Saia Inc. has a market cap of $272.8 million; its shares were traded at around $17.19 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:Consolidated operating loss was $2.1 million for the first quarter of 2010 compared to consolidated operating loss of $7.5 million in the first quarter of 2009. In the first quarter of 2010, LTL tonnage was up 2.8 percent versus the prior-year quarter. Overcapacity in the LTL industry continues to pressure yield in 2010. Loss per share was $0.21 in the first quarter of 2010, compared to a loss per share of $0.47 in the prior-year quarter. The operating ratio (operating expenses divided by operating revenue) was 101.0 percent in the first quarter of 2010 compared to 103.6 percent in the first quarter of 2009.
The Company had $2.3 million in cash used in operating activities through the first three months of the year compared with cash provided in the amount of $7.0 million in the prior-year period. The Company had net cash used in investing activities of $0.1 million during the first three months of 2010 for the purchase of property and equipment compared to $1.9 million in the first three months of 2009. The Companys cash used in financing activities during the first three months of 2010 was zero compared to $20.2 million for debt repayments in the first three months of 2009. The Company had no borrowings on its revolving credit agreement, outstanding letters of credit of $55.1 million and cash and cash equivalents balance of $6.4 million as of March 31, 2010. The Company was in compliance with its debt covenants at March 31, 2010.
Consolidated operating loss of $2.1 million in the first quarter of 2010, compared to operating loss of $7.5 million in the prior year quarter, was impacted by increased tonnage and cost reduction efforts. The first quarter 2010 operating ratio (operating expenses divided by operating revenue) was 101.0 compared to 103.6 for the same period in 2009. The Company implemented reductions-in-force during first and fourth quarters of 2009 to bring the Companys workforce in line with business levels and a reduced outlook. The Company suspended its 401(k) match effective February 1, 2009. On April 1, 2009, the Company implemented a compensation reduction equal to 10 percent of salary for the Companys leadership team, five percent for hourly, linehaul and salaried employees in operations, maintenance and administration and 10 percent in the annual retainer and meeting fees paid to the non-employee members of the Companys Board of Directors. Estimated savings compared to the first quarter of 2009 from the suspension of the 401(k) match is $1 million and $5 million from the compensation and wage reductions. Claims and insurance in the first quarter of 2010 was $2.5 million less than the first quarter of 2009 primarily reflecting favorable trends in the severity of accidents incurred and reduced cargo claims. Purchased transportation expenses increased 25.8 percent reflecting increased utilization due to higher volumes and adjustment to change in freight flow.
Working capital at March 31, 2010 was $39.6 million, which increased from working capital at March 31, 2009 of $12.5 million. This increase was due to a decrease in wages, vacation and employee benefits of $17.7 million, other accrued liabilities of $7.7 million and $8.8 million due to the current portion of long term debt. Cash flows used in operating activities were $2.3 million for the three months ended March 31, 2010 versus $7.0 million provided by operating activities for the three months ended March 31, 2009. For the three months ended March 31, 2010, cash used in investing activities was $0.1 million versus $1.9 million in the prior-year period, due to lower property and equipment purchases. For the three months ended March 31, 2010, cash used in financing activities was zero versus $20.2 million in the prior-year period. The $20.2 million used for financing activities in first quarter 2009 was fully comprised of debt repayments including $11.5 million for the redemption of subordinated debentures.
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.
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