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Saia Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: April 29, 2011 08:27PM
Saia Inc. (SAIA) filed Quarterly Report for the period ended 2011-03-31. Saia Inc. has a market cap of $261.9 million; its shares were traded at around $16.46 with a P/E ratio of 149.7 and P/S ratio of 0.3.
Highlight of Business Operations:
The Company had $1.0 million in cash used by operating activities through the first three months of 2011 compared with cash used in the amount of $2.3 million in the prior-year period. The Company had net cash used in investing activities of $6.0 million during the first three months of 2011 for the purchase of property and equipment compared to $0.1 million in the first three months of 2010. The Companys cash provided and/or used by financing activities during the first three months of 2011 and 2010 was zero. The Company had no borrowings under its revolving credit agreement, outstanding letters of credit of $49.7 million and cash and cash equivalents balance of $22.0 million at March 31, 2011. The Company was in compliance with the debt covenants under its debt agreements at March 31, 2011.
Consolidated operating income was $4.1 million in the first quarter of 2011 compared to operating loss of $2.1 million in the prior year quarter. Overall, the operations were favorably impacted by increased tonnage and measured pricing actions but unfavorably impacted by unusually harsh winter weather. The first quarter 2011 operating ratio (operating expenses divided by operating revenue) was 98.3 compared to 101.0 for the same period in 2010. Higher fuel prices and fuel volumes resulted in $11.2 million of the increase in fuel, operating expenses and supplies. Additionally, a $2.3 million increase in fleet maintenance costs contributed to the increase in fuel, operating expenses and supplies. During the first quarter of 2011, accident expense was $2.1 million higher than the previous year quarter due to increased accident severity. The Company can experience volatility in accident expense as a result of its self-insurance structure and $2.0 million retention limits per occurrence. Purchased transportation expense increased $3.6 million reflecting increased utilization due to higher volumes, adjustments to changes in freight flow and higher fuel surcharges.
Working capital at March 31, 2011 was $54.3 million which increased from working capital at March 31, 2010 of $39.6 million. This increase was primarily due to increases in current assets of $17.8 million which includes increases in cash and cash equivalents along with accounts receivable partially offset by an increase in current liabilities of $3.1 million which included an increase in current portion of long-term debt partially offset by a decrease in accounts payable. Cash flows used in operating activities for continuing operations were $1.0 million for the three months ended March 31, 2011 versus $2.3 million used in operating activities for the three months ended March 31, 2010. For the three months ended March 31, 2011, cash used in investing activities was $6.0 million versus $0.1 million in the prior-year period due to higher property and equipment purchases. For the three months ended March 31, 2011 and 2010, cash provided by and/or used in financing activities was zero.
On September 20, 2002, the Company issued $100 million in Senior Notes under a $125 million (amended to $150 million in April 2005) Master Shelf Agreement with Prudential Investment Management, Inc. and certain of its affiliates. The Company issued another $25 million in Senior Notes on November 30, 2007 and $25 million in Senior Notes on January 31, 2008 under the same Master Shelf Agreement.
The initial $100 million Senior Notes have an initial fixed interest rate of 7.38 percent. Payments due under the $100 million Senior Notes were interest only until June 30, 2006 and at that time semi-annual principal payments began with the final payment due December 2013. The November 2007 issuance of $25 million Senior Notes has an initial fixed interest rate of 6.14 percent. The January 2008 issuance of $25 million Senior Notes has an initial fixed interest rate of 6.17 percent. Payments due for both $25 million issuances will be interest only until June 30, 2011 and at that time semi-annual principal payments will begin with the final payments due January 1, 2018. Under the terms of the Senior Notes, the Company must maintain certain financial covenants including a minimum fixed charge coverage ratio, a leverage ratio, an adjusted leverage ratio and a minimum tangible net worth, among others.
The Company has historically generated cash flows from operations that have funded its capital expenditure requirements. Cash flows from operating activities were $23.4 million for the year ended December 31, 2010, while net cash used in investing activities was $3.3 million. Cash flows used in operating activities were $1.0 million for the three months ended March 31, 2011; $1.3 million lower than the prior year period primarily due to the decreased working capital requirements. The timing of capital expenditures can largely be managed around the seasonal working capital requirements of the Company. The Company believes it has adequate sources of capital to meet short-term liquidity needs through its cash and cash equivalents of $22.0 million at March 31, 2011 and availability under the Restated Credit Agreement, subject to the Companys borrowing base and satisfaction of existing debt covenants. Future operating cash flows are primarily dependent upon the Companys 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 March 31, 2011.
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