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Saia Inc. Reports Operating Results (10-Q)

July 30, 2010 | About:

10qk

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Saia Inc. (SAIA) filed Quarterly Report for the period ended 2010-06-30.

Saia Inc. has a market cap of $233.1 million; its shares were traded at around $14.69 with and P/S ratio of 0.3. SAIA is in the portfolios of Diamond Hill Capital of Diamond Hill Capital Management Inc, Charles Brandes of Brandes Investment.

Highlight of Business Operations:

The Company generated $5.0 million in cash provided by operating activities through the first six months of the year compared with cash provided in the amount of $9.7 million in the prior-year period. The Company had net cash used in investing activities of $0.2 million during the first six months of 2010 for the purchase of property and equipment compared to $4.4 million in the first six months of 2009. The Companys cash provided by financing activities during the first six months of 2010 was less than $0.1 million compared to cash used in financial activities of $20.3 million for debt repayments and $1.8 million for debt issuance costs in the first six months of 2009. The Company had no borrowings under its revolving credit agreement, outstanding letters of credit of $55.1 million and cash and cash equivalents balance of $13.6 million as of June 30, 2010. The Company was in compliance with its debt covenants at June 30, 2010.

Consolidated operating income of $5.9 million in the second quarter of 2010, compared to operating loss of $0.4 million in the prior year quarter, was impacted by increased tonnage and cost reductions. The second quarter 2010 operating ratio (operating expenses divided by operating revenue) was 97.5 compared to 100.2 for the same period in 2009. Salaries, wages and benefit expense decreased $4.3 million due to gains in productivity and decreased health insurance costs. Higher fuel prices and fuel volumes resulted in $8.2 million of the increase in fuel, operating expenses and supplies with the majority of the remaining increase due to higher maintenance costs. Claims and insurance in the second quarter of 2010 was $3.7 million less than the second quarter of 2009 reflecting favorable trends in the severity of accidents and reduced cargo claims. Purchased transportation expenses increased $4.5 million reflecting increased utilization due to higher volumes and adjustment to changes in freight flow.

For the six months ended June 30, 2010, operating income was $3.7 million with an operating ratio of 99.2 percent compared to an operating loss of $7.9 million with an operating ratio of 101.8 percent for the six months ended June 30, 2009. The reductions-in-force and the first quarter 2010 impact of the 2009 wage reductions described above, along with productivity improvement initiatives and decreased health insurance costs, resulted in a $14.4 million decrease in salaries, wages and benefit expense for the six months ended June 30, 2010. Higher fuel prices and fuel volumes resulted in $16.7 million of the increase in fuel, operating expenses and supplies with the majority of the remaining increase due to higher maintenance costs. Claims and insurance decreased $6.2 million for the six month period due to favorable trends in the severity of accidents incurred and reduced cargo claims. Purchased transportation expenses increased $8.1 million due to increased utilization as a result of increased tonnage and adjustments to changes in freight flow.

Net income was $2.0 million, or $0.12 diluted per share, in the second quarter of 2010 compared to a net loss of $1.7 million, or $0.13 per share, in the second quarter of 2009. Net loss was $1.2 million or $0.08 per share in the first six months of 2010 compared to a net loss of $8.0 million or $0.60 per share in the first six months of 2009. Due to the equity issuance of 2.3 million shares in December 2009, the number of shares outstanding has increased to 15.7 million for the second quarter compared to 13.3 million for prior year quarter. This change impacts the comparative earnings per share calculation.

Working capital at June 30, 2010 was $41.3 million which increased from working capital at June 30, 2009 of $11.6 million. This increase was due to a decrease in accrued wages, vacation and employee benefits of $17.4 million, other accrued liabilities of $6.4 million and a decrease of $8.9 million due to the current portion of long-term debt. Cash flows provided by operating activities were $5.0 million for the six months ended June 30, 2010 versus $9.7 million provided by operating activities for the six months ended June 30, 2009. For the six months ended June 30, 2010, cash used in investing activities was $0.2 million versus $4.4 million in the prior-year period, due to lower property and equipment purchases. For the six months ended June 30, 2010, cash provided by financing activities was less than $0.1 million versus $22.0 million of cash used in financing activities in the prior-year period. The

The Company has historically generated cash flows from operations that have funded its capital expenditure requirements. Cash flows from operations were $14.1 million for the year ended December 31, 2009, while net cash used in investing activities was $7.6 million. As such, the cash flows from operations funded a portion of the $24.8 million cash used in financing activities in 2009. Cash flows provided by operating activities were $5.0 million for the six months ended June 30, 2010, $4.7 million lower than the prior year period primarily due to the increased 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 $13.6 million at June 30, 2010 and availability under its revolving credit facility, subject to the 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 June 30, 2010.

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