities may be more disruptive to existing Company operations than anticipated or more expensive than expected. There can be no assurance that the Company will achieve the expected financial benefits of the acquisition of such terminals.
We rely heavily on technology to operate our business and cybersecurity threats or other disruptions to our technology infrastructure could harm our business or reputation.
Our ability to attract and retain customers and compete effectively depends upon the reliability of our technology network including our ability to provide services that are important to our customers. Our cybersecurity and technology infrastructure includes technology products and services provided to us for use in our business by outside providers such as software as a service and cloud-based products and services. Our technology systems are constantly subject to attacks and efforts by outsiders to breach or gain access to our systems. Any disruption, failure or breach to our cybersecurity processes, technology controls or information technology infrastructure, including those impacting our computer systems and website, could adversely impact our customer service and revenues and result in increased risk of litigation or other costs. Our cybersecurity and technology infrastructure may experience errors, interruptions, delays or damage from a number of causes outside of our control including power and internet outages, hardware, software and network failures, computer viruses, malware or other destructive software, internal design, manual or usage errors, cyber-attacks, terrorism, workplace violence or wrongdoing, catastrophic events, natural disasters and severe weather conditions. While we have invested and continue to invest in technology security initiatives and disaster recovery plans, these measures cannot fully protect us from technology disruptions that could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
Our dependence on electronic data storage, cloud-based systems, automated systems and technology, including our website, gives rise to cybersecurity risks. The techniques used to obtain unauthorized access or to disable or degrade systems change frequently, have become increasingly more complex and sophisticated, may be difficult to
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detect for a period of time and we may not be able to anticipate these acts or respond adequately or timely. The rapid evolution and adoption of AI technologies may intensify our cybersecurity risks. We currently maintain insurance to address certain costs associated with cyber incidents and data privacy-related concerns. However, we cannot ensure that we will continue to maintain such insurance coverage in amounts we deem sufficient, that our insurance carriers will pay on our insurance claims, or that we will not experience uncovered claims. A security breach of our systems or those of our third-party providers may cause a disruption of our business, impact our ability to attract, retain and service customers, damage our reputation and brand, expose us to a loss of information or demand for payment of ransom or result in litigation, violations of applicable privacy and other laws, and regulatory scrutiny, investigations, actions, fines or penalties, and could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
Some of Saia’s employees work remotely, which may increase our exposure to cybersecurity risks, including phishing attempts and other cybersecurity attacks and may increase the demand for information technology resources.
A portion of our workforce operates remotely full-time or under hybrid work arrangements, and we provide these employees with expanded remote network access options to enable them to work outside of our buildings and, in some cases, on their own personal devices, which exposes us to increased cybersecurity risks. Such risks include: (i) unauthorized access to sensitive or confidential information due to company or personal devices being used to remotely access, discuss, or transmit confidential information, (ii) increased exposure to social engineering attempts such as phishing and other scams as cybercriminals may, among other things, install malicious software on our systems and equipment and access sensitive or confidential information, (iii) increased demand for IT resources, and (iv) violation of international, federal, or state-specific privacy laws. Although we have measures in place designed to mitigate our exposure to the increased risk of cybersecurity incidents, we cannot ensure that such measures will effectively prevent a cybersecurity incident. Though we currently maintain property and cyber insurance, losses due to cybersecurity incidents may exceed our insurance coverage and may have a material adverse impact on our financial condition, results of operations, liquidity and cash flows.
A failure to keep pace with developments in technology could impair our operations or competitive position.
Our business demands the use of sophisticated systems and technology. These systems and technologies must be refined, updated and replaced with more advanced systems regularly for us to meet both internal requirements as well as our customers’ demands and expectations. If we are unable to do so in a timely manner or within reasonable cost parameters, or if we are unable to appropriately and timely train our employees to operate any of these new systems, our business could suffer. We also may not achieve the benefits that we anticipate from any new system or technology and a failure to do so could result in higher than anticipated costs or could impair our results of operations.
Technology and new market entrants may also disrupt the way we and our competitors operate. We expect our customers to continue to demand more sophisticated systems and technology-driven solutions from their suppliers. If we do not pursue technological advances or engage in innovation, or if the new technology doesn’t yield the results we expect, we may be placed at a competitive disadvantage, lose customers, incur higher costs or fail to meet our growth strategy. A failure to successfully pursue technological advances, including AI applications could have a material adverse impact on our financial condition, results of operations, liquidity and cash flows.
We use AI in our business, and its use could result in reputational harm, competitive harm, cybersecurity risks and legal liability, which could have a material adverse effect on our results of operations.
We incorporate certain machine learning AI solutions (but not generative AI) into our business operations, and these applications may become important in our operations over time. Our competitors or other third parties may incorporate AI into their operations more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. Additionally, if the content, analyses, or recommendations that AI applications assist in producing are or are alleged to be deficient, inaccurate or biased or to violate intellectual property rights of third parties, our financial condition, results of operations, liquidity and cash flows may be adversely affected.
The rapid evolution of AI may result in increased cybersecurity incidents. Any such cybersecurity incidents could adversely affect our reputation and results of operations. AI also presents emerging ethical issues and if our use
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of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability. The rapid evolution of AI, including potential government regulation of AI and increased cybersecurity risks, will require significant resources to develop, test, implement and maintain our IT systems to minimize unintended harmful impacts. The failure to effectively utilize AI or to respond to cybersecurity threats from the use of AI could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
Employees of Saia are non-union. The ability of Saia to compete could be impaired if operations were to become unionized.
None of our employees are currently subject to a collective bargaining agreement. We have in the past been the subject of unionization efforts which have been defeated. Our expansion into new geographic territory and our acquisition of additional terminals previously operated by Yellow Corporation and its subsidiaries could increase our overall risk of unionization. There can be no assurance that further unionization efforts will not occur in the future and that such efforts will be defeated. The unionization of our employees could lead to restrictive work rules that could hamper our efforts to improve and sustain operating efficiency and impair our service reputation. A strike or work stoppage could negatively impact our profitability and could damage customer and employee relationships. As such, customers may limit their use of unionized trucking companies because of the threat of strikes and other work stoppages. Unionization of any of our operations could lead to pressure on other employee sectors to unionize. Additionally, an election and bargaining process could divert management’s time and attention from our overall objectives and impose significant expenses. The non-union status of Saia is an important factor in our ability to compete in our markets, and if all or a portion of our workforce becomes unionized it could increase our costs and subject us to workplace rules, which could have a material adverse impact on our financial condition, results of operations, liquidity and cash flows.
The price of new and used revenue equipment may adversely affect our business operations.
Investment in new revenue equipment, including tractors and trailers, is a significant part of our annual capital expenditures. The price of such equipment may increase as a result of inflation, new or higher tariffs, increased demand for or decreased supply of such equipment, increased cost of materials and labor or because of current or future regulations on newly manufactured tractors, such as regulations issued by the Environmental Protection Agency (EPA) and by various state agencies, particularly the California Air Resources Board (CARB), requiring progressive reductions in exhaust emissions and a transition to zero-emission vehicles. Current regulations have increased prices for tractors and maintenance costs and may continue to do so in the future. In addition, as we purchase new revenue equipment as part of our normal replacement cycle each year, we rely on the used equipment market to dispose of our older equipment. Oversupply in the transportation industry, higher maintenance or operating costs associated with older equipment, as well as adverse economic conditions, can negatively impact the demand for used equipment and, therefore, reduce the value we can obtain for used equipment. If we are unable to sell our used equipment at or above our salvage value, the resulting losses could have a material adverse impact on our financial condition, results of operations, liquidity and cash flows.
Higher costs for or limitations in the availability of suitable real estate have adversely affected and may continue to adversely affect our business operations.
Our business model is dependent on the cost and availability of terminal facilities. We have experienced higher costs to purchase, lease, build and/or refurbish terminal facilities as a result of inflation and higher demand for and reduced supply of such facilities. Shortages in the availability of suitable real estate or delays in obtaining necessary permits or approvals may result in significant additional costs to purchase, lease, build and/or refurbish necessary facilities, increase our capital expenditures and operating expenses, reduce our revenues, restrict our ability to grow existing markets or expand into new markets and/or prevent us from efficiently serving certain markets. In addition, we may not realize sufficient revenues or profits from our infrastructure investments. These higher costs and limitations in the availability of suitable real estate may adversely affect our financial condition, results of operations, liquidity and cash flows.
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Supply chain disruptions could delay equipment deliveries and could increase costs or reduce operating capacity or expansion.
We do not manufacture any of the equipment or technology hardware used in our business. Tractors and trailers are important sources of capacity for our network operations and network expansion. The production of tractors and trailers could be impacted by manufacturing and component delays and other supply chain disruptions. We could be unable to obtain, or incur delays in the delivery of, equipment necessary for operations, including tractors, trailers and other equipment, as a result of manufacturing delays and supply chain disruptions. These manufacturing delays, supply chain disruptions and shortages could negatively affect our operations, increase our costs and impede our ability to grow and meet customer demand.
Changes in U.S. international trade relationships, including the imposition of new or higher tariffs, may adversely impact our customers, our industry, and our business.
We transport a significant number of shipments that have either been imported into the U.S. or are destined for export from the U.S. The U.S. government has proposed significant changes in U.S. trade policy, including the imposition of new or higher tariffs on goods entering the U.S., including from Mexico and Canada. Certain foreign governments either have taken or are threatening to take retaliatory actions in response. Any increase in tariffs or customs duties or renegotiation of U.S. trade agreements, or any other action that could have a negative impact on international trade, including corresponding actions taken by other countries in response to U.S. governmental actions, could cause a reduction in the volume of shipments transported in our network or could increase the cost to us of goods and materials used in our business, which could have a material adverse effect on our financial condition, results of operation, liquidity and cash flows.
Capacity and infrastructure constraints could adversely affect service and operating efficiency.
We may experience capacity constraints due to increased demand for transportation services and decaying highway and energy infrastructure. Poor infrastructure conditions and roadway congestion could slow service times, reduce our operating efficiency and increase maintenance expense. Some states have taken infrastructure funding measures into their own hands and have explored or instituted road-usage programs, truck-only tolling, congestion pricing, and fuel tax increases. Infrastructure constraints and measures to fund infrastructure improvements could materially adversely affect our financial condition, results of operations, liquidity and cash flows.
We face risks arising from our international business operations and relationships.
We are subject to the requirements of the Foreign Corrupt Practices Act of 1977 (FCPA) for our transportation and logistics services to and from various international locations. Failure to comply with the FCPA may result in legal claims against us or subject us to substantial fines. In addition, we face other risks associated with international operations and relationships, which may include restrictive trade policies, anti-corruption law enforcement, the renegotiation of international trade agreements, and imposition of duties, tariffs, taxes or government royalties imposed by domestic or foreign governments, any of which could materially adversely affect our financial condition, results of operations, liquidity and cash flows.
Our results of operations may be affected by seasonal factors, harsh weather conditions and disasters caused by climate change.
Our operations are subject to seasonal trends and fluctuations common in the transportation industry, which can impact our business in one or more quarterly periods. Severe weather events and natural disasters, such as blizzards, floods, wildfires, hurricanes, tornadoes, storms and earthquakes, could adversely impact our performance by disrupting our operations, damaging or destroying our equipment and facilities, increasing operating and maintenance costs, increasing insurance premiums and reducing the demand for our services. Climate change may increase the severity or frequency of extreme weather conditions and disasters. The Company has previously experienced severe weather events, including hurricanes, floods, wildfires, storms and snowstorms. Similar events in the future could disrupt our facilities or operations. The impact of severe weather events and natural disasters, including those caused
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by climate change, could materially adversely affect our financial condition, results of operations, liquidity and cash flows.
We face risks related to the creditworthiness of our customers or other business partners and their ability to pay for services.
If one or more of our customers experiences financial difficulties, including filing for bankruptcy, it may negatively affect our business due to the decreased demand for our services from these customers, or the potential inability of these companies to make full payment on amounts owed to us. Customer bankruptcies also entail the risk of potential recovery by the bankruptcy estate of amounts previously paid to us that are deemed a preference under bankruptcy laws. We do not carry insurance against the risk of customer default on their payment obligations to us or against bankruptcy preference claims. The risks associated with these matters will likely increase in the event of an economic downturn. The loss of revenue from these customers or payment of preference claims could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
We have significant ongoing cash requirements that could limit our growth and affect profitability if we are unable to generate sufficient cash from operations or obtain sufficient financing on favorable terms.
Our business is highly capital intensive. Our net capital expenditures for 2024 were approximately $1 billion. Additionally, we anticipate net capital expenditures in 2025 in excess of $700 million, subject to the ongoing evaluation of market conditions. We depend on cash flows from operations, borrowings under our credit facilities and operating and finance leases. If we are unable to generate sufficient cash from operations and obtain sufficient financing on favorable terms in the future, we may have to limit our growth, enter into less favorable financing arrangements or operate our tractors and trailers for longer periods prior to replacement, possibly increasing our maintenance costs. The amount and timing of capital investments depend on various factors, including anticipated volume levels and the price and availability of appropriate-use property for service facilities and newly manufactured tractors. If anticipated service facilities and/or fleet requirements differ materially from actual usage, we may have too much or too little capacity. Any of these could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
Our credit agreements contain financial and other restrictive covenants and we may be unable to comply with these covenants. A default could cause a material adverse effect on our business.
We must maintain certain financial and other restrictive covenants under our credit agreements, including among others, a maximum consolidated net lease adjusted leverage ratio. If we fail to comply with any of the covenants under our credit agreements, we will be in default under the agreements which could cause cross-defaults under other financial arrangements. In the event of any such default, if we fail to obtain replacement financing or amendments to or waivers under the financing arrangement, our financing sources could cease making further advances, cease issuing letters of credit required under our insurance programs and declare our debt to be immediately due and payable. If acceleration occurs, we may have difficulty borrowing sufficient additional funds to refinance the accelerated debt or obtain required letters of credit, or we may need to issue securities which would dilute stock ownership. Even if new financing is made available to us, the terms may not be acceptable. A default under our credit agreements could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
We are required to make significant estimates and assumptions in the preparation of our financial statements. These estimates and assumptions may not be accurate and are subject to change.
The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles requires our management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of income and expense during the reported periods. Incorrect underlying estimates and assumptions or events that require us to revise our previous estimates or assumptions could have a material adverse effect on our financial condition and results of operations.
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If we are unable to retain our key employees, our business could be materially adversely impacted.
We depend on the efforts and abilities of our senior management, and we believe their knowledge would be difficult to replicate. The future success of our business will continue to depend in part on our ability to retain our current management team and to recruit, hire, develop and retain highly qualified personnel in the future. Competition for senior management is intense, and most members of our senior management do not have employment agreements. Certain members of senior management are subject to non-compete and non-solicitation agreements; however, there is no assurance that such agreements will be enforced as written or that they will be effective to prevent members of senior management from working for a competitor or soliciting our customers. The loss of the services of any of our senior management could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows. Inadequate succession planning or the unexpected departure of a member of senior management would require our remaining executive officers to divert immediate and substantial attention to fulfilling the duties of the departing executive and to seeking a replacement. The inability to adequately fill vacancies in our senior management positions on a timely basis could negatively affect our ability to implement our business strategy and thus materially adversely affect our financial condition, results of operations, liquidity and cash flows.
Changes to our compensation and benefits could adversely affect our ability to attract and retain qualified employees.
The compensation we offer our employees is subject to market conditions that may require increases in employee compensation and benefits, which becomes more likely as a result of higher inflation and as economic conditions improve. We may experience unusual employee turnover by our drivers, dockworkers, maintenance employees and other personnel that would result in operational deterioration. If we are unable to attract and retain enough qualified employees, we could be required to increase our compensation and benefits packages, amend our hiring standards or reduce our operations and face difficulty meeting customer demands, any of which could materially adversely affect our financial condition, results of operations, liquidity and cash flows.
An increase in the cost of healthcare benefits could have a negative impact on our business.
We maintain and sponsor competitive health insurance and other benefits for our employees and their dependents to attract and retain our employees. We have incurred higher costs for these benefits, and it is possible that healthcare benefits and administration costs could become cost prohibitive, forcing us to either reduce our benefits program (making it more difficult to attract and retain qualified employees) or pay the higher costs. Either outcome could materially adversely impact our financial condition, results of operations, liquidity and cash flows.
Our business depends in part on our strong reputation.
We believe that the Company’s corporate reputation and the positive image of our brand are valuable assets. As use of social media becomes more prevalent, our susceptibility to risks related to adverse publicity, whether or not justified, increases. Adverse publicity regarding labor relations, legal matters, cybersecurity and data privacy events, truck accidents, cargo theft, environmental issues and similar matters, even when based on erroneous information, could have a negative impact on our reputation and may result in the loss of customers and our inability to secure new customer relationships. The immediacy of certain social media outlets precludes us from having real-time control over postings related to the Company, whether matters of fact or opinion. Information distributed via social media could result in immediate unfavorable publicity that we do not have the ability to reverse. Unfavorable publicity, regardless of its cause or source, could result in damage to our reputation and adversely impact our financial condition, results of operations, liquidity and cash flows.
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Our past acquisitions, as well as any future acquisitions we may make, may be unsuccessful or result in other risks such as the failure to realize the anticipated benefits of such acquisitions or the disruption of our business due to such acquisitions.
We may acquire additional businesses and operations in the future. However, there is no assurance that we will be successful in identifying, negotiating, consummating or integrating any future acquisitions. Additionally, we may not realize the anticipated benefits of any future acquisitions. Each acquisition has numerous risks including:
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Difficulty in integrating the operations and personnel of the acquired company or unanticipated costs to support new business lines or separate legal entities;
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Unanticipated issues in the assimilation and consolidation of IT, communications, and other systems, including additional systems training and other labor inefficiencies;
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Disruption of our ongoing business, distraction of our management and employees from other opportunities and challenges due to integration issues;
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Additional indebtedness or the issuance of additional equity to finance future acquisitions, which could be dilutive to our stockholders;
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Potential loss of key customers or employees of acquired companies along with the risk of unionization of employees;
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Reductions in prices we charge certain customers in order to match existing customer pricing in the acquired company’s markets;
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Inability to achieve the financial and strategic goals for the acquired and combined businesses;
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Potential impairment of tangible and intangible assets and goodwill acquired as a result of acquisitions; and
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Potential failure of the due diligence processes to identify significant issues with legal and financial liabilities and contingencies, among other things.
In the event that we do not realize the anticipated benefits of an acquisition or if the acquired business is not successfully integrated, there could be a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
Litigation and Regulatory Risks
We face litigation risks that could have a material adverse effect on the operation of our business.
We face litigation risks regarding a variety of issues, including accidents involving our trucks and employees, workers’ compensation claims, federal and state labor and employment law claims, securities claims, privacy claims, contract claims, environmental liability and other matters. These proceedings may be time-consuming, expensive and disruptive to normal business operations. The defense, settlement or resolution of such matters could result in significant expense and the diversion of our management’s time and attention from the operation of our business. In recent years, several insurance companies have completely stopped offering coverage to trucking companies for automobile liability claims, have significantly reduced the amount of coverage they offer or have significantly raised premiums as a result of increases in the severity of automobile liability claims and sharply higher costs of settlements and verdicts. This trend could adversely affect our ability to obtain suitable insurance coverage, could significantly increase our cost of obtaining such coverage or could subject us to significant liabilities for which no insurance is in place, which could materially adversely affect our financial condition, results of operations, liquidity and cash flows. Costs we incur to defend or to satisfy a judgment or settle claims may not be covered by insurance or could exceed the amount of that coverage or increase our insurance costs and could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
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The engines in our tractors are subject to emissions-control regulations that could substantially increase operating expenses, and regulations concerning emissions or fuel-efficiency may have a material adverse impact on our business.
The EPA, Department of Transportation (DOT), and the California Air Resources Board (CARB) have issued regulations requiring significant reductions in greenhouse gas emissions for medium and heavy duty trucks over model years 2027 to 2032.
Tractor engines that comply with the EPA emission-control design requirements have generally been more expensive, less fuel-efficient and have increased maintenance costs compared to engines in tractors manufactured before these requirements became effective. If we are unable to offset the higher costs associated with this equipment with higher freight rates or improved fuel economy, our financial condition, results of operations, liquidity and cash flows could be materially adversely affected.
In California, CARB has also adopted regulations to accelerate large-scale transition in California to zero-emission medium and heavy-duty trucks, including trucks of a type used in our operations in California. CARB’s Advanced Clean Truck (ACT) regulation is designed to ensure that zero-emission vehicles are brought to market in California. That regulation requires manufacturers to sell zero-emission trucks as an increasing percentage of their annual California sales. By 2035, zero-emission truck/chassis sales must account for 40 percent of truck tractor sales in the state.
At this point, there are virtually no zero-emissions vehicles widely available that are suitable replacements for current technology used in less-than-truckload operations. In addition, there does not appear to be sufficient infrastructure in place to support an electric vehicle fleet operation throughout our current terminal network. If zero-emission vehicles are not available or not commercially viable for the less-than-truckload market, we may be required to modify or curtail our operations in California or other states that may adopt similar regulations. During any transition to zero-emission trucks, due to the mandates on manufacturers limiting diesel engine sales, we may be forced to continue using older model diesel trucks that may require higher maintenance costs or be less reliable. The transition to utilizing zero-emission vehicles could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
We operate in a highly regulated and highly taxed industry. Costs of compliance with or liability for violation of existing or future regulations may adversely affect our business.
The DOT and various state agencies exercise broad powers over our business, generally governing such activities as authorization to engage in motor carrier operations, safety and financial reporting. We may also become subject to new or more restrictive regulations imposed by the DOT, the Occupational Safety and Health Administration, the Food and Drug Administration or other authorities relating to engine exhaust emissions, safety performance and measurements, driver hours of service, drug and alcohol testing, food safety, security, ergonomics, as well as other unforeseen matters. Compliance with such regulations could substantially impair equipment productivity and increase our costs.
Taxes are a significant part of our annual expenses, and we are subject to various federal and state income, payroll, property, sales and other taxes. In addition, various federal and state authorities impose significant operating taxes on the transportation industry, including fuel taxes, tolls, excise and other taxes. There can be no assurance that such taxes will not substantially increase or that new or revised forms of operating taxes or tax laws or regulations, will not be imposed on the industry. Higher tax rates, claims, audits, investigations or legal proceedings involving taxing authorities could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
The FMCSA rules on motor carrier driver hours of service limit the maximum number of hours a driver may be on duty between mandatory off-duty hours and require driver rest breaks. These rules could result in us not meeting customer demands, upward pressure on driver wages and benefits, underutilization of our truck fleet and/or use of higher cost purchased transportation which could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
The Company’s operations are subject to a variety of other federal, state and local laws and regulations, including labor and employment, wage and hour and employee benefit laws and regulations, tax, environmental, health and safety, data privacy, anti-trust and securities laws and regulations. Compliance with these laws and regulations is
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onerous and expensive. New and changing laws and regulations can adversely affect the Company’s business by increasing costs and requiring changes to the Company’s business. New and changing laws and regulations can also create uncertainty about how such laws and regulations will be interpreted and applied. There can be no assurance the Company’s employees, contractors or agents will not violate such laws and regulations or the Company’s policies and procedures. If the Company is found to have violated laws and regulations, it could materially adversely impact our financial condition, results of operations, liquidity and cash flows.
We may incur unforeseen costs from new and existing data privacy laws.
Our business is subject to increased legislative and regulatory efforts regarding data protection and transparency in how data is used and stored. State governments have enacted and may enact in the future data protection laws, such as the California Consumer Privacy Act of 2018 as amended and extended by the California Privacy Rights Act in 2020. As a transportation and logistics provider, we collect and process significant amounts of data daily. Complying with data protection laws may increase our compliance costs or require alterations to our data handling practices. The increasing scope and complexity and the uncertainty of the interpretation and enforcement of these laws create legal risk. Violations or noncompliance with data protection laws could result in significant liability from governmental or civil actions and negative impacts to our reputation, financial condition, results of operations, liquidity and cash flows.
We are subject to various environmental laws and regulations. Costs of compliance with or liabilities for violations of existing or future environmental laws and regulations could have a material adverse effect on our business and operations.
Our operations are subject to environmental laws and regulations dealing with the handling of hazardous materials, underground fuel storage tanks and discharge and retention of storm water. We operate in industrial areas where truck terminals and other industrial activities are located and where groundwater or other forms of environmental contamination may have occurred. Under existing law, we could be held responsible for costs related to environmental contamination at or emanating from our current and past facilities and at third party waste disposal sites. Our operations involve the risks of fuel spillage or seepage, environmental damage and hazardous waste disposal and costs associated with the leakage or discharge of hazardous materials we transport for our customers, among others. Violations of applicable environmental laws or regulations or spills or other accidents involving hazardous substances have occurred in the past and can occur in the future and may subject us to cleanup costs, liabilities not covered by insurance, substantial fines or penalties and to civil and criminal liability, any of which could materially adversely affect our financial condition, results of operations, liquidity and cash flows.
In addition, there is global scientific consensus that emissions of greenhouse gases (GHG) continue to alter the composition of Earth’s atmosphere in ways that are affecting and are expected to continue to affect the global climate. As these climate change concerns become more prevalent, federal, state and local governments and our customers are increasingly sensitive to these issues. This increased focus may result in new legislation, taxes, regulations and customer requirements, such as limits on vehicle weight and size and restrictions on GHG emissions, which could negatively affect us. In addition, several states, including states where we conduct business, have adopted various GHG disclosure and reduction programs. The EPA and the states could also further regulate GHG emissions. These regulations could increase the costs of replacing and maintaining tractors, and cause us to incur additional taxes and operating costs and capital expenditures to make changes to our operations in order to comply with these regulations. The regulations could also cause delays or disruptions in our operations and could reduce our revenues. We are subject to increasing investor and customer sensitivity to sustainability issues, and we may be subject to additional requirements related to shareholder proposals, customer-led initiatives, or our customers’ efforts to comply with environmental programs. Until the timing, scope, and extent of any future regulation or customer requirements become known, we cannot predict their effect on our cost structure, business, or results of operations. We could lose revenue if our customers divert business from us because we have not complied with their sustainability requirements. These
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costs, changes and loss of revenue could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
Changes to the way LTL freight is categorized may disrupt our business and lead to increased costs to our customers.
In 2025, the National Motor Freight Classification (NMFC) system will undergo several major changes designed to enhance the classification of LTL freight. The announced changes consist of a standardized density scale for LTL freight without handling, stowability or liability issues, a system of unique identifiers for freight that has special handling, stowability, or liability issues, and commodity listings that are condensed and modernized. These changes are to be implemented in phases and are intended to increase freight classification efficiency. Changes to the NMFC system could cause decreased revenues due to potential customer confusion during implementation of the new classification system and increased costs of implementing the new system into our business operations. These changes to the NMFC system could have a material adverse effect on our financial condition, results of operations, liquidity and cash flows.
We may incur additional costs from new and existing laws and regulations regarding how to classify workers.
Regulations issued by the U.S. Department of Labor and the laws of several states, including California, favor treating a worker as an employee rather than an independent contractor. Although we do not typically use independent contractors in our workforce, firms that provide services to Saia often do use independent contractors. These new laws and regulations could lead to the reclassification of independent contractors as employees increasing the prices charged by such firms providing services to Saia, including the cost of purchased transportation. These reclassification risks could materially adversely affect our financial condition, results of operations, liquidity and cash flows.
CSA could adversely affect our results of operations and ability to maintain or grow our business.
CSA is an enforcement and compliance model required by the FMCSA that assesses a motor carrier’s on-road performance and investigation results for a 24-month period using roadside stops and inspections, resulting in safety and performance ratings in the following categories: unsafe driving; hours-of-service compliance; driver fitness; controlled substances/alcohol; vehicle maintenance; hazardous material compliance; and crash indicators.
The CSA evaluations are used to rank carriers and individual drivers and to select carriers for audit and other interventions or enforcement action. If we receive unacceptable CSA scores, our relationships with our customers or our reputation could be damaged, which could result in decreased demand for our services. The requirements of CSA could also shrink the industry’s pool of drivers as those with unfavorable scores could leave the industry. While the ultimate impact of CSA is not fully known, it is possible that future CSA rulemaking could adversely impact our ability to attract and retain drivers, which could materially adversely affect our financial condition, results of operations, liquidity and cash flows.
Our business may be adversely impacted by potential future changes in accounting and financial practices.
Future changes in accounting standards or practices, and related legal and regulatory interpretations of those changes, may adversely impact public companies in general, the transportation industry or our operations specifically. New accounting standards or requirements could change the way we record revenues, expenses, assets and/or liabilities or could be costly to implement. These types of standards, practices and regulations could have a material adverse impact on our financial position, results of operations, liquidity and cash flows.
Other Risks
Health epidemics, pandemics and similar outbreaks have had, and may continue to have, material adverse effects on the Company’s business, results of operations, financial condition and stock price.
Health epidemics, pandemics and similar outbreaks can have significant and widespread impacts. The extent to which a health epidemic, pandemic or outbreak may impact the Company’s operational and financial performance is uncertain and will depend on many factors outside the Company’s control, including the timing, extent and duration
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of the health event, governmental responses to the event, the development, availability, effectiveness of vaccines or treatments, the imposition of protective public safety measures, and the impact of the outbreak on the global economy and demand for products and services. Additional future effects on the Company could include material adverse impacts on demand for the Company’s services, the Company’s ability to execute its operating and strategic plans, the Company’s profitability and cost structure, and supply chain disruptions.
The Company faces risks from international conflicts that could adversely impact our business and financial results.
International security concerns and conflicts, including those in Russia-Ukraine, Taiwan-China, in the Middle East, and other geopolitical tensions, and potential actions or retaliatory measures taken in respect thereof, have had and could continue to have a material adverse effect on global trade and economic activity. The consequences of such conflicts include embargoes, regional instability, supply chain disruptions, new or higher tariffs, disruptions of global financial markets, reduced access to oil and natural gas and higher energy prices. The extent of a conflict's effect on the global economy cannot be predicted, including the extent to which the conflict may heighten other risks disclosed herein. Ultimately, these or other factors associated with international conflicts could materially adversely affect our financial condition, results of operations, liquidity and cash flows.
We are subject to evolving and often contradictory stakeholder expectations regarding environmental and social issues and our failure to meet stakeholder expectations could impact the demand for our services or the price of our stock.
Companies across all industries, including Saia, are subject to increased scrutiny from stakeholders, including investors, customers, shareholder advocacy groups and governmental entities, concerning environmental matters, such as greenhouse gas emissions, and social issues, such as employment practices and civil rights. These expectations are often contradictory, are evolving and can be difficult to manage. If we are unable to meet these stakeholder expectations, our reputation could be harmed resulting in a loss of revenues, we could face litigation or investors may choose not to invest in our stock resulting in a decline in our stock price.
Certain provisions of our governing documents and Delaware law could have anti-takeover effects.
As a Delaware corporation, we are subject to certain Delaware anti-takeover provisions. Under Delaware law, a corporation may not engage in a business combination with any holder of 15 percent or more of its capital stock unless the holder has held the stock for three years or, among other things, the Board of Directors has approved the transaction. Our Board of Directors could rely on Delaware law to prevent or delay an acquisition of the Company.
Our Restated Certificate of Incorporation and Bylaws contain certain provisions which may have the effect of delaying, deferring or preventing a change of control of the Company. Such provisions include, for example, a prohibition on stockholder action by written consent, authorization of the Board of Directors to issue preferred stock in series with the terms of each series to be fixed by the Board of Directors, limitations on who may call special stockholder meetings, and advance notice procedures for stockholder proposals and nominations to the Board of Directors. These provisions may inhibit fluctuations in the market price of our common stock that could result from takeover attempts.
If we raise additional capital in the future, our stockholders’ ownership in the Company could be diluted.
Any issuance of equity we may undertake in the future could cause the price of our common stock to decline or require us to issue shares at a price that is lower than that paid by holders of our common stock in the past, which would result in those newly issued shares being dilutive. If we obtain funds through a credit facility or through the issuance of debt or preferred securities, these obligations and securities would likely have rights senior to those of common stockholders, which could impair the value of our common stock.
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Weakness or a loss of confidence in financial markets could adversely impact demand for our services or for our stock.
Weakness or a loss of confidence in the financial markets could cause our share price to decline and cause broader economic downturns. Weakness or a loss of confidence in the financial markets or economic downturn could also lower demand for our services, decrease the price we can charge for our services, increase the incidence of customers’ inability to pay their accounts, or increase insolvency of our customers, any of which could materially adversely affect our financial condition, results of operations, liquidity and cash flows.
Disruptions in the credit markets, including in the availability and cost of short-term funds for liquidity and letter of credit requirements, may adversely affect our business and our ability to meet long-term commitments.
If internal funds are not available from our operations, we may be required to rely on the capital and credit markets to meet our financial commitments and short-term liquidity needs. Longer term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, significantly higher interest rates, reduced alternatives or failures of significant financial institutions could adversely affect our access to liquidity needed for our business. Any disruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Such disruptions may have a material adverse effect on our financial condition, results of operation, liquidity and cash flows.
The market value of our common stock may fluctuate and could be substantially affected by various factors.
The price of our common stock on the Nasdaq Global Select Market constantly changes. Such fluctuations may be unrelated to our financial performance. We expect that the market price of our common stock will continue to fluctuate due to a variety of factors, many of which are beyond our control. These factors include, but are not limited to:
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Actual or anticipated variations in our earnings, financial or operating performance or liquidity, or those of other companies in our industry;
•
Changes in recommendations or projections of research analysts who follow our stock or the stock of other companies in our industry;
•
Failure to meet the earnings projections of research analysts who follow our stock;
•
Changes in general economic and capital market conditions, including general market price declines or market volatility;
•
Reactions to our regulatory filings and announcements related to our business;
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Operating and stock performance of other companies in our industry;
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Actions by government regulators;
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Potential costs and liabilities associated with cyber events;
•
Widespread outbreak of an illness, any other communicable disease or public health crisis, and the government’s response thereto;
•
Litigation involving our company, our industry or both;
•
News reports or trends, concerns and other issues related to us or our industry; and
•
Other factors described in this “Risk Factors” section.
Our stock price, financial condition, results of operations, liquidity and cash flows could be materially adversely affected by an unfavorable outcome resulting from these risks and uncertainties.
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Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Cybersecurity risk management and strategy
Saia maintains cybersecurity processes, technologies and controls to help us assess, identify and manage material risks from cybersecurity threats. These processes, technologies and controls are part of Saia’s overall enterprise risk management process. Our cybersecurity program is based on the National Institute of Standards and Technology Cybersecurity Framework and is designed to ensure that our information systems are effective and are prepared for cybersecurity threats, including through regular oversight and mitigation of internal and external threats.
We regularly perform evaluations of our information security program and our information technology infrastructure, including through the use of tools and services for network and endpoint monitoring, vulnerability assessments and penetration testing, among other things. We have implemented security monitoring capabilities designed to alert us to suspicious activity and have an incident response program to restore business operations as quickly and as orderly as possible in the event of a cybersecurity incident.
Saia contracts with third party firms to evaluate our information security program, for continuous system monitoring and threat detection, to gather insights for identifying and assessing material cybersecurity threats, and for potential mitigation assistance. We consider cybersecurity matters when selecting and overseeing our third party service providers and we administer a standardized information gathering questionnaire to evaluate cybersecurity risk in third parties. We seek to require third parties who could pose significant cybersecurity risk to us to be contractually responsible for the risk and to agree to cybersecurity assessments in connection with new vendor engagements and annually thereafter.
Saia has an established cybersecurity and information security awareness training program that includes mandatory annual training and regular communications for our employees regarding cybersecurity threats and methods of mitigation. The annual cybersecurity training consists of threat avoidance when working remote, proper password construction techniques, identifying and reporting suspicious activity, social engineering and insider threats. Additionally, we have implemented a regular phishing assessment that provides feedback and additional training as needed to enhance the annual training program. Our information technology professionals also receive additional training related to their position.
There can be no guarantee that our policies and procedures will be effective. Although our risk factors include further detail about the material cybersecurity risks we face, we believe that risks from prior cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected our business to date. We can provide no assurance that there will not be incidents in the future or that they will not materially affect us, including our business strategy, results of operations or financial condition.
For more information about the cybersecurity risks we face, see the risk factors entitled “We rely heavily on technology to operate our business and cybersecurity threats or other disruptions to our technology infrastructure could harm our business or reputation” and "We use AI in our business, and its use could result in reputational harm, competitive harm, cybersecurity risks and legal liability, which could have a material adverse effect on our results of operations" in Item 1A. Risk Factors.
Governance
Management is responsible for the day-to-day assessment and management of cybersecurity risks. Saia’s Director of Information Security and Compliance, who reports to the Executive Vice President and Chief Information Officer, has primary oversight of our cybersecurity risk management and strategy processes. The Director of Information Security and Compliance has served in information security roles since 2001 and led the information security function for a large health care system prior to joining Saia. He has a Bachelor of Science degree in Information Technology with a Concentration in Information Assurance and Security.
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The Director of Information Security and Compliance assesses our cybersecurity readiness through internal assessment tools as well as third-party control testing, vulnerability assessments and evaluation against industry standards. We maintain compliance structures that are designed to elevate issues relating to cybersecurity to our Director of Information Security and Compliance and to our Executive Vice President and Chief Information Officer.
The Board of Directors has oversight responsibility for Saia’s strategic and operational risks. Although the Board has delegated oversight responsibility for certain risks to its committees, the Board has determined that oversight for cybersecurity should remain with the full Board. The Board regularly receives reports from the Executive Vice President and Chief Information Officer concerning the Company’s cybersecurity risk management and strategies and related processes, technologies and controls.
Item 2. Properties
Saia is headquartered in Johns Creek, Georgia and has additional general offices in Houma, Louisiana and Boise, Idaho. At December 31, 2024, Saia owned 131 service facilities, including the Houma, Louisiana general office, and leased 87 service facilities, including the Johns Creek, Georgia corporate office, the Boise, Idaho general office and the Dallas, Texas warehouse. At December 31, 2024, Saia owned 60 percent of its service facilities, accounting for 71 percent of its door capacity. This mix follows Saia’s strategy of seeking to own strategically-located facilities that are integral to its operations and lease service facilities in smaller markets to allow for more flexibility. As of December 31, 2024, Saia owned approximately 6,600 tractors and 26,200 trailers, inclusive of trailers acquired with finance leases.
Top 20 Saia Terminals by Number of Doors at December 31, 2024
Location Own/Lease Doors
Dallas, TX Own 278
Harrisburg, PA Own 245
Houston, TX Own 234
Atlanta, GA Own 217
Memphis, TN Own 200
Salt Lake City, UT Own 188
Fontana, CA Own 162
Chicago, IL Lease 153
Buford, GA Own 153
Indianapolis, IN Own 147
Garland, TX Own 145
Edwardsville, KS Lease 134
Phoenix, AZ Own 121
Richmond, VA Own 118
Nashville, TN Own 116
Cleveland, OH Own 115
Charlotte, NC Own 108
Kansas City, MO Own 102
Newburgh, NY Lease 101
Newark, NJ Lease 101
Item 3. Legal Proceedings
The Company is subject to legal proceedings that arise in the ordinary course of its business. The Company believes that adequate provisions for resolution of all contingencies, claims and pending litigation have been made for probable and estimable losses and that the ultimate outcome of these actions will not have a material adverse effect on its financial condition but could have a material adverse effect on its results of operations in a given quarter or annual period.
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Item 4. Mine Safety Disclosures
Not applicable.
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PART II.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Stock Information
Saia’s common stock is listed under the symbol “SAIA” on the Nasdaq Global Select Market.
Stockholders
As of January 31, 2025, there were 694 holders of record of our common stock.
Dividends
We have not paid a cash dividend on our common stock. Any payment of dividends in the future is dependent upon our financial condition, capital requirements, earnings, cash flow and other factors.
Issuer Purchases of Equity Securities
Issuer Purchases of Equity Securities
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Performance Graph
The graph below compares the cumulative five year total stockholder return on Saia, Inc. common stock relative to the cumulative total stockholder returns of the Russell 2000 index, the NASDAQ Transportation index and a customized peer group of eleven companies. Individual companies within the custom peer group are listed below.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock, in each index and in each of the companies in the peer group on December 31, 2019 and its relative performance is tracked through December 31, 2024.
Companies included in the peer group are: ArcBest Corp., Hub Group Inc., J. B. Hunt Transport Services Inc., Knight-Swift Transportation Holdings Inc., Landstar System Inc., Old Dominion Freight Line Inc., Saia Inc., Schneider National Inc., TFI International Inc., Werner Enterprises Inc. and XPO Inc.
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Cumulative Total Return
Period Ending
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Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations generally discusses our 2024 and 2023 results and year-to-year comparisons between 2024 and 2023. Discussions of our 2022 results and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the Securities and Exchange Commission on February 23, 2024.
Cautionary Note Regarding Forward-Looking Statements
The Securities and Exchange Commission (the SEC) encourages companies to disclose forward-looking information so that investors can better understand the future prospects of a company and make informed investment decisions. This Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains these types of statements, which are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “may,” “plan,” “predict,” “believe,” “should,” “potential” and similar words or expressions are intended to identify forward-looking statements. Investors should not place undue reliance on forward-looking statements, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, except as otherwise required by applicable law. All forward-looking statements reflect the present expectation of future events of our management as of the date of this Annual Report on Form 10-K and are subject to a number of important factors, risks, uncertainties and assumptions that could cause actual results to differ materially from those described in any forward-looking statements. These factors, risks, uncertainties and assumptions include, but are not limited to, the following:
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general economic conditions including downturns or inflationary periods in the business cycle;
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operation within a highly competitive industry and the adverse impact from downward pricing pressures, including in connection with fuel surcharges, and other factors;
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industry-wide external factors largely out of our control;
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cost and availability of qualified drivers, dock workers, mechanics and other employees, purchased transportation and fuel;
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inflationary increases in expenses and corresponding reductions of profitability;
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cost and availability of diesel fuel and fuel surcharges;
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cost and availability of insurance coverage and claims expenses and other expense volatility, including for personal injury, cargo loss and damage, workers’ compensation, employment and group health plan claims;
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failure to successfully execute the strategy to expand our service geography;
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unexpected liabilities resulting from the acquisition of real estate assets;
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costs and liabilities from the disruption in or failure of our technology or equipment essential to our operations, including as a result of cyber incidents, security breaches, malware or ransomware attacks;
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risks arising from remote work, including increased risk of related cybersecurity incidents;
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failure to keep pace with technological developments;
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liabilities and costs arising from the use of artificial intelligence;
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labor relations, including the adverse impact should a portion of our workforce become unionized;
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cost, availability and resale value of real property and revenue equipment;
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supply chain disruption and delays on new equipment delivery;
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capacity and highway infrastructure constraints;
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risks arising from new or higher tariffs;
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risks arising from international business operations and relationships;
•
seasonal factors, harsh weather and disasters caused by climate change;
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•
the creditworthiness of our customers and their ability to pay for services;
•
our need for capital and uncertainty of the credit markets;
•
the possibility of defaults under our debt agreements, including violation of financial covenants;
•
inaccuracies and changes to estimates and assumptions used in preparing our financial statements;
•
failure to operate and grow acquired businesses in a manner that support the value allocated to acquired businesses;
•
dependence on key employees;
•
employee turnover from changes to compensation and benefits or market factors;
•
increased costs of healthcare benefits;
•
damage to our reputation from adverse publicity, including from the use of or impact from social media;
•
failure to achieve synergies and the disruption to our business due to acquisitions;
•
the effect of litigation and class action lawsuits arising from the operation of our business, including the possibility of claims or judgments in excess of our insurance coverages or that result in increases in the cost of insurance coverage or that preclude us from obtaining adequate insurance coverage in the future;
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the potential of higher corporate taxes and new regulations, including with respect to climate change, employment and labor law, healthcare and securities regulation;
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the effect of governmental regulations, including hours of service and licensing compliance for drivers, engine emissions, the Compliance, Safety, Accountability (CSA) initiative, regulations of the Food and Drug Administration and Homeland Security, and healthcare and environmental regulations;
•
unforeseen costs from new and existing data privacy laws;
•
changes to the way LTL freight is categorized;
•
costs from new and existing laws regarding how to classify workers;
•
changes in accounting and financial standards or practices;
•
widespread outbreak of an illness or any other communicable disease;
•
international conflicts and geopolitical instability;
•
evolving stakeholder expectations regarding environmental and social issues;
•
provisions in our governing documents and Delaware law that may have anti-takeover effects;
•
issuances of equity that would dilute stock ownership;
•
weakness, disruption or loss of confidence in financial or credit markets; and
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other financial, operational and legal risks and uncertainties detailed from time to time in the Company’s SEC filings.
These factors and risks are described in Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K.
As a result of these and other factors, no assurance can be given as to our future results and achievements. Accordingly, a forward-looking statement is neither a prediction nor a guarantee of future events or circumstances and those future events or circumstances may not occur. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this Form 10-K. We are under no obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by applicable law.
Executive Overview
The Company’s business is highly correlated to non-service sectors of the general economy. The Company’s strategy is to improve profitability by increasing revenue per shipment while also increasing volumes. Components of this strategy include building density in existing geography and pursuing geographic and terminal expansion in an effort to promote profitable growth and improve our customer value proposition over time. The Company’s business is labor intensive, capital intensive and service sensitive. The Company looks for opportunities to improve safety, cost
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effectiveness and asset utilization (primarily tractors and trailers). Pricing initiatives have had a positive impact on profitability. The Company continues to execute targeted sales and marketing programs along with initiatives to align costs with volumes and improve customer satisfaction. Technology continues to be an important investment as we work towards improving customer experience, operational efficiencies and Company image.
The Company’s operating revenue increased by 11.4 percent in 2024 compared to 2023. The increase was a result of increased volume and pricing actions, which included 7.9, 7.5 and 6.5 percent general rate increases on October 21, 2024, December 4, 2023 and January 30, 2023, respectively, for customers subject to general rate increases. Additionally, the Company experienced year over year increases in shipments and tonnage partially as a result of the redistribution of freight due to industry consolidation mid-year 2023. These increases were offset by a decrease in fuel surcharge revenue, resulting from lower diesel fuel prices.
Consolidated operating income increased to $482.2 million for 2024 compared to $460.5 million in 2023. The increase in 2024 operating income resulted primarily from increased volumes partially offset by increases in salaries, wages and benefits, including workers' compensation claims and related expense, and depreciation expense.
The Company generated $583.7 million in net cash provided by operating activities in 2024 versus $577.9 million in 2023. The Company used $1,035.9 million of net cash in investing activities during 2024 compared to $448.7 million during 2023.
General
The following Management’s Discussion and Analysis describes the principal factors affecting the results of operations, liquidity and capital resources, as well as the critical accounting policies of Saia, Inc. and its wholly-owned subsidiaries (together, the Company or Saia). This discussion should be read in conjunction with the accompanying audited consolidated financial statements which include additional information about our significant accounting policies, practices and the transactions that underlie our financial results.
Saia is a transportation company headquartered in Johns Creek, Georgia that provides less-than-truckload (LTL) services through a single integrated organization. While more than 97% of its revenue is derived from transporting LTL shipments across the United States, the Company also offers customers a wide range of other value-added services, including non-asset truckload, expedited and logistics services across North America.
Our business is highly correlated to non-service sectors of the general economy. Our business also is impacted by a number of other factors as discussed under “Cautionary Note Regarding Forward-Looking Statements” and Part I, Item 1A., “Risk Factors.” The key factors that affect our operating results are the volumes of shipments transported through our network, as measured by our average daily shipments and tonnage; the prices we obtain for our services, as measured by revenue per shipment and revenue per hundredweight (a measure of yield), whether including or excluding fuel surcharge revenue; our ability to manage our cost structure for capital expenditures and operating expenses such as salaries, wages and benefits; purchased transportation; claims and insurance expense; fuel and maintenance; and our ability to match operating costs to shifting volume levels.
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Results of Operations
Saia, Inc. and Subsidiaries
Selected Results of Operations and Operating Statistics
For the years ended December 31, 2024 and 2023
(in thousands, except ratios, workdays, revenue per hundredweight,
revenue per shipment, pounds per shipment and length of haul)
Percent
Variance
Operating Expenses:
Saia LTL Freight Operating Statistics:
LTL Revenue per hundredweight, excluding fuel surcharges $21.90 $20.99 4.3
LTL Revenue per shipment, excluding fuel surcharges $294.23 $291.00 1.1
Year ended December 31, 2024 as compared to year ended December 31, 2023
Revenue and volume
Consolidated revenue increased 11.4 percent to $3.2 billion primarily due to increased shipments and tonnage, partially as a result of a redistribution of freight due to a competitor bankruptcy in 2023. Saia’s LTL tonnage increased 8.9 percent while LTL shipments increased 12.4 percent for 2024. Overall LTL revenue per shipment, excluding fuel surcharges, increased 1.1 percent in 2024 as a result of pricing actions and changes in business mix. For 2024 and 2023, approximately 75 percent of Saia’s operating revenue was subject to specific customer price adjustment negotiations that occur throughout the year. The remaining 25 percent of operating revenue was subject to a general rate increase which is based on market conditions. For customers subject to general rate increases, Saia implemented 7.9, 7.5 and 6.5 percent general rate increases on October 21, 2024, December 4, 2023 and January 30, 2023, respectively. Competitive factors, customer turnover and mix changes, among other things, impact the extent to which customer rate increases are retained over time.
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Operating revenue includes fuel surcharge revenue from the Company’s fuel surcharge program. This program is designed to reduce the Company’s exposure to fluctuations in diesel fuel prices by adjusting total freight charges to account for changes in the price of diesel fuel. The Company’s fuel surcharge is generally based on the average national price for diesel fuel and is typically reset weekly. Fuel surcharges are widely accepted in the industry and are a significant component of revenue and pricing. Fuel surcharges are an integral part of customer contract negotiations but represent only one portion of overall customer price negotiations, as customers may negotiate increases in base rates instead of increases in fuel surcharges or vice versa. Fuel surcharge revenue decreased to 15.0 percent of operating revenue in 2024 compared to 16.9 percent in 2023 primarily as a result of decreases in the cost of diesel fuel.
Operating expenses and margin
Consolidated operating income increased to $482.2 million in 2024 compared to $460.5 million in 2023. The increase in 2024 operating income resulted primarily from increased volumes which were partially offset by increases in salaries, wages and benefits, including workers' compensation claims and related expense, and depreciation expense. The 2024 operating ratio (operating expenses divided by operating revenue) was 85.0 percent as compared to 84.0 percent in 2023.
Salaries, wages and employees’ benefits expense increased $186.6 million in 2024 compared to 2023. This increase was largely driven by increased head count to support increased volumes, ongoing business growth and network expansion, as well as, increased training hours and a Company-wide wage increase in July 2024 of approximately 4.1 percent, excluding executives. In addition, other employee related costs increased, including an increase in the number and costs of workers' compensation claims and unfavorable development of historical claims. Purchased transportation expense decreased $1.4 million in 2024 compared to 2023 primarily due to a decrease in cost per mile. Fuel, operating expenses and supplies increased by $65.7 million primarily driven by increased facility costs and administrative costs related to increased volumes and expanded footprint. Claims and insurance expense in 2024 was $9.7 million higher than 2023 largely due to increased auto liability and cargo claims activity and development of open claims. The Company experiences volatility in accident expense from time to time as a result of utilizing self-insurance as a part of its risk management program. Depreciation and amortization expense increased $31.3 million in 2024 compared to 2023 primarily due to ongoing investments in revenue equipment and network expansion.
Other
Interest expense in 2024 was $6.4 million greater than 2023 due to interest expense related to increased borrowings under the credit arrangements in 2024. Interest income in 2024 was $5.2 million less than 2023 due to due to decreased deposit balances during the period. The effective income tax rate was 23.9 percent for the years ended December 31, 2024 and 2023.
Outlook
Our business remains highly correlated to non-service sectors of the general economy and competitive pricing pressures, as well as the success of Company-specific improvement initiatives. Our outlook is dependent on a number of external factors, including strength of the economy, inflation, changes in regulatory conditions and international trade relations, including higher tariffs, labor availability, diesel fuel prices and supply chain constraints. The potential impact of these factors on our operations, financial performance and financial condition, as well as the impact on our ability to successfully execute our business strategies and initiatives, remains uncertain and difficult to predict. We are continuing initiatives to improve and enhance customer service in an effort to support our ongoing pricing and business mix optimization, while seeking to control costs and improve productivity. Planned revenue initiatives include building density in our current geography, targeted marketing initiatives to grow revenue in more profitable areas and further expanding our geographic and terminal network. On October 21, 2024, Saia implemented a 7.9 percent general rate increases for customers comprising approximately 25 percent of Saia’s operating revenue. The success of these revenue initiatives is impacted by what proves to be the underlying economic trends, competitor initiatives and other factors discussed under “Cautionary Note Regarding Forward-Looking Statements” and Part I, Item 1A., “Risk Factors.”
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Effective July 2024, the Company implemented a salary and wage increase of approximately 4.1 percent for all of its employees, excluding executives. The total cost of the compensation increase is expected to be approximately $59.0 million annually, and the Company anticipates the impact will be partially offset by productivity and efficiency gains.
The strategic objective of the Company is to build market share through excellent customer service, continued operating efficiencies and through its geographic and terminal expansion which should result in numerous operating leverage cost benefits. However, should the economy soften, the Company plans to match resources and capacity to shifting volume levels to lessen unfavorable operating leverage. The success of cost improvement initiatives is impacted by a number of factors, including the cost and availability of drivers, dock workers and personnel, and purchased transportation, diesel fuel and insurance costs and inflation.
See “Cautionary Note Regarding Forward-Looking Statements” and Part I, Item 1A., “Risk Factors,” for a more complete discussion of potential risks and uncertainties that could materially adversely affect our financial condition, results of operation, cash flows and prospects.
Recent Accounting Pronouncements Adopted in 2024
In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The standard requires all entities with a single reportable segment to apply all segment disclosure requirements. This standard became effective for annual reporting periods beginning after December 15, 2023 and interim reporting periods beginning after December 15, 2024. The Company adopted the standard on a retrospective basis for the 2024 annual reporting period with the impact limited to incremental disclosures in our consolidated financial statements.
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” Under this ASU income tax disclosures are expanded primarily by requiring the disaggregation of the rate reconciliation and income taxes paid disclosures. This standard is effective for annual reporting periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU No. 2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses." Under this ASU, entities are required to disclose additional disaggregated information related to certain expense captions included in the Consolidated Statements of Operations. This standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
Financial Condition, Liquidity and Capital Resources
The Company's liquidity needs arise primarily from capital investment in new equipment, land and structures, information technology and letters of credit and surety bonds required under insurance programs, as well as funding working capital requirements.
Working Capital and Capital Expenditures
Working capital at December 31, 2024 was $157.4 million compared to $326.6 million at December 31, 2023. This decrease is primarily due to a decrease in cash and cash equivalents of $276.7 million to fund the Yellow Corporation real estate acquisitions and additional revenue equipment used to support higher volumes and expanded footprint, partially offset by an increase in income taxes receivable and decreases in accounts payable and wages, vacation and employees' benefits.
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A summary of our cash flows is presented below:
Years ended
(in thousands)
Cash and cash equivalents, beginning of year $296,215 $187,390
Net Cash flows provided by (used in):
Net Increase (Decrease) in Cash and Cash Equivalents (276,742) 108,825
Cash flows from operating activities were $583.7 million for 2024 versus $577.9 million for 2023 largely driven by increased depreciation and amortization and deferred income taxes, partially offset by changes in other assets and liabilities. For 2024, net cash used in investing activities was $1,035.9 million versus $448.7 million in 2023 primarily due to the acquisition of terminals from Yellow Corporation in January 2024 in addition to increased purchases of revenue equipment to support higher volumes and expanded footprint. Net cash used in financing activities was $175.4 million in 2024 versus $20.4 million in 2023 as a result of borrowings to fund capital expenditures during 2024.
The Company has historically generated cash flows from operations to fund a large portion of its capital expenditure requirements. The Company believes it has adequate sources of capital to meet short-term liquidity needs through its cash on hand, operating cash flows and availability under its credit arrangements. As of December 31, 2024, the Company has $473.8 million of availability under its Revolving Credit Facility and $250 million of uncommitted financing under the Company's Private Shelf Agreement, subject to certain conditions. Future operating cash flows are primarily dependent upon the Company’s profitability and its ability to manage its working capital requirements, primarily accounts receivable, accounts payable and wage and benefit accruals. The Company was in compliance with its debt covenants at December 31, 2024.
Net capital expenditures pertain primarily to investments in tractors and trailers and other revenue equipment, information technology, land and structures. Projected net capital expenditures for 2025 are expected to be over $700 million compared to 2024 net capital expenditures of $1.0 billion. Estimated 2025 capital expenditures include a normal replacement cycle of revenue equipment and technology investments for our operations, and additional revenue equipment and real estate investments to support our growth initiatives.
See “Cautionary Note Regarding Forward-Looking Statements” and Item 1A., “Risk Factors,” for a more complete discussion of potential risks and uncertainties that could materially affect our future performance and financial condition.
Net capital expenditures are summarized in the following table (in millions):
Years ended
Land and structures:
In addition to the amounts disclosed in the table above, the Company had an additional $24.4 million in capital expenditures for revenue equipment that was received but not paid for prior to December 31, 2024.
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Credit Arrangements
Revolving Credit Facility
The Company is a party to an unsecured credit agreement with its banking group (the Revolving Credit Facility). On December 9, 2024, the Company entered into an amendment to the Revolving Credit Facility. The amendment increased commitments under the Revolving Credit Facility by $300 million to an aggregate commitment of $600 million and expanded the accordion feature, subject to certain conditions and availability of lender commitments, from $150 million to $300 million. This amendment also extended the maturity date of the Revolving Credit Facility from February 3, 2028, to December 9, 2029. Borrowings under the Revolving Credit Facility bear interest at the Company’s election at a variable rate equal to (a) one, three or six month term SOFR (the forward-looking secured overnight financing rate) plus 0.10%, or (b) an alternate base rate, in each case plus an applicable margin. Additionally, the amendment adjusted the applicable margin such that the applicable margin is now between 1.25% and 2.00% per annum for term SOFR loans and between 0.25% and 1.00% per annum for alternate base rate loans, in each case based on the Company’s consolidated net lease adjusted leverage ratio. The amendment also modified the fees that the Company accrues based on the daily unused portion of the credit facility, which will now range between 0.175% and 0.30% based on the Company’s consolidated net lease adjusted leverage ratio. The Revolving Credit Facility contains certain customary representations and warranties, affirmative and negative covenants and provisions relating to events of default. Under the Revolving Credit Facility, if an event of default occurs, the banks will be entitled to take various actions, including the acceleration of amounts due. Under the Revolving Credit Facility, the Company is subject to a maximum consolidated net lease adjusted leverage ratio of less than 3.50 to 1.00 with the potential to be temporarily increased in the event the Company makes an acquisition that meets certain criteria. The Company was in compliance with its debt covenants under the Revolving Credit Facility at December 31, 2024.
At December 31, 2024, the Company had outstanding borrowings of $94.0 million and outstanding letters of credit of $32.2 million under the Revolving Credit Facility. At December 31, 2023, the Company had no outstanding borrowings and outstanding letters of credit of $32.1 million under the Revolving Credit Facility.
See Note 2, "Debt and Financing Arrangements" of the accompanying audited Consolidated Financial Statements for more information on the Revolving Credit Facility.
Private Shelf Agreement
On November 9, 2023, the Company entered into a $350 million uncommitted Private Shelf Agreement (the Shelf Agreement), with PGIM, Inc. (Prudential), and certain affiliates and managed accounts of Prudential (the Note Purchasers) which allows the Company, from time to time, to offer for sale to Prudential and its affiliates, in one or a series of transactions, senior notes of the Company, through November 9, 2026.
Pursuant to the Shelf Agreement, on May 1, 2024, the Company issued senior promissory notes (the Initial Notes) in an aggregate principal amount of $100 million to the Note Purchasers. The Initial Notes bear interest at 6.09% per annum and mature on May 1, 2029, unless repaid earlier by the Company. The Initial Notes are senior unsecured obligations and rank pari passu with borrowings under the Revolving Credit Facility or other senior promissory notes issued pursuant to the Shelf Agreement.
Additional notes issued under the Shelf Agreement, if any, would bear interest at a rate per annum, and would have such other terms, as would be set forth in a confirmation of acceptance executed by the parties prior to the closing of the applicable sale transaction.